Internal Administration
Most of what has been discussed already about administrative law focuses on external aspects of agency actions. For example, the hierarchy of laws indicates the general relationship between agency legal conduct (through the creation of regulations) and the role these regulations play in relation to other legal frameworks, particularly statutory and constitutional frameworks. In addition, other concepts like statutory delegation and the extent of agency discretion that flows from such delegations discussed the relationships between agency conduct and the outer limits of that conduct. What has not been discussed in any precise detail yet is the internal actions of the agency that result in formal agency ‘actions’ (for example the rule an agency ends up creating) and how those internal agency dynamics are controlled by administrative law principles. We have discussed some aspects of internal agency control mechanisms. For example, the Administrative Procedures Act (APA) has been mentioned as a federal law that dictates certain internal agency conduct. As noted, under the APA agencies must follow certain procedural requirements when creating regulations, such as the notice and comment requirements of informal rulemaking. In addition, when agencies are enforcing rules they have created they must respect certain constitutional safeguards such as procedural due process requirements. The focus on this section is on internal agency conduct, specifically focusing on its “quasi-powers” and the rights and responsibilities that flow from each power. By way of review, agencies, under administrative law principles, have the following powers: • Power to ‘Legislate’ (quasi-legislative powers): Agencies have the power to create regulations, or rules, that are official statements about how the agency is going about implementing its statutory obligations. These rules must be within the powers granted to the agency by Congress. We can know the limits of this power by looking to the statute and its delegation of responsibilities to the agency. For example, the IRS is empowered to make rules for the collection and enforcement of tax law. However, the IRS is not empowered under tax law to create new taxes; creating taxes is the purview of Congress and this power has not been delegated to an agency (and likely cannot under separation of power limitations). Power to ‘Administer’ (quasi-executive powers): In order to carry out its delegated functions, agency often has to engage in executive branch-type functions that include, primarily, the power the enforce its responsibilities under statutory delegation. This includes the power to investigate, charge, and prosecute those it believes are violating the rules it has created to carry out a statutory goal. For example, the IRS has the power to audit your personal tax return to determine if you have properly identified all of your tax obligations. If it feels you have not done so the IRS can ‘audit’ you to investigate whether or not you have complied with tax law. If it believes you have acted fraudulently, then the IRS can bring ‘charges’ against you to determine the validity of your actions.

Power to ‘Adjudicate’ (quasi-judicial powers): Finally, agencies have the power to act as a finder of fact by creating tribunal settings in which evidence is presented to help the agency in carrying out its statutory obligations. For example, the IRS has the power to create ‘trial-like’ settings where evidence is presented before it to determine whether or not an individual has complied with federal tax law.

The power to legislate is bounded primarily by internal rulemaking procedures under the APA. The power to administer – including the rights to investigate and prosecute – are bounded primarily by statutory delegations (creating the power) and constitutional constraints (limiting the power). Finally, the power to adjudicate is limited by procedural due process considerations. A. Power to ‘Administer’ – Agency Capacity and Personal Liberties In looking at different parts of internal agency administration, we can see that a good deal has already been provided on the power to administer, at least in terms of the role statutory delegations and constitutional limitations play in this power. For example, the degree to which an agency has a power to investigate, subpoena, and otherwise infringe on personal liberties is bounded by statutory authority on the one hand, and constitutional protections on the other hand. A visual representation of this limitation is presented here:

Thus, when reviewing internal administrative powers (quasi-executive powers), you will note the materials (cases presented, summaries, points made) really focus on understanding just where the boundaries between the green area is in relation to the red areas in the above-referenced figure. One point to make here is that the relative position of the green area above is subject to change over time. For example, the following can occur: • Congress can amend a statute changing the amount of statutory authority delegated to the agency. In such a case the red box would move in one of two directions; the red box would move to the right if Congress limited the amount of statutory authority granted to the agency, and the red box would move to the left if Congress expanded the statutory authority granted to the agency. If Congress repealed the statute, then it is possible the entire green area would be removed, meaning the agency would no longer have any authority to regulate in the area if the statute granting authority ceased to exist. Cases interpreting constitutional limitations can refine our understanding of those limitations over time, thus moving the red block on the right of the diagram further to the left (where constitutional limits on government action are expanded), or further to the right (where constitutional limits on government action are contracted through case law). This is one reason U.S. Supreme Court cases are important; they help us understand the U.S. Constitution in relation to various facts over time, thus refining our knowledge of constitutional limitations on government action.

In some sense, we are drawn back to our hierarchy of laws where we are viewing the interactions between the powers granted to agencies (by statute) and the limitations on agency conduct in carrying out those powers (by constitutional protections). Indeed, we can review specific examples of agency conduct and consider the extent to which that conduct is ‘allowable’ under the statutory delegation, and then, the extent to which that conduct (even if allowable under statutory delegation) is constitutional? This is the conceptual framework by which agency administrative authority is analyzed. B. Power to ‘Legislate’ - Internal Rulemaking Procedures As noted earlier in our discussions, agencies have the power to make rules as a means to carry out the responsibilities granted to the agency under a statutory delegation. Recall, Congress can pass a statute that tells an agency to “make the nations waters clean” and let’s say the statute even includes a specific standard of what “clean water” means, thus making it easy to identify the goal in context (say no more than 10 parts per million of ‘pollution’ in the water – something quantifiable). This statutory goal is clear, but the means of achieving the goal is not clear. Because Congress did not explain the means in the statute, the agency is left to come up with ways of achieving the statutory goal; this is where rulemaking becomes an important function of an agency. Remember rulemaking is not adjudication, or things that bring us squarely into the agency’s quasi-judicial powers (that will be further explained below). In adjudication, an agency is applying facts in a way to resolve an outstanding question, just like facts would

be presented in a hearing to come to a determination on an issue (a trial to determine the ‘guilt’ or culpability of an accused person). In adjudication the rules establishing guilt already exist and these rules are simply being applied to a set of facts: no new rules are being created. In a rulemaking procedure, the agency has set out to create new rules specifically. Thus the difference between adjudication and rulemaking can be identified (in difficult circumstances) by closely observing the goals of the process: • Where the goal is to create a new rule, then the process is most likely rulemaking (and thus must be done in accordance with Administrative Procedures Act (APA) rulemaking requirements: informal, formal, hybrid). Where the goal is to apply an existing rule to a set of facts, but not to create a new rule (or a new subset of an existing rule), then the process is most likely adjudication.

The importance of this distinction is really about following rulemaking procedures outlined in the APA. This most often occurs where an agency is attempting to couch an action that is fundamentally rulemaking in adjudicatory terms, thus avoiding the requirements of the APA. Of course, any agency action found to be rulemaking that does not comply with APA procedures is invalid as a matter of law – something to remember in understanding the importance of the distinction between the two activities. Agencies may sometimes opt for a more expedient way to implement a rule-like outcome and thus try to use adjudication as a way of creating what is in essence a rule. Some of the judicial tools developed to distinguish when this is occurring include: • • • Whether the decision in the adjudication has a substantial impact beyond the immediate facts presented. If it does, it may have ‘rule-like’ characteristics. Whether the decision is generally applicable: if so, more rule-like. Whether the decision has a future effect (goes beyond the bounds of the specific facts of the individual case: if so, more rule-like.

Under the Administrative Procedures Act (APA), there are two primary ways used to make rulemaking, and one hybrid method often employed in complex and technical settings. A summary of the three methods follows here: • Informal (APA §553) – Notice and Comment. Does not require a formal meeting of the public and government officials. A proposed rule is made public through lodgment in the Federal Register. The public has a certain amount of time to submit written comments to the proposed rule. The comments are considered by the government agency, and modifications might occur. If there are modifications, an updated proposed rule will be published in the Federal Register, and further comment sought. A deadline for this procedure is established, and the agency will ultimately submit a final rule for publication in the same Federal Register. Once a final rule, it is also given a specific citation in the Code of Federal Regulations (at the federal level). Once codified, it has binding effect (similar to law – or what we have referenced as the quasi-legislative power of the

agency), but is the lowest form of law in our hierarchy of laws. • Formal (APA §556, 557) – adjudicatory procedure (trial-like). A very expensive proposition for agencies. Since it requires a trial-like procedure, it means a lengthy proceeding where evidence for and against the proposed rule is presented to a tribunal. It allows advocates for various positions to advance evidence in their favor, and cross-examine the evidence presented by other parties. Some of these formal rulemaking procedures have taken years to complete, resulting in little substantive change from the original proposed rule. Hybrid (APA §553-plus) – allows some testimony. Hybrid rulemaking has been favored in recent years for complex rules that might require more than an informal procedure, but still seeks some cost and time saving measures outside of the formal, trial-like procedures. In summary, parties from various interest groups are brought together at the invitation of the agency. The newly proposed rule is then discussed, and consensus-building efforts are initiated (the different viewpoints are attempted to be resolved during this process). Each party usually must give up some part of their position in order to facilitate the softening of other party interests. If it works correctly, there is a formal agreement at the conclusion of the sessions whereby a final rule is negotiated from the process. This process is somewhat similar to how international agreements (conventions) are struck between several nations.

We can see agencies certainly have the power to make rules, which is a quasi-legislative function. However, this power is not absolute, as the rule must be in-line with the legislative delegation of power granted to the agency (the rule cannot exceed the delegation granted by the statute). Similarly, agencies are not free to determine what is a rule and what is not. Often, in the interests of efficiency, an agency may wish to call a decision an interpretation or adjudication of a rule simply because a new rule generally requires a certain procedure before implementation (informal, formal, or hybrid). However, if a court determines the agency decision to have certain characteristics (future effect, general applicability, substantial impact), then the decision is determined a rule. If that rule did not follow the minimal requirements of informal rulemaking (APA §553), then it is invalid. The implications for agencies is obvious, as a determination of invalidity can effect numerous decisions made at the most basic levels of agency operations. C. Power to ‘Adjudicate’ - Internal Procedural Due Process Requirements The power of adjudication (quasi-judicial powers) is really about the agency having the capacity to act as finders of fact, apply legal standards (including rules passed by the agency) and rendering decisions for or against a party. For example, the IRS may conduct a hearing to determine whether a citizen has properly paid all taxes owed. The hearing is not an official court proceeding, but rather a formal hearing within the agency where representatives of the agency hear evidence (provided by other members of the agency) and apply rules to determine whether all taxes have been properly paid as set forth in federal law (the Internal Revenue Code in this example). The agency is given this

‘power’ because it is generally seen to be in the best position (from a resource and expertise standpoint) to make an initial determination on the claim (whether all taxes have been paid). The actions of the agency in its adjudicatory role are bounded in the same ways as described earlier regarding limitations on agency conduct. For example, the agency can only determine your culpability in relation to its statutorily delegated powers; the IRS could not adjudicate a citizen for illegal narcotic possession because the IRS is not empowered to implement federal drug law. In addition, the agency must comply with constitutional protections; it cannot engage in actions that deprive a citizen of constitutional rights as it proceeds in its adjudication. So, once again, we are focused squarely on the concept diagramed earlier under the agency’s power to administer where, like the power to administer, the green box of agency power to adjudicate is sandwiched between red boxes of statutory authority and constitutional limitations. A visual representation is presented here:

Many of the major issues that arise in agency adjudication have to do with constitutional protections, particularly procedural due process requirements. Procedural due process is a constitutional protection that ensures persons (usually citizens but not always) are afforded a sufficient procedure when government takes action against them. Generally, in order to qualify for procedural due process considerations, two things must be shown:

• •

There is government action (and any public agency action would likely meet this requirement); and The government action has impacted a property right of the person being impacted.

Thus, in order to trigger procedural due process safeguards, the government must act in a way that removes a property right. A property right can include a variety of things, for example one’s right to worker’s compensation or social security benefits (or one’s right to a determination of whether they qualify for those benefits if qualification is not automatic). There is an entire history of case law that discusses the evolution of understanding exactly what constitutes a property right so that government action affecting that right can be analyzed under constitutional procedural due process requirements. This history surrounds the distinction between a privilege (a right that can be earned but is not guaranteed by the U.S. Constitution) and a right (something automatically guaranteed by the U.S. Constitution). This distinction is almost irrelevant today based on the evolution of case law, and we now know that as long as some property right is at-stake (including the determination of one’s entitlement to a property right – like whether one is entitled to worker’s compensation benefits, a property right only earned under certain conditions that must be met), then procedural due process must be followed. The main issue in this area is not whether procedural due process is due (it is relatively easy to figure this out), but rather how much process is due? For example, does the denial of certain government benefits (like social security disability benefits) require a formal hearing, or is a summary review of a claim with a letter of denial sufficient? If a public university (a government ‘actor’ for purpose of procedural due process requirements) decides not to rehire an instructor after a one-year contract expires, is there a procedural due process requirement that must be followed? If so, how much? These are the kinds of questions that are involved when thinking about procedural due process, specifically: • Has the government action triggered procedural due process considerations? (This question is answered by the two-prong question identified earlier requiring government action and a property right at-stake). If so, how much process is due?

The amount of process that is due depends on the degree of property right at-stake: the greater the property right, the greater the amount of due process required. This concept is visually expressed here:

As can be observed in the figure, the amount of procedural due process required has a positive relationship with the degree of property right at-stake; the greater the degree of property right at-stake, the more procedural due process required. The following examples help to place procedural due process requirements in context: • Someone who is charged criminally by the state with a crime that can result in a prison sentence has a property right to be free from inhibition at-stake. Because this property right is significant (probably one of the most important property rights in a free society), there is a significant amount of procedural due process required. The procedural due process requirement is satisfied by having a trial (a formal procedure where evidence is presented against the accused person and the accused has the right to confront (cross-examine) the evidence against them as well as present evidence in their defense.1 Most states require children of a certain age to attend primary and secondary education (K-12). The requirement of mandatory education creates a property


Note that those accused of a crime also are entitled to an immediate hearing to determine if there is sufficient evidence to hold the person for a trial on the charges (an arraignment hearing). This immediate hearing is another procedural due process safeguard that ensures there is a sufficient basis for the charges against the person. Even where charges are substantiated, the person is still entitled to a determination of ‘freedom’ prior to the trial (bail hearing) – yet another form of procedural due process.

right in education. Thus, when the state deprives a student of their right to education, procedural due process considerations apply. Deprivations of the right to education span a variety of degrees, from a detention (little property right deprivation requiring very informal procedural due process – a quick discussion with the teacher or principal) to expulsion (significant property right deprivation generally requiring a formal hearing where evidence is presented and challenged). • Public employees have a property right in their employment, and the amount of procedural due process required depends on the extent of the property right atstake. For example, an at-will employee has essentially no property right in future employment because there is no expectation of employment in an at-will relationship beyond immediate employment. Thus, there is very little procedural due process required: a letter giving notice of termination with no other reason will generally suffice. Public employees who have a contract for a specified term (say 2 years) have a future expectation of employment until the expiration of the contract. Thus, action taken against the employee before expiration of the contract would require more formalized procedural due process requirements. Finally, employees under substantial property rights, like civil service protection, required formal procedural due process requirements, which generally include notice and a hearing on the action against the employee.

In summary, the degree of formality of procedural due process rights depends on the property right at-stake: the greater the property right, the greater the degree of formality required. There is a fundamental tension between efficient administration and individual rights. Administrators may likely prefer the ability to make unilateral decisions based on the information they feel is most relevant, without having to consider additional insight or arguments from the individual. If administrative agencies were insulated from individual voices, it would undoubtedly lead to a more efficient administrative state. Of course, administrators can abuse their powers. As representatives of government, their decisions affect the citizenry in fundamental ways (welfare benefits, disability benefits, right to engage in business, the right to maintain personal and real property, etc.). As such, the U.S. Constitution demands individuals are given due process at some point during the agency decision-making process. Whether that process (and how much) is required to be given depends largely on the context of the case, and you now have a framework on determining when due process is required, and when it is, how much process needs to be given. END OF SECTION

Sign up to vote on this title
UsefulNot useful

Master Your Semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master Your Semester with a Special Offer from Scribd & The New York Times

Cancel anytime.