Managers and The Legal Environment Strategies For The 21st Century 7th Edition Bagley Test Bank Download

Managers and the Legal
Environment Strategies for

the 21st Century 7th
Edition Bagley Test Bank
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CHAPTER 6
Administrative Law
TRUE-FALSE QUESTIONS
1. Administrative agencies are usually part of the legislative branch.
ANSWER: False
SKILL LEVEL: Analytic
OBJECTIVE: AICPA: Legal
2. Failure to comply with regulations set in place by agencies may result in the imposition of fines as
well as the revocation of licenses and permits.
ANSWER: True
3. Agencies lack the authority to conduct formal adjudications.
ANSWER: False
4. A rule made by a federal agency is not final until approved by Congress.
77
78 MANAGERS AND THE LEGAL ENVIRONMENT
ANSWER: False
5. Actions of administrative agencies often affect businesses but rarely affect individuals.
ANSWER: False
6. Federal administrative rules that are not properly published in the Federal Reporter are void.
ANSWER: True
7. The U.S. Constitution does not specifically provide for administrative agencies.
ANSWER: True
8. Administrative agencies have been referred to as the fourth branch of the U.S. Government.
ANSWER: True
9. Formal administrative adjudications at the federal level typically include a prehearing discovery
phase.
ANSWER: True
10. The Fifth Amendment’s protection against self-incrimination applies to all records including all
those that the government requires to be kept.
ANSWER: False
11. Determining whether a regulated company or person is complying with laws and regulations cannot
be a function of administrative agencies because of Congressional prohibitions.
ANSWER: False
12. Agencies are required to hold a formal public hearing before enacting any regulation.
ANSWER: False
CHAPTER 6 ADMINISTRATIVE LAW 79

13. Administrative agencies are a relatively new development in the history of the U.S.
ANSWER: False
14. The general rule is that agency action is ripe for judicial review when the impact of the action is
sufficiently direct and immediate as to make review appropriate.
ANSWER: True
15. Administrative agencies have subpoena power to make mandatory requests for information.
ANSWER: True
16. The Internal Revenue Service needs specific cause to order an audit of a company’s tax records.
ANSWER: False
17. The U.S. Supreme Court has repeatedly upheld the fundamental principle that government
employees acting beyond their authority can still bind the government based upon apparent
authority.
ANSWER: False
18. Courts will generally defer to an agency’s construction of a statute within its area of expertise.
ANSWER: True
19. The legislature may probe agency officials to determine why they acted as they did.
ANSWER: True
20. The Fifth Amendment’s protection against self-incrimination does not apply to corporations.
ANSWER: True
MULTIPLE-CHOICE QUESTIONS
1. Agencies are usually part of which branch of government?

A. Judicial
B. Legislative
C. Executive
D. They are equally split between the legislative and executive branches
ANSWER: C
2. The U.S. government has adopted __________ to facilitate seeking consensus of the most affected
groups regarding the substance of new regulations, a process which arose from the Japanese style of
negotiation.
A. administrative review
B. federal mediation
C. regulatory negotiations
D. rule arbitration
ANSWER: C
SKILL LEVEL: Diversity
3. Reasons for creating administrative agencies include:

A. Congress lacks the time to address all of the areas that it controls.
B. Congress lacks the necessary expertise in all of the areas it controls.
C. Congress does not have the power to regulate certain areas.
D. Both that Congress lacks the time to address all of the areas that it controls and that Congress
lacks the necessary expertise in all of the areas it controls.
ANSWER: D
4. What three-step procedure does an agency follow in order to promulgate rules or regulations, and in
what order is the procedure performed?
A. (1) Evaluation of comments (2) notice to the public (3) adoption.
B. (1) Notice to the public (2) evaluation of comments (3) adoption.
C. (1) Voting (2) evaluation of comments (3) adoption.
D. (1) Adoption (2) notice (3) evaluation of results.
ANSWER: B
5. Rules adopted by a federal agency are published in the

A. Federal Reporter
B. Federal Register
C. Uniform Register
D. Legislative Reporter
ANSWER: B
6. A final agency rule is codified and added to the ____________.

A. Code of Federal Regulations
B. Code of Uniform Regulations
C. Code of Legislative Regulations
D. Code of Federal Reporting
ANSWER: A
7. Which of the following is exempt from the Administrative Procedure Act’s requirement that the
public be given notice and an opportunity to comment before a federal agency can promulgate a
rule?
A. Rules of agency procedure
B. General statements of policy
C. Both rules of agency procedure and general statements of policy
D. There are no exemptions from the notice and comment requirements
ANSWER: C
8. The first Congress established ____ administrative agencies.

A. one
B. ten
C. no
D. three
ANSWER: D
9. ________ has been called the lifeblood of administrative agencies.

A. Rule making
B. Administrative adjudication
C. Informal discretionary action
D. Policy
ANSWER: C
10. Which of the following would a comment letter to an agency generally not contain?
A. Identification of the person concerned
B. An explanation of why the person making the comment is concerned

C. A suggestion of a specific change to the rule along with factual information to support the
position asserted
D. An itemization of expected damages
ANSWER: D
11. Which of the following presides over formal agency adjudications at the federal level?
A. An administrative law judge
B. A federal magistrate
C. A federal district judge
D. A judicial commissioner
ANSWER: A
12. Which of the following agencies was created following the terrorist attacks of September 11, 2001,
to be responsible for civilian aspects of national security?
A. The Stateside Protection Commission
B. The Department of Homeland Security
C. The Department for Protection of Civilians
D. The Critical Civilian Defense and Protection Agency
ANSWER: B
13. Which of the following was the result before the U.S. Supreme Court in Free Enterprise Fund v.
Public Company Accounting Oversight Board, the case in the text in which the plaintiffs
brought various constitutional challenges involving the appointment and standards for removal of
members of the Public Company Accounting Oversight Board?
A. That limitations on the removal of Board members contravened the Constitution’s separation of
powers and that the unconstitutional provisions were not severable from the remainder of the statute.
B. That limitations on the removal of Board members contravened the Constitution’s separation of
powers but that the unconstitutional provisions were severable from the remainder of the statute.
C. That limitations on the removal of Board members were constitutional.
D. That limitations on the removal of Board members were constitutional only so long as the
executive branch failed to challenge the restrictions placed on the president.
ANSWER: B
14. Which of the following was the result in Comcast Corp. v. FCC, the case in the text addressing
whether the FCC has the authority to regulate in Internet service provider’s network management
practices?
A. The court struck down the order of the FCC at issue because the FCC had failed to provide the
public sufficient time in which to comment.
B. The court struck down the order of the FCC at issue because the FCC failed to allow all parties
due process protection in relation to a hearing.
C. The court struck down the order of the FCC at issue because it was not reasonably ancillary to
the Commission’s statutorily mandated duties.
D. The court upheld the FCC’s action and order.
ANSWER: C
15. The protection of the ________ Amendment against unreasonable searches and seizures has been
largely obliterated by the courts in the area of administrative law.
A. First
B. Fourth
C. Fifth
D. Seventh
ANSWER: B
16. A formal administrative adjudication does not include the right to

A. a jury trial
B. an attorney
C. present your evidence
D. participate in the proceeding
ANSWER: A
17. What are the four primary ways in which an administrative agency functions?
A. Making rules, conducting formal adjudications, taking informal discretionary actions, and
conducting investigations.
B. Issuing notice, conducting formal adjudications, taking informal discretionary actions, and
C. Issuing notice, making rules, taking informal discretionary actions, and conducting
investigations.
D. Making rules, conducting informal adjudications, taking formal discretionary actions, and
ANSWER: A
18. Which of the following was the result in Baur v. Veneman, the case in the text in which the plaintiff
sued complaining about the Secretary of Agriculture’s policy of certain downed cattle to be used for
human consumption on the basis that it increased the risk of contracting mad cow disease?
A. That the plaintiff lacked standing to challenge the practice because he had not sustained direct
injury.
B. That the plaintiff lacked standing to challenge the practice because he was not a beef producer.
C. That the plaintiff had standing to sue because he had alleged a credible threat of harm.
D. That the plaintiff had standing to sue because he had presented substantial proof of verifiable
emotional distress that he had already sustained.
ANSWER: C
19. Under the arbitrary and capricious standard, if the agency has a choice between several courses of
action, a reviewing court will presume that the chosen course is
A. invalid
B. valid
C. void
D. voidable
ANSWER: B
20. What was the result in Ragsdale v. Wolverine World Wide, involving whether the Department of
Labor could validly institute a regulation giving an employee the right to an additional twelve weeks
of family or medical leave if the employer failed to notify the employee that the twelve weeks of
leave provided by the Family and Medical Leave Act ran concurrently with the thirty weeks of paid
disability leave provided by the employer?
A. The U.S. Supreme Court invalidated the regulation because it granted entitlements not set forth
in the Family and Medical Leave Act and that were inconsistent with the purpose of the Act.
B. The U.S. Supreme court upheld the regulation as a valid exercise of the Department of Labor’s
power.
C. The U.S. Supreme Court invalidated the regulation because it had not first been approved by a
federal judge and also because it granted entitlements not set forth in the Family and Medical Leave
Act.
D. The U.S. Supreme Court invalidated the regulation because it had not first been approved by the
executive branch.
ANSWER: A
21. Which of the following is true regarding review of agency procedures?

A. Agency procedures are not required to conform to the requirements of the Due Process Clause.
B. Federal courts set agency procedures.
C. A court may require that an agency comply with its own procedural rules.
D. Both that federal courts set agency procedures and that a court may require that an agency
comply with its own procedural rules.
ANSWER: C
22. Federal administrative agencies are normally created by

A. Congress
B. the President
C. the Supreme Court

D. the United States Constitution
ANSWER: A
23. ________ by administrative agencies provide a practical decision-making process for repetitive,
frequent actions that are inappropriate to litigate in courts.
A. De novo decisions
B. Informal discretionary actions
C. Formal rule making
D. Informal rule making
ANSWER: B
24. A court will require an agency to comply with its own procedural rules and thus conform to the
a. due process clause
b. Seventh Amendment
c. both the due process clause and the Seventh Amendment
d. neither the due process clause nor the Seventh Amendment
ANSWER: A
25. Statutes and agency rules often provide that courts performing judicial review of agency action may
not rule on which of the following issues?
A. issues raised with the agency and won.
B. issues raised with the agency and lost.
C. issues raised with the lower courts and lost.
D. issues not raised with the agency.
ANSWER: D
26. When an administrative agency adopts a regulation, it becomes binding on the

A. agency
B. public
C. Congress
D. the agency and the public, but not Congress
ANSWER: D
27. The federal statute authorizing individuals to obtain copies of government records on any subject
that is of interest is known as
A. the Federal Register
B. the Code of Federal Regulations

C. the Freedom of Information Act
D. discovery
ANSWER: C
28. Which of the following is false regarding the Dodd-Frank Wall Street Reform and Consumer
Protection Act?
A. Dodd-Frank will bring about a multi-tier system of banks in which the larger banks are highly
regulated but the smaller community banks are not.
B. Dodd-Frank created the Financial Stability Oversight Council.
C. Dodd-Frank significantly curtailed certain powers of the Federal Reserve Board.
D. Dodd-Frank consolidated the Securities and Exchange Commission and the Commodity Futures
Trading Commission into one agency.
ANSWER: D
29. After the passage of the National Environmental Policy Act,

A. each federal agency assumed a new procedural obligation to consider the environmental
impacts of its proposed actions and the alternatives to those impacts.
B. each federal agency had to take “substantial” steps to reduce any environmental harm caused by
it.
C. each federal agency had to take “reasonable” steps to reduce any environmental harm caused by
it.
D. each federal agency had to seek approval from the applicable state legislature before taking
action that would have an environmental impact in that state.
ANSWER: A
30. Which of the following is not exempt from a Freedom of Information Act request?
A. records related solely to the internal personnel rules and practice of an agency.
B. reports prepared by Congress regarding the regulation of an agency.
C. trade secrets or confidential commercial and financial information.
D. information compiled for law enforcement purposes.
ANSWER: B
Fact Pattern 6-1 (Questions 31-32 apply)
Bruce had a disagreement with a new federal agency set up to give additional funds for college to
individuals with an aptitude for math. After a hearing, the agency determined that Bruce had no
aptitude for math and that he would not receive any funding. Bruce, however, was not discouraged.
He told his friend Laura, who just graduated from law school, that he would simply appeal the
decision to federal court, have the judge do a fresh review, and provide additional information to the
judge regarding his math aptitude that the agency did not have. He feels certain that he will win at
the federal court level.
31. Refer to fact pattern 6-1. Assuming the decision by the administrative agency was a factual finding,
what should Laura tell Bruce regarding the standard of review the administrative agency will likely
apply?
A. That the agency will likely apply a de novo, or new, review.
B. That the agency will likely apply an arbitrary and capricious standard in any review.
C. That the agency will likely apply a substantial evidence standard in any review.
D. That the agency will likely apply a preponderance of the evidence standard in any review.
ANSWER: C
SKILL LEVEL: Reflective Thinking
OBJECTIVE: AICPA: Critical Thinking
32. Refer to fact pattern 6-1. What should Laura tell Bruce regarding his plan to provide additional
evidence to the federal court judge?
A. That his plan is a good one and that the judge will consider the additional evidence.
B. That judicial review will likely be confined to the record compiled before the agency.
C. That he will only be allowed to present sworn affidavits for additional judicial review.
D. That he will only be allowed to present additional test scores for additional judicial review.
ANSWER: B
Fact Pattern 6-2 (Questions 33-34 apply)
Officials of the town of Sunnyville were concerned about the number of dogs running loose. They
set up a new administrative agency called “Dog Control.” The new agency issued a regulation that
all dogs must be on leash in public. Tony who had moved to Sunnyville in the previous month did
not own a dog and had no plans to get one. He, however, thought the regulation was outrageous and
decided to sue on the basis that it was not validly enacted. Mona, another resident, was also
concerned about the law. She rents a home with a fence in the backyard that was in public view.
She was concerned that the regulation would be applied to her dogs while in the fenced area. She
decided to bring a preemptive strike and sue the city for revocation of the regulation before the city
could sue her. Both Tony and Mona rush to file suit before the city has a chance to take any action
to enforce the new rule.
33. Refer to fact pattern 6-2. Which of the following is the best defense the city has against the lawsuit
brought by Tony?
A. That Tony lacks standing to sue.
B. That courts have no authority to determine the validity of agency rules.
C. That Tony lacks permission of the agency to sue since authorization of the agency is required
prior to a lawsuit challenging the validity of an agency regulation.
D. That Tony has not lived in the jurisdiction for at least a year since residence in the jurisdiction
for at least a year is required in order to challenge the validity of a local regulation.
ANSWER: A
34. Refer to fact pattern 6-2. Of the following arguments, which is the best for the city to raise in the
lawsuit brought by Mona?
A. That courts have no authority to determine the validity of agency regulations.
B. That the issue is nor ripe for determination.
C. That Mona must be a property owner in the jurisdiction in order to challenge the agency
regulation.
D. That Mona is guilty of self incrimination.
ANSWER: B
35. Brianna is in charge of new federal agency set up to monitor farming operations. The agency wishes
to institute a rule regarding the use of pesticides. Brianna tells her associates to publish the proposed
rule but to decline taking comments on the rule because she does not want to deal with unhappy
farmers. Assuming you are legal counsel to the agency, what would you tell Brianna regarding her
plan to refuse comments on the proposed rule?
A. That her plan is a bad one because the Administrative Procedure Act requires that the public be
given an opportunity to comment before a federal agency can promulgate a rule.
B. That her plan is a bad one because while the Administrative Procedure Act does not generally
require that the public be given an opportunity to comment, it does require that agencies take public
comments when food safety is involved.
C. That her plan is a bad one because while the Administrative Procedure Act does not generally
require that the public be given an opportunity to comment, it does require that agencies take public
comments in all cases other than rule involving taxation.
D. That her plan is a good one.
ANSWER: A
ESSAY QUESTIONS
1. Critics of administrative agencies claim that they violate the doctrine of separation of powers.
Explain the basis for this criticism. Explain why agencies are so prevalent despite the absence of any
explicit provision for their existence in the Constitution. Discuss fully.
ANSWER: The U.S. Constitution provides for a legislature, an executive, and a judiciary. This
division of power creates a system of checks and balances to preserve liberty. It does not specifically
provide for administrative agencies, thus raising the question of whether the delegation of legislative
and judicial powers to an administrative agency is constitutional. Agencies make rules, conduct
formal adjudications, take informal discretionary action, and conduct investigations. There is no
separation of powers doctrine acting as a check on agencies. Agencies are needed because it would
overburden the court system to hear the disputes. Additionally, Congress and the state legislatures
frequently lack the time, human resources, and expertise to enact detailed regulations.
2. Discuss the general rule regarding when a court will entertain an appeal to an administrative
process and the reason for the rule.
ANSWER: The general rule is that a court will not entertain an appeal to review the administrative
process until the agency has had the chance to act and the party challenging the agency’s actions has
pursued all possible avenues of relief before the agency. This requirement conserves judicial
resources.
3. Discuss what is meant by the “ripeness doctrine, why it is needed, when issues involve ripeness
usually occur, and when a dispute is generally ripe for determination.
ANSWER: Courts will not hear cases until they are ripe for decision. The ripeness doctrine helps
ensure that courts are not forced to decide hypothetical questions. The issue of ripeness most
frequently arises in pre-enforcement review of statutes and ordinances; this occurs when review is
sought after a rule is adopted but before the agency seeks to apply the rule in a particular case. The
general rule is that agency action is ripe for judicial review when the impact of the action is
sufficiently direct and immediate as to make review appropriate.
4. The president of a company wishes to comment on a proposed administrative agency rule. What
does a comment letter usually contain?
ANSWER: (1) Identification of the company involved (2) a description of why the person or
company is concerned (3) a suggestion of the specific change in the language of the proposed rule
that is desired, and (4) factual information to support the position.
5. Which categories of documents in the federal government’s possession may the government refuse
to provide for public inspection under the Freedom of Information Act?
ANSWER:
1. Records required by an executive order to be kept secret in the interest of national defense or
foreign policy.
2. Records related solely to the internal personnel rules and practice of an agency.
3. Records exempted from disclosure by another statute.
4. Trade secrets or confidential commercial and financial information.
5. Interagency memorandums or decisions that reflect the deliberative process.
6. Personnel files and other files that, if disclosed, would constitute a clearly unwarranted invasion
of personal privacy.
7. Information compiled for law enforcement purposes.
8. Reports prepared on behalf of an agency responsible for the regulation of financial institutions.
9. Geological information concerning wells.
6. As set forth in the text, what are the seven basic steps for working successfully with an
administrative agency?
ANSWER:
1. Investigate the applicable standards that will govern the agency’s actions.
2. Identify and evaluate the agency’s formal structure.

3. Determine what facts are before the agency.
4. Identify the interests of others who may be involved in the decision-making process.
5. Adopt a strategy to achieve the desired goal.
6. Eliminate any adverse impact on other interested parties.
7. Get involved in the administrative process early and stay involved.

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Managers and the Legal

Environment Strategies for

1. Administrative agencies are usually part of the legislative branch.

3. Agencies lack the authority to conduct formal adjudications.

4. A rule made by a federal agency is not final until approved by Congress.

SKILL LEVEL: Analytic

OBJECTIVE: AICPA: Legal

1. Agencies are usually part of which branch of government?

3. Reasons for creating administrative agencies include:

5. Rules adopted by a federal agency are published in the

6. A final agency rule is codified and added to the ____________.

8. The first Congress established ____ administrative agencies.

9. ________ has been called the lifeblood of administrative agencies.

B. An explanation of why the person making the comment is concerned

16. A formal administrative adjudication does not include the right to

21. Which of the following is true regarding review of agency procedures?

22. Federal administrative agencies are normally created by

C. the Supreme Court

26. When an administrative agency adopts a regulation, it becomes binding on the

B. the Code of Federal Regulations

29. After the passage of the National Environmental Policy Act,

Fact Pattern 6-1 (Questions 31-32 apply)

Fact Pattern 6-2 (Questions 33-34 apply)

2. Identify and evaluate the agency’s formal structure.

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