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Ohnesorge, Administrative Law Outline Fall 2003

[Page number references are to Lawson, Fed. Admin. Law, 2nd Ed., unless noted] APA = minimal procedural requirements when a federal agency takes action Anything or anyone who can take final actions that affect rights o Agency or not? Amtrak case: the Supreme Court is going to decide based on actions rather than what Congress says. Timeline, US History 1. Founding a. Agencies were in the executive i. Single-headed ii. Not much rulemaking authority iii. Small, limited scope b. Courts did most of what we consider administrative law today c. Parties and the spoils system, no civil service system 2. Rise of the railroads a. US very dependent on the system b. The system was fragmented 3. Granger Movement a. Rural/farmer/anti-big business/anti-wall street political movement b. Lots of commerce clause cases 4. Interstate Commerce Commission, 1887 a. First modern federal agency b. Formed mainly to regulate railroads c. Independent Commission 5. Progressive Movement: late 1800s to early 1900s a. Get away from spoils system b. Get politics out of agencies c. Create non-political / non-judicial bodies d. Civil Service Reform 6. FTB, FTC created on the same ICC model, 1910s a. Multi-member commissions 7. New Deal, 1930s continues this movement a. SEC, NLRB, FCC i. Independent ii. Professional iii. Broader mandate... act in the public interest b. National Recovery Administration NRA now gone i. Some Con Law poultry cases got rid of this agency 8. 1946 APA a. controversial... these agencies are not in the Constitution b. enacted right after the war i. a compromise between those who wanted agencies and those who did not 1. How will the public participate in rulemaking by agencies? 9. 1960-70s: EPA, OSHA, NHTSA a. Congress drops the independent commission form b. These agencies are headed by people who are directly under the President c. Congress no longer trusted the agencies to act in the public interest i. Wanted the President and the heads to be accountable for their actions ii. Wanted to keep agencies from becoming the tools of corporations iii. Action Forcing - Given specific mandates, less broad than the earlier public interest mandates 10. 80s to Present Cost-Benefit analysis / Deregulation


Ohnesorge, Administrative Law Outline Fall 2003


Ohnesorge, Administrative Law Outline Fall 2003

Conceptual views of agencies: Madison separation of power checks and balances Eastman Expertise theory Experts will forget affiliation and ideology and rule as philosopher kings Landis Judges are experts at policing the boundaries, the procedural component of agency actions Deference in any review of substantive decisions because not experts Bernstein Capture Theory Advocate of political accountability, greater executive power to combat the power of the regulated parties and industries Noll Mechanical like bernstein Wilson Lets be more empirical Cautions against rigid rational actor models like Bernstein and Noll Ideal Types Legislation ---------------------------------------------------------------------------- Adjudication Speed limit ---------------------------------------------------------------------------- prosecution Generally Applicable ---------------------------------------------------------------- specific people Prospective ---------------------------------------------------------------------------- retrospective Requires actual application to deter --------------------- concrete application of law to facts Gray-area examples ICC Railroads Ratemaking Pond/Sawdust Massachusetts order given to specific sawmill with no hearing When does it matter? Procedural Due Process If it is legislation, no process is due Adjudication, yes


Ohnesorge, Administrative Law Outline Fall 2003

Question: Is it a rulemaking or an adjudication? Londoner, 1908 (Holmes dissents) Cul-de-sac road improvement Paid for by special assessment to people who live on cul-de-sac No hearing given, violates due process This is an adjudication Bi-Metallic, 1915 (Holmes writes majority opinion) 40% increase in property valuations Holmes says that the question is whether all individuals have a constitutional right to be heard before a matter can be decided in which all are equally concerned. no hearing given, no violation of due process o impracticable to have more than a few people have direct voice o Necessity - There must be a limit to individual argument for government to go on

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

Lincoln v. Vigil, 1993 The definition of rule under the APA is barely less than arbitrary Yessler Terrace, 1994 (9th Cir) HUD changes policies to allow for easier evictions when criminal activity is involved Wash. State applies the policy to its rules/laws as applied to tenants Due process is still protected under Wash. State courts HUD wants this to be adjudication b/c they do not want to have comment period o [they had not had a comment period]

Holding: this was a rulemaking/legislative act, so it is invalid under the APA b/c no comment period Interesting HUDs rulemaking is NOT what was challenged in the case! o They were challenging HUDs approval of the Wash. State application of their rules o This was an adjudication under the APA b/c this is basically licensing This was result driven adjudication

Separation of Powers Congressional Delegation: the non-delegation Doctrine How much of its own authority can Congress delegate to other actors? Example: o The Tea Importation Act (repealed in 1996) Congress instructs HHS to create a body that will submit tea standards (samples) to HHS All imported tea will be taste tested against these standard samples If the fails to live up to the standard, it is not let into the country. Rated on purity, quality and fitness for consumption The First Congress: Examples of Delegation Congress says US will pay Rev. War vets pensions for one year under such regulations as the President [ ] may direct.


Ohnesorge, Administrative Law Outline Fall 2003

Congress says that the Sec. of the treasury may remit or mitigate any fine for violating certain laws if in his opinion the same was incurred without willful negligence or any intention of fraud.

The Second Congress: Example of Delegation Postal routes: Bill introduced into the House authorizing the carriage of mail by such route as the POTUS shall, from time to time, cause to be established. o Bill ends up being defeated because many are afraid that this delegates too much leg. Authority to the President. Why not just delegate everything and have a monarchy...? o Final legislation included language that allowed the Postmaster to determine how many deputies he would have and where they should be assigned Cargo of the Brig Aurora v. US, 1813 Conditional legislation o Congress restricts trade with Britain o One of the later versions of the law says that the POTUS can end the restrictions is he proclaims that Britain had met certain criteria This case is a Negative grant of power, like a veto based on a fact finding o There are also positive grants of power, but not here SCOTUS says this is all fine and good Could there ever be review of the presidents fact finding? Wayman v. Southard, 1825 Delegation of power to the federal courts o Such alterations and additions as the [federal] courts ... shall, in their discretion, deem expedient. filling in the details language Court says this type of delegation is ok Field v. Clark, 1892 delegation of power to president if a country had reciprocally unequal and unreasonable trade practices o president could move country into higher level of tariffs Courts says this is fine o Says legislative delegation is a no-no o BUT this is not legislative delegation Congress specified all the duties to be paid in advance This is just expediency and operation delegated to the president JW Hampton v. US, 1928 President can alter amount of a duty of imports to equalize ... the costs of production Court upholds the delegation Intelligible principle doctrine: o As long as such direction is given by congress, then the delegation is OK The New Deal Panama Refining v. Ryan, 1935 New Deal, Congress and Roosevelt want to control oil prices by regulating interstate commerce, this is to raise the price by controlling supply


Ohnesorge, Administrative Law Outline Fall 2003

Not completely open-ended delegation b/c everyone wanted to confront deflation and depression Court strikes down delegation saying that there would be no barriers left blocking legislative delegation Cardozo dissents saying that this delegation is corralled o

Schecter Poultry v. US, 1935 Idea was to get industries to overcome competition and find a consensus on a Code for their industry to be regulated by o The President would OK this code o He can also make changes in his discretion o Limitations: 1. the industry group proposing must be truly representative, no unfair barriers to membership 2. not designed to promote monopolies or to oppress small businesses o Other than these two, the President is left to his discretion, that which is necessary to effectuate the policy The goal was to increase wages o Decrease hours of some o Same total needed, gets more people working o Also increase minimum wage so that the new hires are making a living wage Court strikes down on delegation grounds o Cardozo concurs saying that the code is not canalized within banks that keep it from overflowing

Modern Doctrine Non-Delegation cases will not be well received: Mistretta v. US, 1989 US Sentencing Commission has power to promulgate sentencing guidelines for every federal criminal offense Intelligible Principle? o Majority says there is more than an intelligible principle o Also says: Congress simply cannot do its job absent an ability to delegate power under broad general directives Especially, when dealing with complex, changing, and technical subjects Question: Has SCOTUS given up on enforcing non-delegation completely? Scalia dissents, saying no agency should be created to create laws, that is Congresss job o Delegation of judicial or executive power is fine o There should be no delegation of legislative powers Ohnesorge says that power is now legislative for Scalia if it is co-mingled with executive of judicial power Fiction of non-delegation Congress makes larger decisions and then the agencies fill in the details

o Also:


Ohnesorge, Administrative Law Outline Fall 2003

Skinner v. Mid-America, 1989 9-0 Court says there is no support for a standard different than Mistretta for Executive delegation under the taxing power Touby v. US, 1991 9-0 Court says even if higher standard needed in criminal cases, necessary to avoid imminent hazard to public safety is plenty Court declines to address the question of whether higher standard is needed

Rehnquist wants non-delegation back: Industrial Union, 1980 OSHA single-headed o Mandate: make workplaces safer Not enough data on benzene Majority says that agency needs to provide a threshold showing before creating a permanent standard If agency is right in its interpretation of the statute, then there are delegation problems o Court says lets construe the statute in a way to avoid this problem

Worth reading Rehnquists concurrence again

Spark of Life for Non-Delegation??? South Dakota v. US Dept. of Interior 8th Cir, 1996 Strikes down delegation Discretion to buy land is given for the purpose of providing land for Indians o Court says there are neither perceptible boundaries nor intelligible principles Loving v. US SCOTUS, 1996 Executive order specified criteria for military courts to use in death penalty cases Kennedy writes for 8 justices o Says the President does have this power as commander and chief, the EO is upheld o However, had the president made delegations of judgment and discretion that were outside his Constitutional powers, then Delegation could be a problem Clinton v. City of New York, 1998 Congress enacted the Line-Item Veto Court held that the cancellation of a line item in a bill, was tantamount to an amendment of the statutory text, which can only be done by Congress, Art. I Sec. 7 Scalia, Greyer, and OConnor would have upheld under a delegation analysis Probably Dead, for now... American Trucking, 2001 EPA regulates particulates


Ohnesorge, Administrative Law Outline Fall 2003

DC Circuit strikes down on non-delegation basis Supreme Court reverses 9-0 o Stevens and Souter attack Scalia in concurring opinion o Thomas asks for more non-delegation cases Strong re-affirmation of Mistretta in the majority opinion


Ohnesorge, Administrative Law Outline Fall 2003

Congressional Control of Agencies: When it wants to, how can congress control agencies? Legislative Override Congress passes a new statute that undoes the rule/action of an agency o Seatbelt case: NHTSA Lack of seatbelts is a public hazard, people die in large numbers Creates rule that cars cannot start without seatbelt being engaged (seatbelt interlock) People upset and Industry upset Industry attacks this rulemaking in the courts, fails Congress overrides NHTSA Legislative Veto gives power to agency, but then says, House (or Senate, or committee, etc) can veto the decision o INS v Chadha he must meet 3 conditions to stay: 1. 7 years objective o he meets this prong 2. good moral character DELEGATION o probably meets this one, he has been to school and worked here for 7 years... he probably pays his taxes... we like that. 3. will suffer extreme hardship if deported MORE DELEGATION o From India, but UK citizen, actually lives in Kenya... o What is hardship? What is extreme? INS decides to let him stay b/c he meets the criteria Legislative veto House says no to that decision Question is this constitutional? o Presentment issue: did not present to President o Bi-cameral issue: just the House Court says this is unconstitutional because of both issues Congressional Review Act of 1996 Enacted in the wake of Chadha o Applies to all rules (not orders), it distinguishes between major and non-major rules as OMB does All rules must be submitted to both houses of congress and the comptroller general Not supposed to go into effect before they are submitted, so that Congress can change it before it is enacted (60 days) Supposed to go directly to relevant committees Efficiency and close oversight are the goals o Congress forces itself to act more efficiently and timely

Indirect Effect: Legislative history through courts Significant debate over appropriateness of judicial use Direct Effect: Legislative history in agencies Agencies are very aware of legislative history beyond its use in the courts because they only lose a case of they are wrong in the courts o If they are wrong vis--vis Congress, they can lose funding, the entire program, and the individual careers of the officials


Ohnesorge, Administrative Law Outline Fall 2003

Do congressional committees actually control agency action via this informal conduit?

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Ohnesorge, Administrative Law Outline Fall 2003

Agencies and Article II Appointments Clause Buckley v. Valeo, 1976 FEC board members, are they officers? Yes Appointment procedure not ok, two problems: o Congress cannot appoint o House and Senate do not both have advice and consent President must appoint and Senate must advise and consent Freytag, 1991 Tax Courts legislative creation o Special Trial Judges (STJ) Are they officers? Primary Officers? Court says obviously officers. Take testimony, conduct trials, rule on evidence, power to enforce compliance with discovery orders Possibly also primary officers because there decisions are final if not acted upon by those above. They have the power to make final decisions. Landry v. FDIC, 2000 DC Circuit Administrative Law Judge, ALJ Landry has been dismissed by the FDIC on the recommendation of an ALJ o Landry was the CFO at a bank in Indiana o Landry argues that ALJs are inferior officers o If they are, this will run afoul of the Appointments clause

Congress has given the FDIC (and other banking agencies) instructions to establish their own pool of administrative law judges. Court distinguishes Freytag: o ALJs never render final decisions o ALJs do not receive the same deference on factual determinations that judges in Freytag did o However, ALJ position is established by law as in Freytag o Also, conduct trials, take evidence, etc Significant discretion Court says that ALJ is an inferior officer

Removal of Officers Decision of 1789 House and Senate have significant and sophisticated discussion of the issues and considered: o 1. impeachment only o 2. presidential removal o 3. by mode of appointment o 4. congressional power to decide mode of removal Decided that presidential removal power was the way to go o VP split tie in Senate

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Ohnesorge, Administrative Law Outline Fall 2003

Myers v. US, 1926 Portlands Postmaster, removed by President before end of term o But, the statute that governs says the president can remove only with the permission of the Senate Family is suing for back pay, for the rest of the postmasters term Court says: the president has this power because removal of an officer is an executive power. o Controlling subordinates = executive power, if not confident in subordinates, must be able to remove o This applies at least to all heads of departments and bureaus Humphreys Executor, 1935 Or... Roosevelt v. FTC Commissioner Humphrey FTC governs commerce o Rulemaking, bringing suits, investigative actions Humphrey appointed by Hoover just before Stock Market Crash Roosevelt takes office, politely asks Humphrey to leave office.... Then orders him to leave office o But, the governing act says that he cannot remove without good cause Courts says: o FTC Act meant to limit Presidents power in this area Must be non-partisan, etc o Says most of Myers is dicta Confines decision to the removal of purely executive officers, not officers of independent agencies By modern standards, this case was simply decided wrongly Bowsher v. Synar, 1986 Budget Deficit Reduction Act Comptroller general ends up being the executor of the law o If he is an agent of congress, then unconstitutional. o If he is an agent of the executive, then OK.

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

Morrison v. Olson, 1988 Courts says Ind. Counsel is inferior officer Independent counsel, removal by Atty. General is limited to good cause o Does this interfere with the Presidents executive functions? o Court says it does, but not to a very large degree and the President still has some power b/c of good cause dismissal o Cites Humphreys Executor as better for this case than Myers.

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

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Ohnesorge, Administrative Law Outline Fall 2003

Interaction with the Executive Trading Commission v. Schor, 1986 Issue: CFTC has power to adjudicate claims under statute, but do they have power to adjudicate counterclaims stemming from the same transaction, but based on state common law? o Did Congress overstep its Article III powers? These judges do not have tenure, salary, etc of Art. III courts But, the courts did not lose any power b/c they have review These are very limited circumstances, only regarding counterclaims like this More efficient Distinction: Public and private rights o Public law = historically can be adjudicated by both agencies and Article III courts o Private law = property, torts, contracts, etc historically, only adjudicated by Art. III Courts OConnor writes a functionalist opinion o These provisions the congressional scheme does not impermissibly intrude on the province of the judiciary Only differ from traditional boundaries in one respect: jurisdiction over common law counterclaims Dismisses slippery slop arguments Cites RFC v. Bankers Trust (jurisdiction over a state law claim ancillary to federal law claim, w/ judicial review) and Katchen v. Landy (state law counterclaims from same transaction) to support argument Brennan and Marshall write an almost formalist dissent Question: how do functionalists, like OConnor here, explain why Congress cannot transfer all adjudicative functions to politically controllable officials? o Schor is a narrow holding to counterclaims of same transaction o There is judicial review of all o The SCOTUS will not allow it!!!! Thats how the Constitution works! Lawson wants to separate: Executive adjudication o Deals with mere privileges

Judicial adjudication o Deals with due process life, liberty, or property

Due Process Notice Opportunity to be heard Cross-examination / Contest / Confront Neutral adjudicator / not biased in decision making Withrow, 1975 Wisconsin Examining Board has investigative and adjudicatory powers/responsibilities regarding practitioners of medicine o At hearings, those under the gun can appear with a lawyer but cannot cross-examine witnesses SCOTUS says this is all fine

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Ohnesorge, Administrative Law Outline Fall 2003

Presumption of honesty Analogous to a judge issuing a warrant for probable cause and then sitting for the trial o Lots of precedent cited Bias: Decisions to not recuse oneself will be reversed where an actor has demonstrably made up his mind about important and specific factual questions and is impervious to contrary evidence. United Steelworkers v. Marshall. Also Cinderella Career and Finishing Schools v. FTC. o o Constraints on Administrative Procedure Sources of law o Constitution Procedural due process Federal and state o APA o Organic Statutes o Agency Procedural Regulations o Practices o Court Decisions APA 1946, page 909 553 notice and comment/informal hearing o 553(c) if to be made on the record then 556, 557 apply

554 is there an informal adjudication? 556 formal/trial-type hearing 557

Formal (no longer) Rulemaking. In rulemaking, look to organic statute. Florida East Coast Ry., 1973, page 198 [right after Roe and Doe in US Reports] Rulemaking only needs to be formal (556, 557) if the words on the record o Hybrid rulemaking o Court relied heavily on Allegheny-Ludlum in making this decision o In the 25 years since FECR, no statute that lacks the magic words has been found to require formal rulemaking B/C of this case, vast majority of rulemaking is under 553, notice and comment rulemaking o Can just be in writing Criticisms of the opinion o Goes against text of APA o Both parties thought formal was required They were arguing escape clause o Rehnquist writes this major decision Compliments o Formal rulemakings were so complex and slow that it was almost useless as a rulemaking mechanism Percentage of peanut content in peanut butter under formal rulemaking... it took NINE YEARS Can cross-examine anyone involved, too many people o This informal presumption makes the process much more streamlined

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Ohnesorge, Administrative Law Outline Fall 2003

Procedural rulemaking attacks Constitutional DP unlikely APA b/c of FECR, unlikely to get anywhere Statute as long as reasonable under step two... o Chevron enhances agency discretion Regs they will have likely changed their regs Practice they will have likely changed their practice Adjudication Formal/Informal split Formal 554-557 o 554a: Exact same triggering language as rulemaking Informal 555 o Not much by way of requirements o Can be very informal Courts have applied some restrictions to informal adjudication because they need to be able to review meaningfully the agencies decision A split between the Circuits, SCOTUS has not spoken.

Seacoast anti-pollution league v. Costle (1st Circuit, 1978) Discharge of heated water, from nuclear plant Question: what language creates a presumption of formal hearing? o The court says that any language calling for a hearing should create the presumption of a formal hearing. Guarantees reasoned decision making an evidentiary record for reviewing courts 555 is pretty thin, also get what Congress specified in the organic statute. Court did not want to leave the factual record created under 555 and Congress alone. The judiciary would be doing the review, they should have a say in what the record will include o says that FECR is for rulemaking only West Chicago v. NRC (7th, 1983) Regs 10 CFR 2.104 and 2.105 o Very deferential review o Court says neither is triggered 2.104 defer to agencys interpretation 2.105 this is not a commercial disposal Statute 189(a), the AEA o Adopts a stance very similar to FECR, either on the record or very clear intent from Congress o thus no APA b/c not triggered Constitutional Due Process o Court says health and environment concerns do not constitute liberty or property o Even if they were, we would hold that there was sufficient process

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

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Ohnesorge, Administrative Law Outline Fall 2003

Chevron (SCOTUS, 1983) Vermont Yankee (SCOTUS, 1978) o Courts cannot add to the procedural requirements of the APA o Trying to reign in the federal courts o But this was on rulemaking

Chemical Waste (DC, 1989) Issue: what procedure should be used for review of EPA orders (orders result from adjudications)? o (b), EPA uses formal, says congress probably intended formal, but leaves some wiggle room o (h), EPA uses formal for some, informal for others, depends on type of situation, type of order given, severity of corrective action, level of civil penalty Ohnesorge said in email - What you need to take from Chemical Waste is o i) that the Supreme Court's 1983 Chevron decision provides a new, deferential, framework for courts reviewing agency interpretations of statutes, and o ii) that courts in various circuits have applied the Chevron framework to agency determinations of whether their statutes require them to engage in formal, rather than informal, adjudication. Informal Rulemaking Buildup to VY: 60s and 70s saw the fear of agency capture grow DC Circuit dominated by liberal activists creates hybrid rulemaking, requiring additional procedure from agencies, though not nearly equal to formal rulemaking Example: Portland Cement v. Ruckelshaus, It is not consonant with the purposes of a rulemaking proceedings to promulgate rules on the basis of ... data that, [to a] critical degree, is known only to the agency, Taken to mean that the DC Court would require this DC makes by far the most Admin law decisions Flight to rulemaking, as almost all rulemaking was now notice and comment after FECR Three layers of informal rulemaking: 1. Notice of Proposed Rulemaking, NPR 2. conduct of rulemaking proceedings (Vermont Yankee, narrowly construed, only is here) 3. publication of a statement of basis and purpose Vermont Yankee, 1978 Rehnquist reigns in DC Circuit, 7-0 decision o DC was requiring more formal requirements than APA Would this allow public interest/NGO orgs to challenge industry influence? Were the DC circuit justices worried about agency capture? Apparently so Can be read in two ways

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Ohnesorge, Administrative Law Outline Fall 2003 o 1. narrowly only concerns middle section of rulemaking, courts cannot make new
procedural requirements

o 2. broadly applies to all rulemaking procedure

Did anyone listen to VY??? Seems like they did for Phase Two. Portland Cement: 1973, DC It is not consonant with the purpose of a rulemaking proceeding to promulgate rules on the basis of inadequate data, or on data that [in] critical degree, is known only to the agency.

Nova Scotia, 1977, 2nd circuit Phase One: o Agency promulgates rule but provides none of the data it relies on o To suppress meaningful comment by failure to disclose the basic data relied upon is akin to rejecting comment altogether. For unless there is common ground, the comments are unlikely to be of a quality that might impress a careful agency. Could lead to arbitrary decision-making o Court says this is procedurally erroneous as the burden is on the agency to show why the rule should be applied to such a broad class of fish Phase Two: o Court strikes down on this basis as well o Agency left vital and material questions that were raised in comments unanswered o Court will not sanction silence Connecticut Light and Power Co. v. NRC, 1982, DC Court upholds the regulations, but has concerns about the procedures followed, says the commission has complied, but just barely o Exemption procedures play an important role in the courts upholding the rule

Phase One: Rule changes from NPR to final rule o Court says this makes comments almost useless because comments are on something that is not the final rule o Courts says that NPR must contain adequate technical basis for proposed rule so that meaningful comments can be made (like Nova Scotia) o But, all is good because the final rule was a logical outgrowth of the NPR NPR gave precise subject matter and issues as required by 553(b)(3) Phase Two: o Court says that the statement of basis and purpose must be sufficient to allow judicial review without the court rummaging through the record to elicit reasoning

MCI, 1995, DC Circuit 1st phase NPR o buried notice

In NPR, one issue is only mentioned in a footnote in the background section Turns out to be important aspect of changes

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Ohnesorge, Administrative Law Outline Fall 2003 o Court applies Florida Power & Light was the notice adequate to afford interested
parties a reasonable opportunity to participate in the rulemaking process More cites on 275 Exemptions from APA rulemaking procedures Procedural rules (procedure and practice) JEM, 1994, DC FCC creates hard look rule o Any incomplete applications or errors in applications

All procedural rules effect substantive rights, there must be a balance between the degree to which rights are effected and the needs of the agency Court upholds hard look rule because after applying balance test, the rights affected are not as important as the efficiency concerns of the agency

Policy Statement or Interpretive Rule? Four tests Legal Effects legal formality test, very pro-agency, causes gamesmanship o Substantive/Legislative Rule - Has legal effect, is binding on regulated parties, has the effect of law o Interpretive rules are not enforceable, cannot be direct basis for enforcement action Practical effects of interpretive rules may be the same as those of legislative rules Substantial Impact reality-based, Vermont Yankee killed this test o Does a rule have a real, substantial effect on the regulated parties Impact on Agency - reality-based, can only be applied much later... o Fact/history specific: what is the agency actually doing with regard to the rule? If 100 people break an interpretive rule and all 100 are prosecuted by the agency, then... See 287: US Telephone Assc. Williams 4-part test American Mining, DC, 1993 Test: If YES to any of these, then it is a legislative rule: 1. in absence of rule, there would NOT be an adequate basis for enforcement action 2. whether it has been published in the Code of Federal Regulations 3. whether the agency has explicitly invoked it legislative authority 4. whether the rule effectively amends a prior legislative rule Good Cause 553 when the agency for good cause finds ... that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.

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Ohnesorge, Administrative Law Outline Fall 2003

Inherently fact-specific

Tennessee Gas Pipeline v. FERC, 1992, DC Interim rule challenged o Rule requires notice to be given to the agency before construction on existing or new pipelines Agency argues that it falls under the good cause exception o 1. interim measure o 2. needed to prevent environmental harm, especially if accelerated construction before final ruling is given Court strikes it down because the agency did not back up fears about environmental problems from construction with good data.

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Ohnesorge, Administrative Law Outline Fall 2003

Informal Adjudication Adjudication whatever creates an order Same on the record language, but not the same at all Trend is to make adjudication more like rulemaking, deference to agency, look for hearing language in organic statute Informal adjudication requirements Constitutional Due Process o 5th and/or 14th amendments Organic Statute o May not trigger formal, but may require some process Agency Regs Agency Practice APA DOES NOT HAVE anything beyond 555(e) o If you have made a written application/request and it is denied, you should get a prompt notice of denial with grounds for denial Citizens to Preserve Overton Park v. Volpe, 1971 Congress has said that Federal funds may not support the building of a highway through a park (or other similar area) unless o no feasible and prudent alternative AND o all possible planning to minimize harm Secretary of Transportation decides to run highway through Memphiss Overton Park o Says no feasible and prudent alternative AND all possible planning to minimize harm o But, does not back up these findings 706 gives the court its standard or review, arbitrary and capricious o to review using this standard, the court needs some record to go on o so, they must remand to District Court for factual record-building This case is based on the citizens substantive complaint, but it develops additional procedural requirements. Similar to Overton, see US Tankers Owners Committee v. Lewis, 1982, DC: Court says the trend is towards requiring the equivalent of note-and-comment procedures for informal adjudications o Courts require some explanation of agency action o Also, interested parties need to be somewhat informed of and have the ability to comment on the evidence that the agency has in front of it PBGC v. LTV, 1990 PBGC is kinda like the FDIC, but provide pension insurance LTV files for bankruptcy, PBGC takes the LTV pension plan... then decides to give it back when it thinks the steel industry is facing an up tick LTV refuses to take the pensions back, so agency is forced to bring an enforcement action, LTV challenges enforcement action in court LTV argues Overton o This decision was procedurally inadequate o Sometimes it is ok for courts to require additional procedures

PBGC argues Vermont Yankee

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o Vermont Yankee says that Courts should not add procedures

Court upholds the agency action and says that Overton and VY are not in opposition. That Overton did not create new procedures out of thin air but based them on the arbitrary and capricious section of 706. Castillo-Villagra v. INS, 1993, 9th Circuit (Supplement) Legislative v. adjudicative facts o Legislative: facts about the world, you want adjudicators to take notice of these X is president of C o Adjudicative Fact: relevant to parties in the case, the facts under adjudication Y and Z can return to country C without fear of persecution o Mixed Q is out of power in C 556(e) of the APA o only applies to formal adj No clear rules about when official notice must have a chance for opponent to rebut Chenery Saga Chenery I, 1943, US Chenery owns Federal Corp through a complex set of corporations owning other corporations Federal is a holding company that owns shares in utilities Federal Corp has three classes of shares o A o B: voting rights o Preferred: often do not have voting rights, special dividend rights 1935 Public Utility Holding Act o creates SEC to force reorganization of public utility holding companies o supposed to approve reorganization plans that are fair and equitable and not detrimental to the interests of investors Commission says o Chenery cannot buy into the new shares of the new post-merger corp through Federals current preferred shares o Why?

1. Business Law reasoning - SEC says that Chenery has a fiduciary duty to the shareholders from Business law, Meinhard v. Salmon Unfortunately, this does not provide any real support for the SECs position 2. Expertise Theory the SEC has the experience to apply the standards of the organic statute did not raise this until the Trial, not in original SEC order

Chenery I rule o Cannot uphold agency action based on justifications brought up in court alone o Must base review on actual reasoning used by agency at the time Court seems to want SEC to use its expertise to promulgate a rule/regulation, not an adjudication

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Ohnesorge, Administrative Law Outline Fall 2003

Due Process 1. What is the action? (according to the Courts, Londoner/Bi-Metallic) a. Rulemaking b. Adjudication Was there a deprivation of a Protected Interest? What process is due? a. Often this means, When is the process due? i. Before deprivation can take effect? Usually a strong presumption ii. Afterwards?


Joint Anti-Fascists Refugee Comm. v. McGrath, 1951 Ignore the majority opinion... Frankfurters concurrence is the important opinion Group was put on a list of communist orgs by Attorney General a. Being called a communist in 1950s was a big deal b. Tarnished your reputation No process given, they were lucky to even find out that they were on the list Was there a deprivation of life, liberty, or property? a. Kinda Frankfurter uses grievous loss of any kind or magnitude analysis a. Dont necessarily worry about life, liberty, or property b. But if fits into life, liberty, or property then dont worry about magnitude Application of McGraths grievous loss standard: Wisconsin v. Constantineau (1971) (page 396) Bd. Of Regents v. Roth One-year contracted professor is not rehired Court limits due process deprivation inquiry o The range of protected interests [in property and liberty] is limited o We are not going to look at magnitude, we are going to look at the nature of the deprivation o Move magnitude to third inquiry, when and what process needed? For property interests o legitimate claim of entitlement what is that? Documentation of some kind saying you have a right to it Basically, look for a formal positive source Some people describe this case as creating a positivist trap o The employer or legislature can control whether you get an entitlement Entitlement Paradox Entitlement is defined by the process given to you o So, if the process given to you says you have no process, then you have no entitlement and no due process claim o There is a post-Roth line of cases that bring this and other problems up Likely cover these in con law II

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Ohnesorge, Administrative Law Outline Fall 2003

What procedures are due (if first two inquiries are met)? Perry v. Sindermann, 1972 Professor at junior college in Texas is fired o He had been there for four years under one-year contacts renewed every year o He had some institutional disagreements with the Regents and had missed some classes to testify before the Texas Legislature o Regents never gave him a hearing, just did not renew contract

Court holds that his lack of tenure did not dismiss his free speech claim o Also, notes that government employees may not be fired for things covered by freedom of speech (any constitutional protected interest) o Held that no hearing is required for the nonrenewal of a non-tenured teacher Unless can show a deprivation of life, liberty or property even without tenure Reverses summary judgment and remands to District court for further proceedings

Cafeteria & Restaurant Workers Union, AFL-CIO v. McElroy, 1961 the very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation. Mathews v. Eldridge, 1976 (page 447) a few years after Roth, 1976 Disability is cancelled by agency, enough process given? Eldridge cites Goldberg (1970) which was a Welfare case o Goldberg was still in the grievous loss period o It said that you needed a ALJ hearing before the money is taken away Three part test to determine what procedures are due o 1. private interest including magnitude of harm o 2. the risk of an erroneous deprivation through procedures given reliable? Fair? What is the value of adding additional procedures? o 3. the governments interest, including the burdens additional procedure will cause on the government is the govt interest, the public interest? What are the costs of adding additional procedures? Judicial Review - Facts Under 706 Unless formal, only arbitrary and capricious to review findings of fact Universal Camera (1951) substantial evidence review needs to be more searching o look at whole picture, all evidence Industry and congress think that the NLRB is too pro-labor, express intent to enhance the role of the judiciary in reviewing agency determinations Court says that action must be: o Supported by the evidence seen in the whole picture Includes pro and con evidence Also must look at the findings of the initial determination, probably not the findings in the final Commissions decision o What exactly does substantial evidence mean?

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Ohnesorge, Administrative Law Outline Fall 2003

Dont replace with new language, then we have to define the new language.... same problem faced with substantial evidence Substantial Evidence is for formal agency actions

Kimm v. Dept. of the Treasury, 1995, DC Kimm works for the Dept. of Treasury/the ATF and used his govt owned car four time in the last year to drop his child off on his way to work, major time savings, not much extra driving at all, he is required to stay in contact and staying in the govt car allows him to do so. He is also highly decorated. ATF suspends him for 30 days b/c this was willful violation of the statute Court cites Felton v. EEOC (DC, 1987) which said that willful violation requires more than intentional action when the action is a violation, must have knowledge that it will be categorized as a violation Kimm gives solid, unwavering testimony to Trial court (AJ) indicating that he did not think this was a violation and he thought this was necessary to accomplish his duty successfully. Agency normally gives discretion to officers to make this type of decision. Court says Not supported by substantial evidence, reverse Judicial Review of Facts Informal Proceedings Association of Data Processing... v. Federal Reserve, 1984, DC, page 530 Scalias opinion from his DC days o He says when reviewing informal actions, arbitrary and capricious review is the same as substantial evidence This is not the norm He is actually try to move substantial evidence test to the arb. And cap. Standard Lawson says (page 537) that this is settled law in the DC Circuit (citing Center for Auto Safety v. FHA) Some of the other circuits do not agree, see Corrosion Proof Fittings v. EPA (5th Circuit 1991) Judicial Review Law Pre-Chevron Pure, abstract legal questions are reviewed De Novo Mixed questions, Applied legal questions, fact-specific are reviewed: o In varying ways.... see cases NLRB v. Hearst, 1944 Pure Law question o When Congress defined employees as employees, did they intend for the common law definition of employee (i.e. respondeat superior) to be used? Court rejects common law and even state laws as bases for defining employee Says congress intended a national standard Mixed legal question: o Are full-time newsboys employees? Court decides that the Board should make the decision with review by the Courts Through adjudications, NLRB almost never uses rulemakings Various clauses are used on 553 to define the standard of review Court should accept agencys determination if it has:

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Ohnesorge, Administrative Law Outline Fall 2003

1. warrant in the record AND 2. a reasonable basis in law Court agrees with the agency

OLeary v. Brown-Pacific-Maxon, 1951 Man is on employers property, sees a man drowning, goes to save him, drowns himself Pure Law question o How should scope of employment be defined? Common Law scope of employment asks Detour or Frolic of the activity. Court agrees with the agency decision Mixed legal question o Was OLeary acting in the scope of his employment when he tried to rescue these guys in the channel? Court says yes Uses substantial evidence test Why? Cites Universal Camera.

Chevron, 1984 Opinion by Stevens o Whether the Bubble-concept is legal Question: is this a pure question of law? The consensus is that it is Chevron analysis o 1. Has Congress spoken on an issue? With enough specificity?

[if not, then we assume Congress had delegated some discretion to the Agency] o 2. If not, was the agencys determination reasonable?
INS v. Cardoza-Fonseca, 1987 Stevens writes majority opinion It was fairly well-established that plaintiff feared the Sandinistas b/c they had held relatives prisoner and plaintiff had fled country Two ways for aliens to petition to not be deported: o 243: mandatory withhold deportation more likely than not, subject to persecution demonstrates that life or freedom would be threatened o 208: discretionary give asylum persecution or a well-founded fear of persecution on account of... Court rules that the two standards are separate and the terms of each should be used exclusively for that rule, used plain meaning to determine this o Cites chevron for the courts and agencys deference to congressional intent as expressed through the statute o Also holds (citing chevron) that the judiciary has the final word on the statutory construction, no deference, de novo, just as it was before Chevron was misread by courts, and in particular by Scalia. Scalia dissents: says Stevens, the author of Chevron, is misinterpreting Chevron. That it should be deferential review of agency interpretations of pure law. No justices join him.

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Ohnesorge, Administrative Law Outline Fall 2003

NLRB v. United Food, 1987 (after Cardoza-Fonseca) Courts applies: o 1. intent of congress through statutory construction o 2. if silent or ambiguous, then is the agencys construction of the statute permissible?

Scalias vision seems to win o He writes a concurrence (joined by 3 others) declaring that this is a re-affirmation of strong Chevron analysis Strong Chevron has not really been questioned since this case

Judicial Review of Agency interpretations of their own regulations Seminole Rock, 1945 Regarding agencies interpreting their own regulations o Same as Chevron? More deference? o Seems to be more deferential:

The agencys interpretation is of controlling weight unless it is plainly erroneous or inconsistent with the regulation.

Interpretation of Constitution or Judicial Decisions De Novo review o Gulf Power Co. v. FCC, 11th Circuit 2000: no deference for constitutional interpretation o Reno v. Bossier Parish School Board, 2000: judicial opinions no chevron deference... de novo? Not sure. Contracts, deeds, and other legal instruments are a mixed bag.... page 586 Chevron Step 0: Wagner Seed v. Bush, 1991, DC Courts holds that EPA interpretation of CERCLA (Superfund) is ok because EPA administers it o It says step 0 is met

Chevron Analysis only if step 0 met: o Step 0: Is this a statute administered by the agency? APA and Freedom of Info. Act not administered by any agency, so not under Chevron analysis o Step 1: Has Congress spoken? o Step 2: Is this reasonable?

There is a split in the Circuits over whether Chevron deference applies to interpretive rules. (page 593) DC says yes: Ginsburg opinion in Wagner Seed & Health Ins. Assn v. Shalala (collects a whole bunch of cases from DC that say this) o 3rd Circuit agrees with DC: Elizabeth Blackwell Health Center for Women v. Knoll.

10th Circuit disagrees:

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

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Ohnesorge, Administrative Law Outline Fall 2003

Of course, it seems logical that if one is supposed to administer the statute, then other interpretations should be discarded

Haggar Apparel, 1999, cited in Mead Held that Customs regulations receive chevron deference Mead, 2001, Supplement QP: Whether customs classification rulings should receive chevron deference Court holds that Chevron deference applies when the agency is acting with a congressional grant of authority to make rules that have the force of law o Examples (safe-harbors): Adjudication Note-and-comment rulemaking Other indications of congressional intent Court holds that Chevron does not apply to the ruling in the case But, the Court revives Skidmore v. Swift o Skidmore stands for the experience and expert nature of agency decisions. Of course, some are more than others and judges should give agency action the chance to persuade them. o No power to control, but there is power to persuade. o Spectrum or sliding scale of Skidmore deference: from indifference to substantial deference Scalia Dissents and thinks that Chevron should always apply SWANCC v. US Army Corps of Eng., 2001 Solid Waste wants to use an old query outside Chicago as a landfill. The Army Corps of o Engineers denies them a permit.

The Army gets its authority from a Congressional statute that gives them jurisdiction over all navigable waterways. Congress gets its authority from the Commerce Clause because birds travel interstate and need the waters. So, anywhere a bird may get its feet wet is a navigable water. The query outside Chicago had some small ponds and such. o Or, at least thats how the Army was interpreting things. Rehnquist dislikes the Armys interpretation. An agency shouldnt really be able to determine their own jurisdiction. Moreover, the Army was interfering with the state of Illinois ability to govern its own land and waters. o This is a 10th Amendment issue, and agencies should not get Chevron deference in constitutional questions. This case is controversial for revived Federalism.

Chevron Step 1: should it be exhaustive investigation or obvious answer? FDA v. Brown & Williamson Tobacco, 2000, page 618 Basic question: Whether tobacco should be covered by the FDCA? Be regulated by the FDA? This is the step one analysis Why not leave it to congress? (Court does not want to leave this decision to congress.) o Political pressures will make congress leave the agencys decision alone?

OConnor seems to make Chevron into one question or maybe reverses, in any case, she definitely makes it all pretty confusing: o She decides that the agencys decision is unreasonable and that the reasonable decision would have contradicted clear congressional intent. Very extensive

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Ohnesorge, Administrative Law Outline Fall 2003

Chevron Step 2: what is reasonable? Agencies seldom lose at this stage When they do lose, they seem to be either contrary to the underlying statute or completely bizarre. AT&T Corp v. Iowa, 1999, page 643 This is an agencys first loss on step two ever in the supreme court The statutes standard was necessary and impair o The FCC decided that necessary standard would be met even if alternatives were available because it could cause delay and higher costs for new Market entrants o The FCC decided that the impair standard would be met if a failure by the incumbent to provide access would decrease quality or increase cost (financial or administrative) when compared with the cost and quality of using the incumbents network Basically, the FCC interpreted every very expansively in order to give new market entrants and competitors the best access to incumbent networks o Scalia says they based this on an erroneous interpretation of at any technically feasible point o But, that section only says where access will occur, not which network elements must be unbundled Not a reasonable interpretation Reviewing discretionary policy decisions Q2: outcome v. process v. procedure justification The benzene case is a good one here, see page 6 of the OUTLINE. Industrial Union Dept, AFL-CIO v. Hodgson, 1974, DC, page 672 Technically supposed to be substantial evidence according to OSHA Statute Ends up being a hard look review o The same thing the court would have done under APA arbitrary and capricious Question: is this review done on substance or on procedure? Court remands some things, keeps others... o Says that agencies must justify the decision to regulate all agencies the same Motor Vehicle v. State Farm, 1983, page 677 Point One: when agencies rescind a rule, they need to go through the same process and face the same level of review as in a normal rulemaking. Then, the court applies arbitrary and capricious o Agency tried to get around this standard by arguing: This was not a policy decision, but a pure discretion decision, so standard should be abuse of discretion What would the difference be??? Ohnesorge says this is not necessary to know for this course 1. the agency never considered just requiring airbags

Test A) the agency must give a reason If no reason, it is prima facie A&C Test B) if a reason is given, but it is a bad one... it will be overturned as A&C Smoking out bad decisions o Policy decisions need to be made for the right reasons

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Ohnesorge, Administrative Law Outline Fall 2003 o 2. they did not examine the actual safety gains caused by passive detachable seatbelts
the agency did examine, but failed to distinguish sufficiently passed A but failed B This is THE SCOTUS endorsement of Hard Look Review

Engraving and Printing v. FLRA, 1993, DC, page 705 Agencies must explain departures from past practice, if not A&C o This may only result in remand for justification Center for Auto Safety v. Federal Highway Admin, 1992, DC, page 707 This is a mandate on the states Allowing petitions to excuse from 2 year inspection requirement o Concurrent problems: 1. A&C 2. Procedural problems with not including data from draft studies Requiring 5 year inspections for underwater parts of bridges o No data/insufficient data Court will not allow the agency to define the record in a vacuum

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Ohnesorge, Administrative Law Outline Fall 2003

Chevron Step Two Conclusion In an article, Judge Silberman says that Chevron Step Two and A&C are analytically the same. They both end up asking: whether the agency considered and weighed the factors Congress wished the agency to bring to bear on its decision Then in a decision, Silberman says the same thing National Assn of Regulator Utility Commissioners v. ICC. The trend is towards joining the two tests. Pages 713-716. Preclusion Doctrine 701 (a) (1) and (2) pre-1900, presumption of non-reviewability 1900 SCOTUS gets rid of this presumption 1967, Abbott Labs creates presumption of reviewability o also allows pre-enforcement review

then Overton Park no law to apply

Statutory preclusion - 701(a)(1) after Abbott, the courts generally were skeptical of claims of statutory preclusion o limited statutory preclusion to direct or Express preclusion mid-80s, near chevron, court makeup changes, New Category of Statutory preclusion: o Implied Preclusion

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

Committed to Agency Discretion by Law 701(a)(2) Possible overlap between this and implied? Overlap in process of examining situation? Just in practice? Overton Park o No law to apply Webster v. Doe o CIA fires an employee for being homosexual They did not follow their own regulations This is an informal adjudication o Majority applies Overton Park and Heckler v. Chaney and find that this is a 701(a)(2) discretionary case where review is precluded What about the agency regulations? Preclusion, Review 701(a)(1) o express: statute precludes review

courts generally hostile to express restrictions on their right to review action o implied: preclusion is the intent of congress one way or another
relies more on standard statutory construction seems contrary to the courts reaction to express preclusion Block: basically gets rid of customers as plaintiffs (dairy) Bowen: does not preclude consumers (health insurance)

701(a)(2) o Committed to Agency Discretion by Law

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Ohnesorge, Administrative Law Outline Fall 2003 o Webster: when no law exists to apply (from Overton Park), then it is committed to

o Lincoln v. Vigil: congress gives agency money, for no particular reason. Agency creates
program... then decides to end program. No guidance from congress. Probably no review at all b/c implied preclusion OR 701(a)(2) Any review (if ANY at all) will be very deferential. Standing Two major things to know: Need to do Lujon 3 part test, know 3 part test. Adapso zone of interest Lujon v. Defenders of Wildlife, 1992 Standing 3-Part test 1. Injury in fact: (a) concrete and particularized and (b) actual or imminent 2. Causal Connection: traceable to challenged action of the defendant, no third party 3. likely that injury will be redressed by a courts favorable opinion 702, see page 802 for summary First sentence = pretty restrictive legal interests/legal wrongs test First sentence was basically re-written by Adapso case (zone of interest), page 810 o Makes the standard for standing much broader: o When? Exhaustion Twofold: o Make use of the opportunities that exist within the agency o Raise during these reviews any arguments you want to raise later in court Like preserving arguments Why exhaustion? o We want the agency to have the chance to correct and learn from its own error o The court will get the most final opinion from the agency o We want agency process to mean something

aesthetic, conservational, and recreational Zone of interest test is just made up

Common Law Exhaustion ended with Darby Darby: 704 o if statute does not make requirements for exhaustion, courts cannot create requirements (like those of common law exhaustion) o in 704, final means exhausted

Finality 704 again o no finality problem with rules or adjudications that have been finished o NEED to look at the substance of the rule and the effects on the parties. Are they substantial? FTC v. Standard Oil of Calif. o This could also be challenged under standing, i.e. committed to agency discretion by law A lot like prosecutorial discretion

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Ohnesorge, Administrative Law Outline Fall 2003

Ripeness Not in the APA Generally, it is the desire to have agencies apply a rule before having judicial review of the rule. It may be applied narrowly or broadly. o Actual damage Affects standing as well Abbott Laboratories: o General presumption of reviewability by the courts Recognition that judicial review is pat of the game. Realist view of the process. o Then, two prong inquiry, not necessarily a test, just inquire into these areas:

1. Fitness: fit for judicial review? Then it is ripe 2. Hardship: would there be hardship if we wait until the agency actually applies this? Then we ignore ripeness and must review it

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