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Admin Law Outline, Spring 2005 Overall Course Outline

o Source of Admin Power. What power are agencies exercising o When can the Leg. Or exec branch still maintain power for themselves? o Power derived from Const. & Statutes

o The processes of the Agency, how agencies are divided

o The Judicial Connection- how the judicial branch keeps watch over power & process (exec & legislative branches)

o The Constitution o Art I, 1: Leg power granted to Congress o Art I, 7, Presentment Clause: all bills before become a law shall be presented to the President o Art II, 1 Executive Power: o Pres. is granted authority of Enforcement and to Carry out the laws o Art II, 2: o Pres is the Commander & Chief, given Power of Appointment of officer of US o Art II, 3: Take Care Clause o Pres. shall take care that the laws will be faithfully executed o Art III, 1: Judicial Power o Statutes (organic/APA) o Congress creates power with APA and organic statutes o Can make agencies executive or independent. Why Do we have Agencies? o Expertise- So that certain government body will have expertise. o Efficiency- A group of people doing one thing is probably better off then congress doing something, or article III courts doing something o Political Cover & Pol. Control- politicians dont need to handle the blame. Can push blame on the agency. What are the Downsides of Agencies? o Accountability Problems-Who is actually making these decisions? Whos responsible o Lack of Uniformity or Direction-have turf wars; diff. agencies have dif. Interests trying to further o Burocratic Inefficiencies 1

o Lack of Democracy- Agency members are not elected A. LEGISLATIVE POWER o We focus on how much Congress has & how much they can delegate b/c: Democratic Legitimacy- Congress is elected while agencies are not. We care about what Congress says b/c cant oust the agency through elections Counter Draft a New Law: If congress doesnt like what the agency is doing they can draft a new law to fix problem. o Constituents dont have a connection w/ the agency but can elect Pres. or Congress out of office Vagueness- Problematic b/c gives agencies too much of a blank check to exercise authority But- Dont want law to be too specific b/c then loose some postitive aspects from Agency Efficiency & expertise if Congress dictates everything. Problem- the Constitution has delegated all Legislative Power to Congress B. THE NON-DELEGATION DOCTRINE a. Field v. Clark (1892)- Upholds tariff act- allows pres. to set high tarrifs in response to other countries setting high tariffs i. Pres. is merely making a Factual Determination of WHEN to implement Congresses policy b. Hampton (1928, Taft)- Congress cannot delegate legislative power but if Congress shall lay down by legislative act an INTELLIGIBLE PRINCIPLE to which the person or body authorized to fix . . . rates is directed to conform, such legislative action is not a forbidden delegation of legislative power. i. Cannot be an impermissible delegation of power, must have an inteoclligible principle c. Impermissible Delegation- only found in Hot Oil and Sick Chicken case i. Panama Refining (Hot Oil case) (1935): As to the transportation of oil production in excess of state permission, the Congress has declared no policy, has established no standard, has laid down no rule. ii. Schechter Poultry (sick chicken)- the industry was setting the standards & pres. could not accept the standards w/out more specificity form Congress for what type of codes OK. Law uncodified 1. Finally, in 1935, the Hot Oil and Sick Chicken cases strike a statute as unlawfully delegating by not supplying an intelligible principle (i.e in Sick Chicken, the principle was fair, open, and equitable) 2. After those two, no other statute has since been declared an unconstitutional delegation: Yakus (1944): Wartime price 2

controls okay the requirement that prices be fair and equitable plus some other guides is enough of a policy AMALGAMATED MEAT CUTTERS v. CONNALLY (US Dist Ct of Columbia, 1971) o Union, which had previously negotiated a wage increase, claimed that the Econ. Stabilization Act of 1970, authorizing the Pres to impose a price-wage freeze, was an unconstitutional delegation. o Allege that the act granted the Pres a naked grant of authority which was impermissible b/c there are no checks & it gives the Pres. Legislative Power (a separation of powers problem).Concerns: a. Sep of powers (nondelegation problem)- each branch is given separate powers under Art I,II, III- Nondelegation- requires that one branch does not pass off on their job b. Arbitrariness: If people make arbitrary decisions we wont know how to behave. We want standards- so people know how to act going forward. o Holding: Not an impermissible delegation for 3 reasons: a. Timing: Pres only granted the power for 6 months- limiting constraint & possible damage b. Past Similar Acts: Look to leg hist. & Past acts-Have had similar stautes in the past- for Pres to help stabilize the economy. Limitation on Pres. power b/c operating in shadow of past practice (is this a good reason) c. Judicial Review: Court puts a lot of emphasis on the availability of Judicial review & the meaningfulness of judicial review. i. Court points to APA- the enabling stat can provide diff specifics governing the agency. APA has procedural safeguards that agency must comply w/ like Judicial review o Class: Ask: what is legislative power; intelligible principle; separation of powers a. Separation of powers: checking function, prevent self-aggrandizement (assume power at the expense of another branch b. Legislative power: rules effecting broad policy decisions; delegation okay so long as Congress has provided limits so we can tell if the agency is acting without them Vagueness SUN RAY DRIVE-IN DAIRY, INC. v OREGON LIQUOR CONTROL COMMISSION (Oregon 1973- state case) o Petitioner was denied a liquor license, but the licensing body had no written standards for receiving license and members of the body gave conflicting reasons for their denial. Court overruled denial. o Agency needs written Standards: no written standards is like no standards at all. Court says: agency should write standards, need an intelligible principle, must write & follow the standards It is okay to delegate the power to write the standards to the agency. The interest here should be the public interest for convenience. Judicial oversite is important & review gives agency great deal of deference. 3

Delegation Doctrine COMMODITY FUTURES TRADING COMMISSION v. SCHOR (1986) o Issue: Whether the Commodity Exchange Act (CEA) empowers the commodity Future Trading Comission CFTC to entertain state law counterclaims in reparation proceedings and, if so, whether the grant of authority violates Art III of the constitution? o SC says can hear Counterclaims and doesnt violate Art III o Facts: Challenge to the Commissions authority to adjudicate counterclaims arising from reparations claims in commodities trading. The Court below, to avoid the Constitutional question, read the organic statute to allow the agency to hear only counterclaims involving the organic statute or the agencys regs, but not common law counter claims. Court of App says agency cant hear counterclaims. o SC says- this the App courts rational is unattainable- b/c the counterclaims arise out of the same course of events- and if this decision was upheld would force parties who agreed to utilize agency procedure to forgo this and incur the expense of litigation. This would destroy the purpose of the Agency- and would have a crippling effect on the remedy that the admin agency provides b/c most claimants have counterclaims. Step II- whether the assumption of juris over common law counter claims violates Art III- judicial rev. (doesnt). o Delegation of Judicial Power: The const provides that judicial power is vested in Art III Courts- but congress has power to create inferior courts Why does congress want to delegate judicial power here? o Want expert leg body, Efficiency, Political cover, flexibility, independence/objectivity. Stops court clogging o Indep Agency- Doesnt report directly to executive o Much more of a structural approach then formal- consider practical realities. The underlying purpose of the agency has not been violated. o Art III rights subject to waiver o Structural Interests- only deal w/ specialized area of the law- still subject to De Novo review. o There is no real threat to the balance of powers here, and the delegation is necessary for the system to work. o Dissent (Brennan): makes a slippery slope argument, stressing the importance of separation of powers. As for consent, Brennan says it is irrelevant because in his view the right to an Article III court should be unwaivable. WHITMAN v. AMERICAN TRUCKING ASSOCIATION, INC. (2001) o Facts: Clean Air act gives the EPA the authority to regulate clean air standards- says protect health. They set standards and Co.s challenged the standards pursuant to the authority vested in the EPA by the Act. The D.C. Circuit had held that the delegation was unconstitutional because it had not provided a determinate criterion

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for saying how much of the regulated harm is too much. The Court reversed, holding onto the intelligible principle test and finding it satisfied here. 2 Challenges: Statutory Construction- whether the organic statute conferred power to the agency to consider the cost of implementing the standards. o SC says- the lang of the Statute is clear and the Agency need not consider the cost. The enabling statute did not make cost a factor. Did Congress delegate Leg. Authority to the Agency? Was the Delegation Unconstitutional? o Scalia Majority: An Agency cannot cure an overbroad delegation of legislative power by declining to exercise some of the ower granted to them (rejects sun-ray approach). But the court reasons that the delegation is not too much b/c it is consistent w/ what the courts have accepted before. Congress Delegate legislative authority. But Scalia says- whether the statute delegates legislative power is a question for the courts. An agencies voluntary denial to exercise the power has no bearing on the Amt of authority that has been delegated. It is true enough that the degree of agency discretion that is acceptable varies according to the scope of the power congressionally conferred. -Perhaps when Congress has more legislative power it can delegate more. Scalia says that Congress did not Delegate legislative Authority to the Agency b/c there are standards- congress has given the agency substantial guidance to satisfy the test. Stevens (Concurrence): Agrees w/ the result but Disagrees w/Scalias rational of Legislative Authority: The Agency is exercising Legislative power- but if congress clearly delegate it, it is ok. The Const does not purport to limit the authority that Congress or the executive can delegate to others. The Proper Const Test is whether a sufficiently intelligible Principle exists. Congress msut make the fundamental policy choice- but it doesnt need to make every minor decision. o (Kelly thinks the concurrence is right) Class- There is sense in the majority- to hold congress accountable and what is left to the agency is the execution of that decision. Congress is responsible for making the legal determination. Scalia is concerned w/ accountability. Sun Ray v. Whitman 2 approaches: o Sun Ray- There must be adequate standards for people to apply o Whitman- More structural- is there an impermissible delegation- is the system functioning the way it was meant to? Accountability Concerns

The Legislative Veto INS v. CHADA (1983) - Separation of powers- Formalism v. Functionalism

o The Courtstrikes down the one House veto over the AGs right to stay the deportation process of Immigrants. The Veto was not presented as an Article I legislative act, therefore bicameralism and presentment are not required. o Majority: Very Formalistic Approach to Separation of Powers. o How do you determine if this is a legislative act? If it alters the legal rights, duties and relations of persons then it is a legislative act & it is subject to presentment. o Congress is aggrandizing themselves- they cant try to delegate executive power & then retain it for themselves. They are impeding on the executive function. They cant legislate this way but can in other ways ex. sunset laws o Dissent (White): The legislative veto is necessary to secure the accountability of the agencies. In the lower court (9th Cir.) opinion, J. Kennedy pointed out that the legislative veto threatened judicial power as well as executive, by rendering judicial remands to agencies impermissible advisory opinions Are we really altering legal rights. Nothing has been altered yet. Chadas right not to be deported was always conditional. Bicameralism- Pres did sign the veto into law. (Circular) o Pros of the Leg Veto: Allows congress to delegate broad authority but impose a check on admin agencies.- rarely exercise power. o Con: It is inefficient for congress to go back and evaluate what the agency is doing Threatens the judicial function b/c agency actions are almost always reviewable by the court. Impermissibly infringes on judicial function. C. EXECUTIVE POWER & CONTROL a. Power of Appointment -Buckley b. Power of Removal Bousher i. Controlling Congresss power to appoint & Remove ii. Think accountability- Chada, Buckley & Bousher-can all be explained by the Courts desire for accountability ot rest with the Executive branch. o Executive Power Art II 1 Vesting Clause- exec power is vested in the Pres. Appoints all officers of the US, but Congress may appoint inferior officers Principle Officer-Pres Apt w/ Adv & consent of the senate Inferior Officers- Congress can choose who will apt- Can vest in Pres. alone, in the Courts of law or heads of depts.. o Pres Can set policy or agenda, Issue Exec orders, veto legislation, enter into treaties. o Does power of appointment include power of removal? Yes (implicit) BUCKLEY v. VALEO (1976) o Challenge to the (independent) Federal Election Commission created by the Federal Election Campaign Act of 1971. Court finds that the FEC cannot constitutionally

exercise the broad powers delegated to it. FEC has wide agency power (investigatory, executive, (enforcement)) o Congress set-up committee to oversee campaign finance- 2 people appointed by Pres, 2 appointed by Pres. Pro Tempore of the Senate, Sec & Speaker of House are on the commission. Problem: This does not follow the power of appointment- Congress is not supposed to sit on these commissions. The Const. Permits pres to elect officer, the Congress to appoint inferior officer & employees. The Commission members are at least inferior Officers under the Appointment clause- Congress may vest such appointments as they see fit but the Const limits the Power of who they Can appoint. Congress CANNOT Aggrandize themselves and appoint themselves. Cant grab the executive role The Commission exercises Executive Powers- they cant aggrandize themselves to exercise an executive function- they can delegate executive power but not back to themselves . Removal- Congress cannot limit the Power to Remove BOWSHER v. SYNAR (1986) Challenge to section 251 (reporting provisions) of the Gramm-Rudman-Hollings Act, allowing the Comptroller General to order the president to cut spending (balance budget). Under the Act, Congress was allowed to remove the Comptroller General through joint resolution or impeachment. o Separation of Powers concern b/c the C.G. tells Pres. what to do and Congress can tell C.G. what to do- or remove him. o We conclude that Congress cannot reserve for itself the power of removal of an officer charged with execution of the laws except by impeachment. o Chadha applies here: the power to remove acts as a Congressional veto. Comptroller General is an Officer: exercises executive, not ministerial power. Once you delegate the power you cant take it back. Congress cannot Aggrandize itself. o Concur (Stevens): C.G. is both executive AND legislative. Congress can delegate to the executive, but not to itself; the removal power by itself is enough to strike the act. o Dissent (White): The delegation to a legislative agent is OK because the statute sufficiently limited his authority. He is exercising a leg. Function, not an executive function (appropriating funds is legislative) o Class: FORMALIST (we should follow the letter of the Constitution), FUNCTIONAL (we need this because otherwise the system wont work), and CONTEXTUAL (this is whats REALLY going to happen if we dont let this go on) Case Meyers Yea r 1926 Issue Presidential removal of Statute/Actio n Postmaster removal 7 Disp Action Upheld Reasoning/ Approach Purely executive function. Want executive to uphold

Humphrey s


Postmaster Gen. Issue: Whether pres could remove him? Presidential Removal.

the laws



Pres removal

Statute involves FTC. Roosevelt Calls member of commission & fires him. Estate wants to collect back pay. Statute had fore cause provision for removal War Claims commissiondecide on reparations Fed. Election Commission Act.

Staute upheld, removal not allowed

Quasi legislative/ quasi judicial office- congress meant for the agency to be independent. The limitation by congress to limit removal is ok.

Removal not allowed





Appointment clause. Issue: Statute challenged since officers of the US must comply w/ appointment clause & congress cant grab for itself the pres power. Legislative Veto

Congress aggrandiz ing itself. Statute invalidate d.

Look at function say adjudicatory- even in the face of congressional silence read in removal for cause & invalidate pres. removal Say officers of the US, separation of powers concern, cant grab someone elses power (here grabbing pres power) b/c congress can also appoint on commission


Struck down legislative veto

Look at presentment & bicameralism (take formalistic approach)- look at constitution, have bicameralism and presentment and wasnt followed. Another Concern- separation of powers- if the house overrides the AGs executive function then

they are trying to take executive power for themselves. Bousher 1986 Whether its a violation of separation of powers for congress to have given certain functions to the Comptroller generalwhether Compt General under Grahm Rudman Act removable by congress and has exec functions> CFTC- Judicial Power question- Art IIIComprtoller GeneralGrahm Rudman Act Struck Removal/Separation of down powers under separation of powers and aggrandiz ementcant have congressi onal control of executive function




Uphold the statute.

Uphold it b/c the judicial branch still maintained its power b/c they had de novo review. Take pragmatic approach- not impeding on the judicial function. Allows us to solve a complex problem. Structural Concerns are preserved. - Formalists would probably say this was a bad decision b/c some art III power given to an agency.

Morrison Whitman

Looks to what is functional- looks to what agency is doing. Agency not doing legislation- in this context the vague language of congress was enough. Will it work? Is this good government. o Meyers: If the function is purely executive Pres has right to remove

1988 2001

Art I leg power- Clean Water non delegation Act doctrine

Statute ultimately upheld

o Steps: (1) Is the Position Purely Executive? Is it Legislative or quasi-judicial (2) If not purely executive then Congressional limitations are okay (3) is the person a Principle officer or an inferior officer? Buckley HUMPHREYS EXECUTOR V. U.S. (1935, Sutherland) o Executor of FTC commissioner who was removed from office by President Rooselt for political reasons sues for back pay, claiming that the removal was contrary to both the organic statute (requiring that removal be for inefficiency, neglect of duty, or malfeasance in office) and the Constitution. o Issues: (1) Whether the Federal Trade Commission Act (FTCA) bars the president from removing a commissioner for a reason other than those enumerated and, if so (2) whether such a bar is Constitutional. o Holding: (1) The intent of the Act is to limit the executive power of removal to the causes enumerated (2) The bar in the statute is Constitutional; The authority of Congress, in creating quasi-legislative or quasi-judicial agencies, to require them to act in discharge of their duties independently of executive control cannot well be doubted; and that authority includespower to forbid their removal except for cause o To the extent that it exercises any executive function as distinguished from executive power in the Constitutional sense it does so in the discharge and effectuation of its quasi-legislative or quasi-judicial powers, or as an agency of the legislative or judicial departments of the government. o NOTES: (1) Unlike Bowsher (budget) and Buckley (FEC), Humphreys Executor involves a claimed usurpation of executive power that did not directly augment the powers of Congress. o Independent agencys are designed to mitigate the degree to which [presidential] politics can dominate their decision making. If a President cannot remove an administrator for failure to execute presidential policy directives, the agency is said to have true policy independence. In determining what kind of agency it is, Courts look at both the organic statute and what the agency actually does (functional view). Wiener v. U.S. (1958) (even though the statute specifically vested power in the executive, because the Commission adjudicated according to law i.e. exercised a judicial function, a measure of independence from the executive was necessary) (FUNCTIONAL view look at what the agency does to determine level of independence from the executive that is necessary.) Class: Humphreys limits Meyers quasi-judicial and quasi-legislative agencies can have removal for cause provisions. Refines Bowsher/Buckley to the extent that the nature of the office (functions performed) determine Presidents power to dismiss.

MORRISON V. OLSON (1988, Rehnquist)

o Challenge to Ethics in Government Act of 1978, allowing for the appointment of an independent counsel (IC) to investigate crimes among top officials in the Executive department. After Morrison was appointed to investigate possible perjury of Justice Department official Olson, Olson challenged the IC provisions of the act under the (1)


Appointments Clause, (2) Article III, and (3) separation of powers. The Court upheld the Act on all grounds. E This was enacted post Watergate- Court takes FUNCTIONAL Approach o (1) Appointment Clause- SC says that the Independent Counsel is an Inferior Officer b/c: (a) he is subject to removal by the AG (termination & process) (b) hes inferior b/c he is not formulating policy (c) Duties are limited (- limited in time & duration) Congress can make inferior Appointments- including inferior interbranch appointments- but not an unlimited power o (2)Art III- Buckley held that executive or administrative duties of a nonjudicial nature may not be imposed on judges holding office under Art. III of the Constitution. The Special Divisions functions under the Act, however, are ok because 1) Appointments Clause- was not in violation- why? b/c it was an appointment of an inferior officer therefore part of the appointment clause but not in violation b/c congress directs how appointed- limited in policy & scope of employment a. Majority doesnt rule out that there might be a problem w/ inter-branch appointments- If there is no incongruity- if not messing up the other branches Job then its not a problem 2) Separation of Powers- test: is there an infringement on separation of powers? a. Are we stepping on the pres toes? b. Are we going outside the lines? i. Looking at the functions of each branch everyone must stay w/in those lines ii. Are you taking too much power or are you aggrandizing yourself? c. Court says- as long as not infringing upon the executives job- even if go outside the lines you are not necessarily violating separation of powers doctrine 3) No Article III Problem- whether its inappropriate use of Art III- no violation of Art III b/c comes from the appointments clause- which says congress can vest this power in courts of law- power here is temporary for a little bit of time. The new test for determining whether the President can be denied full power to remove an officer at will is whether the removal restrictions are of such a nature that they impede the Presidents ability to perform his Constitutional duty. o Scalia Dissent: Formalism Scalia begins w/ separation of powers (majority focuses on the Appointment clause. Draws very strict boundaries in Separation of powers Scalia says that Art II says that the executive power shall be vested in Pres and that this gives the pres all of the exec power (even though language doesnt say all), and take care clause and once begin infringing on this thats it. Says Humphreys Executer- the limits on pres power, should not be the test here. We have other remedies, all powers are subject to abuse and we should


consider it when it comes up- but the cosnt provides checks for this like Judicial review and Presidential impeachment if the Pres. Abuses his power. Post Morrison- the Functional approach applies. Congress may limit Pres removal power unless they impede the Pres.s ability to do his job. D. INSTRUMENTS OF EXECUTIVE CONTROL a. Executive Orders i. Want executive to set policy & dont want Congress to impede on that prerogative. Want pres to take care ii. Executive Order- when Pres tells someone what to do- he must file all exec. Orders w/ the registry ex. its groundhog day iii. Power survived from Take Care clause- the laws come from Congress- statutes written by Congress- if dont delegate enforcement Pres. must enforce. Inherent powers (foreign policy, Military) YOUNGSTOWN SHEET & TUBE v. SAWYER (1952) o Truman issued an executive order & seized the steel mill after threat of strike. Did Truman Act w/in his executive power? o All opinions state that the Press power must come from the Constitution or Statute Neither gave Pres the authority o J Clark & Burton: Pres. may be able to initiate policy in times of national Emergencybut here Congress had enacted several statutes for the purpose of dealing w/ the issue and thus pre-empted the field. o J. Jackson Concurrence** (most memorable):Divides Pres Action into 3 Categories: (1) President acts in accordance with Congressional authority (power at a maximum) (2) President acts contrary to Congress: only ok if the power to do so is in Constitution and that power is exclusive. (3) President acts zone of twilight Congress has not acted, President may initiate some policy until Congress acts. o Here, No. 2. Holds, the seizure was unconstitutional o J. Frankfurter added one detail long practice (custom & usage, sort of) could give the President power as well. o Dissent (C.J. Vinson, JJ. Reed, Minton): The seizure fulfilled the objectives of some statutes (military procurement) and there was a history of similar Presidential action. o Major lesson from Youngstown: Although Article II may confer some independent law making power on the President in the fields of military and foreign affairs, a judges conviction that the President is or is not acting contrary to Congressional policy is likely to be decisive in evaluating the legality of domestic initiatives. b. Presidential Exercise of Inherent Constitutional Power 3 early cases lay it out


o In re Neagle (1890): Federal Marshall is prosecuted for homicide after shooting a man while protecting a Supreme Court Justice. The Court finds that he cannot be prosecuted, as he was acting pursuant to federal law, although there was no statute autherizing bodyguards for judges, only executive power. Court held that executive has the power under the Take Care clause to enforce all rights, duties and obligations growing out of the Constitution itself, our international relations, and all the protection implied by the nature of the Government under the Constitution. o In re Debs (1895): Justice Dept gets an injunction against Eugene prohibiting him from interfering in an 1894 railroad strike. Court holds that, even though Congress had not authorized getting injunctions, President may do so in the protection of interstate commerce. o U.S. v. Midwest Oil Co (1915): President could preserve lands that had been set aside for oil exploration by Congressional statute (i.e. ignore Congress). o Taken together these early cases are generally read to stand for 2 propositions: (1) If Congress, within its constitutional powers, directs the executive to implement a particular action, the President has no lawful right to suspend the law. (2) If Congress, within its constitutional powers, prohibits the executive from implementing a particular action, the President has no lawful right to authorize the action. C. Implementation of Statutory Authority (more practical concern than straight up executive policymaking under Article II) o President can delegate his authority to subordinates. (3 USC 301 Pres may delegate his authority to anyone confirmed by the Senate) o Stockton Memo (EO 12291): Executive has more of a reach in executive agencies than in independent agencies (more non-partisan). i. EO 12291-says what agency must go through before can issue policy ii. Cites Meyers. Then says Humphreys is broad dicta and wouldnt be followed today. iii. Pres can direct agencies 9that are not independent) to do what he wants as long as it is w/in congresses limits iv. Independent agencies- would still require a Humphreys analysisthey were set-up to be independent from Exec. Agency. v. Reagan adopts 12291 / respect to agencies that are not independent (leaves indep. Agencies alone). 1. Agencys must consider the Cost before instituting a regulation. o Exec Order requires Regulatory Impact Analyses (RIAs) prior to promulgation o In independent agencies, President cannot make ultimate decisions, but can attempt to influence. More leeway given in Rule Making (which is always political) as opposed to adjudication (off-limits). EPA v. THOMAS (DDC 1986)


Environmental group seek an order for the EPA to promulgate rules pursuant to Resource Conservation and Recovery Act (RCRA) and an injunction preventing OMB from further using its authority to delay such promulgation in violation of the stautory deadlines. Court sets a reasonable deadline for promulgation and declares that OMB may not delay promulgation. o First, a certain degree of deference must be given to the authority of the president to control and supervise executive policymaking. o However, this court has previously found that in certain egregious situations, statutory delay caused by OMB review is in contravention to applicable law under [Executive Order 12291] and therefore that no further OMB review could occur o This court declares that OMB has no authority to use its regulatory review under EO 12291 to delay promulgation of EPA regulations arising from [RCRA] beyond the date of a statutory deadline.


APA 551 Definitions o (4) Rule means the whole or a part of an agency statement of general or particular applicability and future effect designed to impalement, interpret, or prescribe law or policy or describing the organization, procedure or practice requirements of an agency and includes the approval or prescription for future rates, wages, corporate or financial structures or reorganization thereof . . o (5) Rulemaking means agency process for formulating, amending or repealing a rule o (7) Adjudication means agency process for the formulation of an order. Any unit of gov is an agency. When an agency tells people what to do it is either making a rule or an adjudication APA 554 Adjudication o Adjudication must be provided for by statute Adjudication shall be provided for on the record after an opportunity for an agency hearing, except (see state)- when have de novo review, cases when agency is acting as agent for the court What is an adjudication? When go through customs and get passport stamped- that is an adjudication. Desired Process for Agency Decision-making What Why Notice- informs people of adjudication Promotes Accuracy Reasoning- aware of how reached result. Helps Judicial review Representation-Not always required) Integrity- process- need someone to plead case Impartiality Promotes Accuracy, Fairness Review-ensures other factors like process & accuracy Process relies Confrontation- cross examine/ respond Accuracy, fairness Exparte Contact- dont want others to contact other parties to asses situation o Rulemaking- streamlines the process makes it fair for everyone o Want adjudications- as well b/c want people to understand the context & then make policy decisions as experts in the field When have a rule of gen applicability, like rulemaking we are concerned w/ arbitrariness. When have an adjudication, which affects indiv rights- we are concerned b/c it effects 1 indiv.s rights/ GOLDBERG v. KELLY (1970) What process is due & when is it due? Facts Group of welfare recipients challenges the termination of benefits prior to a fair hearing on due process grounds. Court agrees that the process is Constitutionally flawed. o Issue: Whether the Due Process Clause requires that the SS recipient be afforded an evidentiary hearing before termination of benefits? Yes


o (1) Welfare benefits are property o (2) consideration of what due process may require under any given set of circumstances must begin w/ a determination of the precise nature of the gov function involved as well as the private function that has been affected by gov action. Like the Mathews test- weigh the Gov. interest against the private interest. Private Interest here is very High b/c deprivation of benefits may deprive an eligible person of means for survival. Depriving the effects of poverty are important gov. interst. o (3) What Process is due? Fundamental requisite of due process is the opportunity to be heard. Which includes: Timely & adequate notice Confrontation of Adverse witnesses (cross exam) & oral presentation of evidence An erroneous deprivation is greater here w/out a hearing b/c the factors are so subjective o Dissent (Black): We live in a welfare state, welfare is not property, there is no way for the government to recoup the money from ineligibles, and the majority is putting us on a slippery slope to skyrocketing costs MATHEWS v ELDRIDGE (1976) Issue: Whether the Due Process Clause of the Fifth Amendment requires that prior to the termination of Social Security disability benefit payments the recipient be afforded an opportunity for an evidentiary hearing NO o TEST: (1) Private Persons interest (2)Government Interest (3) Risk of Erroneous deprivation if procedures are not given o Here the Court places a greater emphasis on the Government interest. o The shift in focus is based on Accuracy- the process values are not at great b/c only need medical records- it is more susceptible to paper b/c less risk of error, less subjectivity. o Distinguish Goldberg- disability is not as necessary to livelihood as welfare- presume that private interest is not as pressing (but this may not really be true) Fundamental shift in looking at Process Values in determining the Gov. interest. TheGov interest & erroneous deprivation overlap- the court looks more at the factors w/out concern for process values Focus more on the economic interest & gov interest then the dignity interest Holding: the specific dictates of Due process generally require consideration of three distinct factors: o the private interest that will be affected by the official action o the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards o the Governments interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. 16

Comparing Goldberg & Mathews o Part of the difference at play are the agencies involved. Less faith in State welfare agency o In Goldberg more subjective- focus more on Cred issues- While Mathews more concrete- Paper records is enough o Framework for Future Cases on Adjudicatory Due Process: Balancing test: Comparing the Gov. interest & the personal interest of indiv loosing the right INTERESTS PROTECTED BY DUE PROCESS HEARING RIGHTS The Rights/Privileges Distinction- Employment o (1) do you have any Rights (2) what due process do you get? Statutory Rights: o 2 Hurdles to cover: (1)What is required by the Constitution (2) Even when the Const requires something- the Stat may require more o Cafeteria & Restaurant Workers Union v. McElroy (1961): Deprivation of a food service worker on a military base was okay, BUT there has to be some kind of interest balancing. Here, military commanders traditionally have exercised unfettered control o Greene v. McElroy (1959): Due Process was not satisfied where termination of an employee for a government contractor left the employee with severely limited work opportunities. (Private interest) BOARD OF REGENTS OF STATE COLLEGES v. ROTH (1972) Facts: Prof. has 1 year contract w/ university- no tenure. Hired for a fixed 1 year term. No reason for non-retention need be given, no hearing provided. He wasnt re-hired. Roth argues that punished for his speech and therefore entitled to do process. o Must Look at the Liberty & Property Interest: o Liberty Interest: What is the basis for it? It is a broad interest but there is no suggestion that Roths good name, reputation, honor or Integrity is at stake. No violation of liberty interest b/c he didnt receive a stigma- the right to stay in a job does not implicate a liberty right o Why isnt it a Property Interest? Look at the statute to see what rights have been created. A tenure system would provide you w/ a property right. Must look at the Nature of the or What is in dispute- simply b/c the job is important to him doesnt make it stronger. o Property interests, created and defined by state law, give rise to a legitimate claim of entitlement. But the state procedures here said nothing about renewal of contracts. o Dissent (Douglas): Roth should win a hearing on First Amendment grounds (he claimed he was fired for anti-administration statements). The protection of the


individual against arbitrary action is the very essence of due process. Also would take a broad view of 14th amendment interests, including renewal of a teachers contract. o Focuses on the Speech-Should receive due process b/c the 1st amend is at issue o Dissent (Marshall): would go further than the Court does in defining the terms liberty and property. Unlike private corporations, the government may only act fairly and reasonably. Believes everyone who applys is entitled to a government jobs or reasons for not getting it. Purpose is to avoid Arbitrariness 2 Step Test: (1) What Process is due? (is there a claim of entitlement) (2) Is a Liberty or Property interest involved? (Goldberg interest balancing) PERRY V. SINDERMAN (1972) o Companion case to Roth o Here- the school doesnt have a full tenure system- but has a defacto system. Does the statute create a tenure system? o We can say that the state creates a property right and can say it can be done through statute- can come from state law. o First question: Whether the lack of a contractual or tenure right to re-employment, taken alone, defeats the claim that the nonrenewalviolated the First and 14th amendments. NO o Sindermann should be given a chance to prove that there was a de facto tenure program o Property denotes a broad range of interests that are secured by existing rules or understandings. Just as there are implied contract terms, respondent might be able to show that he had a valid expectation of continued employment in light of the policies and practices of the institution. Arnett v. Kennedy (1974- Per curiam)-The Bitter with the Sweet o Since state law creates the Right the state can give and take away- the property right that is created is almost created on the condition that they have limited procedures o If the Legislature can choose not to confer any rights at all- when they give someisnt that enough. o Nor the law today but important CLEVLAND BD. OF ED. v. LOUDERMILL (1985) o Facts: 2 cases where respondents were fired w/out pre-trial termination hearing. 1, a civil servant who could only be fired for cause was fired b/c they said that he lied on his application. The 2nd, a bus driver was red b failed eye exam and refused to retake it. He was eventually re-hired but w/out back-pay. The lower courts followed Arnettsaying that what the state giveth the state may taketh away but the SC disagreed. o SC specifically rejects Arnett, stating that the bitter with the sweet approach misconceives the constitutional guarantee.


o SC says that Due Process Requires notice & an Opportunity to respond. The statute provided for some process here. The Court held that there is a protectable property right in continued public employment- & the state statute under which they were hired entitles them to continued employment during good behavior & efficient service The termination can only come after a finding of either of these factors & requires a pre-termination opportunity to respond & post termination hearing. o Court says that the employment here is a property interest- and the Legislature can only act to the extent that it is constitutionally permitted- limited by the due process clause. Once Constitutional rights are triggered you msut look at what process is due. o Once the Ct identifies a property right it is for the Court to decide what process is due o SC looks at balancing test: o (1) what interests are involved? The Gov. interest & Indiv. interest (2)What process is given? Apply Mathews test. o SC conducts interest balancing test and finds that a minimal predeprivation hearing should suffice o Okay, what is this Process-Substance Distinction? The State, once it creates an entitlement (by limiting unfettered discretion) cannot then prescribe its own procedures for taking it away. The Court seems to be saying to the States that, if you give, you give subject to OUR determination of what you need to do to take it away. o The Statute generally provides the Property right- state writes stat. o The Constitution Provides the Process right o It is hard to separate the property right from the process. o The state can stop short of triggering Mathews by creating less of a right. (b/c test begins with whether you have a due process right to begin with) o Con- the state cant control a right by giving you less o We want the doctrine to reflect systemic integrity, fairness, value in the system, avoid arbitrariness (all things Marshall discussed in Mathews) Statutory Hearing Rights (Enabling Statute & the APA) o Has the agency failed to give you what is required by statute? o When think about stat right must consider the following: o (1) The Enabling Statute - the statute that gives the agency power to do something- Did the client get what she was entitled to under the act? (procedures) o (2) Then Look at APA- Did the client get what they were entitled to under the APA? o Hearing rights in 553 APA Rulemaking(informal Rulemaking)- Notice and Comment Rulemaking- Its all done on paper- no hearing is required o 556 (formal)- 553 or 554 may trigger this section then the following is on the menu: o 556, 557- Deal w/ matters involving Formal/ on the record adjudication & Rulemaking- need a hearing


The APA is brought in when an indiv. challenges a law based on a failure receive something that is provided by the Organic Statute or the APA

UNITED STATES v. FLORIDA EAST COAST RAILWAY CO. (1973) What triggers formal Rulemaking under 556 &557? o 2 RR Cos Challenge the Interstate Commerce Commission (ICC) rulemaking to regulate Freight car shortage without a formal hearing, b/c rule injured these 2 companies much more than others. They challenged the rulle under 556(d) that the decision to hear only written evidence without cross examination, unfairly prejudiced them. o The respondents argued that the Organic statute triggers the APA and says that they should receive on the Record review, because the organic statute uses the phrase after hearing. Thins does not arise ot a formal hearing- use term hearing in 553- still does not mean a formal hearing o SC- after hearing is not enough to trigger 556 & 557. o If the enabling act said on the Record or the equivalent in the statute then formal hearing under 556 , 557 would be triggered. o Points out the rulemaking/adjudication distinction: In Londoner v. Denver, an individual was unconstitutionally denied the opportunity to present oral evidence on whether his property was unfairly taxed, but in Bi-Metallic Investment Co. v. State Board of Equalization, the rule increased taxes on all property, so no oral hearing for each person was required. o This case is more like rulemaking than like adjudication. SC tries to focus more on what the agencys job is to get more process- but here the Agencys job is rulemaking (across the board) while the line dividing them may not always be a bright one, these decisions represent a recognized distinction in admin law between proceedings for the purpose of promulgating policy-type rules or standards, on the one hand, and proceedings designed to adjudicate facts in particular cases on the other. Their job here is not to adjudicate between 2 different parties- their job is to set policy. o Dissent: (Douglass): Because the courts give so much deference to agency findings, an oral hearing at the agency level should be required. While this may appear to be a broad rule, but it only drastically injures 1 out of 20 RR cos. The Dissent says that that the effect only on certain indiv. turns the Rulemaking into an Adjudication CALIFANO v. YAMASAKI (1979, Blackman) o SSI recipient claims that an oral hearing is required before his request for waiver of recoupment can be denied. Court agrees. o Theres two parts to the statute - 204(a) involves a finding that an overpayment has been made, 204(b) involves a finding that recoupment of overpayment should be waived (if there is no fault on the part of the claimant) o Even though there is no triggering language in either section, the Court finds a hearing requirement for (b) but not (a) 20

o (a) is a math determination that doesnt necessitate an oral showing (only in rare cases) o (b) requires an evaluation of the claimants level of fault, and written submissions are a particularly inappropriate way to distinguish a genuine hard luck story from a fabricated tall tale. Because must assess whether in equity & good conscience fault means looking at the intelligence of the person- need a hearing under 204(b). Even the word hearing is not usedo court finds that it is necessary b/c this is an individual assessment which is more adjudicatory in nature- so favor more process over less. o Compare Fl. East Coast & Calfano RR has more power to seak Pol. Accountability- can approach the leg & get the rule changed while an indiv. cannot. The reversal rate of decisions in Calfano was high. Since the Court looked at Calfanos Statutory rights he received more process then Mathews Mathews deals with a constitutional aanal;ysis & in Calfano it is a statutory analysis (never reach constitutional issue b/c the answer can be found in the statute). APA Provisions: o 554(b)-Initiation of Proceedings- notification of place & timing. Gives people opp. To settle o 554(d)- Separation of functions- the people who investigate the findings should not make the decisions- another person must.. o 555- appearance by parties and entitlement to Counsel if brought by compulsion o 556 , 557- gives exclusivity on the record review. No ex parte functions o 556(d)- formal proceedings- talks about burdens o 557-whether there can be an admin appeal after the fact ADJUDICATON 706 Scope of Review: Courts will look at whether: (a) arbitrary, capricious, or otherwise not in accordance w/ law (b) contrary to constitutional right, privilege, or immunity (Due process); (c) outside of the agencies authority (d) without observance of procedures required by law (procedures set out in the enabling statute) (e) unsupported by substantial evidence in a case subject ot 556 & 557 (f) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court. Is it: o (a) Arbitrary & Capricious (very deferential) o (b) Substantial Evidence (more substantial) (get in adjudication) o (c) De novo- from beginning to end- no deference o The standard that you get depends on what you are alleging for:


(a) usually when challenge an agency (rulemaking) (b) more adjudicatory when its adjudicatory process (c) de novo only when statute says de novo required. In most agencies get (a) & (b)

1. Requirements of Adjudication a. DP/ Statutory- (enabling Act/ Organic statute & APA) b. Richardson RICHARDSON v. PERALES (1971) o SC held that an SSI determination can be made solely from hearsay medical reports. You dont have to call a Dr. in for every hearing. o ISSUE: Whether physicians written reports of medical examinations they have made of a disability claimant may constitute substantial evidence supportive of a finding of nondisability, within the 205(g) [of the SSA] standard, when the claimant objects to the admissibility of those reports and when the only live testimony is presented by his side and is contrary to the reports. YES! o Hearsay evidence is enough to show substantial Evidence if there is evidence of reliability. Can use Hearsay evidence if there is enough to substantiate the finding. (here based on Drs written reports) o The matter comes down to the question of procedural integrality & fundamental fairness. Not an adversarial process, no indication of bias. Process was fair. o Congressional Intent- Congress recognizes that this is a mass justice situation & provides the agency w/ broad authority to make rules & enforce them. Congress statutorily gave the agency the power to figure out the process. o Claimant could have called the doctors (had subpoena power under SS regs) but chose not to. o Received fundamental Fairness. But is this enough? o Admin concerns are important. May want to use fundamental fairness as a yardstick- but may not always want to rely on hearsay evidence aspecially when Dr.s hired by gov. o Dissent (Douglas): hearsay evidence cannot by itself be the basis for an adverse ruling calls the government doctors a stable of defense doctors and thinks not making them testify is cutting corners o CLASS: Important factors here were the nature of the evidence (medical reports, not real credibility problems) and the fact that the claimant did not exhaust his options.

2. Controlling Adjudication through Rulemaking HECKLER v. CAMPBELL (1983)-Arbitrary & Capricious- very deferential


o Campbell is challenging the denial of disability benefits, where her denial was based on the use published guidelines to determine if she was disabled. Lower Court held that it was permissible, while the 2nd Circuit reversed and held that determination is based on a rigid set of guidelines and fails to make a determination as to the individual- therefore it is not doing what Congress intended. o ISSUE: Whether the Secretary of Health and Human Services may rely on published medical-vocational guidelines to determine a claimants right to Social Security Disability benefits. YES. o Because the SSA has rulemaking authority to determine the regulations applicable to hearings, these rules are reviewed only to see whether they exceed the Sectys statutory authority and whether they are arbitrary and capricious. (review limited to this) o Past cases have recognized that, even where an agencys enabling statute expressly requires it to hold a hearing, the agency may rely on its rulemaking authority to determine issues that do not require case-by-case consideration (quoting Storer (FCC case) and Texaco) o SC held that the process provided is enough- the regulations that denied Campbell the benefits are consistent w/ the statute. o Campbell wanted substantial evidence review, but since this is rulemaking & not adjudication arbitrary & capricious standard is enough. o Rulemaking itself provides procedural safeguards- when looking at rulemaking that establishes rules and standards- when rulemaking process is fair- then the only standard is arbitrary & capricious 3. Avoiding Adjudication Through Rulemaking AIR LINE PILOTS ASSOCIATION v. QUESADA (2d Cir. 1960) o Facts: FAA promulgated a rule saying that hereafter, no pilot over 60 could pilot a commercial aircraft. Second Circuit agreed that the FAA could do this without giving each affected pilot a separate hearing. o This is a rule: it applies to all pilots and is prospective. o It would be too burdensome to give all pilots hearings. AS for Due Process, court cites Bi-Metallic Investment, Co., supra, and says: All private property and privileges are held subject to limitations that may reasonably be imposed upon them in the public interest. o Plaintiffs do not meet the arbitrary and capricious burden: the FAA had plenty of reasonable basis for his exercise of judgment o Arbitrary & Capricious gives agencies a lot of power & discretion ADMINISTRATIVE RULEMAKING o Administrative Rules are not given the same deference by the courts as congressional statutes. 1. Discretion to Make Rules NATIONAL PETROLEUM REFINERS ASSN v. FTC (DC Cir. 1973) 23

o Petroleum sellers regulated pursuant to an FTC Rule argue that the enabling statute only granted the agency procedural rulemaking authority. District Court agreed, but Court of Appeals overturns. Issue: Whether the FTV under its governing statute is empowered to promulgate substantive rules of business conduct/ Trade Regulation Rules? Yes o The power would clarify & specify the agency power to prevent unfair competition or unfair, deceptive acts in commerce. o Step I- The Court 1st looks to the enabling Statute- Gives the agency the power to make rules. o Petitioners argue that Congress only provided the Agency with Procedural rulemaking- Court says Congress was ambiguous as to Substantive rulemaking power. o Step II- b/c the law is ambiguous Address the intent of Congress in Context specific way- if dont like what Agency is doing, can pass a new law to limit agency authority. o In Context what FTC is doing is good. o Rules are better b/c people know how to act going Forward- get better compliance o Fairness- applies to everyone in the industry equally- levels playing field. o Look at Agency Mission- May be important for Public Safety o Accountability-Congress may have differed the power to the agency b/c Congress does not want to be Accountable. o Efficiency- if no rule would have to review case by case. o Administrative State-want a flow form agency and industry. Get feedback prior to rule- more effective in garnering public interest then case by case adjudication. o Step III- Court okays the Rulemaking b/c the Agency is Subject to Judicial Review- Like Amalgamated Meat Cutters but Judicial review cant cure everything. 2. What kinds of Rules 551 (4) rule means the whole or part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or proscribes law or policy or describing the organization, procedure, or practice requirements of an agency and includes approval or proscription for the future of rates, wages, corporate or financial structures or reorganizations thereof, prices, facilities, appliances, services or allowances therefore or of valuations, costs, or accounting, or practice bearing any of the foregoing: Can set the Law, Policy or housekeeping Legislative substantive rulemaking are different from policy rule making in terms of (1) the force that the rule has and what it must do to get that force and be legitimate and (2) how the Court will review it. Informal Rulemaking Two major concerns in rulemaking are always: (1) Staying within the legislative grant of power and giving some form of notice and comment (due process)


The Demise of Formal Rulemaking: With full trial-type adjudicatory procedures for rulemaking, it was hard to get anything done, so informal (APA 553) rulemaking became the norm. Informal rulemaking has 4 components o general notice of proposed rulemaking (APA 553(b)) o receive comments (oppty to be heard) and; o adopt rule, giving concise general statement of [the Rules] basis and purpose (APA 553(c)) o publish rule (APA 553(d)) Notes point out that formal rulemaking (APA 556, 557) is good if you want to keep the status quo, because it is hard to get anything done.

Substantive Review and the Rulemaking Process Substantive Review outside the APA framework PACIFIC STATES BOX & BASKET CO. v. WHITE (1935, Brandeis) o Pre-APA challenge to an Oregon state regulation requiring a certain type of box for fruit, a type of box the California manufacturer petitioner didnt sell. Treating the regulation akin to a state statute, Brandeis imposes minimal scrutiny. o We may enquire only whether it is arbitrary or capricious o There is a presumption of validity that is attached to the regulation and it is the challengers burden to prove otherwise. o When Determining if a rule is arbitrary or Capricious- the court must consider the Agencys policy & the agencies use of the Policy. o The Policy ocmes from the Enabling Statute & the Agency- the Court will asses the Facts and ask if the agencys reason is a reasonable means t an appropriate end. The test here is whether the agencies rational was REASONABLE. o The court gives the presumption of the existence of facts to the legislationthere is a rebuttable presumption that the law is good. o There is a Presumption of Validity- a rationality standard AUTOMOTIVE PARTS & ACCESSORIES ASSOCIATION v. BOYD (DC Cir. 1968) Headrests o Petitioner seeks review of a regulation by the Secty of Transportation that required headrests to be factory-installed in all automobiles. The court adopts a standard of administrative review and finds that the agency met it. Pet argue that should have received formal rulemaking. o The National Traffic and Motor Vehicle Safety Act of 1966 didnt specify informal (553) or formal (556) rulemaking, but the legislative history indicates that it wanted to leave the choice up to the Secretary. Moreover, since the Secretary makes basic policy determinations rather than individual fact adjudications, informal, legislativetype rulemaking is more appropriate. o Informal rulemaking is more appropriate b/c Safety is a top priority & things get done more quickly w/ informal rulemaking


o Fosters creativity, innovation, efficiency etc- more accomplished through informal rulemaking. o There is still a Record & docket even though there is no on the record requirement o As for the courts review, the concise, general statement required by APA should provide the Court with the ability to give meaningful judicial review pursuant to the enabling statute. The precise test is to enable us to see what major issues of policy were ventilated by the informal proceedings and why the agency reacted to them as it did. o Court applies this test and finds that the Agency complied. Still looks like pretty minimal scrutiny, though: could reasonably determine. But see we find substantial support in the record. o Threshold question: What type of Review do we get? o 1st Look at the Statute. Here informal rulemaking- Have a Policy Decision which is generally done through Informal rulemaking. When its a policy determination want agency to speak to others in the agency. Formal rulemaking 556, 557- is generally a factual determination, trial type formalities- looking at the evidence. o What Does informal Rulemaking require of the Agency? o 553 APA- Need to Give Notice o Must have concise General Statement on the basis & purpose of the Rule Examine this by looking at the reason for the rule & policy. Need a causal connection bet what the agency says and what the policy is. o Is the policy rational So court can see that issues were ventilated so court can see how agency came to their decision (not in the rule but 553 requires time for comment) o Court Gives meaning to Judicial Review If Judicial review is going to have meaning then the Agency must do a little bit more than just giving the statement under the APA. o Pacific Box- Any rational reason Boyd- need a little bit more. Then Judicial Review- Standard is Arbitrary & Capricious. o Searching Review but the court is more willing to consider things outside of the record. Implicit- if not factory installed- no one will buy headrests & rule wont be enforced.


The Hard Look Doctrine- How the Court Reviews the Agencys Notice & Comment Rulemaking NATIONAL TIRE DEALERS & RETREADERS ASSOCIATION, INC. v. BRINEGAR (DC Cir. 1974) o Facts: Tire re-treaders challenge a rule promulgated by the Dept. of transportation mandating the permanent impression of certain information on tires. o Rules promulgated under a legislative enactment must reasonably advance the Purpose of the enactment. o What do we want from the administrative state and judicial review? o Court relies on the understanding that we need a record and the court will look to the record for the agencies rationales. o The Court will not simply rely on the agencys self serving statements to determine the costs. Must do the necessary surveys to det. What is necessary. o Steps: (1) look at the statute (2) look at the regulation and policy for promoting safety and reg & how does it get there. o Fundamental Question: is it ever right when you have a cost objection to an agency reg- yes there is cost, but it is the function and job of the industry to reduce the cost. Doctrine that comes out of this case: THE HARD LOOK DOCTRINE- while courts should not impose their own judgment, they must ensure that the agency itself took a hard look at all of the relevant issues and reached rational conclusions through understandable reasons. MOTOR VEHICLE MANUFACTURERS ASSOCIATION OF US, INC. v. STATE FARM MUTUAL AUTOMOBILR INSURANCE CO. (1983) o Facts: Agency requires seatbelts or airbags- passive restraints, installed in cars. The enactment of the law was postponed during Carter Admin. to Reagan admin. Once Regan is in office- ran on a platform of deregulation, the agency cancels the restraint requirement altogether. SC held that the revocation was Arbitrary & Capricious. o ISSUE: What standard of Review applies to Rescission of a rule? Is it the same as the implementation of the rule itself? YES o Arbitrary & Capricious applies to rescission of rules as well. The Court will be deferential- but it will not accept the agencys post hoc rationalizations. Must give reason during the time,. Looked @ record- failed to give substantial reasoning. The record is important- the court is searching the record. Did agency respond to comments, did the response make sense? o Agency failed to consider obvious alternatives- of requiring airbags when determined that seatbelts would not meet the agency purpose. Dissent (Rehnquist): This is a legitimate political choice: A change in administration brought about by the people casing their votes is a perfectly reasonable basis for an executive agencys reappraisal of the costs and benefits of its programs and regulations.


o Want accountability- want executive to be responsible o CLASS: (1) Undoing a rule requires the same agency process as RM. (2) Failure to consider obvious alternatives is arbitrary and capricious Recap For Substantive Review of Rulemaking o Substance- Pacific Box- looked at rationality review and compared the agency to a legislature- if looking at the legislature- dont have too much of an inquiry- result is very deferential review. o Automotive box- Conducts a little more searching review- while affirm the legislation(head restraints) they do more searching then mere rationality- the court is weighing policy & facts- more than mere rationality o National tire dealers- get hard look doctrine purpose of judicial review is to make sure that the agency took a hard look at the agencies, the statute & polices & make sure that there is a nexus- not for the court to decide what is best- but make sure the agency took a hard look- the court even when looking at subst arbitrary & capricious they are still looking at process o State farm-Court fleshes out how will review agencies sub decision- if there was an adequate basis for these findings- did the agency respond to comments, did response make sense o Arbitrary & Capricious standard- 706 APA, Deferential- conflates notion of Substantive review & process review, Ct will not substitute their view for the agency (unclear view may have to defend this position)- but court does evaluate Arbitrary & capricious, 553, consider alternative- nexus comments etc. and make sure that agency took a hard look at these things- meaning, did you look at the statute, what does it say, did you consider everything etc. The Procedural Requirements of APA 553: Notice & Opportunity for Comment: UNITED STATES v. NOVA SCOTIAL FOOD PRODUCTS CORP (2d Cir 1977) o Facts: FDA issued guidelines on proper processing of whitefish to avoid botchulism. FDA doesnt disclose data upon which it based its decision and without commenting on the necessity of the guidelines. Whitefish smokers challenge the rule b/c it would destroy the product. 3 challenges (706 scope of Review): (1) Beyond the authority of the statute (2) relied on undisclosed evidence in promulgating the regulation (3) No adequate statement for setting forth the basis of the regulation. The rule is challenged on Substance & Procedure. o Court Focuses on the PROCEDURAL Aspect: Agency failed to disclose how they reached their decision (record insufficient). Must show that you have addressed and Considered the major relevant comments. The purpose of the Process is to get the agency on the Record- so there can be meaningful Judicial review. o But what does that mean to Consider the Comments? Dont actually need to follow them- just Consider. o The extent of the administrative record required for judicial review of informal rulemaking is largely a function of the scope of judicial review. 28

o o o o o

Even though informal rulemaking does not require administrative findings of fact as is required in formal rulemaking, there has to be some attempt to compile a contemporaneous record, especially because the court is going to look only at that record, and not the post hoc record established in the reviewing court. The basis and purpose given by the agency did not deal sufficiently with the companys complaint that the rule would completely destroy their business. An adequate record here needs scientific evidence- the agency is not an expert in the field. The opportunity for comment is critical- issues are best solved when the agency is functioning properly. The Standard that is applied is arbitrary & capricious. 553-must give the opportunity for comment on all reg. Hypo.: What if after notice & Comment for one regulation an agency offers a different regulation like requiring a label that whitefish could kill you. Must provide for new notice and comment b/c prior comments were based on the previous regulation- must give people the opportunity for meaningful comment. o Here the claim was that the procedure was inadequate in Vt Yankee the claim is we need more procedure

VERMONT YANKEE NUCLEAR POWER CORP. v. NATURAL RESOURCES DEFENSE COUNCIL (1978) o Facts: NRDC challenges 2 proposed rules promulgated by the Nuclear regulatory Commission of what is appropriate for nuclear waste disposal. The challenge the rule by saying we need more process. Argue that 553 is the floor for process and that the court may require more (DC circuit agrees but SC strikes down this claim). o Agency did have proposals to different groups, hearings and 79 groups and indi responses from public participation. o NRDC bases their challenge on the following: o Due Process- in rulemaking due process is notice and comment. But its also about fundamental fairness. o 553- the floor or the ceiling? Allege that it merely requires the lower procedural bounds and that a court may routinely require more than the minimum when the agencys proposed rule addresses complex legal issues or technical issues- on issues of great public import. o Holding: Rejects the notion that 553 is the floor nad not the ceiling- if this were the rule it would require rules to me more formal- which is inefficient. Would also cause more judicial review. o Judicial review is limited to the adequate record under the APA- look to the procedures under the APA. o Court also appears to be saying that the agency is at the frontier of science-so they give the agency more deference. o Reconciling Nova Scotia & Vermont Yankee- Process The proper procedure is 553- the 1st question is whether they conducted enough procedure to comply w/ 553 (Nova)


The 2nd point is that- the court is not in a better position then the agency to set the agency policy. 553 is what must be followed unless Congress demands more- it is not the Courts place to require more. (Vermont Yankee) The Court can then review the substance of what the agency did. Look at whether the challenged rule was substantively decided properly

When do private Meetings make the Process unfair? SIERRA CLUB v. COSTLE (DC Cir. 1981) o Facts: Sierra Club challenged a coal combustion regulation because following the close of notice and comment the agency met with the President and Senator Byrd and then adopted standards that were much less stringent then what had initially been considered. o Challenge is based on process of closed meeting after the close of informal hearings. The Court sets some limits but accepts the inevitability of the Political process in rulemaking. o The EPA entered some of these ex parte contacts into the record, but didnt notify the public through the registry that it was doing so. o What level of interference or Post comment Period is okay? o 1st Challenge Post Comment Period Docs- didnt have an opportunity to respond: The EPA can sift through the record and determine what is or is not important. This is reality- its an agency function that must be performed and is always influenced by the person doing the sifting. People impose their own view. Agency was also late w/ rulemaking. Have ability to accept post comment docs, sift through them & organize. o 2nd Challenge Post Comment Period meeting w/ Pres: The EPA is not an indep. Agency- it functions bellow the Pres. these discussions are OK and need to Happen b/c Pres is accountable for agency. It is the Pres. job to take care that the law is faithfully executed.. o Counter argument: Is Pres acting like a legislature here- is the agencies job legislative or executive in nature? Do want the Pres to direct policy form national prospective- but dont want ot diminish agency function (which is independence, efficiency, expertise & improve policy). rd o 3 Challenge- Sen Byrds influence- He is a legislature can he interfere. SC- analysis here is clearly different from the Pres. There are limits o Congressional pressure is appropriate in some cases- if the agency is deciding on factors not made relevant by Congress. In case where congress says I will withhold funds unless you do Y, and agency is persuaded by this then this is an overstepping of Congresses power. But If it is simply a conversation- then that seems to be ok. o (1) the content of the pressure upon the secretary is designed to force him to decide upon factors not made relevant by Congress in the applicable statute. And (2) the Secretarys determination must be affected by those extraneous considerations.


o Its impossible to keep politics out of the process. o SC makes a very Practical argument: Court distinguishes between ex parte contacts in Rule Making and Adjudicatory proceedings (more scrutiny). Bias and Prejudgment in RM ASSN OF NATIONAL ADVERTISERS INC. v. FTC (DC Cir. 1979) o Facts: Assn wants to prohibit a chairman who publicly made his personal views on the substance of RM (Childrens advertising) from participating in the RM. Court says no, setting a ridiculously high standard. o Issue: When should an agent be disqualified form rulemaking proceedings? Is t Okay for an agent to pre-judge the issue? o The issue here is not an adjudication but rulemaking. If it was an adjudication the Cinderalla Pre-finishing school Standard- whether the agent has pre-judged the issue, would apply. Court says that rulemaking should be judged by a different Standard. The FTC is acting like the Legislature here- people always have a view and b/c of their view they will enforce them. o RULE: A Commissioner should be disqualified only when there has been a clear and convincing showing that the agency member has an unalterably closed mind on matters critical to the disposition of the proceeding. The mere discussion of policy or advocacy on a legal question, however, is not sufficient to disqualify an administrator. o Concur (Levanthal): Functional approach administrators are not judges, there is no separation of functions as in courts. o Dissent: Disagrees with view of impartiality. Says the standard is too high. This is not the legislature and there is an absence of safeguards in the agency that exist in the legislature. o CLASS: This is almost no standard at all.- how can you really show an unalterable mind. Relates back to a similar view in Sierra Club- As long as someone can point to a rational connection in the record, then it is no big deal. o Kelly- not bothered by Sierra Club but doesnt like ad hoc system- may be better to put people in positions and then leave them alone. o If standard is unalterably closed mind for procedural standard, then substantively the standard is likely to be Arbitrary & capricious. Legislative (substantive) vs. Interpretive Rules AMERICAN MINING CONGRESS v. MINE SAFETY & HEALTH ADMIN (DC Cir 1993) o AMC challenges agency PPLs (Program Policy Letters) that were not promulgated pursuant to 553 but that claim to interpret earlier rules and the organic statute. Court explains the difference between the type of rules that require N&C and those that dont. o Overinclusiveness & underincusiveness: PPL provides people w/ notice of how to behave. Here it is interpretive. The parties are not challenging the Substantive validity- they are saying that the rule should be subject to notice and comment. (eould make a stronger rule)


o But 553(b)(3)(A)- notice and comment does not apply to interpretive urles, general statements of policy, or rules of agency organization, procedure, or practice. o Substantive Rules: rules that implement the statute and have the force and effect of law. o Interpretive Rules: advise the public of the agencys construction of the statute and its own rules o You need congress to delegate the power to the agency. o How do we know whether the agency intended to create law o Policy statements: prospective advice to the public on how they intend to exercise a discretionary power (i.e. how they intend to enforce a rule, only second violations, etc.) o Substantive rules have the force of law if Congress has delegated power to the agency and if the agency intended to exercise that power in promulgating the rule. o Intent can be found by (1) where, in the absence of the rule, there would be no adequate legislative basis for enforcement, (2) where the rule is published in the FR, (3) where the rule effectively amends a prior legislative rule. o The test for policy statements is whether the rule does not genuinely leave the agency free to exercise discretion. But thats not at issue in this case. o Here, the rule was interpretive. o CLASS: This is important! o What type of rule is it? (Substantive, interpretive, policy statement) o Intent to exercise? (1) no power in absence of rule; (2) published in CFR Factors: (1) the rule has legal effect- in the absence of legislative rule- the enforcement would be inadequate (2) the agency intends for the rule to be legislative if the rule is published in the fed register. (3) If a second rule repudiates or is irreconcilable with a prior legislative rule, the 2 nd rule must be an amendment on the 1st- and a leg amendment make it legislative. o **Can you identify a legislative gap- where the agency wouldnt know how to enforce the rule. (most imp thing to focus on) can an agency do its job w/out the rule. What affect do the interpretive rules have on the regulated parties? o Critical view of case- not only does an agcy have an incentive to entertain objections to an interpretive rule, but the ability to promulgate such rules, without notice and comment, does not appear more hazardous to effective parties then the likely alternative (which is adhockery). o Court says it is a good idea to clarify the rule. Still have judicial review. We consider whether the purported interpretive rule has legal effect which is best ascertained by asking: (1) whether in the absence of the rule there would not be an adequate legislative basis for enforcement action or other agency action to confer benefits or ensure the performance of duties (2) Whether the agency has published the rule in the code of fed regulations


(3) Whether the agency has explicitly invoked its general legislative authority (4) The rule effectively amends a prior legislative rule. a. If the answer to any of these rules is affirmative, we have a legislative, not an interpretive rule. b. The alternative is adhockery- what is the effect of the interpretive rulechallenge it in judicial review. c. Judicial Deference- interp. rule might get less deference then rules going through notice & comment. Implementing Administrative Policy without Legislative Rules Discretion to Adjudicate SEC v. CHENERY CORP (Chenery II) (1947) o Facts: In the first case, the Court said that the Agency incorrectly interpreted prior judicial decisions and, therefore, could not apply a rule based on that interpretation to Chenery. On its second attempt, the SEC merely said that, in light of its experience, it was creating this new rule and applied it to Chenery. The Court said this was okay, the SEC got another bite at the apple. Rules could apply retroactively. Chenery challenges the agencys making a rule through adjudication & not rulemaking. o Applies an abuse of discretion standard to the agencies interpretation of the statute. o The function of filling in the intricacies of the Act should be performed, as much as possible, throughquasi-legislative promulgation of rules to be applied in the future, BUT, because it is often the case, for example, that o (1) the agency cannot foresee the problem that arises in adjudication, (must be solved in absence of rule or o (2) past experience was not sufficient to create a rule, or o (3) the problem is so different in each context that no good rule is possible (too difficult to have across the board rule - an agency should not always have to create a rule. o Therefore the choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency. o Dealing w/Retroactivity (applying a new rule made in adjudication to the party in that adjudication) is okay because every case of first impression has a retroactive effect, whether the new principle is announced by a court or by an administrative agency. o The SC ruled that an agency has broad discretion to choose between rulemaking & adjudication. (to implement their policy) o Dissent (Jackson): This is a very fundamental philosophical issue. The majority is deciding without law administrative authoritarianism. Required Rulemaking MORTON v RUIZ (1974) o An Indian was denied benefits because he lived outside the reservation. The agency said that based on experience & expertise the indiv. is not entitled to benefits. A 33

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challenge is brought for the ultimate decision that denies benefits. Court holds that the BIA must let the public know of its policy on who is entitled to benefits before it can deny them where it had a written internal policy so requiring. First, the Court concludes that legislative intent would allow for benefits to be given to those on or near the reservation. Ct says that the determination of who receives benefits on ad hoc basis cannot be decided in this way (seems to contradict Chenery). But SC goes on to say that this action contradicts the agency manual and the manual requires that parties should be informed of the rules. (since the rules were not published it is invalid) Seems to be the context that drives the decision. In Contrast to Chenery- can look at it as a benefit conferring exception and that the fundamental fairness values are very important here. Where the rights of individuals are affected, it is incumbent upon agencies to follow their own procedures. This is not like a case by case situation where the agency desnt have the $$. Clearly not applying the abuse of discretion standard of Chenery.

Contrast of Chenery II and Morton o Chenery says- as a gen rule must proceed through rulemaking but there are times where cant perceive certain situations. o If have ad hoc decision in Morton would get lack of rationality. o SEC was forming policy at the top- while in Morton policy being created at local office- which is more of a concern. o Chenery I may help us- CT says must base decision upon reasons give & must make sense. And here reasons given dont make sense. Could reconcile this w/ Chenery II by saying this is really a Chenery I case. Recap: many ways to reconcile: (1) benefit conferring case- diff from top (2) Contradicts own internal policy (3) Chenery I case not Chenery II


Scope of Review Presumption of Judicial Review o Can have explicit exclusion of judicial review or o The agency is committed to agency discretion CITIZENS TO PRESERVE OVERTON PARK v. VOLPE (1971, Marshall) Marbury of Admin Law o Citizens brought suit challenging the Secty of Transportation decision to allow a high way to run through a public park. The Court determines that the statute does provide for judicial review an overturns the lower courts overly deferential standard. o Step 1- Establishing Judicial Review: Court holds that the statute is not committed to Agency discretion by law (no law to apply- no review- very narrow exception). The Court looks to the Purpose of the statute- The purpose of the statute is to protect the park. It is a broad statute and the Court devines the Statutes meaning The statute says that the agency must make sure that there is no Feasible & Prudent Alternative. What does this mean? In view of the fact that want to protect the parks o Step 2- Standard of Review 706: Parties ask for Substantial Evidence review- but Substantial Evidence is only applied when the agency action is taken pursuant to a rulemaking provision of the APA or when the agency action is based on a public adjudicatory hearing (only applies to rulemaking). De Novo Review 706(2)(F): Court says no de novo here, it is only warranted in two circumstances (1)when the action is adjudicatory in nature and the agencys fact finding procedure are inadequate; and (2) When issues that were not before the agency are raised in a proceeding to enforce nonadjudicatory action. SC Says that the standard of review is Arbitrary & capricious o HERE, there is a two step process: (1) whether the Secty acted within the scope of his authority. (2) Arbitrary and capricious review ( 706(2)(A)) whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. o BUT this standard is narrow the court is not empowered to substitute its judgment for that of the agency. The Court looks at the Affidavits that the agency provided to the lower courts and Court says that these affidavits- written after the fact are post hoc rationalizations made in anticipation of the litigation and cannot be provided as an adequate record on which to provide review. Court remands for further findings b/c there is no record. Tells the agency to make a record as they go along o Problem: Like Mead- once the court gives the ruling the Agency will creat boiler plate.


3 important things Takeaway points: (1) The presumption of judicial review (2) How do we find this presumption the court infuses itself to the statute to determine what the statute is. Will look at and interpret the law and the facts. (3) Will look at procedure- and look at the record Interpretation of the Law: The Chevron Doctrine CHEVRON USA INC. v. NRDC (1984) o EPA Defines stationary source for a pollutant plant under the statute. There is an Administration change and the EPA goes through notice and comment and changes the agency interpretation of stationary source for power plants. Court of App. Applied the Overton Park standard (looked to the underlying purpose of the statute) and held that since the purpose is to decrease air pollution the interpretation violates the statute. SC reverses. o Holding: The Agency is in the best position to determine the interpretation of the statute. A court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency. o Chevron Test: (1) 1st look if Congress has directly spoken to the precise question at issue (2) If not, if Congress is silent or ambiguous t he Court must ask whether the Agencys answer is based on a reasonable interpretation of the statute. (Reasonableness analysis) o Agency political considerations are okay: an agency to which Congress has delegated policymaking responsibilities may, within the limits of that delegation, properly rely upon the incumbent administrations views of wise policy to inform its judgments. Sends a signal to lower courts to look out for policy arguments disguised as attacks on rationality. o Court cites to the Agencys expertise & accountability (admin changes- pres accountable). Reflects idea that it is about politics- why accountability is paramount. If you have an Agency Interpretation of the LAW Chevron Review If have interpretation of the Facts arbitrary & capricious or substantial evidence o Congress can explicitly or implicitly delegate the law making function to the agency. How? By leaving it open ended. Or if congress is silent May be implicit that congress will leave something out b/c they cant think of everything so allow agency to fill in the blanks. Generally the Courts fill in the blanks but now saying that the Agency should do it. Still have non-delegation doctrine so Congress cant give-up the whole store. US v. MEAD CORP. (2001) Clarifies Chevron


o Mead imports day planners. Customs sends out indiv ruling letters telling COs what the tariff will be. Through letters the agency is making informal policy rules. There are 46 customs ports sending ruling letters and over 10,000 ruling letters a year. Haggar- Court gave Chevron deference to other customs agency regulations b/c backed by Notice and Comment. Haggar said Chevron Deference applies to all agencies. So here Customs argues that Chevron applies to them o Issue is whether a tariff classification ruling by Customs deserves Chevron deference? o Holding: Souter says- the Court will look to the express congressional authorization that produces rulings for which deference is claimed. o We hold that administrative implementation of a particular statutory provision qualifies for Chevron deference when it appears that Congress delegate the authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority. o Delegation of such authority may be shown in a variety of ways, as by an agencys power to engage in adjudication or notice-and-comment rulemaking, or by some other indication of a comparable congressional intent. The customs ruling at issue here fails to qualify, although the possibility that it deserves some deference under Skidmore leads the court to vacate & remand. The Fair measure of deference to an agency administering its own statute has been understood to vary with circumstances, and courts have looked to the degree of the agencys care, its consistency, its formality, and relative expertness, and to the persuasiveness of the agencys position. Skidmore Skidmore Deference- the agency knows more about the area then the court- therefore the court will look at everything de novo and see if deference is warranted. o HOLDING: Chevron deference attaches when [(1)] it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and [(2)] that the agency interpretation claiming deference was promulgated in the exercise of that authority. o The main indication that Chevron deference is required, (ie that Congress contemplated administrative action having the effect of law) is where it provides for a relatively formal administrative procedure tending to foster the fairness and deliberation that should underlie a pronouncement of such force. o This does not only mean N+C (553) requirement, but can also include factors such as (1) Agency consistency (have they applied the ruling to other parties in the past); (2) The quantity of rules issued and the centralization of the rulemaker (here any suggestion that rulings intended to have the force of law are being churned out at a rate of 10,000 a year at an agencys 46 scattered offices is simply self-refuting.) What is the delegation here? Congress gave the agency the power to write letters of clarification that have general regulatory authority (Hagar). So why isnt it entitled to Chevron? Courts seems to say- We must look at both what Congress says & what the agency does. The agency used the delegated power in such a


way to give them lawmaking credit- the agency could create a regulation- that would be ok. Scalia Dissent: When Congress leaves a gap we presume that they left it for the agency to decide. Congress delegated the primary interp authority to the agency and unless they get it wrong we should leave it up to the agency. o Says it is an authoritative agency interpretation- if this is what the agency says that this is what the law means- then we should apply Chevron. o No matter who makes decision. In Scalias interpretation Chevron will insert itself in any issue of law that the agency may have. Gives broad deference on any issue of law to agencies. o Looking at the Delegation prong- what the agency chooses to do with the delegation after the fact is not for the court to decide. He thinks that we should not be as concerned w/ procedure b/c the procedure says nothing about the power that the agency has to enforce it. It is the agency;s job to be innovative- but will be hesitant to interpret the statute b/c once the standard is set by the court then it cuts off a lot of factual determinations Finding of Fact & Law o Factual Determinations and Review of the Law get different standards of review but it is hard to separate them: o Hard Look Doctrine: makes a factual determination on what has occurred o Compare w? Chevron Deference: Review of the Law Hard Look- court looks at whether the agency looked at the substance in making the decision (the court isnt looking at the substance- although they do) Chevron- The court looks at the substance to see if the law is constitutional and a reasonable interp of the statute. Legal interpretation of what the statute means. o Is something a Ques of Law or Fact? Apply both Chevron & Hard Look-use 706 for analysis: o Step 1: Faced w/ Agency action 1st ask is the agency acting w/in their Constitutional authority? Look to the Statute to See what their authority is (looking at the law & making legal interp- Chevron) o Step 2: If Covered under the act Fact issue make sure that the application is not arbitrary & capricious or Substantial evidence Findings of Fact and the Substantial Evidence Test NLRB v. HEARST PUBLICATIONS (1944) (pre-chevron) o Newspapers dont want ot bargain w/ Newsboys b/c they claim that they are not employees under the statute (which requires newspapers to bargain w/ employees). NLRB finds that Newsboys are employees under the act, but Court of Appeals overturns. SC gives the NLRB deference and articulates substantial evidence. o Issue: Is a newsboy an employee under the act?


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(a) What is an employee under the act? (b) Is a newsboy an employee under the act? The Agency interpreted the Statute. The Court looked at the statute and the control that the Newspaper had over the Newsboys. The court says that the statute doesnt only mean employees in the traditional sense- and compare independent contractors to employees. SC says that the purpose of the statute is (1) to give employees bargaining power (2) want to regulate the relationship so that people dont strike & thefore commerce is not disrupted. Court says- Specific persons are employees if it is warranted under the record RESULT- Review: Agency interp of fact/law quesour role is to determine whether specific persons are employees under the is to be accepted if it has warrant in the record and a reasonable basis in the law. The majority focuses a lot more on Substantial evidence Dissent: The agency is engaging in statutory interpretation & this belongs to the courts. They dont think the court is doing their job. (pre-Chevron. Today Chevron would apply)

When do we use Substantial Evidence review 706 (2)(E)? When there is an indication in the act that you should. The act may say Substantial evidence or arbitrary & capricious. De novo review must be specifically provided for & is very rare. o Universal Camera v. NLRB (1951)- get when (1) participate in a proceeding that is on the record (2)Formal adjudicative proceeding 556 & 557. o More than a mere sentilla of evidence o Substantial evidence means that you must look at all of the evidence on the record, including the contradictory evidence. Must look at the evidence that detracts from it weight. o But what is the value given to the contradictory evidence? If the court imposes its own judgment then can get the same stare Decisis effect on agencys here. Scalia wrote in law review: not much difference between arbitrary & capricious & Substantial evidence (a little bit stronger) o Allentown Mack Sales and Service v. NLRB (1998): Credibility determination-court applies the substantial evidence test but rejects the agencys credibility determination that an employer lacked objective reasonable doubt to conduct a poll of his employees on whether they still wanted the union. The Supreme Court upheld the law question (Boards interpretation of the statute as requiring objective reasonable doubt in order to conduct polls) under the A+C standard. BUT, the court rejected the NLRBs fact findings under the SE standard. Looking at all the evidence closely, and doing some pretty crafty law/fact analysis (strict scrutiny??) the Court held that the NLRB lacked a sufficient basis to deny the existence of reasonable doubt This is substituting Courts judgment for that of the agency?? Or is it just assuming fairness? Review of Science based decisions: the Interplay of Fact, Policy and Interpretation INDUSTRIAL UNIO N DEPT. v. AMERICAN PETROLEUM INSTITUTE (1980) (Benzene) Pre-Chevron


o Facts: OSHA set a benzene standard of 1ppm, which placed a heavy burden on the industry & industry challenges the standard. Agency previously does studies on Benzene, there are health effects so try to make standard as low as possible but dont conduct nay studies of effects for 1-10ppm. There is no real direct link of how sick people become sick, but agency uses its authority under 3(8) & 6(b)(5)- to impose the most stringent regulation possible. (they do conduct N+C), Consider comments but dont change anything. 3(8) provides the basic def. for occupational safety & health standard- means the adoption of practical means reasonably necessary or appropriate for safe & healthful employment 6(b)(5) when dealing w/ toxic materials- requires setting standard ot protect health and safety of workers to the extent feasible by standards exp, & available technology & data o Can challenge under 706- (1)A & C (2) Excess of Stat authority (3) Unsupported by substantial evidence 5th Circuit read the two together this is not an absolute standard & requires a cost benefit analysis. o Stevens (Plurality)- The agency has acted in excess of their statutory authority. Strikes the law down only under 3(8)- b/c he interprets the phrase reasonably necessary and appropriate to means unsafe NOT risk free. Attacks this as a matter of stautory interpretation. Congress could not have intended that this is what the statute should mean (protecting every worker) b/c then Congress would have delegated too much power to the agency. He is really interpreting the statute as requiring a sig. risk analysis at the outset. (Fact analysis- failed to find fact that there was a sig risk) FN 33- the agency could have 1st made a factual determination that the situation was unsafe but instead they made a policy choice. Could say that the fact was implicit- but industry would say where is the evidence. Stevens doesnt reach the Substantial evidence question but says it is sketchy at best. o Powell (Concur)- Powell adopts 5th Cir approach. Says the 3(8) & 6(b)(5) should be read together and require a cost-benefit analysis. The agency failed to do this therefore it is invalid. o Rehnquist (Concur)- The problem here is a non-delegation problem and even with both statutes there is still a non-delegation problem. Congress has delegated too much authority to the agency without first making the fundamental policy choice, which it failed to do dont need to reach the fact question the law is invalid. Think back to Whitman trucking- an agency cannot set or narrow the standards to cure an overly broad delegation from congress. (Stevens disagrees w/ Scalias rational there but thought that the agency went too far) o Marshall Dissent: Harasses the majority for replacing Congress judgment w/ their own. He reaches the factual question and says that based on substantial evidence test the regulation is fine. The statutes are clear, the standard is clear & that the agency can reach these decisions.


When dealing w/ science it is hard to find anything conclusively Substantial Evidence is defferential standard- but when you get ot the tough question of the effect of science Marshall admits that policy will inform the evaluation of Substantial evidence.. Class: Renquists view may be best b/c Stevens view may be bad for Admin law & Marshalls view is bad for the industry o This case pulls together Part I- Power of the Agency (Whitman) and delegation to the agency. . . Policy making (part II)Vermont Yankee policy by which agency makes rules and (3) 706 Standard of Review. They are all tweaked by the fact that this is a science issue. The Availability of Judicial Review (None available) o Overton Park- The presumption of Judicial review o Look to 701 & 702 701(a)- provides for judicial review unless (1) statute precludes judicial review (2) agency action is committed to agency discretion by law. Have no review clauses For (1) Efficiency mass Justice-avoid clogging of the courts (2) Uniform decisions & agency expertise What does it mean to be committed to agency discretion by law? JOHNSON v. ROBINSON (1974)- Preclusion o Facts: Johnson is denied benefits from the VA, and the agency says that he is barred from receiving benefits under agency discretion- and that there is no judicial review under the statute. Johnson brings a constitutional challenge o Holding: The Pl. cant be barred by the statute from bringing constitutional claims. The Court says htat this is not a challenge based on the application of the law as an administrator. Statutory preclusion only applies to the application of the law by the administration in the administration of benefits. o Constitutional challenges do not contravene the purpose behind the no review clause. o You can always challenge under 706 that the agency has acted outside of their authority HYPO: What if Congress Amended the Statute and Precluded all Review including Const claims? o Challenge has gone beyond their power. But they have the power to establish jurisdiction of inferior courts. Can limit access to jurisdiction o W/ exec agency may have a stronger argument against judicial review. Pres. can take care 7 has other inherent enforcement powers WEBSTER v. DOE (Rehnquist, 1988) 701(a)(1) & (a)(2) o A CIA employee who admitted that he was gay, was terminated by the director of e agency pursuant to 102(c) of the Natnl security act- which permits the director to terminate anyone who he deems to be a security risk. Doe challenges under 706arbitrary & capricious, abuse of discretion and Constitutional violation.


o Is the Court precluded from review under 701(a)(1) and 701(a)(2)? o 701(a)(1)- Review has been precluded by congress. Congress must have expressed an intent to preclude judicial review o 701(a)(2)-Committed to agency discretion by law. The Court defines this by seeing if there is any law to apply. Ex. necessary or advisable. When a statute is written in such broad terms that in a given case the court has no law to apply. Committed to Agency discretion by law is defined in Heckler v. Cheneyunder 701(a)(2), even when congress has not officially precluded judicial oversight, review is not to be had if the statute is drawn so that the court would have no meaningful standard for which to judge the agencys exercise of discretion. The court looks to Overton &Heckler where congress paints such a broad picture that it would be meaningless for the court to do something. Here- Congress wrote shall be deemed necessary & advisable which makes the standard subjective & takes the teeth out of it. If it only said necessary & advisable- this is more of an objective standard and there would be some review. o Constitutional Claims- Court permits review of Constitutional claims b/c congress did not explicitly preclude consideration of colorable constitutional claims arising out of the discharge may be reviewed by the district court. The law is in place- the law to apply is the Constitution. Congress must be explicit. They must clearly indicate that they intend to preclude review of Const. claims. o OConnor Concur: Disagrees on Constitutional assessment. She says it is a separation of powers issue. The CIA is part of the executive branch- If the pres. fired someone for their religious belief- it is w/in their executive power & court cant interfere. o Scalia Dissent: Different separation of powers approach. Says- Committed to Agency Discretion by law is broader than no law to apply. If you limit it to no law to apply, you could always find something to apply. The no law to apply test does not fully encompass APA 701(a)(2). This section invokes the entire common law of judicial review of agency action stretching all the way back to Marbury v Madison (which stated that the courts will not review any executive action). Scalia argues that a statutory bar on Constitutional claims is no more troubling than a bar on other claims especially, as here, in the context of foreign affairs, committed solely to the executive. Not every constitutional wrong has a remedy or can be reviewed No Law to Apply- Review of Agency Inaction DUNLOP v. BACHOWSKI (1975) 553(13)agency action includes the whole or part of an agency rule, order license, sanction, relief or the equivalent or denial thereof, or failure to act. o Sec. of Labor is empowered by an act to bring claims against people who violate labor laws. There was a labor union election w/ some complaints of irregularities but the Sec. of Labor after an investigation decided not to institute an action. Dist court 42

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said they had no authority to hear the case. Court of appeals said that they could review the case- and was not precluded or committed to agency discretion by law Lower court found that respondent was entitled to a sufficiently specific statement of the factors upon which the Secty of Labor relied in deciding not to institute a civil action to overturn a challenged union election. Court agrees, but assigns a minimal std. of review for the reasons given, finding that 706(2)(A) [(arb. & cap.)] does not] authorize a trial type inquiry into the factual bases of the Sectys conclusion that no violations occurred. In the absence of an express prohibition in the LMRDA [enabling stat.] the Secty bears the heavy burden of overcoming the strong presumption that Congress did not mean to prohibit all judicial review of his decision. The Secretary has to provide a statement of reasons to the complaining witness, but there is minimal scrutiny of these reasons. If the Court concludes there is a rational and defensible basis [in the reasons statement] then that should be an end of this matter, for it is not the function of the Court to determine whether or not the case should be brought or what its outcome would be. The scope of judicial review is governor by 706(2)(A) (A & C)- there is a presumption of reviewability and if the agency wants to fall into the 701 exception then they must rebut that presumption. The Court said that a trial type inquiry is not necessary here. 2 conclusions follow: (1) since the statute relies upon the special knowledge and the discretion of the Secretary for the determination of both the probable violation and the probable effect, clearly the reviewing court is not authorized to substitute its judgment for the decision of the secretary to bring suit (2) therefore, to enable the reviewing court intelligently to review the secretarys determination, the Secretary must provide the court and the complaining witness with copies of a statement of reasons supporting his determination. Says statement of reasons serves a purpose beyond judicial review- Since Secs role as lawyer to union Congress may have intended that they supply union w/ reason for not proceeding. Important takeaway: Reinforces Overton Park presumption of Judicial review Agency inaction is reviewable Burden shifts to the agency to show that the inaction is not reviewable

When Agency fails to Act what can you do? HECKLER v. CHANEY (1985)- Shifting presumption of Reviewability. o Facts: FDA refuses to investigate inmates claims that use of drugs for lethal injection was an improper use of the drug & violated the Food & drug act. They request that the agency take enforcement action. FDA declines to enforce & says that the decision is nonreviewable Court of Appeals held that FDAs refusal to take enforcement action was reviewable and an abuse of discretion not to enforce. SC reverse & says the the normal presumption of reviewability is reversed.


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FDAs underlying rational for nonreview- can enforce every violation. The agency has limited resources and enforcement of the law requires some discretion like prosecutorial discretion. SC applies the no law to apply standard, 701(a)(2) (like the Court of App)- but looks at Overton presumption of review. Court says when you have Agency INACTION there is a presumption of NO review. Shift from Overton. Court applies a Functional Analysis: the agency is best equipped to deal w/ these decisions. This is why we have agencies we allow them to make choices Distinguish Dunlop: this was agency inaction, but there the agency had a Mandate from Congress to review- that forces the agency to act. Here, the FDA does not have the same restraints. Overton Common law doctrine is informed over the statute. The presumption of review is not in the statute. o Reviewablitity of agency action is different then agency inaction. For agency inaction- various factors go into an agencies decision not to act including : (1)recourses (2) policy (3) agency cant act on every technical violation that it is in charge of enforcing. Agency is better equipped then cts to make these decisions When chooses not to act it generally does not exercise its coercive power over an indiv. liberty or property right Marshall Concur: Would allow review but finds that the agency sufficiently explained itself (minimal standard abuse of discretion). Very diff approach. He thinks that there should still be a relationship between the agency & the courts- He wants to keep the judicial role active & accountable. Look to Mathews view of agencies (balance of interests). There are certain agency inactions that the court will want to review like corruption. It is the agencys job to act & they do have discretion

Review of Discretionary Rulemaking (disc to Regulate) AMERICAN HOURSE PROTECTION ASSOCIATION, INC v. LYNG o Agency passed legislation to curb soring in horse racing industry. The legislation was ineffective and the agency wanted to strengthen legislation. After the Agency met with the industry it decided not to enact new legislation b/c the industry wanted to self- regulate. A challenge was brought with respect ot Agency inaction for rulemaking. o Is agency inaction w/ respect it rulemaking Presumptively reviewable? YES o Court shifts back to Overton presumption of reviewability to rulemaking. o Court distinguishes Cheney b/c an enforcement action and a rulemaking action are different.. Diff values in leg and executive functions. Cheney is dealing w/ levels of authority, pros discretion, coercive power. When look at rulemaking deal w/ leg power- dont need to differ to agency expertise w/ respect to the law (But what about Chevron- where say defer to agency w/ respect tl law). Chevron is talking about the content of the rule and here were discussing issuing rules.


o The agency will still receive a lot of deference when the court looks to the agencies ultimate decision. o Although there is review, there is high deference under the arb. & cap. standard: Courts should overturn a refusal to institute RM "only in the rarest and most compelling of circumstances" - involving "plain errors of law, suggesting that the agency has been blind to the source of its delegated power" The agency must give a reason, I think Ill wait is not enough. If this was an Agency Construction of the Law Chevron Deference. If its na application of law to facts then A &C. Still have process. The agency was given a mandate here. Remand for review. Requiring Final Agency Action 704- 1st see if the agencys organic statute provides review. If not look to 704 of the APA- which provides for judicial review of a final agency action for which there is no other remedy. o The statute provides judicial review for final agency action but it doesnt define what final is. Allows for reconsideration. This says can get judicial review- unless the agency says by rule and provides that it is inoperative, during an appeal to a superior authority. DALTON v. SPECTOR (1994) o Challenge to the base-closure commissions recommendations to the President. Commission holds hearings nad makes recommendation. Pres can veto or approve in its entirety. Then Congress can have a joint resolution of disapproval. Army base being closed challenges the procedure under Arbitrary & Capricious. Court finds that the action is not "final", and therefore cannot be reviewed, until the President adopts the recommendations and sends them to Congress. Basically, this is a political decision, so the Court gives it deference. o Issue here is Finality.SC previously decided Franklin v. Massachusetts (1992) (census case), the Court held that the APA does not apply to the President. The President is not considered an agency under the APA therefore 704 does not apply to the president. o The SC says that the report given to the president is not final, it is a tentative recommendation & the Pres. has a lot of discretion.- the act does not limit the Pres.s discretion o The Core ques for determining finality: whether the agency has completed its decision-making process, and the result of the process is one that will directly affect the parties. Why isnt this final agency action. Why does it matter that the pres can look at the list. Why is this not the agency finally finishing this job? Not final until it effects you- Does it effect somebody? Finality, ripeness & exhaustion all blend into each other. Are you effecting a right- goes into ripeness- how much people are harmed by the existence of action Test: (1) whether it has completed the decision- making process (2) whether it effects the parties. 45

o Court of App also considered const basis for review- 952- Our cases do not support the proposition that every action by the President, or by another executive official, in excess of his statutory authority is ipso facto in violation of the Constitution. On the contrary, we have often distinguished bet claims of constitutional violations and Youngstown issue. Youngstown deals w/ absence of stautory authority. Here dealing w/ pres. had some authority but he is acting in excess. Claim here is statutory- that he is acting n excess of the act-responding to procedurally flawed recommendations. o Holding: I. the Boards certification is not reviewable b/c it is not final until it is approved by thr pres. II. Pres. decisions to approve or disapprove is not reviewable b/c the final orders embody Presidential discretion as to Political matters beyond the competence of the court to adjudicate. o Souter Concur- says that the court did not need to address the finality issue b/c the discretionary analysis answers the question. The Court can simply say- that this is not something that is subject to review. RIPENESS o Judge made doctrine- Abbott & Toilet goods were decided on the same day. CLASS: Why ripeness? avoid burden on courts efficiency give agency a chance to get it right consistency expertise allow agency to develop a factual record ABBOTT LABORATORIES v. GARDNER (1967) o Pharmaceuticals challenge a rule requiring generic labeling as beyond statutory power (706(2)(C). Want pre-enforcement review. Court reverses lower court holding that pre-enforcement review of a rule under the FDCA was precluded both by the organic statute and by the Constitution (no case or controversy). In this case, mere promulgation of the rule gave rise to judicial review. o How do we determine review? Steps o (1) Look to the enabling act to see if it provides for review o (2) If it is silent look to 701, 702- if there is preclusion of judicial review. o (3) Overton- Presumption of Judicial review. Agency must rebut this presumption and show that review is cut off. (was it congresses purpose to cut off review) o (4) Then 704- is the agency action final? Does it affect peoples interests? Is there force of law? Court makes a dist between a purely legal issue and an issue dealing w/ a lot of facts. Agency is an expert in the facts- dont want to 2nd Dont want the court to guess what the case controversy will be. This is Purely leg question- defining what the law is. That is okaythe hardship exists b/c the industry will have to spend a lot of money to comply.


o HOLDING: Where the legal issue presented is fit for judicial resolution, and where a regulation requires an immediate and significant change in the plaintiffs conduct of their affairs with serious penalties attached to noncompliance, access to the courts under the APA and the Declaratory Judgment Act must be permitted, absent a statutory bar or some other unusual circumstance. o Ripeness issue: Declaratory Judgment & Injunction are discretionary remedies- that courts are traditionally reluctant to apply in Admin actions. Unless they arise in a controversy as being ripe for judicial resolution. Dont want premature judicial adjudication Dont want judicial interference until agency decision has been formalized and its effects felt in a concrete way by the challenging parties. o Looks at ripeness in a twofold way (1) the fitness of the issues for judicial decision; (2) the hardship to the parties of withholding court consideration. o What is a final Agency Action under the APA? 704- finality element interpreted in pragmatic way- (1) when statement of intentions has the force of law before the sanctions are invoked (2) when process of rule making appears completeo Rule here appears final: (1) announced in fed register (2) considered comments by interested parties (3) it was made effective upon publication (4) the FDA expected compliance. o Dissent (Fortas): Would be much more stingy with access to the Courts. All agencies place burdens on private conduct, and the public interest here in drug marketing free from deception outweighs the private interest in saving some paper. We should give more deference to Congressional intent. How is this case different? Is it also a legal question? TOILET GOODS ASSOCIATION v. GARDNER (1967) o Applying the two part test above to determine that there is no pre-enforcement review of a rule threatening possible suspension of registration for failure to allow the govt access to cosmetics facilities. o As for the fitness of the question, the finality of the action is outweighed by its permissive language (the Secty may suspend certification on the basis of a failure to allow inspection) o As for harm unlike Abbott, no advance action is required here (they only have to wait for the agency to ask for access). o When looking at a case- to determine if it is ripe for judicial review, we must consider: (1) whether the issues tendered are appropriate for judicial resolution (2) to assess the hardship of the parties if judicial relief is denied at this stage. Issue here not ripe for judicial resolution o In terms of hardship might have diff level of hardship in Abbott. o Legal Ques.- Whether need to allow FDA into plant to inspect it. Court agrees that it is a legal question one of authority, but it is outweighed b/c the regulations are not mandatory for the agency to enforce them- so there is no gurantee that it will be


enforced. Agency reg says may enforce- so doesnt impose the same type of regulation as Abbott. The Petitioner doesnt have to spend money yet. o But Petitioner may risk harm if FDA wants to search factory. But the court says the effect is not as great-the Manufacturers primary conduct I not effected so much and the harm that will come to him is not so bad. o Fortas Dissent: There is no dist. between Abbott & Toilet Goods. Thinks Toilet goods correctly decided and Abbott was not. o Thinks it is a much higher standard for getting courts involved t for injunction or decl. Judgment- for - then the expense and trouble of risk and cost of defiance. Says the courts should not attempt to judge the abstract in the reg scheme. Says reg w/ branding in the abstract as well. Let the agency do its job so the court can do its job. o Looks at the doctrine based on a separation of powers analysis. Says- let them do their job- let the agency do its job- give sep of powers must wait for something big to happen before separation & this isnt enough. o We all must comply w/ agency regs. If stop agency every time- they will never need to do their jobs