Law of how gov't interacts w/ the world | Comprises majority of Am. Govt-

Law that governs agenciesa.Law that agencies makeb.

Admin law includes two different facets-

-551(1)- 'agency' means each authority of the Government of the United States, but does not include, congress, courts, DC, military.

a.What is an Agency:1.

Execute the laws of the USa.

corrects imperfections in private market system-

Addresses inadequate consumer information, insufficient competition-

Regulate private conductb.

Social Security, Medicare-

Administer entitlements programsc.

Everything else - IRS, Immigrationd.

What do Agencies do ?2.

Rulemaking -Corresponds to legislative action1.Adjudication -Corresponds to judicial actions2.Investigations -Corresponds to enforcement3.

Types of Agency action3.

What is Admin Law and Why should We study it?A.

Definition of Adjudication and Rulemaking - Distinction is future effect

551(4)-agency process for formulating, amending, repealing a rule!!A.an agency statement of future effect designed to implement, interpret, or prescribe law or policy

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When an agency engages in rulemaking, it promulgates a regulation that has the same forceand effect of law as if it has been passed by congress or a state legislature. §551(4)

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Formal 1)Informal2)Hybrid3)

Types of Rulemaking:B.

Rulemaking-1.

-551(7)-agency process for the formulation of an order A.Order = whole or part of a final disposition other than rulemaking, including licensing-

When an agency applies an existing rule or statute to a set of facts to determine what outcomes is required by the rule or statute. The power to adjudicate means that an agency decision concerning how a law or regulation applies in a specific circumstances has the same force of law as if it had been made by a specific court. §551(6)

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Formal Adjudication1)Informal Adjudication2)

Types of Adjudication:B.

Adjudication2.

Courts generally defer to agencies choice of whether to proceed by adjudication or through rulemaking

Agencies may preclude parties from raising certain issues in adjudication by deciding them

Judicial review3.

A walk through the APAB.

Outline 1 : Admin Law OverviewThursday, April 14, 2011

7:15 PM

Outline Page 1

Agencies may preclude parties from raising certain issues in adjudication by deciding themin rules.

Trend toward greater use of rulemaking to set policy, but some agencies (e.g. NLRB) continue to use case by case adjudication to do so

Constitutionality of agency action - Standing (Case or controversy) a.Whether agency action is contrary to a specific statute b.Adequacy of agency procedures usedc.

What can be reviewed:i.

De novoa.Substantial Evidence b.Arbitrary and Capricious c.

Standards of Review:ii.

Normally the agency itself will be the client. -

The public interest approach - Makes serving the public good the attorney's primary duty-

Who is the client?1.

Radack reading -Agency Interest v. Public Interest-

What are the Ethical Obligations?2.

Professional Considerations:C.

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Statutory commandi.Response to staff recommendations ii.Political pressure iii.

Events to prompt agency to propose rule:a.

legislation requiring specific regulations-

Agency initiation (staff recommendation)-

Congressional persuasion (investigation, hearings, budget)-

Public (petition, lobbying)-

Source of Proposed Regulationsb.

Workgroup, steering committee, red border review, final rules-

McGarity Reading - Institutional structurei.

You need skills, know what the agency's mission is, make it easier for them to their purpose/job.

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Bailey Comments -Initiating actionii.

Hitchcock Comments -6 tips on how to influence agenciesiii.

Lobbyingc.

Rulemaking initiationA.

Time 0 - rulemaking begins when agency starts thinking about rulemaking-

Decides whether to initiate a rulemaking.

What procedures have to be followed between T1 and T2?

Time 1 - when agency does something besides thinking-

Finish rulemaking

Time 2 - issuing a rule/adopt a rule -

Time 3 - court issues decision of validity of rule-

Time 4 - enforcement - enforce the rule - proceedings and procedures-

Time 5 - experience with the rule (agency) - questions, agency issues interpretations of the rule, things to explain

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Start over at time zero/time 1-

Amendment is the same as new rulemaking process-

Time 6 - agency decides we need to amend or change this rule-

Process: RULEMAKING (timeline)

to what procedures an agency has to follow to propose and adopt a rule (between T1 and T2)-

No procedure except issue a rule1.Informal Rulemaking - Notice and Comment (Section 553 of APA)2.Notice and Comment Procedures even though not required3.Notice and Comment Rulemaking + some other steps (Hybrid rulemaking)4.Formal Rulemaking5.

553b – Notice: general notice of proposed rule making will be published in the federal register or persons subject to are personally served or have actual notice

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If something is an exception in b, then the exception applies to c-

If something is totally procedural then NO notice and comment necessary-

Adjudicatory procedures for trial like procedures and the creation of a record from which the agency is to make a decision

Triggers formal rulemaking –must comply with 556 and 557-

553c – Comment: obligation to provide comment - inextricably linked to notice-

1) A substantive rule which grants or recognizes an exemption or relieves a restriction

2) Interpretative rules and statements of policy

3 Exceptions -

553 d – timing of rules and obeying – must allow 30 days between the notice of adoption and when the people are obliged to obey the rule.

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Other Requirements:

5 Possible Ways an Agency can act:

Outline: RulemakingFriday, April 15, 2011

3:22 AM

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2) Interpretative rules and statements of policy

3) As otherwise provided by the agency for good cause found and published with the rule

Procedural rule is exempt from notice and comment but not from (d)-

§553e – right to petition – each agency shall give an interested person the right to petition for issuance, amendment, or repeal of a rule.

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§555e – when written application, petition, or other request of an interested party made in connection with agency proceedings is denied, agency must give prompt notice, notice shall be accompanied by brief statement of grounds for denial.

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§551 - Agency Action – includes the whole or a part of an agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act.

551(13)of the APA defines agency action to include "failure to act"-

Agency Action:A.

Time agencies take to make decisions must be governed by a rule of reason1.

Courts have still have refused to issue a writi)

Where Congress has provided a timetableor other indication of speed with which it expects the agency to proceed in enabling statute, that statutory scheme may supply content for this rule of reason.

2.

Delays that may be reasonable in the sphere of economic regulation are less tolerable when human health and welfare are at stake

3.

The court should consider the effect of expediting delayed action on agency activities of a higher or competing priority

4.

The court should also take into account the nature and extent of the interests prejudiced by delay

5.

The court need not find any impropriety lurking behind agency lassitude in order to hold that agency action is unreasonably delayed

6.

Whether agency delay warrants a mandamus: (from Telecommunications)A.

A finding of agency impropriety is not necessary in order to determine that the delay is "unreasonable”

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Determine if delay is so egregious (flagrant) as to warrant mandamus 1.Telecommunications Research & Action Center v. FCC

Overall Rule: If person petitions an administrative agency for rulemaking, but agency fails to respond within reasonable time, petitioner may seek judicial review of unreasonable delay - get either mandamus or continuing court jurisdiction until final agency decision.

A common basis for denial of a petition could be that the issue is simply not important enough, given the agency’s resources and priorities, to justify rulemaking at this time.

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Once an agency has denied a petition for rulemaking, one of the obstacles to judicial review has been eliminated because the agency made a decision that can be reviewed.

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Standard of Review: Arbitrary and capricious –see judicial review of rulemaking

1) Agency did not adequately explain the facts and policies it relied on, or 2) Facts cited have no basis

RULE: When agencies deny rulemaking petition, courts will overrule decision only if:-

Arkansas Power & Light Co. v. Interstate Commerce Commission –p69, coal consuming power companies filed a rulemaking petition with the agency responsible for regulating railroad rates, demanding extensive study which would locate the cheapest coal shipping railroad routes for them, agency refused contending rulemaking was too cumbersome and individual adjudication was more efficient, companies sought judicial review to compel rulemaking.

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The petition presented unreasonable demands, court found no reason to compel rulemaking. Hard to get denial reversed.

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What is the record - look at explanation of agency and its rationalereasonableness of agency explanation given the record-

Court is looking for a reasonableness test-

Section 706 (1) can compel agency action unlawfully withhold. - APA, Judicial review-

Denial of petitionB.

What if the agency doesn’t do anything???1.

Petitions for Rulemaking

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The record is the petition and whatever you and your client submitted as part of petition and agency's letter of denial

What is the record - look at explanation of agency and its rationale-

reasonableness of agency explanation given the record

SC said they did.

EPA said not under jurisdiction►

Court was distinguishing between policy a consideration vs. a question of law

EPA stated unwise to do so at the time►

Under statute EPA did not have discretion to refuse rulemaking on the things it talked about

Only refuse if concluded greenhouse gas was not a danger then could refuse

Interpretation of Clean Air Act - EPA was under congressional mandate and had to address endangerment question

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Court finds CAA states that EPA can avoid rulemaking only if it finds that GHGs do not contribute to climate change or if provides some statutory reason to state why it cannot make that determination. EPA didn't give a good reason initially.

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MASS. v. EPA-

Note: ARK Case still governs-

RULE: Agency’s rulemaking actions are judicially reviewable under arbitrary and capricious standard –courts must defer to the agency expertise unless it failed to articulate a satisfactory explanation, including a rational connection between the facts found and the choice made

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The first step for an agency lawyer is to determine whether the procedures apply at all, determine whether notice and comment were required.

A.

Rules involving military, foreign affairs, public property, loans, grants, benefits, contracts not subject to 553.

1)

Military, social security, Medicare all exempt.2)

General Exceptions: a.

1) Rules of agency organization, procedure, or practice2) Interpretive rules (clarifies existing law, does not create it)3) General statements of policy

Impracticable: a situation in which the due and required execution of the agency functions would be unavoidably prevented by its undertaking public rulemaking proceedings.

i)

Unnecessary means unnecessary so far as the public is concerned, as would be the case if a minor or merely technical amendment in which the public not particularly interested were involved.

ii)

Public Interest: requires that public rulemaking procedures shall not prevent an agency from operating and that on the other hand lack of public interest in rulemaking warrants an agency to dispense with public procedure.

iii)

Definitions:a)

Require agency to find good cause and to publish finding and reasons with the rule.

i)

4) Other rules for which notice and public procedure are impracticable, unnecessary, or contrary to the public interest

Certain rulings outside N+C provisions of 5531)

RULE: Agencies procedural rules are exempt from APA 553’s notice and comment requirements if they do not suggest approval/disapproval of certain behavior, even if the procedural change affects parties’ rights.

2)

Agency label is not determinative on the whether it is procedural.

Procedure is not defined in the APA –up to the courts to determine between substantive (which requires NC) and procedural rule which doesn’t

o

Exceptions from Notice and Comment: b.

The exceptions1.APA rulemaking procedures:B.

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Agency label is not determinative on the whether it is procedural.

American Hospital Assn. v. Bowen-

manual imposes no new burdens on hospitals that warrant notice and comment review.-

Reason for exemption -to ensure that agencies retain latitude in organizing their internal structure-

Overruled Rule: Exemption from N+C covers agency actions that do not alter the rights or interest of parties although it may alter the manner in which parties present themselves or their viewpoints to the agency. this proved to be too difficult of a standard to prove

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Behavioral Response -

The agency didn’t call it a rule, called it a manual, but it was actually a rule, so the court found the enactments to be procedural, thereby exempt

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(when federal agency authorized to oversee Medicare hired private doctors to audit hospitals’ Medicare fraud, it enacted audit procedures without public notice or formal rulemaking. The hospitals sued to void the procedures, claiming necessary notice and comment was omitted)

Air Transport Association of America v. Dept. of Transportation (overruled)

Exemptions to N+C do not apply to action that 'substantially alters the rights or interests of regulated' parties.

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"In the instant case, because the penalty rules substantially affected civil penalty defendants' right to avail themselves of an administrative adjudication"

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Rather than focus on whether rule is procedural or substantive, decisions employ a functional analysis.Where nominally procedural rules encode a substantive value judgment or substantially alter the rights of interest of regulated parties the rules must be precede by notice and comment. (553 exemption does not apply)

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(The federal aviation safety agency increased civil penalties and changed administrative and adjudication procedures without prior notice and comment contending the rules were exempt as procedural)

Consider whether the rules’ substantive effects are sufficiently grave so that the notice and comment are needed to safeguard the APA underlying policy

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What matters is the effect’s degree, not just the presence of an effect on rights-

RULE: For APA 553 purposes, agency rules are deemed procedural (exempt from NC) if the rules’ substantive effects on parties’ rights are too minor to justify notice and comment’s inefficiency and expense

JEM Broadcasting Co v. FCC

Hard look" procedure of review announced w/o N+C-

Critical test: the actions do not themselves alter the rights or interests of the parties, although it may alter the manner in which the parties present themselves or their view points to the agency

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Also held that Air Transport is no longer binding precedent, the opinion there extended the value -

judgment rationale further than any case of the circuit.

Post 911 – rules adopted asap or when things are misspelled o

If there was an emergency justifying an exception from prior notice and comment, the APA does not require later notice and comment nor does it limit the time the rule may remain in effect

o

Good cause exception is when a change in a rule, or a rule, is extremely trivial, or where things are extremely urgent:

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Interim final rule: Sometimes an agency will allow comment after the passing and make changes accordingly.

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Direct final rulemaking: An agency publishes a final rule in the federal register with a statement that the rule will become effective on a particular date unless an adverse comment is received before that date. If adverse comment is rec, the agency withdraws the rule and it ten publishes it as a proposed rule under notice and comment procedures.

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(the federal radio licensing agency adopted rules without NC whereby license applications containing errors were summarily rejected. When an applicant’s ambiguous application was rejected, it sued to declare the rules void –court found the rules to not be void)

Rules mostly made by informal which are only subject to N&C.-

Congress requires formal rulemaking in certain areas which requires trial type procedure. -

Formal, Informal, or hybrid rulemaking

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Congress requires formal rulemaking in certain areas which requires trial type procedure.

Unless Congress uses the phrase “on the record” then agency is not required to use trial like procedures

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US v. Allegheny Ludlum Steel Corp

Formal rulemaking triggered (556 and 577 need to be applied) only where the agency statute, in addition to providing a hearing, prescribes explicitly that it be "on the record"

o

(After federal agency regulating railroad rates enacted rules without hearing, dissatisfied users sued, contended formal rulemaking and a hearing were required –court found that formal rulemaking only required when the statute explicitly requires it to be on the record)

RULE: formal rulemaking per APA 556-557 is required only when the agency’s enabling legislation specifies 1) there must be hearing AND 2) hearing must be “on the record”

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Requirement of "hearing" does not trigger formal rulemaking. □

"Thus even though the commission was not required to comply with 556 and 557 of that act, it was required to accord the "hearing" specified in 1(14)(a) of the interstate commerce act"

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United States v. Florida East Coast Rwy. Co. p92 – While the ICC’s enabling statute requires rate regulations be made “after hearing” the ICC made rules after accepting only written comments, regulated railroads sued, contended that the hearing was inadequate, court found that “hearing” could mean just Notice and Comment.

RULE: statutory provisions requiring a hearing do not trigger formal rulemaking APA 556-557, and the hearing sometimes need not include the right to present evidence orally, cross examine witnesses or present oral arguments to the agency

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Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc. p94 –

(agency enacted atomic energy rules without allowing discovery or cross examination of experts, an anti-nuke group challenged the procedure as denying meaningful participation –court cannot require an agency to grant additional procedural rights during rulemaking)

The answer of which is no. The adequacy of a record in a proceeding is not correlated directly to the type of procedural devices employed but rather turns on whether the agency has followed the statutory mandate of the APA.

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Considered whether the courts can impose hybrid rulemaking procedures on an agency? -

If courts reviewed all agency proceedings to determine if the agency employed the proper procedures to reach the "best" result, the agency model would fail.

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APA lays down the only procedural requirements unless Congress has ruled, not just because the DC Circuit says so – wanted to put an end to the judicial expansion of notice and comment rule making

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RULE: Courts reviewing agency rulemaking procedures can’t impose additional procedural rights, absent constitutional constraints or extremely compelling circumstances.

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Formal Rulemaking:1.

Notice A.APA requires general notice of proposed rulemaking shall be published in the Federal Register 5 USCA 553(b)

Findings and Certifications –agency statement about how it meets other laws, ex why an environmental impact standard isn’t required

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Agency’s failure to give adequate notice can result in a remand, start over again□

Supplementary Information –agency explains background, elements of proposed rule, agency’s justification, section by section summary, legal authority

A statement of the time place and nature of public rulemaking proceedingsa)References to the legal authority under which the rules is proposed and b)Either the terms or substance of the proposed rule or a description of the subjects and issues involved”

c)

The notice shall include:□

to protect the interest of parties in commenting on proposed rules, the courts have consistently held that the notice of proposed rulemaking must fairly appraise interested persons of the issues in the rulemaking.

When an agency fails to make the necessary disclosures, a court will remand a final rule to an agency for a new notice and comment period

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If you’re unhappy with the issued regulation you can challenge the notice

Not subject to publishing in FR, if persons subject to the rule are named or either personally service or otherwise have actual notice of rulemaking in accordance with law agencies seldom if ever rely on actual notice,

Informal Rulemaking Requirements2.

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persons of the issues in the rulemaking.

Grounds for reversal if the agency doesn’t say enough in the notice about what it knows or what it thinks it knows at the start of a rulemaking –does it have an obligation to share what it knows?

o

If you’re unhappy with the issued regulation you can challenge the notice□

NS keeps selling fish that doesn’t meet the standard of the rule, violates the rule and concedes that it violates.

NS argues that rule is invalid because FDA didn’t share any scientific thinking behind imposing rule on all fish.

US v. Nova Scotia Food Products, p98 – case about smoked white fish, FDA proposed a regulation to require all smoked fish to be heated to a certain temp for a certain time to kill botulism spores… receive comments that say it should be regulated species by species – the heat would destroy the fish, commercially infeasible, FDA refuses and adopts the rule anyways.

RULE: Court held that when the basis for a proposed rule is a scientific decision, the scientific material believed to support the rule must be shared… to suppress meaningful comment by failure to share the data relied on is akin to rejecting comment

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Affirmative rule puts readers on constructive notice that the exact opposite may be adopted, so readers should expect both

Suppose the agency proposes that it will do regulations A and B, and then it adopts A and B and C – is it okay for the agency to include in the final rule/regulation –no, potential problem because public lacked notice about C

Agency will say that it just modified A and B in response to comments and developed C, its not new, just changes to what was put out in notice

Logical outgrowth test-Was the concerned party put on notice that its interests were at stake?

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"Notice is adequate if the changes in the original plan are in character with the original scheme and the final rule is a logical outgrowth of the comments already given"

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if the final rule materially alters the issues involved in the rulemaking or if the final rule substantially depart from the terms of substance of the proposed rules, the notice is inadequate.

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Chocolate Manufactures Ass. v. Block: – the agency administering subsidized food proposed a rule disallowing high-sugar cereals, but continuing to allow flavored milk, yet after receiving comments, in enacted a final rule disallowing chocolate milk. Chocolate milk makers sued, claiming insufficient notice –court found there wasn’t fair notice here because USDA never proposed rejecting it and the notice said it would permit flavored milk.

TEST/RULE: if a proposed rule is later revised, the original notice was adequate if the revisions are in character with the original scheme, and the final rule is a logical outgrowth of the notice

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Relevant inquiry is whether or not potential commentators would have known that an issue in which they were interested was on the table and was to be addressed by final rule.

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NOTES:

Problems with notice-

1) Determined by a close examination of the facts of the particular proceeding 2) Rule will be invalidated if no notice was given of issue addressed by final rules3) Inadequate where an issue was only addressed in the most general terms in the initial proposal, or where a final rule changes a pre-existing agency practice which was only mentioned in an NPR in order to place unrelated changes in the overall regulatory scheme into their proper context

Whether or not potential commentators would have known that an issue in which they were interested was on the table and was to be addressed by a final rule

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4) Crucial issue - whether parties affected by a final rule were put on notice that their interests were at stake

FACTORS to determine the adequacy of a NPRM:-

A related approach would be for the agency in addition to its specific proposal, to pose a series of questions going beyond the terms of the proposal on which it seeks comment

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One way an agency can both set forth specific proposals in an NRPM and retain flexibility in fashioning the final rule is to include in the NPRM several alternatives that are under considerations

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of questions going beyond the terms of the proposal on which it seeks comment

It does have a requirement that final rules be published 30 days prior to their effective date – sometimes misinterpreted as mandating 30 day comment period

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The purpose of NPRM is to enable interested persons to comment on proposed rule, 553crequires agencies to provide interested persons an opportunity to comment through submission of written data, views, or arguments

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Congress could have if it wanted to but didn’t o

553 doesn’t ban ex parte communications for informal rulemaking-

Ex parte communication: APA places specific prohibitions on ex parte communications for formal rulemaking. communications made to decision makers in the agency outside of the prescribed and public procedures

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2 Perspectives on ex parte communication-

Communications received before formal notice need not be included in public record, unless communication formed basis for agency action,

1.

Once notice of proposed rulemaking issued, all agency officials should refuse to discuss rulemaking proceedings with interested parties, AND

2.

If ex parte communications occur, their documentation should be placed in the public file immediately advises use of caution

3.

RULE: When private parties/lobbyists attempt to communicate with agency officials off the public record, then

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HBO v. FCC-

DC Circuit feels it is inconsistent with process of 553 for there to be secret ex parte communications with agency decision makers

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DC Circuit, agency initiated rulemaking about cable TV standards, accepted comments through end of the comment period, then solicited and received hundreds of off record communications from cable companies, court found final rule void

Once a NOPR has been issued, any agency official who is or may reasonably be expected to be involved in the decisional process should 'refuse to discuss matters relating to the disposition of a rulemaking proceeding with any interested private party"

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Can't be two different paths of information, one open and then one secret.-

1) May accept comments submitted after the comment period without giving notice, and refuse to docket such late comments if they are not of central relevance to the rulemaking,

2) May have off-record meetings after comment period with lobbyists and politicians, and refuse to docket transcript of such meetings i f they’re not of central relevance, AND

3) May have off-record meetings with other executive branch officials and must not docket those meetings transcripts unless information or data from them formed the basis for the rule

RULE: Agencies in rulemaking -

Reverses HBO v. FCC effectivelyo

The attitude that the court brought here was totally different than that which they had in Home Box Office (rules were much stricter)

Naturally people are going to want to meet, its part of the process, docketing requirement allowed the public to find out

Typically this is given more weight because it reflect intervening SC case decisions.

Sierra Club v. Costle, p116 – when the EPA lowered emissions standards after accepting post-comment period comments, and then having off record meetings with lobbyists, politicians, and the president, environmentalists challenged the rule’s procedural validity

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Ex Parte Communications:

Statement of Basis and PurposeAfter receiving comments from interested persons, §553c requires agencies after consideration of relevant matter presented to incorporate in the rules adopted a concise general statement of their basis and purpose

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To skimp on the statement of basis and purpose, effectively limits the ability of the agency later to justify the rule if it is challenged in court

o

The agency’s explanation for its action, supported by information in the rulemaking record, is the basis upon which courts review the substantive rationality of the rule

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Opportunity for Comment:A.

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later to justify the rule if it is challenged in court

Rare for agency to only have APA rulemaking procedural requirements-

Look to other sources of requirements, organic act, agency rules-

1) What triggered the rulemaking?-

2) What analysis must the agency undertake? -

3) Is the agency’s compliance with the analytical requirements subject to judicial review, and If so, what relief can the court grant to plaintiffs?

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Consider:-

Merely commenting about an issue that will come up in rulemaking isn’t enough..o

Pre-judgment TEST - agency member should be disqualified only when there has been a clear and convincing evidence of a closed mind.

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In between - agency may have to tell public that its thinking about making notice□

Notice that the agency considers beginning a rule, Look before you leap, The costs of information gathering are usually less than the costs of recovering from a bad decision

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555 of APA requires some notice before the first leap□

T0 – time when idea emerges, T1 is the first leap by publishing notice of proposed rulemaking, T2 – agency first adopts the rule, T3 – judicial review

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Vermont Yankee – no more judicial addition of stopping points, but Congress can and does still add procedures for individual agencies

o

Focus on time between T0 and T1 – what is it that the agency ought to do and think about before it publishes?

o

Congressional Enactments –outside the APA

Executive Order –applies only to executive agencies, not agencies whose decision making authority is directly vested in people not under the power of the president

Agency Regulations

Sources of additional requirementso

Hybrid Rulemaking – addition of procedures somewhere along the timeline amounts to a series of additional points at which the agency is required to stop and reflect on what the agency is doing –somewhere between formal and informal –uses formal esque procedures –only proper when specifically provided for

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Congress may make agency compliance subject to judicial reviewo

Executive orders always have provision that eliminate judicial review, solely a matter of the business of the executive branch

o

Statutory hybrid v. Executive hybrid-

If an agency fails to follow its own regulations than that is subject to judicial review because it is arbitrary and capricious.

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Ossification of rulemaking - Academic debate over whether the increased accountability imposed by Congress and the President have greater costs, in terms of slowing down the rulemaking process, than benefits, in terms of making agencies smarter about the rules they promulgate

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NEPA, Regulatory Flexibility Act, Paperwork Reduction Act, Unfunded Mandates Reform Act, Data Quality Act – p127-126

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Hybrid rulemaking procedures3.

Negotiated Rulemaking 4.

Together explore their shared interests and differences of opinion, collaborate in gathering and analyzing information, generate options, and bargain and trade across these options according to their differing priorities

o

If a consensus is reached, its published in the Federal Register as the agency’s notice of proposed rulemaking, and then the conventional review and comment process takes over

o

Negotiated Rulemaking – an agency and other parties with a significant stake in a rule participate in facilitated face-to-face interactions designed to produce a consensus

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Doesn’t excuse compliance with APA, but makes it easiero

Occurs between T0 and T1 – work it out with the key players before notice-

Issues should be mature and ripe for decisiono

Issues should not be such that would require participants to sacrifice their fundamental tenants o

Interests significantly affected should be such that individuals can be selected who will adequately represent those interests

o

Growing interest in Alternative Dispute Resolution and it's applicability to rulemaking

FACTORS - when it makes sense to try to negotiate the outcome of a rule-

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represent those interestsGrowing interest in Alternative Dispute Resolution and it's applicability to rulemaking-

The government's efforts to limit agency discretion have increased the time and cost involved in rulemaking.

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Negotiated rulemaking may be a solution to the increased delays and costs.-

Susskind reading-

Agency is in the negotiations simply to give effect to the agreement-

Regulatory negotiation substitutes a private law remedy with a public one-

Funk Reading -Regulatory negotiation-

All federal officers are bound by the constitution to follow the laws of the US.-

Courts review agency actions alleged to be substantively unlawful either because agency has incorrectly interpreted governing statute or because agency’s decision is arbitrary and capricious

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Ambiguous Rules (page 398)

If the enforcement occurs in a judicial forum, the court will interpret the meaning of the regulation with possible issues of deference to the agency if the agency has expressed an interpretation of the regulation

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If the enforcement occurs in an agency adjudication, the agency interprets the regulation-

A regulated entity may be subject to an enforcement action under circumstances it did not anticipate -

Judicial Review of RULEMAKINGA.

Test for due process issues-General Electric Company v. U.S. Environmental Protection Agency –when the EPA fined a polluter under a creative interpretation of its regulations, the polluter claimed the fine violated due process After this decision can GE bring an enforcement action for other companies at that time? No – they lacked ascertainable certainty for activities before the case, but for activities after the case may be fined

TEST: whether the regulation itself, or other agency statements that might have been issued to explain the regulation, give the party acting in good faith enough to identify what was required/prohibited with ascertainable certainty.

•

Statutory Interpretation

Compel agency action unlawfully withheld or unreasonably delayed, and;1.Hold unlawful and set aside agency action, findings, and conclusions found to be:2.(A) Arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law-

De novo review

(B) Contrary to constitutional right, power, privilege, or immunity-

(C) In excess of statutory jurisdiction, authority, or limitations, or short of statutory right-

Compliance with §553 procedures and rulemaking

De novo review

(D) Without observance of procedure required by law-

(E) Unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by the statute; or

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(F) Unwarranted by the facts to the extent that the facts are subject to trial de novo-

§706 – To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action

When there is an argument over the meaning of the statute it is the job of the court to resolve it and neither party gets particular deference unless there is a special base line…

o

When there is a claim that an agency is acting not in accordance with a statute:•

1) Determine if the statute clearly requires or forbids the agency’s interpretation… then

Yes – then that must be adopted, if the agency has adopted a different interpretation then its interpretation is unlawful

No – two or more plausible constructions of the statute, then proceed to step 2 - deference

1) Did Congress itself resolve the precise question – is there one and only one plausible interpretation? Job solely for the court to interpret –determine if Congress definitively resolve the issue, did they define the terms

o

2) If the statute is silent or ambiguous with respect to the specific issue, the question is whether the agency’s answer is based on a permissible construction of the statute –agency can choose any

o

2) If the statue is ambiguous, courts must uphold the agency’s interpretation if it is a permissible construction of the statute

Chevron 2 Step: If an agency’s interpretation of its enabling statute is challenged, reviewing courts must

Outline Page 11

Must be a plausible construction – doesn’t matter which the court prefers

agency’s answer is based on a permissible construction of the statute –agency can choose any interpretation among a range of reasonable alternatives

*** Chevron itself involved a formal rule – if an agency adopted formal rule with NC, then the 2 step applies BUT there is disagreement as to whether if an agency adopts construction of statute by other means –whether that’s entitled to chevron or Skidmore??

o

Chevron v. Natural Resources Defense Council, Inc. – when the EPA interpreted the Clean Air Act to allow polluting factories to add new equipment while keeping pollution levels constant, environmentalists claim Act should be interpreted to reduce pollution –SC found COA erred because the mandate was ambiguous, COA’s failed to consider whether the EPA construction was permissible instead imposed its own reading

The statutory text – words of the statute – you enact a document not purposes or intentions –evaluating what the words say is the key first step

How has the statutory text changed during the course of consideration –what was the motivation behind the changes

Plain meaning – dictionary definitions

Cannons of constructions - construe a statute to avoid a constitutional problem

Many courts will use the legislative history to clarify general ambiguity -

Some feel its improper because Congress doesn’t enact legislative history, or intentions, or committee reports, only the text is law, nothing else

-

Legislative History – history of the voting, reports on committees, statements by legislators, comments from executive branch agencies

Factors court will consider in determining step 1

Substantive Decisions

First – determines on the basis of available evidence what the relevant facts areo

Second –decides what type of rule, if any, is appropriate in light of those factso

When an agency promulgates a rule, it reaches two types of substantive decisions:-

Scope of Review

Arbitrary and Capricious scope applies to informal rulemakingo

Litigants must check an agency’s statutory mandate to determine whether it imposes a different scope of review on the agency’s rulemaking

o

706 states the substantial evidence standard applies when an agency must comply with §§556-557 which involves formal rulemaking

-

Substantial Evidence – instructs the court to uphold a rule if it finds the agency’s decision to be reasonable or the record contains “such evidence as a reasonable mind might accept as adequate to support a conclusion”

-

1) Failure of the agency to explain its decision adequately (see below for more)o

2) Failure to take account of key facts or alternativeso

If the agency’s decision is one that could not have been what congress authorized (limited to reasonable/plausible choices)

No rational connection between the findings and the conclusions

3) To arrive at an irrational or implausible decisionso

Arbitrary and Capricious – standard of review, used to be deferential but now is like the substantial evidence standard

-

Did the agency itself take a hard look at facts, and reason about those facts to come to a conclusiono

Did the court take a hard look at how the agency made its decision?o

Used to deal with the overlap between substantial evidence and arbitrary and capricious standardso

Applies to informal rulemaking and informal adjudicationo

Hard Look Approach - The current approach (post Overton Park) to judicial review of agency rules, legislative rules adopted under §553… stresses thorough, probing review

-

Rulemaking Record706 requires court review the whole record when determining whether to affirm a rule-Facts: In a formal agency adjudication, as well as in court trials, the nature of the facts in issue usually relate to what happened in the past, in rulemaking the facts in issue relate to what will happen in the future – thereby justifying a regulation to prevent it

-

Adequate ExplanationRequirement that agencies provide adequate reasons for adoption of the rule-

Outline Page 12

Adequate ExplanationRequirement that agencies provide adequate reasons for adoption of the rule-When an agency lacks “adequate reasons” its action is “arbitrary and capricious”, court will normally remand a rule to an agency rather than declaring it to be invalid

-

When an agency hasn’t provided adequate explanation, even if court itself could discern an adequate explanation from record, court should remand the case back to the agency

-

Motor Vehicle Manufacturers Assoc. v. State Farm Mutual Automobile Inc. Co. p175 – when an agency first enacted a rule that cars be equipped with airbags or passive seatbelts, then rescinded the rule, an auto insurer challenged the recession as arbitrary capricious… failure to consider alternatives was arbitrary and capricious

o

RULE: Agencies’ rescission of their own rules are reviewable under the arbitrary and capricious standard, meaning they must be rational, based on relevant considerations, and within the agency’s statutory authority

-

Agencies interpret statutes in determining what type of rule to adopt, these interpretations are subject to judicial review under 706

-

Strong agency deference to interpreting it's organic act-

Step one, court determines whether the statute clearly requires or forbids agency's interpretation (i.e. is the statute ambiguous If so the agency has wiggle room and the court should give deference).

-

Step two, the court determines whether the agency's interpretation is reasonable or permissible. Deference is given in step 2.

-

Chevron two-step-

Chevron v. NRDC

Determines on the basis of the evidence available, what are relevant facts1)It decides what type of rule is appropriate in light of those facts choosing the regulatory option that will best further its statutory mandate.

2)

When an agency promulgates a rule it reaches 2 types of substantive decisions-

Judicial review of substantive decisions under 706 involves 3 issues. -

Formal rulemaking: 556,557requiresubstantial evidence-

Informal rulemaking: arbitrary or capricious-

Although the court has traditionally said that "arbitrary and capricious" was more lenient, it has never defined the difference between the two standards

-

Scope of Review1.

Court is required to review the entire record under 706-

No record required by APA for informal rulemaking-

In Overton Park, SC defined "record" for informal proceedings to be the information that the agency actually considered in making the decision

-

What is the "entire record"?-

Rulemaking record2.

Agency must provide adequate reasons for adoption of the rule-

Overton Park-

"At most OP suggests that706(2)(A)which directs a court to ensure that an agency action is not arbitrary and capricious or otherwise contrary to law , imposes a general 'procedural' requirement of sorts by mandating that an agency take whatever steps it needs to provide an explanation that will enable the court to 3evaluate the agency's rationale at the time of decision"

-

Adequate explanation3.

Application of "hard look review"-

an agency rule would be arbitrary and capricious if (multifactor test)-

agency relied on factors which congress has not intended it to consider-

Entirely failed to consider an important aspect-offered an explanation for its decision that runs counter to evidence

-

is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.

-

Motor Vehicle Manufactures Assoc v. State Farm Mutual Automobile Ins.

Substantive Decisions1.

Statutory interpretation1.

Outline Page 13

expertise.

Outline Page 14

Rulemaking’s Impact on Adjudication RightsStatutes or regulations may give individuals a right to formal adjudication of a dispute before an agency BUT by adopting a legislative rule, an agency may be able to restrict the scope of such rights

-

Agency has no duty to hold a formal adjudicatory hearing if there were no material facts to be resolved in such a hearing

o

RULE: If the rule is in place, cannot use adjudication to challenge the factual basis for the adoption of the regulation in the first place –Storer Broadcasting, p335

-

APA defines adjudication as the process for formulating an order-

One major caveat is an investigation, which is neither a rulemaking or an adjudication, but where the agency is seeking information

-

representation, right to appear before the agency-

right to have matter concluded in a reasonable time-

several others relating to evidence, subpoenas, notice of denial-

reasonable time for notice and time to achieve compliance-

555 sets minimum requirements for any agency action, and that includes adjudication-

5th, 14th amendments-

An agency's informal adjudications can be subject to the Due Process clause-

IntroductionA.

Adjudication as distinct from rulemaking, involves application of existing regulations.-

Adjudication = anything that is not rulemaking-

Any agency process that results in final disposition, which is not rulemaking, must necessarily be adjudication

-

Formal – APA 554, 555, 556, 557-

Informal –APA 555 - the right in any proceeding to be represented by counsel or other qualified representative… requires agencies to conclude matters within a reasonable time, and give prompt notice of the denial with brief statement.

-

Formal or Informal AdjudicationB.

Even when a statute requires a hearing, if the nature of the proceeding is one for determining facts and applying the law to them, the language of section 554 is triggered.

-

Do the proceedings under review fall within that category of quasi judicial proceedings deserving of special procedural protections??

-

Marathon Oil v. EPA-

SC has not established a controlling test to determine when section 554requires an agency to use formal adjudication.

○

the plaintiff contends that the defendant violated the Atomic Energy Act of 1954 by denying its request for a formal, trial -type hearing

-

A formal adjudication is not required if a statute does not use the words "hearing on the record".

-

City of West Chicago v. NRC-

7th Circuit 1983 - RULE: APA 554 specifies that the governing statute must satisfy the on the record requirement…. There is no presumption in favor of a formal hearing – without those 3 words congress must clearly indicate its intent to trigger formal hearing.

A.

environmental groups challenged decision made by EPA after public service company applied to EPA for permission to discharge heated water from nuclear generator into gulf of Maine –overruled by west Chicago

-

Unless a statute otherwise specifies, an adjudicatory hearing subject to judicial

Seacoast Anti Pollution League v. Costle-

1st 1978 - Use of the word hearing should be presumed to mean full blown formal AH under 554 of the APA require formal adjudication

B.

3 Perspectives on what a “hearing” requires between formal and informal

Chapter 3:

Adjudication Outline:Sunday, April 24, 2011

8:23 PM

Outline Page 15

generator into gulf of Maine –overruled by west ChicagoUnless a statute otherwise specifies, an adjudicatory hearing subject to judicial review must be on the record

-

court applied Chevron 2 step to this case because didn’t define “hearing”-

Chemical Waste Management, Inc. v. U.S. Environmental Protection Agency, two waste management companies seek review of EPA regulations that establish informal procedures for administrative hearings concerning the issuance of corrective action orders -

-

Held that EPA had "provided a reasonable explanation for its choice of informal procedures based on the number and nature of factual issues expected in a typical proceeding"

-

This approach seems to have won the day!!!-

DC Circuit 1989 - If hearing isn’t defined in the statute and you cant conclude based on analysis of the statute that Congress legislated one and only one meaning of “hearing” then you go to step Chevron 2

C.

Should Chevron deference apply to the issue of whether an agency is required to use formal adjudication?

1.

There is little rhyme or reason behind which proceedings must be formal and which may be informal

-

Because of the potentially significant differences in procedural protections afforded person under formal and informal adjudications, one might hope Congress has given a logical basis for when it requires one and when it does not. However, this is not the case.

2.

Notes:-

554b requires that the proceeding begin with notice that includes the time place and manner of the hearing; the legal authority and matters of act and law asserted by whoever is bringing the proceeding.

-

Defendant is usually required to reply to notice with issues controverted in fact or law-

Notice1.

Not uncommon for persons not parties to want to participate-

Many adjudications are of major consequence, setting precedents for future cases and for all practical purposes, establishing agency rules

-

555(b) as far as orderly conduct of public business permits, an interested person may appear before an agency" in a proceeding

-

Applies to all agency proceedings, very permissive standard-

Held that if a person has standing to appeal the decision of the agency, as a matter of the case and controversy requirements of the constitution, the person has a right to intervene

-

Office of Comm. Of United Church of Christ v. FCC◊

DC circuit has-

SC has not declared a standard to control when a person can intervene as a party-

Provision that allowed NRC to admit any person as a party in a hearing "whose interests may be affected by the proceeding"

◊

Envirocare v. NRC-

May not hold in all cases, NRC has different requirement in organic statute-

Intervenors2.

APA always provided that there should be an opportunity before a hearing for the parties to settle or adjust their dispute - §554, 556(c)(6)

-

ADR is always voluntary-

Settlement3.

the agency 1.one or more members of the body that comprise the agency, or2.ALJ - (same types of authorities and responsibilities as a federal judge in a trial without a jury.)

3.

556(b) at hearing, 1 of 3 entities must oversee the taking of evidence-

AJ is not protected by the agency -

Formal – ALJ, informal – AJ -

ALJ functions like a judge but is not independent, is an employee of the agency

Admin law judges4.

Adjudicatory ProceduresC.

Outline Page 16

AJ is not protected by the agency

APA envisions the possibility that the head of the agency would run the hearing –not reality… Head of the agency or members of commissions or boards are not forbidden from participating in the adjudicatory or prosecutorial functions

o

Inherent tension because the ALJ is an employee of the agencies, agencies want ALJs to move things along, what the agency sees as poor performance the ALJ sees as appropriate judicial thought

o

Agencies aren’t allowed to rate, evaluate, discipline, reward, punish, or remove the ALJs who work for them – performed by the Merit Systems Protection

o

ALJ functions like a judge but is not independent, is an employee of the agency-

557b ALJ either decides the case or recommends the agency make a decision-

Provisions requiring "an internal separation of the functions between the agency officials who hear and decide those who investigate and those who prosecute"

-

Describes agency norm that personnel should not participate in the decision of cases that they have helped to investigate

-

554d of the APA requires the institutional separation of an agency's law enforcement officers from its ALJs

i)Institutional separation of functionsA.

554d1 provides that an ALJ presiding over a formal adjudicatory hearing may not "consult a person or party on a fact in issue, unless on notice and opportunity for all parties to participate"

-

No consultation rule applies only to the ALJ and is limited to consultation regarding "a fact in issue"

-

Exception to act w/o notice for adjournments, continuances, paper filings-

Separation of functions limitations on ALJs in formal adjudicatory proceedingsB.

554d provides that agency personnel who prosecute or investigate a case "may not in that or a factually related case participate or advise in the decision"

-

Separation of functions limitations on agency law enforcement personnel in formal adjudicatory proceedings

C.

-Separation of functions-

OSHA and OSHARC – separate agencies bring the complaint and decide the ultimate disposition

-

Adjudicates if a person has violated OSHA-

OSHRC is the ALJ employer-

OSHRC stands in the position of the agency under sections554, 556, 557-

Special review commission (OSHRC)-

OSHA, Mine Safety and Health Administration-

Head of an agency can engage in both prosecutorial and adjudicative functions, but in two instances Congress has separated these functions by adopting a split enforcement model

-

The "Split-Enforcement arrangement"5.

proponent has the burden of proof-

Burden of persuasion rather than burden of production – need preponderance of evidence for adjudication

-

Substantial evidence refers not to the quantity but the quality-

Must at least meet the preponderance of the evidence test from civil cases-

556d Agency's decision must be supported by and in accordance with the reliable, probative and substantial evidence

-

Hearsay is permitted – commonly entered, can be deemed sufficient to meet burden of proof and satisfy the sufficient evidence test… as long as it is not irrelevant, immaterial, or unduly repetitious

-

Burden of Proof6.

APA permits parties to present their case by oral or documentary evidence, to submit rebuttal evidence, and to conduct cross examination

-

Testimony and documents7.

556e The transcript of testimony and exhibits together with filed papers constitutes the exclusive record for decision

-

The record and Ex parte communications8.

Outline Page 17

exclusive record for decisionTo protect the exclusivityof the record as the basis for the decision, the APA PROHIBITS ex parte communications during APA adjudications.

-

Decision itself becomes part of the record-

ALJ makes either a recommended (Agency reserves the right to review) or initial (agency must demand review) decision for the agency, decision includes findings of fact and conclusions of law, the reasons or basis for those findings and conclusions, and the appropriate order

-

Parties can submit proposed findings and conclusions supporting their case-

These are internal agency appeals-

ALJ makes a final decision or recommendation if the initial decision is not appealed by a party or an agency official decides to review it.

-

Appeals board or agency head decides the case de novo-

Appeals within an agency are not in the nature of appellate review, insteadAPA states that the agency has all the powers which it would have in making the initial decision

-

The agency cannot appeal it's own decision-

Private party may seek judicial review under the APA or the agency statute that provides for it.

-

Appeals9.

Adjudication in most states mirrors the federal mode-

State adjudication10.

When a hearing is broader in scope than the notice provided, it has been held that there may not be a subsequent challenge of issues that are actually litigated as long as there has been actual notice and an adequate opportunity to cure surprise

-

Judge found some stuff sua sponte-

case cannot stand because the D's did not receive notice.-

p220 – worker filed a complaint alleging the union had engaged in unfair labor practices by failing to provide him with referrals because he wasn’t a union member, ALJ found for the union, but ALJ went beyond the complaint to consider the legality of the CBA

-

NLRB v. Local Union 25-

RULE: An ALJ may not sua sponte raise an issue that was not previously raised in the complaint, briefs, or oral argument, and when no evidence was presented concerning the issue

-

The important consideration in permitting an agency to rely on a new theory is the respondent’s opportunity to present an argument

-

Generally entitled not to have theories switched on you mid stream-

p221 the FTC found that the defendants violated the FTC Act by engaging in unfair and deceptive practices in their sales of undeveloped land –new standard was actually more difficult to prove a violation under, SW’s argument had no notice fails

-

P's contend that application of a new standard violates the APA.-

New standard was not substantially different that prevented an opportunity for the D's to respond

-

Commission did not violate the APA-

-Southwest Sunsites v. FTC--

RULE: The purpose of the notice requirement is satisfied if the party proceeded against understood the issue and was afforded full opportunity to justify his conduct, even if the legal standard for adjudicating his conduct changed during the course of the hearing

-

drug manufacturer challenges FDA’s decision to withdraw its approvals of manufacturer’s applications for new drug products… Granted summary judgment because there was a lack of prejudice – they may have had to read all the violations, but they knew what the issue was.

-

FDA published notice in the register proposing to withdraw the drugs b/c of inadequacies , and then followed through

-

Copanos v. FDA-

RULE: high degree of flexibility for forgiving shortfalls of notice if the shortfalls don’t really effect the delivery of notice… where there is prejudice it will matter

-

Applying Adjudicatory procedures11.

Outline Page 18

inadequacies , and then followed through "requirements of due notice depend on the context of the agency's action"-

D's were not confronted with ambiguity regarding the type of information that would warrant a hearing before the agency

-

– p226 – the plaintiff challenged the ALJ’s decision denying him disability benefits based upon medical reports obtained outside of his hearing which he was unable to cross-examine –court found that ALJ’s reliance

-

Wallace found not disabled, claims he couldn't not cross examine expert medical reports, denied due process

-

secretary may not rely on post-hearing reports w/o giving the claimant an opportunity to cross examine the authors

-

Wallace v. Bowen-

RULE: When ALJ goes outside the testimony adduced at hearing in making decision, ALJ must afford claimant the opportunity to comment and present evidence, and opportunity to cross-examine authors, and must reopen hearing if requested

-

1.

APA prohibits ex parte communications during formal rulemaking but not for informal rulemaking-

Exclusivity of the record created in the proceeding is what marks formal adjudication-

There is a comparable provision that prohibits an ALJ from consulting a person or party on a fact in issue unless on notice and opportunity for all parties to participate

o

Ex Parte Communication – Means an oral or written communication not on the public record with respect to which reasonable prior notice to all parties is not given, but it shall not include requests for status reports on any matter or proceeding covered by this subchapter … From someone to an adjudicatory decision maker

-

If the objective is to have a closed record, then that would be undermined if the decision maker were free to augment the record ex parte

-

Even if APA doesn’t apply, sometimes ex parte communication can violate due process -

Don’t want agencies to be sealed from the industries –not all communications are problematic –issue of line drawing

-

§551(14) – oral or written communication not on prior record…-

§557d – applicable to prohibition, addressing ex parte communications from outside the agency – no interested person outside the agency shall make a communication to the decision maker relative to the merits

-

Evidence taker may not consult a person or party on a fact-

Employee or agent investigating or prosecuting may not participate or engage in the decision

-

§554d – separation of functions–applicable to persons within the agency who play specified roles

-

Ex Parte

Formal agency adjudication should be based solely on the record compiled by the ALJ-

1) Gravity of ex parte communications,

2) Whether contracts may have influenced the agency’s ultimate decision,

3) Whether party making improper contacts benefitted from agency’s ultimate decision,

4) Whether the contents of the communications were unknown to opposing parties, who had no opportunity to responds

5) whether it would be useful to remand.

Factors for irrevocably taintedo

1) The person is an interested party –greater interest than general public

2) Communication is relevant to the merits of the proceeding

Ex parte communication should be disclosed if: o

RULE: When agency proceedings have been blemished by ex parte communications, a court must consider whether, as a result of the improper ex parte communications, the agency’s decision making process was irrevocably tainted so as to make the ultimate judgment of the agency unfair

-

Ex parte communicationsD.

Outline Page 19

2) Communication is relevant to the merits of the proceeding

3) Communication threatens interests of openness and effective response

ALJ had several ex parte communications with a union during formal adjudication-

557d prohibits communications relevant to the merits of the proceeding by an interested person.

-

Disclosure of content discussedi)Requires the violating party to show cause why his claim or interest in the proceeding should not be dismissed denied or adversly affected.

ii)

557d provides two remedies-

but make voiding the decision a potential action.◊

Ex parte communications do not void an agency's decision-

PATCO challenged the FLRA’s revocation of PATCOs status as exclusive bargaining representatives for the air traffic controllers after PATCO called a nationwide strike against the FLRA… court found that mechanical rules have little place in judicial decision whether to vacate an agency proceeding, instead the focus should be on the integrity of the process and fairness of result

-

Professional Air Traffic Controllers Organization v. Federal Labor Relations Authority-

Factors: whether ex parte communication merely introduces cumulative information or new information, whether employee knew of error and had chance to respond, whether communications likely to result in undue pressure

-

EE made false requests for leave, fired, ex parte comm during appeal-

Essential requirements of due process:Notice and an opportunity to respond-

Introduction of new and material information by means of ex parte communications to the deciding official undermines the public employee's constitutional due process guarantee of notice

-

But, material not new here, so no DP violation.-

Stone v. FDIC -- the plaintiff sought review of decision upholding his termination from employment, claiming that harmful error occurred in removal proceedings because the deciding official received ex parte communications – court found for the plaintiff

-

RULE: Only the introduction of new and material information by means of ex parte communications to deciding official in administrative proceeding undermines public employee’s constitutional due process guarantee of notice and opportunity to respond.

-

When APA procedures do not apply, must look to other statutes that may provide certain procedures

-

Usually agencies will have adopted procedural regulations governing-

5th Amendment – federal government-

14th Amendment –state and local governments -

Due Process – no person shall be deprived of life, liberty, or property without due process of law, requires the government to hold some type of hearing before it deprives an individual of life, liberty, property based on the resolution of disputed factual issues

-

Substantive – traditionally discussed in courses on con law-

Procedural – issues 1) whether the clause applies at all; 2) assuming the clause applies, what procedures are required

-

Two types of Due Process: Substantive and procedural-

Admin law is generally procedural, -

Not to policy based deprivations affecting a class of people-

Generally, DPC requires the gov't to hold some type of hearing before it deprives an individual of life liberty or property

-

Due Process applies if: Individualized decision making AND deprivation of a property or liberty interest

-

Court distinguishes between individualized deprivations of life liberty and property, which require due process, and those of a class which do not.

-

Individualized Decision making1.

Londoner v. Denver- a landowner challenged a tax assessed by the city to his property for RULE: Key is whether person is exceptionally affected in the case on individual grounds

Due Process HearingsE.

Outline Page 20

Where a legislature delegates authority to assess taxes, due process of law requires that, before tax becomes irrevocably fixed, taxpayer have notice and opportunity to be heard

-

Londoner v. Denver- a landowner challenged a tax assessed by the city to his property for improvements to a street which abutted his land

-

RULE: Key is whether person is exceptionally affected in the case on individual grounds

Where a rule of conduct applies to more than a few people, it is impracticable that everyone should have a direct voice in its adoption

-

Distinguished Londoner as being a relatively small number of persons.-

Number of person affected1.Extent of the impact on each person2.Factual basis for determining the impact on each person3.

Distinction between this case and Londoner draws on three factors-

Bi-Metallic Investment Co v. State board of equalization - a property owner brought suit to enjoin an order increasing property values by 40%, thereby increasing tax obligations, because the plaintiff was not given an opportunity to be heard as it claims is its constitutional right

-

The fact that it might disparately effect members of large group doesn’t give special protections to those more severely effected

-

RULE: where a rule of conduct applies to more than a few people, it is impracticable that everyone should have a direct voice in its adoption

Liberty is inherent in the Constitution itself- “Liberty denotes contract, engage in the common occupations of life, knowledge, marry, children, religion”

o

Neither importance nor unilateral expectation is sufficient

Property –framers intended to build into that term the content with reference to the history of what we understand property to be

o

Sources of liberty or property-

Citizens have an expectation that entitlements, like private property, are protected by the government’s obligation of due process

-

Particularized act of state power to deprive someone of something –must be either liberty or property, otherwise government is constitutionally free to deprive you of it without any procedures

-

Property Interest1.

To determine if DPC applies, court must find deprivation of life, lib, prop-

Faculty appointment for one year, released after that year-

suit brought, alleging no notice, due process violation-

To have a property interest in something a person must have a legitimate claim of entitlement to it.

-

Board of regents v. Roth- p257 an assistant professor brought suit against the university for a violation of his 14th amendment rights after his employment contract term expired and he was not subsequently rehired for a new term, name can be considered property –didn’t have the right to due process

-

Court buys the notion that more process is required when someone has been lead to believe the contract will be renewed

-

Perry v. Sinderman-

Govt action that adversely affected a person's reputation might be a denial of liberty w/o any adverse impact on the individual's job opportunities

-

Wisconsin v. Constantineau-

RULE: a person must have legitimate claim of entitlement in order to have property interest in benefit, and right to procedural due process - the fact that its important doesn’t make it property, person must have government actions/rules that support the expectation… morethan a unilateral expectation

All those privileges long recognized as essential to the orderly pursuit of happiness by free men

-

Gov't action that adversely affects a person's rep might be a denial-

includes when it denies or revokes a person's professional license-

Liberty Interest2.

RULE: For stigma cases, reputation is not sufficient… reputation alone apart from some more

Protected interests2.

Outline Page 21

includes when it denies or revokes a person's professional license

Stigma Plus TEST - in order to trigger due process protections, the government action not only must harm person’s reputation, but must also subject individual to some other disability - loss of a job or the ability to purchase alcohol

-

Flyer distributed with mug shots of "active" shoplifters, Reputation alone apart from some more tangible interests such as employment, is not enough to make a due process claim

-

Stigma-plus test-

Paul v. Davis 261 – man identified in police flyer naming potential shoplifters, it was circulated to local merchants, he brought an action claiming he was impermissibly deprived of some liberty protected by the 14th – court found against him because he lacked interest harmed other than reputation

-

RULE: For stigma cases, reputation is not sufficient… reputation alone apart from some more tangible interest, is neither liberty nor property by itself sufficient to invoke the procedural protection of the DP

Morrissey v. Brewer-parole system creates entitlement to liberty if meet required conditions

-

Wolff v. McDonnell -Good time credit system creates a liberty interest in credits-

Sandin v. Coner-Due process protects against atypical and significant hardship, but not ordinary prison discipline

-

Prisoner Cases:

Stigma been found where employer accuses them of dishonesty, immorality, criminality, racism.

-

A gov't EE is entitled to procedural due process in connection with being discharged from employment only when he has been deprived of a constitutionally protected property or liberty interest

-

City official claimed in an interview the EEs were insubordinate-

Court holds these statements did not create the level of stigma required to implicate a constitutionally protected liberty interest.

-

No stigma plus here-

Shands v. City of Kennett- four firemen were fired for insubordination and misconduct, and they allege that their due process rights were violated because they were not given a hearing – court found DP not deprived because only 1 official made statements about them and it was politically correct

-

RULE: An employee’s liberty interest is implicated where the employer levels accusations at the employee that are so damaging as to make it difficult or impossible for the employee to escape the stigma of those charges

Must be some factual dispute between an employer and a discharged employee which has some significant bearing on the employee’s reputation in order for a hearing to be mandated under DP

-

No dispute of facts = no hearing-

To establish the truth or falsity of the charge1.To provide a basis for deciding what action is warranted by the facts.2.

The purpose of a hearing is twofold-

Dissenting opinion-

Codd v. Velger- – plaintiff alleged he had been wrongly dismissed without hearing or statement of reasons after material was placed in his file that he held a gun to his head in an attempted suicide –didn’t assert that report was false, court found no factual dispute

-

RULE: For due process to apply there must be some fact in dispute-

What Hearing Procedures Must Be Used?3.

Timely and adequate notice detailing the reasons for proposed termination

o

Effective opportunity to defend by confronting and cross-examining adverse witnesses, present own arguments and evidence orally

o

Right to be represented by counsel, but not to have counsel provided

SC requirements for a hearing:-

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adverse witnesses, present own arguments and evidence orallyRight to be represented by counsel, but not to have counsel providedo

Decision that rests solely on the evidence adduced at the hearingo

An impartial decision maker, with statement explaining decision and evidence relied upon

o

1) Importance of the interest of the individualo

2) Considering current procedures, what is the risk of an erroneous determination under current procedures (or, degree of increased accuracy if additional procedures were implemented)

o

Procedure is not free—recognizes the frequent truth that there are only so many resources, so for every dollar we spend on procedure there is going to be one less dollar for actual benefits

3) Government interest re: additional cost of more procedureso

TEST for determining process due – whether or not evidentiary hearings are required -

The Matthews Balancing test-

Interests of individual + Risk of deprivation VS. govt interest in reducing costs.-

Does it lead to predictable law, or is it totally ad hoc

Split among the SC applying the Matthews test – illustrative of the fact that Matthews doesn’t result in a due process bottom line other than that some kind of notice and some kind of hearing are required

Matthews has been criticized because the 3 elements are not weighed comparatively –how do you actually go about performing the utilitarian calculus

-

Matthews v. Eldridge- a disabled worker filed suit after his disability benefits were terminated without evidentiary hearing, claimed that due process requires pre-termination hearing - An evidentiary hearing is not required prior to the termination of disability benefits under 5th amendment due process clause

-

Court disagrees, says enough procedure was followed, refuses to invade traditional academic sphere of evaluating academic performance w/ procedural requirements

-

Board of Curators of the University of Missouri v. Horowitz - a medical student claims she was denied procedural due process by not receiving a formal hearing prior to her being dismissed for failure to meet academic standards, she was unable to demonstrate

-

RULE: The plaintiff must show that her dismissal deprived her of either a liberty or a property interest to make a claim that her due process was violated

-

Hearing was held, P questions right to counsel ability-

P has right to advice of counsel, but not to be represented at hearing.-

-Osteen v. Henley -college student filed suit after being expelled for fighting, claimed his right to counsel at hearing was denied –he had no right to counsel

-

RULE: The Due Process clause of the 14th Amendment does not confer a right to counsel in student disciplinary proceedings

-

Trend is to let things be in educational disciplinary matters-

court concluded that an evidentiary hearing was required before termination-

Goldberg v. Kelly - dealt with this issue-

Withrow v. Larkin - SC a medical examining board appeals a district court’s decision finding that the combination in the board of prosecutorial and judicial functions was unconstitutional as a violation of due process

o

No DP violation when judge issues restraining order, injuction, and hears case o

It is not unconstitutional for agencies to perform both investigative and prosecutorial functions in a an administrative proceeding –554(d) – this is a broader authorization than the APA

-

Texaco v. FTC 283 – DP violation was found when an FTC commission made public speeches where he manifested pre-judgment about a pending case

o

When decision makers publicly prejudge a case, it is a DP violation-

Neutral Decision-maker

Review would take place in federal district court-

706-After an agency has rendered a decision in an adjudication, a disappointed party ordinarily may sue for judicial review of that decision

-

Congress has generally authorized appellate court review for the independent agencies that conduct formal adjudication.

-

Judicial Review:

Outline Page 23

formal adjudication.§706 of the APA specifies the grounds for judicial review of any agency action-

Only applies to formal agency actiono

706(2)(e) - If its an adjudication that’s required to be on the record, subject to 556, 557, then the court must set aside if the decision is unsupported by substantial evidence according to the entire record

-

If a reasonable person could find that a preponderance of the evidence supports the agency decision then that decision must be upheld, even if the court thinks that there is a better view of the evidence.

-

Court ruled that the admin factual findings, though entitled to respect must nonetheless be set aside when the record clearly precludes the agency's decision from being justified by a fair estimate of the worth of the testimony of witnesses or its informed judgment on matters within its special competence or both; Court looked at whole record

-

Highly deferential standard-

Universal Camera Corp v. NLRB-

If the court thinks that the agency has adopted procedures that are fair and reasonablythorough then it is more likely to show deference

-

This is a highly deferential standard-

The Substantial Evidence Standard (Formal Agency Action)1.

557 the reviewing agency "has all the powers which it would have in making the initial decision."

-

Means that the agency makes its decision de novo and that the agency is not required to defer to the ALJ's findings and conclusions

-

But, because the ALJ’s decision is part of the record, a reviewing court must take it into account when assessing whether an agency has substantial evidence for its findings and conclusions.

-

1) Testimonial – the demeanor of the witnesses, gives the ALJ more power, because the ALJ was there when it happened, the Agency on a cold record cannot get that same impression2) Derivative – substance of the testimony

2 forms of credibility -

Guy was tortured in his home country, IJ and board both denied asylum-

-IJ was argumentative during the hearingCourt will not automatically yield to the IJ's conclusions when they are drawn from insufficient or incomplete evidence'

-

Torres v. Mukasey-

BUT in Universal Camera, SC held the ALJ's findings are part of the entire record

Penasquitos Village, Inc. v. NLRB – the NLRB reversed the decision of an ALJ and instead held that the defendant wrongfully discharged two employees in violation of the NLRA –the dispute was basically factual and the decision turned on the credibility of witnesses – NLRB gets deference but because the ALJ’s findings were part of the record that is reviewed, court gives those findings on demeanor special deference

RULE: Deference given to the ALJ’s determination because of his first hand exposure to the testimonial information –especially if its demeanor based.

when a finding by the presiding official of this nature has been reversed by the board, we cannot sustain the board's decision unless the board has articulated a sound reason, based on the record, for its contrary evaluation of the evidence

-

Credibility determinations based on testimonial inferences, weight is given to the ALJ-

Jackson v. VA-

When finding by an agency’s presiding official has been reversed by the board, a court will not sustain the board’s decision unless it has articulated a sound reason, based on the record, for its contrary evaluation of the testimonial evidence

Substantial Evidence and the ALJ's credibility findings2.

Substantial Evidence applies for formal adjudication when there is a dispute concerning the facts

Mixed questions of law and fact

Outline Page 24

Factual issue – use substantive evidence

When it is a legal question:

1) Court must determine if Congress answer the question in a meaningful way;

2) The agency’s construction of the ambiguous term and the application of the term to the facts has to be ACCEPTED unless its unreasonable

if no…

Legal issue - one that can be resolved without any consideration of case facts -

Legal Issue - §706 authorizes a court to hold unlawful and set aside agency action that is unconstitutional “in excess of statutory jurisdiction, authority, or limitations, or short ofstatutory right” or “otherwise not in accordance with law”

Substantial Evidence applies for formal adjudication when there is a dispute concerning the facts found by the agency BUT different standard applies if it is a legal issue

court found that the NLRB’s determination that they were employees must be accepted because it was warranted by the record and reasonable basis in law

4 newspaper publishers refused to bargain collectively with a union of newsboys, claiming the newsboys were not employees within the meaning of the act – this was a mix of law and fact –

-

NLRB v. Hearst-

The court reviews the facts found by the agency and determines whether these conclusions have a "warrant in the record"

1.

The court reviews the agency's explanation for its decision to decide whether it has a "reasonable basis in law"

2.

Court has 2 functions when it reviews a mixed question of law and fact1.

If it has defined it, then the question is purely legal-

They ask if congress has defined the term or whether it has delegated that responsibility to the agency

1.

If congress did not define it, it will conclude that the question is one of specific application of a broad statutory term and that deferential review is therefore appropriate

2.

Although courts haven't indicated how they determine whether an issue is a mixed question of law and fact, they often employ a two step approach similar to chevron.

2.

National Labor Relations Board v. Hearst –

RULE: Agency decisions should be ACCEPTED if they are reasonably based in the record and in law – its not the court’s function to substitute its own inferences of fact for the agency’s –must have a “warrant in the record” AND “reasonable basis in the law”

Unless activity is so totally unreasonable that it severs the employee’s connection with employer, any accident resulting there from should be considered as sustained in the course of and arising out of employment

◊

an employer was held liable for compensation to an employee’s widow after one of its delivery drivers was killed when his gun, which was being handled by a co-worker went off

-

Delivery guy moonlighted as a taxi driver. Cab was in an accident, on break time he took the cab to get fixed, got accidentally shot.

If ALJ's decision is supported by the evidence as a whole and not inconsistent w/ the law, it should be upheld

1.

The strong legislative and judicial policy favoring awards in workmen's comp cases2.

Two basic rules

Evening Star Newspaper Company v. Kemp 302 –

- Courts are to defer to the agency when the agency made a reasonable decision

RULE: judicial review - inferences drawn by ALJ are to be accepted unless they’re irrational or unsupported by substantial evidence from whole record

Durrah v. WMATA

RULE: A violation of a rule which does not place an employee in the path of new risks not inherent in his employment will not render his activity nonincidental to employment… fairness in agency action is the bottom line.

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– DC Circuit found that his fall was within the time and space boundaries of his employment, reversed the ALJ

p306, workers compensation was DENIED to an employee who fell down the stairs to the employee break room and injured himself while taking an unauthorized break, ALJ found that he had violated a rule in taking an unauthorized break and refused worker’s compensation because his actions were removed from the course of employment

The asserted violation did not place Durrah in the path of new risks not inherent in his employment situation.

-

Durrah v. WMATAaction is the bottom line.

Is hardly used anymore-

§706(2)(F) – courts to determine the facts independently by authorizing a court to overturn an agency decision if it is unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court

Failure to explain - no coherent explanation then typically there is a remand for the decision maker to provide one

-

Adequate Reasons – applies to agency rules and judicial review of adjudication…Arbitrary and capricious standard requires agencies to articulate a satisfactory explanation for its action including a rational connection between the facts found and the choices made – State Farm

Inadequate explanation – Ignores important parts of record, too opaque/vague-

Like cases should be decided alike - inconsistency is interpreted as evidence of the agency acting arbitrarily and capriciously

Yepes-Prado v. US INS 1993, p315 – permanent resident alien challenges his deportation after he was refused a waiver of deportation and judge failed to offer a reasoned explanation for denial –court found judge abused discretion by failing to explain

-

IJ failed to offer a reasoned explanation of why the only adverse factor, the single drug conviction, outweighed all of the equities in Yepes-Prado's favor

-

RULE: In making a discretionary decision, an agency must indicate how it weighed the factorsinvolved and how it arrived at its conclusion

Davila-Bardales v. INS, 1994, p316 – 15 year old boy entered the country illegally and challenged his deportation order because the INS considered unlawful evidence in its immigration hearing, considered his admission to border officer when he was under the age of 16 – not permissible under INS regulations

-

BIA affirmed IJ's deportation order-

Two similar circumstances, two different outcomes by the BIA-

RULE: Agency is prohibited from adopting significantly inconsistent policies that result in the creation of conflicting lines of precedent governing the identical situation

-

Consistency: decisions inconsistent with comparable prior decisions, with failure to distinguish seemingly comparable prior case would be an abuse – if the reasoning is there, then that’s not an abuse

-

For a finding of abuse of discretion, court must review the material that was available to the decision maker when he made the decision plus his explanation

-

706(2)(a) – arbitrary and capricious, abuse of discretion > standard for informal review…. Basis for this finding:

1) acted within the scope of his authority,2) made a choice which was not arbitrary/capricious, an abuse of discretion, or otherwise not in accordance with law, and

Citizens to Preserve Overton Park v. Volpe p308 – plaintiffs contend that defendant violated federal statutes by authorizing the expenditure of federal funds for construction of a highway through a public park, the secretary announced that he agreed with local officials but didn’t explain his reasoning, district court rejected their claim

3) followed the necessary procedural requirements

RULE: 706 requires that in reviewing an administrative decision, the court must determine whether the Administrator:

Arbitrary and Capricious Review (Informal Adjudication)

Outline Page 26

Was an order because it was a final disposition of question of whether there will be funding for highway and is not rulemaking adjudication

-

explain his reasoning, district court rejected their claim

After Overton Park, the courts apply the arbitrary and capricious standard in the same manner in informal rulemaking and informal adjudication Hard Look

-

o When action is adjudicatory and agency fact finding procedures are inadequateo When issues that were not before the agency are raised

De Novo review of whether the secretary’s decision was unwarranted by the facts is authorized by 706 only in 2 circumstances:

Outline Page 27

advises the public of an agency's view on an issue-

No binding legal effect , but technically rules 551(4)-

Generally two types, statements of policy and interpretative rules-

Nonlegislative rules, briefly-

CHOICE - ADJUDICATION, LEGISLATIVE, AND NON-LEGISLATIVE RULES

FACTORS:-

1) Whether the case is one of first impression-

2) Whether the new rule departs abruptly from settled practice or merely decides new issues-

3) The extent to which the defendant relied on the old rule-

4) The retroactive order’s burden on the defendant -

Retail v. NLRB – When the NLRB suddenly changed policies after an adjudication, requiring bosses to re-hire fired strikers, it applied the rule retroactively… highlights the problem when the agency’s statute imposes harsh penalty when the defendant followed the prior rule faithfully

o

5) The statutory interest in applying the new rule despite reliance-

RULE: courts may refuse to enforce agencies’ retroactive adjudicatory orders if retroactivity is unfair… -

By seeking interpretive guidance, the regulated individual might alert the agency to an interpretive problem and prompt it to render an undesired interpretation

-

Does the agency have the authority to promulgate substantive rules?o

Can an agency restrict the scope of adjudicatory hearing rights by promulgating a rule that eliminates the materiality of facts otherwise subject to resolution by hearing?

o

Can an agency give retroactive effect to a rule?o

To what extent does due process limit an agency’s authority to use adjudication to clarify an ambiguity in a rule

o

If an agency can engage in rulemaking and adjudication, it can adopt a new policy and make it legally binding through rulemaking and then, if necessary, enforce it through adjudication or judicial action

-

Make decision through adjudication that is binding on parties to the adjudication and may be precedent with respect to non-parties in future adjudications

1.

Legislative rule –one adopted through notice and comment

Or it can promulgate a rule that is binding on all those subject to the rule2.

Nonlegislative rule - agency pronouncement that advises the public of the agency’s view on an issue

Interpretive rules or general statements of policy

Exempt from notice and comment of §553

Or can promulgate a nonlegislative rule3.

Agency Can:-

Rule – whole/future effect designed to implement, interpret, or prescribe law or policy-

Leads to the conclusion that the only way you can make a rule is through rulemaking Maybe since it is future oriented the agency is required to use rulemakingo

If an agency has both rulemaking and adjudicatory powers (granted by Congress) then the agencies must specify the behavior –should it develop through legislative rulemaking or through adjudicatory decision?

-

Non Legislative Rules Friday, May 06, 2011

11:39 PM

Outline Page 28

Leads to the conclusion that the only way you can make a rule is through rulemaking Not the way the SC has seen it – Bell

Maybe since it is future oriented the agency is required to use rulemaking

Advantages and Disadvantages

Comparative costo

Timing –which is faster – incentive to get it doneo

Adjudication is more hermetically sealed than rulemaking – includes political considerationso

Main Factors to Consider:-

Rulemaking has only a prospective effecto

Availability of notice before the promulgation, wide public participation in rule making avoids the problem of singling out a single defendant among a group of competitors for initial imposition of new and inevitably costly legal obligation

o

Uniform for industry – adjudication risks that there will be different conclusions because of particular facts, would loose clarity for future behavior

o

Adjudicatory order is legally binding only on entity against which issued

All competitors are bound to follow the new policyo

Political input – virtue – inherently political process, ought to include political input… Rulemaking is more likely to engage national interests

o

Broader record – adjudication is better with specific facts, but less on industry wide practices

o

Rules are easier to find than adjudicatory decisionso

Clarity increases compliance with the policy and decreases opportunistic behavior by regulated entities that seek to avoid the new policy

If the agency uses rulemaking, it can establish a bright-line policy, which is clearer and more precise than a policy developed on case-by-case basis

o

Reasons why an agency might prefer rulemaking-

Proceeding against one individual/firm is likely to be significantly less expensive /time consuming than rulemaking applicable to entire nation

Adjudication, generally, is less costly and faster o

Problems may arise in a case which the administrative agency could not reasonably foresee, problems which must be solved despite the absence of a relevant general rule

o

Agency may not have had sufficient experience with a particular problem to warrant rigidifying its tentative judgment into a hard and fast rule

o

Problem may be so specialized and varying in nature as to be impossible of capture within the boundaries of a general rule

o

Agency can pick weakest defendantwith adjudication, perhaps in terms of having the most egregious practices or perhaps in terms of lack of resources

o

Agencies will have to adjudicate anyway – rules aren’t always precise enough o

Reasons why rulemaking might not be suitable-

Ex parte contacts are prohibited in formal adjudication, which the NLRB uses, but not in informal rulemaking

o

NLRB avoiding being lobbied by management/unions regarding labor policies o

The NLRB generally prefers adjudication to rulemaking for the adoption of new policies-

National Labor Relations Board v. Bell – NLRB previously adopted a narrower definition of which employees could unionize, When the NLRB changed the rule in an adjudication, an employer sued to require public rulemaking instead, court found no proof of great reliance, fines incurred –not unfair

o

RULE: agencies have discretion to adopt rules through adjudication rather than rulemaking unless granting adjudications retroactive remedy would be unfair… reaffirms agency discretion

-

Agency has discretion to choose, but discretion is limited-

Outline Page 29

Court can reverse agency’s decision to proceed by adjudication if that decision is an abuse of discretion

o

Agency has discretion to choose, but discretion is limited-

Unfairness depends on the extent to which the interpretation is novel and unanticipated as well as on the severity of its impact

-

By seeking interpretive guidance, the regulated individual might alert the agency to an interpretive problem and prompt it to render an undesired interpretation

-

OPTION THREE: NON-LEGISLATIVE RULES

Nonlegislative rules are efficient-

May be adopted without public input o

agency thinks that its binding on the public due to inadvertence-

adversely affected by regulated communities' reliance-

Most members of the regulated community will change their behavior in accordance with the expressed views of the agency

o

Nonlegislative rules can be used as a management tool to issue guidance to agency employees, thereby ensuring centralized policy control and administrative uniformity

o

An agency may treat a nonlegislative rule as binding on members of the publico

ISSUE: Because members of the public who rely may be adversely affected by their reliance because agencies can change these without NC

o

Disadvantages-

When agencies use N+C for interpretive rules, courts give them the same deference that they give to legislative rules

-

court must determine whether rule is nonlegislative or legislative-

**Party might challenge nonlegislative rule on grounds that the pronouncement is really a legislative rule

Advantages and disadvantages of option nonlegislative rules

§552 – FOIA – requires each agency to publish in the Federal Register statements of general policy or interpretations of general applicability formulated and adopted by the agency

-

§ 553 exempts interpretive rules and policy statements from the notice and comment rulemaking, but APA mandates procedures for nonlegislative rules for PUBLICATION

-

Judicial authority to give relief when an agency fails to publish a nonlegislative rule is RARELY exercised perhaps because agencies make so much available and perhaps because few citizens have ever demanded their full statutory rights

-

APA procedures

Distinguishing Non-legislative From Legislative Rules

If a court finds that the agency has adopted a new duty, its statement is a rule that can be promulgated only through rulemaking procedures

1.

Court will refuse to give the statement any legal effect2.

court will ask whether the statement of the agency imposes a new duty or merely announces the intention to impose a new duty at some future time

1)

Binding Effects Test-Courts use binding effect test to distinguish policy statements from legislative rules,

1.

Policy Statements: Future oriented, provides guidance to employees and announces intentions to the public

A.

Used to indicate to the public/regulated community when the agency will take investigative or enforcement action, or to indicate how an agency intends to act under certain circumstances

General Statements of Policy --

Look at the relationship between the interpretation and the predicate statute to determine if the interpretation is legislative or nonlegislative

-

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Agencies routinely put guidance documents on the interneto

circumstances

Does the rule have a present effect –does it make a binding norm right then? If yes, then it’s a legislative rule. If no.

1)

-Issue: Implementation of peer review system in Medicare w/o N+C

AHA v. Bowen – when the federal agency authorized to over-see Medicare hired private doctors to audit hospitals for Medicare fraud, it set auditors qualifications/procedures without notice and comment, contending they were exempt as general policy statements.

o

Does it leave the agency with authority to use discretion in the future?2)

2 criteria for distinguishing a general policy statement from a legislative rule:-

1) They do not presently impose any rights/obligations

2) They leave the agency free to exercise discretion

RULE: agencies general statements of policy are exempt from NC if:-

Are rules, but they are not subject to N&C rulemaking because of exception within 553o

Theory is that interpretation is fingerprint dust, bringing out latent fingerprint (obligation) –interpretation only illuminates that which was already there

o

Then industry has no role in the rulemaking □

CHEAP: Agencies like them because they save money on not having to do NCo

When Congress has not granted an agency the authority to make legally binding rules, any rule that the agency issues is necessarily interpretive.

□

Difference between IR and legislative rule is whether the statement is the imposition of a BINDING requirement

o

Courts may defer to it as the agency interpretation – legal significanceo

Courts are to give far greater weight to the language actually used by the agency than its characterization

o

Cannot ALTER legal rights established in PRIOR law, cannot add a NEW dutyo

Consistency: Can NOT repudiate or be inconsistent with an existing statute or regulationo

Agency cannot enforce an interpretive rule as such – people cannot be charged with violation of an interpretive rule –must be violation of the rule that the interpretive rule interprets

o

Interpretive Rules –states what the agency thinks the underlying statute means, and only REMINDS affected parties of EXISTING duties

B.

Community Nutrition v. Young p344o

RULE: a rule is legislative if it is binding on an agency, regardless of whether it is also binding on a regulated entity

-

some statues command the agency to establish the specific duty or qualifications for benefits, with them the agency must exercise legislative rulemaking power to establish the required legal duty or qualification, under them there is nothing to enforce or carry out with respect to the public until the agency has adopted legally binding rules à if the agency can enforce duties or confer benefits in the absence of the questioned rule, then its interpretive

-

Without the rule, there would be no adequate legislative basis for agency action –1)

The agency never published the rule in the Code of Federal Regulations 2)The agency never invoked its general legislative authority explicitly AND 3)The rule does not amend prior legislative rules4)

Issue: Do X-Ray readings qualify as diagnoses?

American Mining – a statute required mines to report miners diagnoses of disease, when the mine safety agency defined diagnosis, the mining industry challenged it as a legislative rule requiring notice and comment - Dominant test

o

RULE: agency rules are Interpretive –no legal effect when: -

RULE: Legal Effects Standard - Agency rules are deemed legislative if they have no legal effect, considering the agency’s characterization and whether they interpret existing laws or create new law

-

Outline Page 31

Starting point is the agency's characterization of the rule

Interpretive rules are statements as to what the administrative officer thinks the statute or regulation means, whereas legislative rules have effects completely independent of the statute

Metro School District v. Davila – When agency interpreted statute to require school districts to keep providing special education to expelled students, the agency challenged the interpretation as legislation under the traditional test (substantial impact on the regulated community)

o

Don’t want agencies to immunize themselves from NC by labeling rule non legislativeo

The way in which the agency characterizes what it has done is RELEVANT, but is not determinative

o

law

Reliance on Guidance – Interpretations of an Agency

System usually works well, people mostly get the correct answerso

What about when the agency changes its mind?o

Agency advice about the meaning of its statutes is very common and has benefits… allows regulated entities to avoid unexpected liability

-

Pilots relied on the regulations for 30+ years before FAA changed-

No opportunity to participate in the development in new regulations-

"Express, direct, and uniform interpretation" present here-

Alaska Professional Hunters Association, Inc. v. Federal Aviation Administration–When the FAA changed a longstanding regulatory interpretation exempting hunting-guide pilots from licensing, the industry sued to require rulemaking –notice was invalid because it was published without notice and comment – this protects regulated entities reliance on agency interpretations

o

so long as a new guidance document "can reasonably be interpreted" as consistent w/ prior documents, it does not significantly revise a previous authoritative interpretation

-

Metwest Inc. v. Secretary of Labor-

RULE: If an agency gives its regulations an authoritative interpretation, it can change that interpretation only through rulemaking (sometimes this presents difficult factual issues)

1.

Heckler v. Community Health Services - When a government agent mistakenly advised a nursing service the government would reimburse extra expenses, the service sued to estop the government from demanding refunds, here there was not enough reliance p376

o

Reliance on agency advice regarding reimbursement procedures-

Regulatee had other ways to get information, was on notice-

Government is rarely estopped by its agents misinterpretations of policy –court will go to extremes to find that reliance was not detrimental or not reasonable to prevent estopping the government from collecting funds

o

RULE: For a governmental agent’s mistaken advice to estop the government, the agent must at least have misrepresented facts upon which another relied reasonably to his detriment

2.

Office of Personnel Management v. Richmond – when the navy’s mistaken advice caused a pensioner to forfeit his benefits, he sued to require the government to pay him anyway –court found that allowing estoppel to force the government to make payments would cede Congress’s control of public funds… forcing the government to pay him would violate a federal statute making the requested relief illegal

o

can a gov't EE who received erroneous oral and written advice regarding benefits estop the government from barring claims.

o

Here, statute of limitations ran, therefore no law authorizing payment

Appropriation clause in the constitution requires that money may be paid out only through an appropriation made by law

o

RULE: Estoppel cant force the government to make payments not authorized by statute3.

Outline Page 32

Here, statute of limitations ran, therefore no law authorizing payment

The more general the language is in predicate rule (fair, reasonable, equitable language), the more likely it is that later rule is legislative and not interpretive

-

The more specific the language in the predicate rule is, the more likely it is that the later rule is interpretive

-

If the predicate rule imposes a duty the later rule is more likely to be interpretive-

Something is a rule when it is an agency statemento

Fact related problem - which agency representatives are empowered to make agency statements

o

Issue of reliance only comes up if there are differing agency statements, but what if one of the statements wasn’t an agency statement in the first place?

o

The lower in bureaucracy someone is, the less likely it is that that person has been authorized by the agency

Does the document claim high authority? Does it purport to speak for the agency?

Factors:o

When is the statement the statement of an agency?-

RULE: Agency may not promulgate mush then give rule concrete form through subsequent interpretive rules

4.

RULE: Regulated entities must show actual reliance on an agency’s interpretation to require that it can be changed only through NC – difficult factual issues to determine if regulations have authoritative interpretation

5.

JUDICIAL DEFERENCE to AGENCY CHOICE OF PROCEDURESD.

No Deference when agency makes argument as to what the statute means

No deference if an agency is advancing an interpretation of a statute for the very first time in the case in which it is a litigant – Bowen

Little Deference –agency is simply a litiganto

Relies on a theory of implied congressional preference, Congress ought to be understood to intend that agencies, not courts, be the arbiters of its own ambiguous rules because agencies have expertise

Seminole Rock – courts should defer to an agency’s interpretation of its own regulation –highest level of deference

High Deference - agency’s interpretation of its own ruleo

Deference –allocation of power, to resolve statutory construction problems-

Step 0 – Congress actually intended the agency to resolve statute’s ambiguities o

Court will defer to an agency’s statutory interpretation if it concludes that a statutory term is ambiguous and that the agency’s interpretation of the term is reasonable or permissible

o

Chevron Deference –more deferential end, below Seminole level-

Rulings and interpretations and opinions of the Administrator, not controlling, but do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance

o

Skidmore v. Swift 1944 - overtime compensation issue, employees not being paid for time spent off shift monitoring premise to be able to stop fires if started… Court took the agency interpretive agency bulletin into account, valued agency expertise

Agency interpretations in forms like opinion letters, policy statements, agency manuals –all lacking force of law, are entitled to some deference but only to the extent that they have the power to persuade

o

Weaker deference than Chevron because it assigns the decision to the court, but the agency interpretation is owed respect

o

Thoroughness evident in a judgment’s consideration1)FACTORS to analyze the amount of respect due:o

Skidmore Deference –may be given when the agency’s interpretation of the statute is embodied in something other than a rule adopted under 553 of APA

-

Outline Page 33

Thoroughness evident in a judgment’s consideration1)Validity of the reasoning2)Consistency with earlier and later pronouncements 3)

Sheriffs wanted chevron to apply to get deference to letter

Chevron only applies with formal rules…

Christensen v. Harris SC 2000 p389– overtime dispute between sheriffs and their employer, employer adopted policy requiring employees to schedule off time in order to reduce amount of accrued overtime – the statute didn’t expressly authorize or prohibit and because the opinion letter lacked the force of law court found against the sheriffs

Focus on whether an administrative decision has the force of law 1.

Only legislative rules and formal adjudications

Strong evidence that what congress wanted was the agency given the lawmaking power to be the one to deal with ambiguities in the statutes…

Comparatively elaborate rulemaking process of agencies fosters greater deliberation and fairness

If the agency interpretation was embodied in a statement that has the force of law, then its entitled to Chevron

o

If not, Skidmore deference –gets respecto

Determining which agency actions get Chevron and which get older weaker Skidmore 1.

TEST: If Congress delegated to the agency authority to make rules with the force of law, and if the agency interpretation was promulgated in the exercise of that authority, then the agency interpretation gets Chevron deference

o

Was a HQ letter, one of many a year, not a legislative rule or formal adjudication under Christensen it would not be entitled to Chevron deference.

administrative implementation of a particular statutory provision qualifies for Chevron deference when it appears that congress delegated authority to the agency generally to make rules carrying the force of law,

United States v. Mead Corporation – the customs service issued a ruling letter classifying planners as diaries and Mead challenged that ruling

o

RULE: When congress delegated to the agency authority to make rules of law, and the agency interpretation claiming deference was promulgated in the exercise of that authority… a reviewing court is obliged to accept the agency position where Congress is silent and the interpretation is reasonable…(Chevron) opens the door a little

-

1) Importance of question to administration of the statuteo

2) Interstitial (interconnected) nature of the legal questiono

3) Related expertise of the agencyo

4) The complexity of the administrationo

5) Agency’s careful consideration o

Barnhart v. Walton SC 2002 p394– Walton’s application for social security disability benefits was denied because he was out of work for only eleven months

o

Even without the regulation, there is still something to give deference to and the fact that it isn’t in regulatory form doesn’t matter

Court responds that the less formal means does not automatically deprive that interpretation of the judicial deference otherwise due

o

Assumes that deference will be afforded unless there are clear reasons not too

RULE: Barnhart says that even if the text is not a legislative rule or formal adjudication, Chevrondeference may be given if the pattern of agency pronouncements is sufficiently robust in a technical area and consistent:

-

BOTTOM LINE - Non force of law items may still get chevron deference-

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BOTTOM LINE - Non force of law items may still get chevron deference

Outline Page 35

The general federal question jurisdictional statute is normally availableo

If a P has standing, a court must still have a statutory grant of jurisdiction-

Next, P must state a cause of action, needs statute granting some judicially enforceable right-

statues preclude judicial review, ORa)agency action is committed to agency discretion by lawb)

701a states the APA's judicial review provisions do not apply to the extent that-

The appeal must be one that is not excluded from review1.

The agency must have performed an agency action under 551(13)2.

if a federal statute limits the type of development that can occur in a wilderness area, hikers are likely within the zone of interest that congress intended to protect

-

702 cause of action is limited to persons suffering "legal wrong" or those "adversely affected or aggrieved w/in the meaning of the relevant statute"

3.

The requirement for final agency action is known as the finality doctrine-

704 provides that only agency action specifically reviewable by statute or "final agency action for which there is no adequate remedy in a court" is reviewable under the APA.

4.

704 requires exhaustion of remedies, has an exclusion if there is an agency appeals process5.

To assert a cause of action under the APA, a P must meet 5 requirements:-

Brett Notes:

JUDICIAL REVIEW

Does the court have subject matter jurisdiction-Does at least one plaintiff have standing-Does a plaintiff have a right to review –particular grievance-Does any statute preclude judicial review or is it committed to agency discretion-Does the plaintiff have a cause of action? Is there agency action? -

Finalityo

Exhaustiono

Ripenesso

Timing hurdles-

Hurdles a litigant must overcome in order to get to an argument on the merits in court

STANDING

If government action or inaction injures a 3rd person in some real fashion, then the person has suffered a sufficient injury for standing purposes

One of its members would have standing to bring the action (Sierra Club v. Morton)1.The lawsuit relates to the purposes of the organization 1)Neither the claim asserted nor the relief requested requires the participation of individual members

2)

Future plans must be concrete and be thwarted

Associational or representational standing if:

1) Plaintiff must allege personal injury in facto

Court must determine whether the injury is result of the government action and that a favorable court decision would remedy the injury

Warth v. Seldin – poor people did not have standing to challenge a city’s zoning requirements which prevented the construction of low cost housing because the lack of low cost housing could be attributable to other factors

2) Injury must be fairly traceable to defendant’s unlawful behavioro

3) Injury must be likely to be redressed by requested relief

Standing – issue that never goes away, can be raised by the court on its own motion, is not waived even if not raised by government, required by case or controversy language of Art III (injury in fact, fairly traceable, likely to be redressed with concrete remedy)

-

Reviewability Saturday, May 07, 2011

4:19 AM

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That a favorable court decision would remedy the injury

3) Injury must be likely to be redressed by requested reliefo

4) Injury and redress must be concrete, specific, not too hypotheticalo

Zone of interests,1.no 3rd party standing, 2.claim cannot be generalized grievance 3.

§702 – outlines the prudential requirements for admin lawo

Prudential requirements intended to assure that courts don’t exercise judicial power unnecessarily … Not based on the case and controversy requirement

-

Lujan v. Defenders of Wildlife - When Congress passed a statute protecting endangered animals, it authorized any person to sue the administrative agency for violating it… moved from foreign to domestic… wildlife activists sued, the agency claimed they lacked standing

o

1) suffer an actual or imminent, and concrete and particularized injury in fact which-2) was caused by the defendant’s actions, must be fairly traceable, and-3) is likely redressable by the court in a favorable decision-

RULE: For plaintiffs to have standing to sue in federal courts, they must

Best you can do is try to strengthen your positiono

Its very difficult to predict what will be enough to satisfy the judges, unpredictable to answer how much of an interest and injury is enough to have standing

-

Argument - failure to produce information impairs their ability to inform their members about those situations who would then lobby congress etc

o

Federal Election Commission v. Akins – a voter claims standing to challenge the federal election agency’s decision to exempt a Jewish political group from disclosure

o

RULE: if an agency decision deprives voters of disclosure mandated by statute, then any voter has standing to challenge it… limited to voter standing –will not extend to taxpayers and environmentalists (court still unfriendly to them)

-

Laidlaw p428 – there was sufficient injury in fact for people who sued claiming they feared to swim in polluted river

o

Emotional impacts/ reasonable fear for people who experience some place may be sufficient injury in fact-

Mass v. EPA – p427 2007 - Doesn’t matter that global warming is massive effect, as long as Mass can talk about its particular impacts – shore erosion – is enough

o

Indication that when a state is a litigant the federal courts ought to be more lenient about applying a criteria for standing

-

But limited in Hine to its facts, no precedential impact

Flast v. Cohen – 1968 p436 – notable exception, allows hearing of generalized grievances –taxpayer had standing to challenge a federal expenditure as unconstitutional under the Establishment Clause of the 1st Amendment

o

P's injury in fact w/ regard to that project has been remedied, and is "not at issue in this case"-

"We know of no precedent for when a P has sued to challenge the lawfulness of certain action but has settled that suit, and retains standing to challenge the basis for that action"

-

P claims procedural injury, but deprivation of a procedural right w/o some concrete interest is insufficient to create article 3 standing

-

Summers v. Earth Island Institute-

Federal taxpayers generally don’t have standing because illegal appropriation of funds is not an injury in fact

-

AGENCY ACTION AND EXCLUSIONS FROM REVIEWIf you’re in court its because either a statute or the APA gives you a cause of action

701(b)(2) – preserves definitions – same meanings apply from 551

APA 701(a) – you don’t get judicial review if (1) either a statute precludes judicial review or (2) agency action is committed to agency discretion by law

-

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701(b)(2) – preserves definitions – same meanings apply from 551o

Includes the whole or part of agency rule order, license, sanction, relief, or the equivalent denial thereof, or failure to act

Not everything an agency does is agency action

What counts as agency action?o

702 – adversely affected or aggrieved by agency action has right to judicial review-

703 – if there is a provision that enables that is what applies-

Agency action is reviewable if non APA statute makes it soo

Final agency action is reviewable under the APA – if there is no final agency action then there is no basis for review or relief

o

704 – private right of action in 2 circumstances-

Court is not meant to deal with programmatic (policy) issueso

Ongoing agency action is not subject to judicial review under the APAo

Lujan(2) v. National Wildlife Federation – the national wildlife federation challenged the agency’s implementation of laws relating to public lands

o

RULE: if your complaint is about a broad policy, as opposed to specific instances of the policy manifested through rules, orders, etc, then it is not a case for judicial review

Norton v. Southern Utah Wilderness Alliance– the SUWA brought an action to compel the agency to prohibit off-road vehicle use in the wilderness study area

o

Allegation that the agency generally fails to carry out its responsibilities is not a cognizable claim

o

RULE: For a failure to act to give rise to remedy under 706 (scope of judicial review) it must be discrete, specific and identifiable, comparable to the other defined agency actions à706 allows court to review only final actions and can compel an agency to act but it cannot say how the agency should have acted

The greater the specificity of the predicate law, the more likely it is that the failure to act will be failure to take agency action

o

If the agency says no to something you want, the agency acted by refusing the request – that is not a failure to act

o

If the agency just ignores you, that is a failure to act if it is something that a suit could be filed foro

Harder to identify concrete failure to act-

Exclusions from Judicial ReviewStatutory PreclusionStatutory Grant of Jurisdiction – court must have this, usually not a problem in administrative law because many statutory regimes contain specific jurisdictional provisions, and if a plaintiff doesn’t have jurisdiction under a statutory regime, the general federal question jurisdiction is normally available

-

Preclusion of judicial review of constitutional claims is probably unconstitutional o

The APA is perceived as codifying a presumption of affording judicial review to those adversely affected or aggrieved by agency action

o

This restrictive interpretation stems from two considerations-

701 – if some other statute precludes judicial review then you don’t get it under APA-

ISSUE: More frequently, the agency claims that statute implicitly bars judicial review-

In Abbott labs, the court required "clear and convincing evidence" that congress intended to preclude judicial review, but in Block the court indicated that this standard is satisfied if congressional intent to preclude review is "fairly discernible in the statutory standard"

-

Abbott Laboratories v. Gardner - agency argues that statute prevents APA review of adopted regulation, but the agency claims that no one is entitled to judicial review now –only if/when its been enforced against company can it be judicially reviewed

o

RULE: All agency decisions are presumed judicially reviewable, unless the agency offers clear and convincing evidence congress intended to preclude review

Defendant agencies may overcome the presumption of reviewability by showing Congress’ intent to -

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Statutory scheme’s structure, objectives, legislative history, or the type of agency action involved

o

Fairly discernable test - Allows the court to reject review whenever it feels that review would violate the statute’s main purpose of public policy

o

Block signals the SC’s retreat from the strong presumption of reviewability noted in Abbott

Block v. Community Nutrition Institute– when agency regulations increased the price of milk, advocates for poor consumers claimed they should be allowed to seek judicial review… court found that the statutory scheme was intended to provide only limited review and to deny it to consumers

o

Defendant agencies may overcome the presumption of reviewability by showing Congress’ intent to preclude review is fairly discernable from the text, and outside the text of the statute and its legislative record

-

Committed to Agency Discretion

If a statute grants discretion to an agency, and the law does not establish a standard against which to assess the exercise of that discretion, then congress has committed that action to agency discretion by law

-

701 excludes agency action from review if committed to agency discretion by law-

Webster – the agency action is committed to the CIA discretion by law to the extent that it is a question of the statutory standard of hiring BUT with respect to the constitution it is not committed to the agency

o

Language in 701 – “applies except to the extent that 1) statutes preclude judicial review or 2) agency action is committed to agency discretion by law”

-

Heckler serves to work this contradiction out:o

706 allows court to overturn agency action for abuse – how can there be no review at all when action is given to agency discretion –would be no standard against which to judge if there is an abuse

-

Heckler v. Chaney – inmates condemned to lethal injection challenged the poison used did not meet FDA standards, but the FDA claimed discretion not to investigate – there was no redressability here, they would still be dead

o

RULE: agency decisions not to begin enforcement proceedings are presumed discretionary and unreviewable, unless enforcement is required by law (where statute has provided guidelines for the agency to follow in exercising enforcement powers) –courts want to leave this to congress

If yes, then 701(a)(2) is NA – court is able to consider whether the action was an abuse of discretion taking into account what the law is

o

If there is law that is not relevant, then there is other law to apply

Question – is there law to apply – shifts to what law is relevant hereo

TEST: Whether there is law for a court to apply? Overton Park-

If all you’re left with is nothing but the provision, then there is no law to apply-

Decision not to bring an enforcement action - Hecklero

Question of how an executive branch agency would spend a portion of a lump sum, left to agency discretion, traditionally no agency review - Lincoln

o

Congress could subject these traditional exercises of discretion if it chose to by explicitly imposing criteria

o

If Congress doesn’t, then silence = presumption of nonreviewabilityo

Decisions that are traditionally committed to agency discretion:-

Webster v. Doe – when the CIA director claimed discretion to fire a gay employee, the worked sued, claiming abuse of discretion and constitutional violations

o

RULE: even if a statute grants an agency discretion, its decision is still presumably reviewable for constitutional claims, unless Congress clearly intended otherwise

-

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sued, claiming abuse of discretion and constitutional violationsSC’s CL modification of APA to confer reviewability on constitutional claims, even if the statute expressly confers unreviewable discretion, reviewability is still presumed for constitutional claims

o

DISSENT – Scalia - Proposition is illogical – Simultaneously saying it is reviewable because its constitutional but is committed to agency discretion so not reviewable

o

CAUSE OF ACTION

Congress may establish a cause of action in the statute’s mandateo

Cause of Action – means that there is a statute granting the plaintiff some judicially enforceable right, where there are specific judicial review provisions, they can provide both jurisdiction and a cause of action

o

Agency must have performed an agency action - §551(13) – the whole or part of an agency rule, order, license, sanction, relief, or the equivalent thereof, or failure to act.

1.

A) statutes preclude judicial review or 1.B) agency action is committed to agency discretion by law2.

Agency must be one that is not excluded from review§701 – states that APA judicial review provisions don’t apply to the extent that

2.

Having established standing and the existence of agency action, and having survived any claim that their action is precluded under the APA, a person must still establish the existence of a cause of action to sue

-

Doesn’t cover competitors, or people not directly in the relationship with the government agency

Narrow in scope – people do not suffer a legal wrong from lawful competition… Narrow CL notion

Legal Wrong – direct injury traditionally recognized by courts, action by the government that interferes with a person’s constitutional, statutory or common law rights

Statutes that explicitly identify those who have a cause of action, those adversely affected…

Bennett v. Spear p479 – Endangered Species Act allows any person to sue through citizen suit provision, limited by constitutional standing requirements, but extends zone of interest to all persons with constitutional standing

Adversely affected/aggrieved – if this were construed narrowly, then many people might not have a basis for judicial review

When statute is not so explicit Zone of Interests test

702 – person suffering legal wrong because of agency action, OR adversely affected/aggrievedby agency action within the meaning of the relevant statute is entitled to judicial discretion

o

Zone of Interests Test – authorizes lawsuits by persons who assert interests that are within the zone of interests to be protected or regulated by the statute that the person claims is violated… court looks to who congress meant to protect - permissive test

-

National Credit Union v. First National Bank(1998) – when the agency’s regulatory interpretation allows credit unions to compete more effectively with banks, a bank claims standing to challenge it… the banks did have a cause of action under 702, statute meant to protect the banks themselves… modifies Air Courier

o

Air Courier Conference v. American Postal Workers Union (1991) – when the postal service allowed some competition by private couriers, postal employees sued, claiming the statutes were intended to guarantee their employment… employees did not have cause of action

o

RULE: ZOI test should include all interests that the statute arguable protects even if congress never intended to protect those interests… injury effectively confers standing if the statute conferred some articulable benefit on the plaintiff since if the plaintiff received protection, then it may be argued that he was an intended beneficiary and arguably anyone who gains a benefit from a statute should have standing

For matters not covered by specific review provisions of the organic or regulatory statute, APA §702 is fall back provision, establishes a cause of action for a person suffering legal wrong because of agency action.

Outline Page 40

Only SC case to find that ZOI not satisfied… modified by Credit Union

Plaintiffs asserting standing under 702 must prove the agency’s challenged action caused an injury in fact which is within the zone of interests and was intended to be protected by the relevant statute, or a closely related statute

Postal workers had constitutional standing – the more postal services that went to private carriers, the fewer jobs there would be just because you have constitutional standing doesn’t mean you have standing under 702

were intended to guarantee their employment… employees did not have cause of action because the statute in question was meant to protect the postal service itself, not the workers.

TIMING3 principles impact timing – finality, exhaustion, ripeness

Finality1.Looks to the conclusion of activity by the agency, party can get judicial review ONLY if agency action is final, unless congress authorized review at an earlier stage

-

If there is no specific statutory provision for judicial review, then 704 restricts review to final agency action for which there is no other remedy

o

704 - only agency action specifically reviewable by statute or final agency action for which there is no adequate remedy in court is reviewable under the APA, requires people to wait until an agency has reached its final decision in the matter

o

Purpose of finality – avoid judicial review of preliminary and subsidiary agency actions separate from the final action, and without a final decision, a court often lacks a record of the matter and a complete justification for the agency’s action

-

When a particular statute specifically provides for judicial review of agency action, then the review proceeds pursuant to that statute, not the APA

-

Taylor v. Dole – Labor Department changed its overtime policy – lists factorso

Franklin v. Mass, 1992

If the agency sends a letter to A and you’re B, and you’re circumstances are similar to As, then there is more potential for direct effect on A than B

Whether the agency has completed its decision-making process and whether the result of that process is one that will directly affect the parties.

1) Does it have a direct/immediate effect? Look to whether its impact is sufficiently direct and immediate – not final if it only is the ruling of a subordinate official

o

Bennett v. Spear 1997

Does it determine rights or obligations, will legal consequences will flow… does it have penalties for noncompliance?

2)

Who took the action? More likely to be seen by the courts as final if done by the head of the agency3)When you read it, does the action purport to reflect the views of the agency itself –definitive statement of the agency’s position?

4)

After the action has occurred, after the thing issued, how much latitude does the agency have to then do something different?

5)

Situation specific 6)Leaves no administrative remedy whereby to overturn it7)

Finality Factors:

If it seems clearly intended to make people comply with “guidance” –can be binding in practical sense even if the agency tries to label it otherwise

BUT policy statements aren’t binding even though they effectively threaten regulation with costly enforcement litigation if party fails to comply

Appalachian Power Company v. EPA – DC Circuit 2000, EPA issued an informal bulletin setting guidelines for states’ pollution monitoring, polluters challenge the bulletin as final and binding

RULE: Agencies’ nonlegislative rules are reviewable if they are effectively final and bindingo

Courts are concerned with agencies playing games with rulemaking provisions, making statements that are meant to be rules, but they don’t follow procedures because they’re not final…

-

To have final agency action, there must have first been an agency action -

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Court may treat administrative inaction as equivalent of an order denying relief o

To have final agency action, there must have first been an agency action -

Exhaustion - is directed to the steps a litigant must take,2.General requirement that if an agency provided an internal means of review of its decisions, persons should be required to use those means before coming to court

-

Courts may make exceptions to this rule because it is a CL rule – judges have flexibility-

If by the time a court finds that a person has not exhausted available remedies, the deadline for invoking those remedies has passed, the person will be precluded from either further administrative review or judicial review

-

Application can result in preclusion of judicial review-

Congress can require exhaustion through statute, but has not done so in the APA itself-

Allow the agencies to use discretion and expertiseo

Save the courts from needless work, cases that would get resolved through exhaustiono

Helps ensure that an adequate record has been developedo

Goals of the Doctrine - McCarthy-

Only applies to agency requiring exhaustion –not statutes –common law cannot contradict congressional statutes in this area

Administrative remedies need NOT be pursued if the litigant’s interests in immediate judicialreview outweigh the government’s interests in the efficiency or administrative autonomy

o

Problem with incommensurable weightso

If would suffer irreparable harm without judicial review

If agency would take unreasonable amount of time to make a decision

1) If exhaustion would result in undue prejudice to the plaintiff

If statute under which agency acts is unconstitutional –agencies don’t have the authority to declare their own statutes unconstitutional

2) If there is doubt about whether its possible for the agency to grant effective relief (how long would it take)

3) If the agency is biased or has predetermined the issue

3 circumstances where there is sufficient justification to overcome exhaustiono

McCarthy v. Madigan – a prisoner suing his jail for money damages over unconstitutionally denying medical treatment seeks to bypass the prison’s internal grievance system, contending it cannot award monetary compensation, all he wanted was money, and the agency couldn’t provide that

Balancing Test – McCarthy (CL doctrine)-

1) the agency by RULE requires exhaustion AND ○

If agency action is challenged under APA procedures, exhaustion is not required unless mandated by statute or regulation

o

No exhaustion unless the agency has taken those 2 steps, not the business of the courts to change what congress said

Language of 704 – ANTI EXHAUSTION - forget the CL exhaustion doctrine, it doesn’t apply to final agency action unless the agency says so – agency would have to have rule and must suspend action while you let people appeal

o

704 – sentence 1 provides reviewability for final actions, sentence 3 defines final action as including unexhausted decisions unless expressly required by statute, then courts cannot demand exhaustion unless mandated by statute

Darby v. Cisneros – a housing developer appealing his suspension claims the APA precludes discretionary application of the exhaustion doctrine.

o

2) suspends the action during the appeal process○

RULE: If agency action is FINAL under the criteria for finality (above), and you’re seeking APA review under §704 and not some other statute… then you’re NOT required to have exhausted administrative remediesunless

If a plaintiff does file an intra-agency appeal, he cannot later sue in federal court before that appeal is resolved –once the agency action is appealed internally, it becomes non-final pending the appeal’s outcome

-

Issue Exhaustion – note 4 p500 - If you don’t raise an issue in the administrative process (adjudication) you -

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Ohio Forestry – was a ripeness decision, but SC tried to introduce new information with SC and SC said it had to be raised in the lower courts first

o

Issue Exhaustion – note 4 p500 - If you don’t raise an issue in the administrative process (adjudication) you likely will not be allowed to raise it later when you get judicial review

-

Ripeness - CL3.Deals with an attempt to obtain pre-enforcement judicial review, review of an agency action before the agency tries to enforce that action against the person in court

-

Partly grounded in case or controversy language – if issue isn’t ripe then court decision on the issue amounts to an advisory opinion, art III doesn’t allow for advisory opinions

-

Goal - protects agencies from premature interference, protects courts from suits with abstract policy issue-

RULE: where the legal issue presented is fit for judicial resolution, and where a regulation requires an immediate and significant change in the plaintiff’s conduct with serious penaltiesattached to noncompliance, access to the courts under APA must be permitted absent a statutory bar

o

Must be purely legal –Abbott was purely legal

Is the regulation formal and definitive?

Would judicial intervention interfere with further administrative action?

Is there yet more to happen?

Whether the issues presented are ready for judicial decision? Fitness test1)

Court CANNOT better resolve the issue by waiting for enforcement

In Abbot, statute was new and obviously going to be enforced (direct and immediate impact)

Fines were heavy for violation, already a lot of money invested in the labels, a lot of economic hardship here

Is there a direct and immediate impact? Change business practices immediately?

Would delay cause hardship to parties by court withholding the decision if yes, then violate 2)

TWO PART TEST: ○

Abbott Laboratories v. Gardner– When the agency overseeing drug labeling required greater disclosure than mandated by statute, the industry sued, the agency claims the statue makes its decision implicitly unreviewable –creates 2 part test

-

If the court would LEARN ALOT about the legal issue, then it may want to wait for enforcement action-

Later agency action would be better. To rule now would limit agency action.

Fitness:-

the Forest service's plan would not cause the organization or its members any significant hardship

Did not inflict significant practical harm-

Hardship:-

Ohio Forestry v. Sierra Club – When the federal forests agency approved a forest for logging, subject to more specific environmental studies, treehuggers sue, Gov claiming ripeness, challenge here was not ripe – technical plan not finalized

o

When there is too much yet to happen for the court to gain an adequate understanding between the alleged illegalities and the harm then the issue is not ripe

-

Day to day business practices not significantly impactedo

Toilet goods – here it wasn’t ripe, not appropriate for judicial review, not as clear cut as the advertising rule in Abbott

-

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CHAPTER 10: DELEGATION OF LEGISLATIVE AUTHORITY AND LEGISLATIVE VETOESINTRODUCTION TO AGENCY STRUCTUREAgencies routinely engage in adjudication-Independent Agency –one for which congress has forbidden the president from firing some administrators because of a policy agreement

-

Argue the action is invalid because the agency is structured in an unconstitutional wayo

Argue that the interpretation proposed by the agency would make the statute unconstitutional

o

Lawyer seeking to block agency action:-

Under a legislative veto, congress reserves for itself the right to void agency orders or rules by the passage of a resolution by one or both houses of congress

-

Powers may comingle so long as one branch’s exercise of power does not jeopardize the core function of another branch

-

DELEGATION OF LEGISLATIVE POWER

Its impractical to have congress foresee all the circumstanceso

Don’t get the benefit of agency expertiseo

Congress can give agencies zero discretion –doesn’t happen often-

The more agency discretion afforded by congress, the more there could be a constitutional issue with separation of powers

-

Framers used this to establish the separation of powers, congress is more politically responsive because of frequency of elections

o

Discerning the line between permissible and impermissible grants of jurisdictiono

Issue arises when Congress writes broadly or imprecisely worded grant of authorityo

Courts can reign in agencies depending on how they answer the Chevron step 1 question

Courts can say that there is a possibility of a delegation problem, and in order to avoid that (which would be presented if it is broadly construed) we will narrowly construe it

Delegation doctrine is a tool that courts use to give a narrow construction to an agency’s statute

o

Delegation Doctrine - Delegation of power issue SOP, Art I § 1 – all legislative power is vested in the Congress

-

A congressional grant of rulemaking authority is not an unconstitutional delegation of legislative authority if the statute has an intelligible principle to guide the exercise of the authority

Scalia: when a statute authorizes the creation of an agency in the judicial branch to make rules, even subject to an intelligible principle, this is unconstitutional because the judicial branch can exercise neither legislative powers nor executive powers

Whitman v. American Trucking – 2001 – the Clean Air Act required the administrator of the EPA to promulgate rules regarding air pollution, and the rules were challenged as an unconstitutional delegation of legislative authority – IP was “means sufficient, but not more than necessary”

Impermissible if there is no intelligible principle, if you think about what the principle was that made it constitutional to delegate authority, the line is close to the max delegation…

o

A broad grant of discretion is likely to be held constitutional in the future barring a radical

Intelligible Principle - if the delegation is intelligible then it is permissible-

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7:38 PM

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A broad grant of discretion is likely to be held constitutional in the future barring a radical change in the supreme court because court has not found IP only twice

o

Statutory InterpretationAlthough the SC has not struck down any statutes under the nondelegation doctrine since the 1930s, it has used the doctrine to give narrow constructions to statutes that might otherwise have violated the doctrine

-

Court found statute to be broad – the criteria by itself might be insufficient under the IP standard so court construed the language as requiring a cost benefit analysis requirement

□

International Union, UAW v. OSHA 1991 DC Circuit – representative organizations from industry and labor challenge the OSHA regulations, aimed at reducing accidents caused by industrial equipment, promulgated under federal statutes as an unconstitutional delegation of congressional authority

o

RULE: the judiciary will interpret legislation delegating power to government agencies in a manner that limits agency discretion so as to avoid conflict with the constitution’s nondelegation principle if reasonably possible

Traditional cannon of construction – if there are 2 readings of a statute possible, and 1 raises a constitutional issue but the 2nd doesn’t, then courts should adopt the 2nd, the reading that does not raise a constitutional issue

-

THE LEGISLATIVE VETO

Statute enacted that delegates power to agency/official… within that statute there is a reservation of power by congress to review and nullify the executive agency action… agency acts… congress nullifies what the agency did, not by passing statute but by using the reserved power

o

It basically allowed congress to veto rules or orders in almost 200 statutes. Congress could delegate substantial discretion to agency and still retain the authority to disapprove the specific agency decisions.

-

The legislative veto was declared to be unconstitutional because it violates requirements of presentment and bicameralism

-

That the legislative veto is an unconstitutional bypass of the process set forth in Art 1 – bicameral and presentation requirements

1)

Purpose of the presentation requirement is satisfied by proxy and because either side of congress may pass a resolution to overrule the decision to suspend deportation, the purpose of bicameralism is met

White’s Approach – Constitution doesn’t provide a clear answer, when the text is silent, proceed to perceived purpose of Art I – system of checks and balances

2)

That when initially enacting the Immigration Act, all constitutional requirements were met, both branches knew what the law provided for and chose to approve it – renders bicameralism and presentation issues moot

3)

INS v. Chadha – 1983 p552 - grant of discretion to the AG to exempt people from deportation but also says that either house can overturn the AG’s exemption… AG grants Chada exemption, House resolves under the veto provision that says they nullified the exemption granted to Chada… Here, the action by the house violated both the bicameralism and presentment requirements… 3 views

o

RULE: Once delegated authority, Congress may not legislatively overrule or veto decisions made by the agency pursuant to the delegated authority without following the constitutional procedures of bicameralism and presentation

-

What happens when a legislative veto provision is part of a statute, then the legislative veto is held to be unconstitutional, to the rest of the statute?

o

Severability/Separability-

Outline Page 45

Or for whatever reason, its unconstitutional

legislative veto is held to be unconstitutional, to the rest of the statute?o

1) The whole statute goes

2) The rest of the statute stands

Alternatives:o

If statute doesn’t have it, there is still a presumption that Congress means for what can be saved, to be saved

Statutes may have explicit severability clauses – that if any part of the law is unconstitutional, the rest stays in effect….

o

Other Forms of Congressional Control over Agencies Post-Veto Developments

Limited time for debate1.Only the chair of the committee with jurisdiction over the bill can move to amend2.Opponents are limited to one motion to recommit the bill. 3.

Expedites process:;-

Requires 60%. -

Corrections Day - faster way of getting something through the House – no constitutional issue here, step in when agencies have made mistakes.

Submits to congress, then must wait 60 dayso

Major rule – one with an annual economic impact of 100 million or more, or with other significant regulatory impacts identified in the legislation

o

Congressional Review of Agency Rulemaking - Agency not permitted to make a Major Rule effective until 60 days have gone by – theory is that congress can prevent it if it doesn’t like it by passing legislation against it

-

Does it change the legal rights and responsibilities -Key Constitutional Question – was it legislative? Is this legislation?

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CHAPTER 11: INSPECTIONS AND SEARCHESINTRODUCTION TO INSPECTIONS, REPORTS AND SUBPOENAS

If its rulemaking, then the needed info comes from internal agency expertiseo

Agency has what the applicant wants

Application process – agency gets the info to decide whether the applicant qualifies – met the regulatory criteria

Burden on applicant to provide enough information to satisfy agency

If the activity is licensing or relief so information comes from the applicanto

Obtaining information for law enforcement purposes – info from complaints, consumers, competitors, whistleblowers, voluntary or no coercive

o

In a regulated enterprise, are strong economic incentives to comply with regulations-Regulations become meaningless if they’re not enforced-

Kind of information agency needs and sources depend on what the agency is doing-

INSPECTIONSAgency’s authority to inspect is only as great as its statutory authorization-

Authority to physically inspect regulated facilities1)Authority to require information to be maintained, record keeping2)Authority to subpoena3)

3 basic tools that a statute might provide to an agency to acquire information, typically get more than one-

Agencies highly value flexibility in where/when to inspecto

There usually aren’t enough inspectors to go aroundo

For some agencies inspections are indispensable – the only way to find safety violations-

Protects us from unlawful seizureo

Warrant requirement – must be specific and supported by probable causeo

4th amendment grants a right that is subject to waiver. If I allow the inspector to come in, I have waived the right I had

-

Specific evidence of an existing violation 1)Showing that the plan pursuant to which the warrant is issued must be based on specific, neutral criteria… particular company must be selected pursuant to application of neutral criteria

2)

Marshall v. Barlows p90-91o

RULE: for the purposes of an administrative search and 4th amendment probable cause justifying a warrant may be based on:

-

No – because it’s a public space/open field (fly over example)

Yes – then it must be reasonable

Is it a search subject to the 4th amendment?1)

RULE – agency must get a warrant because it is the best guarantor of reasonableness in searches – UNLESS its emergency (includes public health)

If the search must be reasonable, then warrant required – under Camaraunless emergency

2)

Camara says that in the nature of things you don’t know without looking if something has a problem… statutory or regulatory criteria for area

When a warrant is required, then you need probable cause3)

With Respect to Administrative Inspections:-

Ch 7: (1) Inspections Reports and SubpoenasSaturday, May 07, 2011

8:12 PM

Outline Page 47

If they want to inspect Bob’s building because of things they think they know about Bob that requires particularized probable cause

If there are criteria set out for how you go about inspecting a whole area, and that building falls within the area, that is sufficient probable cause – still need a warrant

inspections that establish how you inspect to see whether the standards are met

Diluted probable cause requirement because they want people to be able to do searches, to find a violation… want the 4th to apply – don’t want regulators to be blocked from carrying out statutory regime

When government is conducting a search of an entire area with a reasonable basis, it may search all apartments in that area

Camara v. Municipal Court – 1967 p583 – San Francisco resident was charged with violating the city’s municipal code when he refused to allow city building inspectors to enter his apartment without a warrant… the resident had the right to demand a warrant before this inspection and cannot be convicted for refusing to consent to the inspection –even

o

RULE: Agency must get a warrant unless it is an emergency, if a warrant is needed then must have probable cause (this is administrative)

-

Justified by probable cause that the search will uncover evidence of a statutory or regulatory violation

1)

See Barlow above

Takes place in a residence or business under a warrant issued based on a showing that the inspection comports with reasonable administrative and legislative standards

2)

2 ways to get a warrant- LAUREN-

Connection between affidavits and scope of investigationo

Specific evidence of existing violation inspector limited to scope of the evidenceo

Trinity Industries, Inc. v. OSHRC (Trinity 1) 1994 p588 – A lawsuit ensued when OSHA attempted to use an employee complaint about certain specific workplace safety violations to justify a full scale administrative inspection of a company’s entire workplace

o

RULE: When agency inspection is prompted by a complaint regarding certain workplace violations, agency is not permitted to make comprehensive inspection of the alleged violator’s worksite, only inspect things that bear appropriate relationship to complaint.

-

In re Trinity Industries, Inc. (Trinity 2) – Manufacturer fines $10,000/day for not allowing OSHA inspectors to enter and inspect its facility

o

RULE: an administrative search warrant for a particular company, with probable cause from neutral administrative standards, will only withstand judicial scrutiny if the inspection plan is based on specific neutral criteria

-

Nuclear?

Essentially a waiver theory – if you want to do this type of business you have a lowered expectation of privacy

o

Examples: Liquor dealer, auto junkyard, firearms dealer, nuclear power

Warrantless searches, unreasonable in other business settings, in this setting is reasonableo

Highly regulated industries are an exception to warrant requirement exception to probable cause-

1) The search must further an important government interesto

2) Warrantless searches must be necessary to achieve that interesto

3) The statute authorizing the warrantless searches must provide other safeguards to those subject to the search

o

If You’re Industry Attorney and inspector show up unannounced:-

EXCEPTION TEST – when don’t need a warrant - Burger(604)-

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Why are you here? If its for a neutral search then let in, if its in response to a complaint and that issue can be fixed before inspector could return with warrant then don’t let in

o

Try to do limited grant of permission o

Generally – let inspector ino

If You’re Industry Attorney and inspector show up unannounced:-

REMEDIES for ILLEGAL INSPECTIONS:

United Stated v. Janis – a defendant in a civil tax suit brought by the US government objected to the IRS’ use of evidence illegally obtained by police who were executing a defective search warrant in an unrelated criminal case

o

When the exclusion of illegally obtained evidence will have no deterrent effect on those officials, the SC will allow admission of the evidence

Exclusionary Rule – a constitutional requirement that evidence obtained in violation of the constitution be excluded at trial –purpose is to deter future misconduct by officials conducting a search

o

Argue around this – distinguish by saying different agencies, different proceedingso

A dispute arose when the INS introduced an illegally obtained confession in a deportation proceeding

INS v. Lopez-Mendoza – expands Janis rule to situations involving only one agency, significant extension

o

RULE: Evidence illegally seized by law enforcement and inadmissible in criminal proceedings is admissible in subsequent civil proceedings because to exclude it from these civil proceedings would provide no deterrent effect to those who illegally seized it

-

Case precedent is wrongo

Distinguish on the facts – look at salient factso

Take advantage of exception indicated –or narrow the scopeo

This kind of lawyering problem, there are 3 ways to argue-

“SPECIAL NEEDS” SEARCHES

Board of Education of Independent School District No. 92 of Pottawatomie County v. Earls –p610 – board of education required students participating in extracurricular activities to consent to drug testing, Earls claimed that policy violated of the 4th amendment… even though there was no evidence that drug abuse was rampant – court student’s privacy interest in public schools is limited

o

RULE: In the context of safety and administrative regulation, a search without probable cause may be reasonable when there are special needs, beyond the normal need for law enforcement, that make the warrant and probable cause requirement impracticable

-

Why does the government need the info –how urgent is it?-

Privacy interest allegedly compromised by the testing/investigationo

Nature of the intrusiono

Special Needs Analysis –balancing test used by the SC to determine whether certain searches impose unreasonably on individual rights…consider:

-

Nature and immediacy of government’s concerns

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RECORDKEEKING AND REPORTING REQUIREMENTSRecord keeping requirements imposed by agencies through regulations, statutes, or simple agency communication

-

Ad Testificandum – requires the person to come and testifyo

Usually don’t require probable cause to issue

Duces Tecum – requires the person come testify and bring materials with himo

Subpoenas used when agency investigates possible violations of regulations/lawo

Agencies may subpoena if they’re expressly authorized by statute-

Statutory Authority and Limitations

No implied authority to issue a subpoena○

Agency substantive authority derived from statute, limitations from statute, constitution… -

Agency must be able to find statutory authority for any reporting or record keeping requirement that it imposes on people

-

When the requirement is imposed by regulation, no need to have express authority – its implied by the statute creating the regulatory program

-

When an agency imposes a reporting or record keeping requirement by rule, the rulemaking requirement of the APA apply

-Administrative Procedure Act

Line of Business – DC Circuit – SC denied cert - accepted universallyo

RULE: information gathering was not required to be done by rulemaking

The Fourth Amendment

The 4th Amendment at most guards against abuse only by way of too much indefiniteness or breadth in the things required to be particularly described, if also the inquiry is one the demanding agency is authorize by law to make and the materials are relevant…. Disclosure shall not be unreasonable

o

Administrative agency has no inherent subpoena authority –must be granted by statute, requirements of the 4th amendment (diluted and weak) must be complied with

-

Oklahoma Press Publishing v. Walling –Court enforced a subpoena issued by the Wage and Hour Administrator despite the lack of probable cause. Probable cause was not necessary because neither the statute nor the 4th amendment required it. No 4th amendment requirement because the agency subpoena involves less of an invasion of privacy. (Court also said that the agency needed this leeway.)

-

1) The inquiry is within the authority of the agency

2) The demand is not too indefinite and is not excessively broad (if there are fights they are over this)

3) Information sought is reasonably relevant

Demands of the 4th amendment are:o

What’s missing from the demands is reasonable cause –none requiredo

Government agency can investigate merely on suspicion that the law is being violated, or even just for assurances that it is not being violated – Morton Salt

-

To look for wrongdoing when there is no indication that any had occurred is an unreasonable purpose

o

Freese v. Federal Deposit Insurance Corp. – District of NH When bank went into receivership, the FDIC initiated an investigation into potential wrongdoing by the bank’s former officers and directors and issued subpoenas as a part of that investigation –subpoenas sought extensive

o

Morton (SC) overtakes this RULE: To issue a valid subpoena, agency must 1) issue for a proper purpose, 2) the information sought is relevant to that purpose and is adequately described within the subpoena, AND 3) proper procedures have been followed in the issuance of the subpoena

-

CH 7: (2) RECORDKEEKING AND REPORTING REQUIREMENTSSunday, May 08, 2011

5:23 AM

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directors and issued subpoenas as a part of that investigation –subpoenas sought extensive personal financial information, court held it was a fishing expedition

Broadness alone is not sufficient justification to refuse enforcement of a subpoena so long as the material sought is relevant

o

Reasonableness and relevance are the keyo

Denial of subpoena is appropriate when court finds subpoena to be unreasonable, arbitrary, too broad in scope

o

Adams v. Federal Trade Commission 8th Circuit – dairy company resisted compliance with subpoenas issued by the FTC, FTC sought judicial enforcement

o

RULE: 4th amendment places some important restrictions on what an administrative agency can ask for in a subpoena duces tecum

-

For the most part if an agency wants documents from a business, the agency will get them … difficult to mount 4th amendment resistance to this kind of information demand

-

The Fifth Amendment

Neither courts, nor congress, nor agencieso

No person shall be compelled in any criminal case to be a witness against himself-

Sometimes information gathered in admin hearings can lead to criminal chargeso

Not much easier to mount 5th amendment defense-

5th amendment offers only limited protection against administrative attempts to obtain documents as opposed to oral testimony

-

Corporations –corporation cannot resist production on grounds of self incrimination

Corporate documents

Does not apply to o

Natural Persons

Sole proprietorships

Testimony

Applies too

5th amendment-

Wilson v. USo

Cant claim a privilege for organization. o

RULE: When the government seeks documents from a non natural person, the natural person who must respond for the organization cannot claim a personal privilege for the organization’s documents, even though those documents might incriminate the person

-

Voluntarily undertaken the requirement to do these records through choice to enter that field -Shapiro

o

Summary: Required to keep because of industry you are involved you cant plead 5th. -

RULE: If an individual is required by virtue of entry into regulated activity to keep certain records, the 5 th

amendment doesn’t apply to those records-

US v. Doe – compelled surrender of self incriminating document was not compulsion to testify unless author had been forced to write document

Even when records are not required to be kept by the government, the court has indicted that requiring the production of already created documents is not self incrimination… Because the 5th goes to compelled testimony and compelling the production of already existing documents is not compelling testimony

o

Marchetti – government said if you’re a bookie you have to keep records, the court says this went to far

Sometimes the 5th gives right not to produce the record, even when the government requires it – when engaged in criminal activities

o

Distinction about the reason for required records – is it legitimately linked to a regulated field of endeavor other than being a criminal

o

Require Records: -

Fact of producing tells government that you had them, had knowledge of them

Main surviving area where 5th is still pertinent in administrative world is notion that the act of producing documents (not what they say) can itself be testimonial

-

Outline Page 51

Fact of producing tells government that you had them, had knowledge of them o

documents (not what they say) can itself be testimonial

Those documents cannot be used against the person outside of his role as corporate custodiano

Government cannot use the fact that B turned over the documents against him personally because it was the corporation and not b that turned them over, but it can use the fact against B because he is an officer of the corporation

Braswell v. United States – p632 – the president of two related corporations chose not to comply with a subpoena issued to him in his capacity as president of the requested documents would incriminate him personally

o

RULE: Regardless of whether it is addressed to a corporation or to an individual in his or her capacity as records custodian for a corporation, a corporate custodian may not resist a subpoena for corporate records on 5th amendment grounds

-

Smith v. Richert – a man was jailed when he failed to produce tax documents to the government in compliance with a subpoena issued by the state –mere fact of possession of the documents was incriminating, permits Smith to resist production

o

RULE: Required Records doctrine is inapplicable in cases in which the production of records would have testimonial force incriminating the taxpayer, and in such cases production is excused by the self incrimination clause

-

WHEN DEALING WITH SUBPOENA – ANALYZE UNDER 4TH AND 5TH AMENDMENTS

1) Complyo

2) Go to court and move to quasho

3) Ignore it – await government’s invocation of judicial enforcement, failure to comply post judicial enforcement results in contempt of court

o

4) Negotiate –unrealistico

Person receiving the subpoena can:-

Specifications are overly broad – in time or substanceo

Specifications aren’t relevant (what the business is worth isn’t relevant to pricing methodology)

o

To resist subpoena: Argue that -

1) Does the agency have jurisdiction

2) Breadth in scope and duration

3) Is the request relevant to agency inquiry

Morton Salt Criteriao

Reason to believe you have a 4th amendment right not to provide?-

Doesn’t apply to corporations –corporate documentso

Applies to natural persons and sole proprietorshipso

Reason to believe you have a 5th amendment right not to produce?-

PARALLEL PROCEEDINGSParallel proceedings = simultaneous civil and criminal proceedings-

Wont allow potential harm from testifying in civil proceeding to interfere with criminal proceeding

o

Except in extreme situations, such as evidence that the civil or administrative proceeding is really just a sham, then courts will not interfere with parallel proceedings

-

Congress’s choice to give the agency the ability to pursue both tracks at the same time-PP are unobjectionable unless they create substantial prejudice to one or more of the parties involved - SEC v. Dresser

-

US v. LaSalle National Bank – the IRS may not use its subpoena power when its sole purpose for doing so is to gather evidence for a criminal investigation

-

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1 4 0.04 7.2

2 4 0.04 7.2

3 4 0.04 7.2

4 4 0.04 7.2

5 4 0.04 7.2

6 4 0.04 7.2

43.2 45

1 19 0.19 34.2

2 19 0.19 34.2

3 19 0.19 34.2

4 19 0.19 34.2

136.8 2 hrs

Total 180 100 180

Timing Sheet Saturday, May 07, 2011

6:03 PM

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