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7/30/2019 Admin Law - Debow
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ADMIN. LAW OUTLINE
Trevor Jones
Introduction
a. Interpretation: 2 Schools of Thought
i. Textualist/Formalist
1. Text itself to find meaning of drafters (Debow)ii. Living, Breathing, Document
1. Constitution must change with society
2. Under this view, due process and equal protection clauses can be
interpreted in various ways.
b. Art. I § 8 has been misconstrued .i. Art. I § 8 cl. 1 gives legislative powers herein granted , thus states
retain police power. No broad authority however, to promote generalwelfare—text says that Congress has power to tax and that money
must be spent for general welfare
ii. Cl. 3: Control over commerce only supposed to cover control over interstate and foreign commerce—not instate commerce.
iii. Cl. 18: Also not a broad grant of authority: Framers were saying “If
we have overlooked something in 1-17, Congress can legislateaccordingly.
c. Bill of Rights Issues
i. People opposed Bill of Rights b/c why addres things Congress can not do? This gives Congress idea that they can do anything not listed. 10th
amendment attempts to reinforce this idea.
ii. States are supposed to have all other powers to legislate. Have police
powers and can make whatever laws they want. However, Congresshas all but taken over police power.
Text Intro
d. Agencies
e.Administrative Procedure Act (APA, 1946)—is a statute that regulatesmany of the operations of federal administrative agencies.
f. Agencies : each authority of the U.S. government except Congress, thefederal courts, territorial governments, and certain military entities.
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i. An “authority” can be an agency even if it is within another
agency.
ii. Heads of departments are the President’s cabinetiii. Behind every agency lies a legislative act, called an organic act
or organic statute, that creates, empowers, defines, and limits that
agency.iv. Congress creates agencies.
g. Structural Distinctions Among Agenciesi. Single-Headed v. Multi-Member
1. Single-Headed means that there is a single person at the
top of the organizational chart, while multimember means that
there is more than one sharing ultimate decisional authority.2. The term “commission” or “board’ usually means
that it is multi-member.
ii. Executive v. Independent Agencies1. Agencies whose heads are subject to unlimited
presidential removal authority are executive agencies2. Agencies headed by persons who the president cannot
remove at will are independent agencies.
3. Generally, single-headed are executive, while multi-member are independent.
h. Why Insulate Agencies from Presidential Control?
i. Congress began to do this beginning with the Progressive Movement.ii. The progressives wanted to keep a unitary executive out of politics
with regard to policies, management, and administration. (Bureaucrats
(on policy side) instead of Politicians) They wanted to takegovernment away from politicians and give it to experts.
iii. The flip side of this is that politicians are politically accountable while
bureaucrats are not.iv. Is it good to give someone governmental authority and then
completely insulate them from the democratic process?
i. Agency Historyi. Interstate Commerce Commission is first in 1887.
ii. FDR and New deal: major progressive president creating many new
agencies which are generally multimember.iii. LBJ and Nixon later create new ones which focus on health and safety
—theirs are generally single member because the Progressives were
overly optimistic about taking it out of the political process.
j. Rulemaking Vs. Adjudication : When agencies affect the rights and
obligations of people, they do so through one of these two methods.
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i. Rulemaking: this looks very much like a legislature passing a law. A
properly conducted rulemaking results in a rule, which functions like a
statute (quasi-legislative). Rules have General Applicability and
Future Effect
1. If you violate a rule, you can be heavily fined or event sent to jail.
2. Rulemaking is the function of laying down general regulations(rather than identifying an individual).
3. Rules do not name particular persns or entities at whom the rule is
directed.4. Rulemaking is prospective, and has a definite effect on individuals
only after the rule is subsequently applied (general and prospective
application.
ii. Adjudication : this looks very much like a court deciding a case. A
properly conducted adjudication results in something called an order,
which functions like a court judgment.(quasi-judicial)
1. If you violate an order, it can be legally enforced.2. Orders apply to named persons or to specific situations
(individuals are named).3. Adjudications also differ from rulemakings in that they have an
immediate effect on specific individuals (backward looking and
specific parties).
iii. Londoner v. City of Denver (1908) pg. 15
1. Facts: Series of procedures were supposed to be followed before
city (board of public works) paved and charged property owner for improvement. City says this must be started by petition from the
owners—this petition never occurred. City also lied about there be
no objection that the property owners filed—the city met withoutnotifying property owners.
2. Holding: Due process of law requires that the plaintiffs have an
opportunity to have arguments heard. Thus court holds thatagency was constitutionally required to hold hearings.
3. Debow says: This holding is absurd. Is oral hearing the true
meaning of “due process”? (Contrast with Bi-Metallic)
iv. Bi-Metalic Investment Co. v. State Board of Equalization of
Colorado(1915) pg. 20.
1. Facts: Agency increased the value of all taxable property inDenver by 40 percent. No property owners are given opportunity
to be heard.
2. Holding: When an agency imposes a tax on an across-the-board basis, without attention to the particulars of any taxpayer, due
process does not require individualized hearings. “There must be a
limit to individual argument in such matters if government is to go
on.”
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a. Due process is required only when “a relatively small number
of persons was concerned, who were exceptionally affected,
in each case upon individual grounds.3. Distinguished from Londoner: Holmes says that a relatively
small number of persons were affected in Londoner compared with
a large number here; and this decision is decided on generalgrounds rather than individual grounds (different situations and
facts).
4. Londoner and Bi-Metallic as applied today: Due process isrequired when the proceeding is functionally an adjudication, as
opposed to a rulemaking.
II. THEORIES OF AGENCY BEHAVIOR
a. 1787, James Madison
i. “If men were angels, no gov’t would be necessary. If angels were to
govern men, neither external nor internal controls on gov’t would benecessary.” Gov’t reflects the fallen human nature. The difficulty of
creating & maintaining a gov’t is this: “you must first enable the gov’tto control the governed; and in the next place oblige it to control
itself.”
1. This is a positive claim: it is a statement about the way the worldis (true or false—it is a claim of fact).
2. Normative statements are neither true nor false, but rather are
arguments about the way things should be (claims of opinion.
b. 1928, Eastman
i. Highly naïve view of agencies: “independent regulatory commissions
are clearly nonpartisan in their makeup, and party policies do not enter into their activities… When once the members are selected their
political affiliations cease to be of the slightest consequence.”
c. 1938, Landis
i. Optimistic view of agencies (arrogant/egomaniac). Basically thinks
that people like him ought to be given power to deal w/ problems;
arbitrary decisions w/out regard to law/political process. Totally notw/in the const. process. Argues that the legal field loses nothing from
the increasing reliance on administrations instead of judges, but that
under the banner of the law “as a commanding discipline are enlistedarmies of men dedicated to the idea of justice.” “The rise of the
administrative process represented the hope that policies to shape such
fields could most adequately be developed by men bred to the facts.”ii. Major administrator of new deal under FDR
iii. Lawyers would not have a function in court under this philosophy.
iv. Basically says set a match to the Constitution (and he was Dean of
Harvard law school0
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v. Wants lot of authority in agencies with little judicial oversight.
d. 1955, Bernsteini. Human life cycle view of agencies: agencies begin w/ an aggressive,
crusading spirit, but in the period of maturity, “the Commissions
become more concerned with the general health of the industry andtries to prevent changes which adversely affect it. Cut off from the
mainstream of political life, the commission’s standards of regulation
are determined in the light of the desires of the industry affected.”ii. A generation after the beginning of the New Deal, people begin to
realize actual performance vs. what was promised; the agencies didn’t
turn out as great as they were supposed to
iii. Debow says there is naturally a limit to how much regulating acommission does to the industry.
e. 1971, Noll
i. Public Choice Theory: Applying economic reasoning to politics &gov’t: says that human behavior is more or less predictable; it’s goal-
oriented & rational.1. Concentrated benefits & (broadly) dispersed costs—sugar farmers
example. Those with concentrated benefits are more successful
than those with dispersed costs. Lots of politics involves actorswho get organized to receive concentrated benefits, & the cost gets
spread out broadly in a way that doesn’t really affect everyone else
too much (slightly more expensive sugar). This is why consumers’
interests are underrepresented—don’t have incentive to get politically involved in things that don’t really affect you much.
2. Easier to get small numbers of people to do things than to get large
numbers—also easier to get people to do things that they have astrong interest in.
3. Free Rider Problem-- people think, “I’m just one person—it won’t
make a difference one way or the other, so I won’t do it” so they just free-ride the other people’s effort. If the group is small
enough, you can’t really get away w/ being a free-rider (small
study groups, etc.).
a. Politics is an attempt to get people to overcome this problemin very large numbers.
ii. Industry Capture Model of Agencies: it’s the industries that the
agencies regulate who are affected most by agency decisions, sothey’re going to make the most effort (spending time & money) to
sway the agency decisions. Agencies get captured by the interest
groups that they are supposed to assert authority over iii. Negative view of agencies. “An agency that tries to minimize the
chance of being overruled by subsequent legal or legislative decisions
must, when the interest of a regulated firm and its customers or the
public generally are at odds, be overly responsive to the interests of the
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regulated.” Theoretically, appointees to agency commissions are
neutral, but practically, they must have the tacit approval of those in
the regulated industry. Also, economic analysis demanded lessregulation & more protection of individual liberty from gov’t intrusion
f. 1980, Wilsoni. Notes that agency behavior is “complex & changing; it cannot easily
be summarized as serving the interest of either the regulated sector or
the public at large.” Says that the trend now is for agencies to chose“stricter and more costly standards over more lenient, less expensive
ones,” and that the cost of political access has been lowered. “Any
generalization about how government works is vulnerable to the
behavior or persons who have learned that generalization and wish torepeal it.”
III. THE CONSTITUTION AND THE ADMINISTRATIVE STATE
a. Concept of Separated Power
i. The 18th Century vision
1. Madison, Federalist 10 & 51 : the powers properly belonging to oneof the departments ought not to be directly and completely
administered by either of the other departments. Must provide
some practical security for each, against the invasion of the others.
Ambition must be made to counteract ambition (have to give each branch incentive to guard their respective power). Madison
realizes that the Constitution can be a “mere parchment barrier”
against the encroaching human spirit of power
ii. The 20th Century Vision
1. Landis: Opposite of Madison: Says the admin process springs
from the inadequacy of a simple tripartite form of gov’t to deal w/
modern problems. Wants to recombine the three powers in
agenciesa. Example of New Deal attitude—to extent that Constitution
stops them, they will ignore it.
b. Says modern problems are different from madison’s and thuswe cannot always strictly follow Constitution.
c. Debow says the framers gave us a way to change the gov’t in
a Constitutional way—through amendments.
2. Straus, Formal and Functional Approaches another example of
functionalism, though not as brash as Landis (at least tries to
reconcile). Says administrative issues aren’t political, so it’s ok for
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agencies to have such power. Says agencies are unavoidable given
Congress’s need to delegate at some level the making of policy for
a complex and interdependent economy.a. Truth is that agencies are unconstitutional.
iii. The 18th Century strikes back: formalism v. functionalismdebate.
1. Burns and Markman: Formalists: There are no “inherent” power of national gov’t (as opposed to state gov’t, which does have
inherent power to legislate about anything express what’s
expressly disallowed in the state constitution); the national gov’t
only has the power enumerated to it by the constitution.2. Formalism would take the original constitution and place it next to
the gov’t institution in question and determine whether the latter is
consistent with the former. If not, then it is unconstitutional.
3. Functionalism turns this around—takes the existing institutions,and if they look unconstitutional, they come up with an
interpretation that makes those institutions look constitutional.Their arguments are:
a. Congress has near plenary regulatory power.
b. Congress has an almost unlimited powr to delegate thisalmost unlimited legislative power.
c. Combination of the 3 functions in a single entity is OK.
d. It’s OK to insulate administrative agency decision makers
from political influence.4. Debow says formalists interested in protecting Constitution while
Functionalists interested in protecting institutions.
b. Agencies and Article One
i. Incentives problem: if you’re an elected official, you’ll be tempted toPUNT controversial issues to wherever else you can
ii. Art. I vests legislative power in Congress
iii. Concerns federal statutes that delegate “quasi-legislative power.
iv. Issue is whether Congress has given an agency so much rulemakingdiscretion that Congress has abdicated its responsibilities to exercise
“all legislative powers” as granted by Art. 1 Sec. 1.
v. Even the First Congress carved out an exception, allowing thePresident to essentially legislate on matters concerning pensions for
Revolutionary War vets
vi. Basic Rule —Congress can delegate quasi-legislative power as long asit gives the agency an intelligible principle to follow in exercising that
power.
1. Test (1928): If Congress shall lay down by legislative act an
intelligible principle to which the person or body authorized to fix
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such rates is directed to conform, such legislative action is not a
forbidden delegation of legislative power
vii. The New Deal
1. National Industrial Recovery Act (NIRA): instituted by FDR;allowed for a bypass of the legislature; the code allowed industries
to waive anti-trust laws in exchange for labor concessions
2. Panama Refining Co. v. Ryan (1935) pg. 55
a. Facts: President, by Executive Order, prohibited the
transportation of petroleum exceeding a certain amount, as he
was authorized to do by section9(c) of the NIRA. P claimsthat it’s unconstitutional b/c the section authorizes the
President to pass a prohibitory law
b. Issue: whether such a delegation of legislative power is
permitted by the Constitution (no).c. Holding: Unconstitutional because it contained no standards
guiding the President’s decision of whether to invoke his powers in a particular case (no intelligible principle).
Concerning the matter in 9(c), Congress has declared no
policy, has established no standard, has laid down no rule.There is no requirement, no definition of circumstances and
conditions in which the transportation is to be allowed or
prohibited. Therefore, if 9(c) were held valid, it would be
idle to pretend that anything would be left of limitations uponthe power of the Congress to delegate its lawmaking
function.
i. The Congress manifestly is not permitted to abdicate or to transfer to others, the essential legislative functions
with which it is thus vested.
d. Test: whether the Congress has declared a policy w/ respectto that subject; whether the Congress has set up a standard for
the Prez’s action; whether the Congress has required any
finding by the Prez in the exercise of the authority to enact
the prohibition.e. Dissent (Cardozo): Says that concerning the separation of
powers, there should be sensible approximation & elasticity
of adjustment in response to the practical necessities of today’s gov’t
3. Schecter Poultry Corp. v. United States (1935)
a. Facts: Ds were indicted for violating the Live Poultry Code
which was approved in NIRA by President. (D was letting
his customers pick out the chickens that they wanted). Ds
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claimed that the Code had been adopted pursuant to an
unconstitutional delegation by Congress of legislative power.
b. Issue: Whether Congress in authorizing the code has itself established the standards of legal obligation, thus performing
its essential legislative function, or, by the failure to enact
such standards, has attempted to transfer that function toothers. (the latter).
c. Holding: Section 3 of the Recovery Act doesn’t prescribe
rules of conduct but rather authorizes the making of codes to prescribe them. Such a sweeping delegation of legislative
power finds no support in the decisions upon which the Gov’t
especially relies
i. Congress cannot delegate legislative power to the Prezto exercise an unfettered discretion to make whatever
laws he thinks may be needed or advisable for the
rehabilitation and expansion of trade or industry.
d. Last of Its Kind: Court totally invalidates the NationalRecovery Act. ***This is the first and the last time that the
Court has decided that there has been a delegation of power that violates the constitution.
viii. After the New Deal—The Modern Doctrine
1. Congressional Directives to Regulatory Agencies
a. Example of the Broadness: “The FCC shall grant broadcast
licenses to applicants if public convenience, interest, or necessity will be served thereby.” Basically, the FCC gets to
define “public interest.
2. Mistretta v. U.S. (1989) pg. 64
a. Facts: Ds were sentenced after being found guilty of drug
possession. They argue that the Sentencing Guidelines,under which they were sentenced, which are promulgated by
the U.S. Sentencing Commission are unconstitutional b/c the
legislature transferred its power to this commission.
b. Issue: Whether Congress delegated excess authority to theCommission to structure the Guidelines. (No)
c. Holding: The holding allowed the Prez to remove art. III
from sentencing commission. The nondelegation doctrinedoes not prevent Congress from obtaining the assistance of
its coordinate Branches; so long as Congress shall lay down
by legislative act an intelligible principle to which the personor body authorized to exercise the delegated authority is
directed to conform, such legislative action is not a forbidden
delegation of legislative power.
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d. Analysis: The Court held that the act’s declaration of
purposes and goals, and its specification of the factors to be
considered by the commission provided a sufficientintelligible principle.
i. The Commission was not part of the executive branch
—it is an independent commission in the judicial branch. Thus, this gave Prez authority to remove
supposedly impartial judges.
e. Dissent (Scalia): i. The “guidelines” have the force & effect of laws, which
is solely the legislature’s job
ii. There is no acceptable delegation of legislative power,
& this case presents an example of a completedelegation. It is irrelevant whether the standards are
adequate, b/c they are not standards related to the
exercise of executive of judicial powers; they are
plainly standards for further legislationiii. The Const. doesn’t allow for a body which is not
Congress and yet exercises no governmental powersexcept the making of rules that have the effect of laws
f. Death of Delegation Doctrine: Mistretta means that the
Delegation Doctrine is Dead. This means that courts are OK w/ the legislature punting issues to agencies to
decide/legislate. Who are these agency people, who are they
accountable to, what are they up to?
3. Industrial Union Dept AFL-CIO v. American Petroleum Inst.
(1980) pg. 74 (though the court has not invalidated a delegation
since 1936, this case uses it to justify interpreting a federal statutenarrowly)
a. Facts: OSHA tried to limit industries to 1 ppm for benzene
rather than the suggested 10 ppm. It had no data that said 1 ppm was safer than 10 as far as causing cancer goes; it only
assumed it, citing that it could basically do what it wanted
under §3(8) & §6(5) of the Congressional Act that instituted
OSHA. Court concluded that §3(8) requires the Secretary of OSHA to find, as a threshold matter, that the toxic substance
in question poses a significant health risk in the workplace
and that a new, lower standard is therefore “reasonablynecessary or appropriate to provide safe or healthful
employment and places of employment.”
b. Issue: Whether a showing that workers exposed to highlevels of benzene is a sufficient basis for a standard that
places the most stringent limitation on exposure to benzene
that is technologically and economically possible
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c. Holding:. No. The plurality construed the statute to require a
threshold finding of significant risk in the workplace before
the agency was authorized to promulgate a workplace safetystandard.
d. Rationale: OSHA presented no evidence to support their
conclusion that the ppm should be reduced tenfold, yet theyare supposed to have the burden of proof, not the industry.
OSHA just noted that the 10-100 safety factor was
“customary.i. Court found that this broad interpretation may violate
the delegation doctrine, and so construed narrowly.
e. Occupational Safety and Health Act of 1970 §3.8 —“The
term occupational safety and health standard means astandard which requires conditions, or the adoption or use of
one or more practices, means, methods, operations, or
processes, reasonably necessary or appropriate to provide
safe and healthful employment and places of employment.i. Does Congress mean this to be read “benefits are
greater than costs”?f. Legislative Intent: * In interpreting a statute, you
ALWAYS discuss the text first & try to determine what it
means on its face (the language, the structure), before youlook at legislative intent.
i. The statute was not designed to require employers to
provide absolutely risk-free workplaces whenever it is
technologically feasible to do so, so long as the cost isnot great enough to destroy an entire industry.
ii. The statute was intended to require the elimination, as
far as feasible, of significant risks of harmg. Concurrence (Rehnquist): The Court should have deemed
the statute unconstitutional, since it delegates power to
legislate to another entity. Congress needs to stop avoidingits responsibilities & get other the fact that there will be some
political division. Should revive nondelegation doctrine
h. Law of Agency
i. Agencies acting pursuant to Congressional power andso act as Congress’ agent.
ii. In this case however, Dept. of labor (exec. Branch)
seems to act as principal as well.i. Note 4, page 97-99
i. Multi-factor balancing tests
ii. Problem: it’s always open to the decision maker to say,“Well, this one thing outweighs this other thing.”
iii. You can justify practically anything under a multi-
factor balancing test.
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c. Life After Mistretta--A Spark of Life?
1. American Trucking Assn’s v. US EPA (2001) pg. 97
a. DC Circuit court makes attempted revival of nondelegation
doctrine, but the U.S. Supreme Court reverses unanimously.
d. Controlling Delegations— The nondelegation doctrine is dead—what can
we do to make agencies more accountable?
i. Legislative Overrides1. Statutory Overrides: Congress can control agency decisions by
passing statutes that override the agency decision or can amend the
organic statute to eliminate the agency’s discretion or even the
agency itself 2. Legislative veto: Congress gives the agency discretion that is
conditional on subsequent approval or lack of disapproval by
Congress; the alternate to a full blown bill
ii. Appropriations: Congress has exclusive control over federalspending; agencies cannot fix their own budget but must rely on
congressional appropriation legislation for funding. Congress thuscontrols the resources that are available to each agency and can use
that control to penalize or reward agency behavior through reduced or
expanded budgets.iii. Legislative History: Paper trail of documents surrounding the passing
of the bill, including:
1. Hearing transcripts
2. Committee reports from the House, Senate, or both3. Statements on the floor of the House and/or Senate from individual
members of Congress
4. A conference committee report5. A presidential signing (or veto) statement
a. Each of these gives the legislature/president a chance to
say/record what they think the statute means (or what theywant it to mean). Therefore, there are almost always
conflicting statements
6. Agencies will treat legislative history very seriously regardless of
whether or not courts continue to use it as an authoritative tool of statutory interpretation. That is because leg. history is a formal
way in which member and committees of Congress can
communicate their desires to agencies. Agencies ignoreCongressional intentions at its peril
7. Immigration & Naturalization Service v. Chadha pg. 101
a. Facts: Deportation of immigrant is suspended. Congress passes immigration legislation without the bill going to both
houses and without the president’s approval.
b. Holding: One-house legislative veto is unconstitutional.
End of the legislative veto. Veto not upheld b/c violated
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i. Formalistic Opinion (Debow says rightly decided)
e. The Scholarly Debate—Are Delegations good policy?
i. Mashaw thinks death of delegation doctrine is a good thing.
1. Have presidential elections for accountability.
2. Those concerned about this accountability can choose to elect adifferent president.
3. Says the amount of discretion in an administrative system is
always constant.
f. Agencies and Article II
i. The Appointment of Agency Officials
1. The fed gov’t now has virtually unlimited legislative jrd over nat’laffairs, & Congress has virtually unlimited power to delegate that
expansive legislative jrd to administrative agencies
2. The Constitution contains an Appointments Clause that specifies a
method of selection for many of the gov’t positions that Congresscreates.
3. Art. II’s appointments clause does not vest this power in Congress,however.
4. Two distinct modes of appointment
1. For “principal” officers--Presidential appointment subject toadvice & consent by the Senate (default mode) &
2. For “inferior” officers--Appointment, w/out Senate participation,
by the President, the courts, or department heads (exclusive
mode)i. Available only for “inferior Officers” & only when
Congress chooses to utilize that mode.
ii. Buckley v. Valeo pg. 126 (1976)
1. Facts: The election commission was appointed by members of
Congress, but the Commission is given extensive rulemaking &
adjudicative powers. Appellants urge that this is unconstitutional b/c of Art. II, § 2, cl. 2
a. The Appointments Clause: “The president shall
nominate…all other officers of the US…but the Congress
may by law vest the appointment of such inferior officers, asthey think proper…
2. Issue: whether, in view of the manner in which a majority of its
members are appointed, the Federal Election Commission mayunder the Constitution exercise the powers conferred upon it. No;
these administrative functions may therefore be exercised only by
persons who are Officers of the US3. Holding: No. The FEC cannot engage in executive functions
such as rulemaking and enforcement because four of its six
members were appointed by members of Congress.
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a. “Officers of the United States” must be appointed under the
Appointment Clause. If Congress appoints, the Commission
must then be limited in its power. b. Any appointee exercising significant authority pursuant to the
laws of the US is an “Officer” & must therefore be appointed
in the manner prescribed by the appointment clause.c. Principal Officers are selected by the Prez w/ the advice &
consent of the Senate. Inferior officers Congress may allow
to be appointed by the Prez alone, by the heads of departments, or by the Judiciary.
d. Unless their selection is elsewhere provided for, all Officers
of the US are to be appointed in accordance w/ the Clause
4. Debow says rightly decided.
5. First time in 40 years that congressional statute concerning
structure of government is struck down.
a. Model of formalism
iii. Landry v. FDIC pg. 132 (2000)
1. Facts: The ALJ (administrative law judges) held a hearing & proposed to the FDIC that a bank officer should be removed. P
argues that the method of appointing the ALJ (allowing the
banking agencies to establish their own pool of ALJ) violates theappointment clause b/c they are inferior officers.
a. Prosecutor and judge both work for agency
2. Holding: ALJs are not “officers” b/c they don’t have the power
of final decision in cases (the FDIC ultimately decides).3. Dissent: ALJs are officers b/c their role is functionally
comparable to that of a judge.
4. Debow does not like outcome.
iv. Morrison v. Olson (1988)
1. Facts: Federal statute authorizes independent counsels toinvestigate and prosecute crimes by high level federal officials.
Under the statute, independent counsel was not appointed by the
Prez with advice and consent from the Senate. Instead, she was
appointed by a panel of 3 Fed. judges. The case arose whenIndependent Counsel (Morrison) had Olsen held in contempt of
court for refusing to cooperate with her investigation. Olsen
challenged the order, arguing that independent counsels were principal officers and should be appointed only with advice and
consent of Senate.
2. Issue: whether independent counsel is an “inferior” or “principal”officer (if she’s the latter, the Act violates the appointment clause).
Held: Inferior
3. Rationale: Inferior officer because:
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a. She is subject to removal by a higher Executive branch
official
b. She is empowered by the act to perform only certain limitedduties—investigation and prosecution
c. Her office is limited in jurisdiction (only certain serious
federal criems) and limited in tenure4. Dissent: Scalia combats each of the court’s points of rationale:
a. She’s only removable for good cause, meaning that she’s
harder to remove than most principal officers b. Her authority is not that limited (she has “full power &
independent authority,” etc.)
c. Unlike most high-ranking executive branch officials, she
continues to serve until she decides that her work issufficiently complete; plus, although her jrd is small, w/in it,
she exercises more power than the Atty General.
d. Debow agrees with Dissent—(textualist/formalist)
e. Notes following the casei. Whether one is an inferior officer depends on whether
he has a superior. Inferior officers are officers whosework is directed & supervised at some level by others
who were appointed by Prez nomination w/ the advice
& consent of the Senate.ii. The exercise of significant authority pursuant to the
laws of the US marks, not the line between principal &
inferior officer for Appointments Clause purposes, but
rather the line between officer & non-officer (employee)
iii. Once an officer is appointed, then gets new
responsibilities, does the officer have to bereconfirmed? No answer right now.
g. Removal of Agency Officials
i. Removal Possibilities:1. Should be solely an executive power/right.
a. According to this standard (a unitary executive view),
although the Prez cannot directly exercise power vested by
statute in another official, any action by that subordinatecontrary to presidential instructions is void.
2. Same standards for removal as for appointing
a. This was the founding fathers’ choice, known as “thedecision of 1789.”
3. Rely on the sweeping clause & say that Congress could condition
the removal of anyone4. Each house of Congress can expel (remove) its members by a 2/3
vote
5. Congress may also remove the Prez & all other executive &
judicial officers via impeachment (in Constitution)
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a. Prez’s pardon power doesn’t extend to impeachments
b. Impeached officers are not entitled to trial by jury in senate
6. Appointment & removal powersa. Madison said that Art. II by vesting the executive power in
the Prez was intended to grant to him the power to
appointment & removal of executive officers (except asexpressly limited by Art.)
i. Also said that the power of removal of executive
officers is incident to the power of appointmentii. Warned: vest this power in the Senate jointly w/ the
Prez & you abolish at once that great principle of unity
& responsibility in the Exec Dept, which was intended
for the security & liberty & the public good.7. Myers v. U.S Court struck down a federal statute that required the
President to get Senate approval to remove a postmaster. Court
held that Congress could not interfere with the President’s removal
of an executive officer who the president had appointed withadvice and consent of the Senate.
8. Humphrey’s Executor , contrary to Myers —Court upheld afederal statute restricting the President’s removal of a member of
the FTC who had been appointed by the Prez with advice and
consent of the Senate.i. Court explained that postmaster in Myers was a “purely
executive officer”, while FTC in Humphreys carried out
quasi-legislative and quasi-judicial powers.
ii. Thus, Congress could restrict the president’s powr toremove presidential appointees who carried out quasi-
legislative or quasi-judicial powers.
9. Morrison v. Olson, part II
a. Independent counsel, under statute, could be removed by
Attorney General, who is a subordinate to the Prez.
However, independent counsel could be removed only for “good cause”—this restriction was set by Congress.
b. Issues
i. Whether the removal restrictions (i.e., the Atty Gen can
only remove the independent counsel for good cause)are of such a nature that they impede the Prez’s ability
to perform his constitutional duty. Held: No.
ii. Whether the Act (concerning the independent counsel)taken as a whole violates the principle of separation of
powers by unduly interfering w/ the role of the Exec
Branch. Held: No.c. Rationale
i. Changed the “category” test of Humphrey’s (i.e.,
restrictions on the Prez’s power turns on whether that
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official is “purely executive” in nature) & created a new
test:
1. So long as Congress does not interfere w/ thePrez’s exercise of the executive power & his
constitutionally appointed duty to take care that
the laws by faithfully executed, a statute limitingPrez’s removal power is valid.
2. Court said, “we simply do not see how the Prez’s
need to control the exercise of the independentcounsel’s discretion is so central to the
functioning of the Exec Branch as to require as a
matter of con law that the counsel by terminable
at will by the Prez.”3. B/c the independent counsel may be terminated
for good cause, the executive retains ample
authority to assure that the counsel is competently
performing his statutory responsibilities in amanner that comports w/ the provisions of the
Act.ii. Concerning the second issue, court said they have never
held that the Const. requires that the three branches of
gov’t operate w/ absolute independence.iii. Held that this case simply does not pose a danger of
congressional usurpation of exec branch functions
iv. Functional Approach: Court considers whether the
restriction impedes the President’s ability to performhis constitutional duties.
d. Scalia’s dissent
i. The Constitution vests ALL of the executive power inthe executive branch.
ii. The statute at hand deprives the Prez of exclusive
control over a quintessentially executive activity (gov’tinvestigation & prosecution of crimes).
iii. It’s irrelevant how much the statute reduces Prez control
in this area: the fact that it reduces it at all should render
it void.iv. Evidently, the governing standard is to be what might
be called the unfettered wisdom of a majority of this
Court, revealed to an obedient people on a case-by-case basis. *** This is not only not the gov’t of laws that the
Const. established; it is not a gov’t of laws at all.
v. It is now open season upon the Prez’s removal power for all executive officers. The Court essentially says to
the Prez: Trust us. We will make sure that you are able
to accomplish your const. role. I think the Const. gives
the Prez & the people more protection than that.
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vi. ***The law is, by definition, precisely what the
majority thinks, taking all things into account, it ought
to be. I prefer to rely upon the judgment of the wisemen who constructed our system, & of the people who
approved it, & of 2 centuries of history that have shown
it to be sound. Like it or not, that judgment says that“the executive power shall be vested in a Prez of the
US.”
ii. The Unitary Executive1. Unitary executive: the Const’s vesting of exec power in the person
of the Prez rather than in the exec dept as a whole.
2. But if a statute vests discretionary authority directly in an agency
official (as do most regulatory statutes) rather than in the Prez, theArt. II Vesting Clause seems to require that such discretionary
authority be subject to the Prez’s control.
h. Agencies and Article III ( Agency adjudication raises a separation of
powers problem. Because Art. III vests the judicial powr in Art. III courts,it has been argued that administrative agencies usurp that power when they
adjudicate cases. However, the Supreme Ct has approved of a great deal of agency adjudication.
i. Commodity Futures Trading Comm’n v. Schor pg. 174 (1986)
1. CFTC regulates items bought and sold through brokers. Schor is acustomer of one of these brokers. Schor alleges that the broker
violated trading laws. The broker counterclaimed that Schor owed
him balance of debit account. No dispute about Commission’s
power to hear Schor’s claim (arising from federal statute).Broker’s claim, however, is a state contract claim.
2. Issue: whether the commission’s assumption of jurisdiction over
common law state counterclaims violates Art. III of the Const3. Holding: No. the limited jrd that the commission asserts over
state law claims as a necessary incident to the adjudication of
federal claims willingly submitted by the parties for initial agencyadjudication does not contravene separation of powers principles
or Art. III
4. Rationale:
a. Court declines to “adopt formalistic & unbending rules.”Looks instead to the “practical effect that the congressional
action will have on the constitutionally assigned role of the
federal judiciary.” Instead, weighed a number of factors. b. Court made the decision based on four factors:
i. Extent to which essential attributes of judicial power
are reserved to Art. III courtsii. Conversely, the extent to which the non-art. III forum
exercises the range of jurisdiction normally reserved to
Art. III courts
iii. Origins and importance of the right to be adjudicated
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iv. Concerns that drove Congress to depart from the
requirements of article III.
1. The constitutionality of a given congressionaldelegation of adjudicative functions to a non-Art.
III body must be assessed by reference to the
purposes underlying the requirements of Art. IIIc. Reasons that the commission’s adjudicatory powers departs
from the traditional agency model in just one respect: its jrd
over CL counterclaimsi. “There is little practical reason to find that this single
deviation from the agency model is fatal to the
congressional scheme.”
d. Court is persuaded that “the congressional authorization of limited commission jrd over a narrow class of CL claims as
incident to the commission’s primary & unchallenged
adjudicative function does not create a substantial threat to
the separation of powers.”i. Reasons that the decision to invoke this forum is left
entirely to the parties & the power of the judiciary of these matters is unaffected
5. Dissent: Says the court should only recognize 3 narrow
exceptions to the otherwise absolute mandate of Art. III (whichvests the judicial power solely in the judiciary): territorial courts,
courts-martial, & courts that adjudicate certain disputes concerning
public rights (claims against the gov).
a. The Framers knew that the accumulation of all powers,Legislative, Executive, & Judiciary, in the same hands,
whether of one, a few, or many, and whether hereditary, self-
appointed, or elective, may justly be pronounced the verydefinition of tyranny
b. The Fed judicial power, then, must be exercised by judges
who are independent of the Exec & Legis in order tomaintain the checks & balances that are crucial to our const.
structure.
c. By sanctioning the adjudication of state-law counterclaims by
a fed admin agency, the Court far exceeds the analyticframework of our precedents
d. The Court requires that the legislative interest in convenience
& efficiency be weighed against the competing interest in judicial independence.
i. The danger in this balancing approach is that as
individual cases accumulate in which the Court findsthat the short-term benefits of efficiency outweigh the
long-term benefits of judicial independence, the
protection of Art. III will be eviscerated
ii. Administrative Adjudication and Jury Trial
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1. When politically accountable agencies adjudicate, and perhaps
impose fines on defendants totaling hundreds of thousands of
dollars, does the 7th amendment require the use of a jury? NOsays a unanimous S.C.
i. Agencies and the Separation of Powersi. Modern admin agencies are Madison’s worst nightmare come true.
Agencies routinely combine in one body the executive power of
enforcement & administration, the legislative-like power of rulemaking, & the judicial-like power of adjudication
ii. Withrow v. Larkin(1975)(heads of agencies may be involved both in
directing the investigation and prosecution of someone as well ashaving ultimate responsibility for the adjudicatory decision—APA
creates exception from the separation of functions provision.)
1. Facts: state medical board initiates an investigation of Larkin, a
doctor, after he begins performing abortions Board later chargeshim with licensing violations and sets a hearing date where the
board will preside. Board also refers matter to local prosecutor after finding probable cause that he had committed criminal acts.
Larkin sues to enjoin the board from hearing the case on the
ground that given the board’s prejudgment as evidence by its prior actions, it would violate due process for the board to hear the case.
2. Issue: Specifically in this case, whether the authority given to a
statutorily created medical examining board both to “investigate
physicians & present charges & rule on those charges & impose punishment, at least to the extent of reprimanding or temporarily
suspending” violated the physician’s due process rights. Held: No.
3. Holding: S.C. holds that it would not violate due process for the board to hear the case after its investigation and referral to the
prosecutor. Court held that the combination of these functions did
not constitute a per se violation of due process. The Courtsuggested that a due process violation would be found only when
some additional evidence existed that the board had prejudged the
ultimate outcome of the case.
4. Rationale: The challenge to this combination of function assumestoo much and would bring down too many procedures designed, &
working well, for a gov’t structure of great & growing complexity.
a. * W/out a showing to the contrary, state administrators areassumed to be men of conscience and intellectual discipline,
capable of judging a particular controversy fairly on the basis
of its own circumstances. Right… b. The risk of bias or prejudgment in this sequence of functions
has not been considered to be intolerably high or to raise a
sufficiently great possibility that the adjudicators would be so
psychologically wedded to their complaints that they would
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consciously or unconsciously avoid the appearance of having
erred or changed position
5. ***This case was doomed to fail, b/c the S.C. was not going to saythat 2/3 of the US Gov’t (the agencies, which combine all 3
functions of gov’t) were unconstitutional. Here, the same people
(the board) were the prosecutors & the judges, but the courtwouldn’t say it’s unconstitutional (although it clearly is).
iii. Separation of Powers and Separation of Functions
1. Formal proceedings : agency proceeding that use procedures
resembling those of judicial trial
2. Administrative Law Judge (ALJ ): agency official who makes an
initial (& sometimes final) decision, performing many of theadjudicative, judge-like functions carried out by agencies.
a. Unlike const. judges, ALJs have no guarantees of salary or
tenure: salaries are set on a gov’t-wide basis, & ALJs can be
removed for good cause3. Separation of functions : the agency as an entity is permitted to
combine prosecutorial and adjudicative functions, but different personnel in the agency generally must perform those functions
a. Gaping hole : proceedings can be conducted by a semi-
autonomous ALJ or by some or all of the Commissioners.Agency heads, therefore, may be personally able to
investigate, prosecute, & adjudicate the same case
4. The problem of bias
a. Court will set aside a commission member’s decision not torecuse himself from his duties only where he has
demonstrably made up his mind about important and specific
factual questions and is impervious to contrary evidencei. Essentially impossible to prove.
IV. Statutory Constraints on Agency Procedurea. Intro: the Administrative Procedure Act
i. Origins of the APA
1. Originated in 1946
2. First statute to systemize admin law on a gov’t wide basis.3. Hardly been amended at all
4. In many aspect, agency and judicial application of the APA bears
no real relationship to the statute that was enacted in ’46.ii. Structure of the APA
1. Provisions cover 4 subjects; this chapter focuses on provisions that
regulate the procedures that agencies must employ when makingdecisions.
2. Relies on two fundamental distinctions:
a. Distinguishing rulemaking from adjudication
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b. Distinguishing between what have come to be called formal
(trial type/ on the record) and informal procedural modes.
3. In formal rulemakings, the procedure is very similar to formaladjudication in that there is a trial-type procedure governed by
sections 556 and 557 of the APA.
4. In informal rulemakings (notice-and-comment rulemakings),agencies need only provide minimal notice and a right to file
written comments on the agency’s proposals (called notice-and-
comment rulemakings). (APA 553). In general, the agency givesnotice of the rulemaking to the public, accepts comments from the
public about the proposed rule, and after consideration of the
comments provides an explanation of the basis and purpose of the
rule when it adopts the final rule.a. It is sufficient notice for the agency merely to describe a
problem that it is investigating (has the option of, but doesn’t
necessarily have to include the terms or substance of the
proposed rule). b. The public has a right to comment on the agency’s proposal,
but the agency determines the form in which those commentsare presented (can allow oral, but doesn’t have to).
c. After the agency’s consideration of the matter, they must
incorporate in the rules adopted a concise general statementof their basis & purpose
d. Rules that emerge from informal rulemakings do not need to
be based solely on material presented in the proceeding.
i. In informal adjudications, the APA requires virtually no procedures at all
e. Determining which procedural mode to use :
i. For rule-making & adjudication, must employ theformal mode when the proceedings are required by the
organic statute that created the agency to be
made/determined on the record after opportunity for anagency hearing
iii. Shapiro Essay
1. During the New Deal, Democrats’ view was “agencies good,
courts bad.” Republican’s view was “agencies bad, courts good.”The APA was a limited concession to the Republican’s criticisms,
since it provided for some adjudication/judicial review. However,
its provisions/requirements for rulemaking are lacking, to say theleast.
2. Original understanding of APA: agency had very broad discretion
to make rules & only had to supply a concise general statement of their purpose, & if anyone bothered to take them to court on it, the
standard of review (only way to overturn the agency) was to find
that the agency had acted “arbitrarily and capriciously” (i.e., like a
lunatic) (§ 706).
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a. Courts do not use this standard today—now agencies must
convince the court that its rulemaking is reasonable.
b. Until Congress comes in to rewrite the APA, we’re stuck w/it the way it is, even though it’s interpreted differently from
how it’s written.
c. APA was obsolete when it was passed, b/c it was written inthe 30’s, but was not passed until 1946 (after FDR had died
& after WWII).
b. Formal Rulemakingi. Formal rulemaking is required when the agency’s enabling act
requires that rules are to be made “on the record after opportunity for
an agency hearing.” APA Section 553(c) states that “when rules are
required by statute to be made on the record after opportunity for agency hearing, sections 556 and 557 of this title apply instead of this
subsection.” 556 and 557 prescribe formal, adjudicatory type
procedures.
1. The Original Understandinga. Instead of reading the actual APA, courts look now to the
“cliff notes” version: the Atty General’s Manual on theAdministrative Procedure Act. From the manual:
i. Statutes rarely require hearings prior to the issuance of
rules of general applicabilityii. Where rates or prices are established by an agency after
a hearing required by statute, the agencies themselves
and the courts have long assumed that the agency’s
action must be based upon the evidence adduced at thehearing
iii. In the type of statute that doesn’t contain “on the
record” language, there is no requirement, express or implied that the rules be formulated on the record
b. Rate regulation historically required formal procedure
ii. U.S. v. Florida East Coast Railway (1973) (Supreme Court interpreted language in section 553 very narrowly, requiring a statute
either to state in terms or by reference to sections 556 and 557 that
formal rulemaking is required or to use language explicitly invoking
the need for the rule to be made both on the record and after anopportunity for agency hearing.)
1. Facts: Background: Informal rulemaking is now the default
mode, even in rate regulation. Basically, court ignores the APA.All agencies have to do now, in most cases, is to allow written
comments to be filed.
a. The Esch Car Service Act said that the ICC could establishrules “after hearing.” In this act, they were given the power
to regulate the terms by which railroads borrow rail cars from
each other (ratemaking, which is rulemaking).
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b. In 1966, after a number of years in which portions of the
nations were plagued w/ seasonal shortages of freight cars in
which to ship the ICC was considering whether to establishan incentive element increase. Congress pressured it, so after
some time, they decided to make the increase. They had
gone through the formal rulemaking procedures, butultimately did not hold an oral hearing, but only allowed
dissenting comments to be filed. The railroads complained,
but the ICC said that the railroads were not prejudiced by thelack of oral hearing (they claimed they could do this under
the last sentence of §556(d). Basically, everyone thought that
the formal procedure requirement was there, even through
they differed on whether the ICC had appropriately met them2. Holding: S.C. held that the ICC’s proceedings were only
governed by § 553 & that the “hearing” requirement was met
a. Allegheny--Court looks to its decision in U.S. v. Allegheny-
Ludlum Steel Corp. In that, they held that the language in theICC’s organic statute (“after hearing”) was not the equivalent
of a requirement that a rule be made “on the record after opportunity for an agency hearing.”
b. Court said the term “hearing” does not necessarily provide
for oral argument.c. Paper Hearing OK--Even where the statute requires that the
rulemaking procedure take place “on the record after
hearing,” thus triggering § 556, the agency may proceed by
the submission of all or part of the evidence in written form
if a party will not be prejudiced thereby.
d. The fact that the order may in its effects have been thought
more disadvantageous by some RRs than by others does notchange its generalized nature (in other words, the court is
saying that this was a rulemaking, not adjudicative thing).
3. Dissent:
a. This is clearly a rate regulation, and a hearing under the ICA
that fixes rates, charges, or fees is certainly adjudicatory, not
legislative in the customary sense.
b. These rules involve the creation of new financial liability.Although quasi-legislative, they are also adjudicatory in the
sense that they determine the measure of the financial
responsibility of one road for its use of the rolling stock of another road.
4. The Aftermath:
a. Apart from the few rulemaking statutes that contain anexpress “on the record” requirement, formal rulemaking has
virtually disappeared as a procedural category. Although
the ICC case said that a statute didn’t necessarily have to
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have the magic “on the record” phrase to require formal
rulemaking, that’s how lower courts have interpreted it.
5. The Stakes:
a. Rulemaking activity was dramatically increasing just as this
case substantially reduced the procedural requirements in
many rulemakings. b. The combination of increased rulemaking activity under
sharply decreased procedural constraints and a gloomy view
of agency behavior proved highly volatile. Indeed, must of this course charts the consequences of this combination
i. The courts will begin to try to re-write the APA; there
will be a lot of judicial inventiveness, as a result of the
distrust of agencies & the lack of requirements for aformal proceeding under the APA. Federal judges are
now trying to make §553 more formal by elasticity of
interpretation.
c. Formal Adjuciation (Section 554 of the APA contains procedural requirements for cases of adjudication “required by statute to be
determined on the record after an opportunity for agency hearing.”Sections 556 and 557 then apply specifying more procedure.)
i. Seacoast Anti-Pollution League v. Costle
1. Facts: Environmental group challenges a Clean Water Act permitissued by EPA to a nuclear power plant. Petitioners claim that the
decision contravened APA 554, 556, and 557. The Clean Water
Act provides that permits are issued “after opportunity for public
hearing” but does not specify that the hearing must be “on therecord”. Thus, if the case would have involved rulemaking, the
presumption against formal procedures would apply, as in Florida
East Coast.2. Holding: Where a statute specifically provides for administrative
adjudication (such as the suspension or revocation of a license)
after opportunity for an agency hearing, such specific requirement for a hearing ordinarily implies the further requirement of
decision in accordance with evidence adduced at the hearing
a. Presumes that unless a statute otherwise specifies, an
adjudicatory hearing subject to judicial review must be on therecord. Holds for formal adjudication. When nature of
determination is adjudicatory, determining facts and
applying law to them, the presumption should be in favor of trial-like procedures, because adjudication is the
administrative equivalent of judicial determination.
b. Case here is fact-specific to the particular situation and soshould look more like a trial than a piece of legislation.
Adversarial hearings will be helpful. A record that is
developed at trial type setting will be helpful and will
facilitate meaningful judicial review.
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c. Opposite holding from Fl. East Coast .
ii. City of West Chicago Il v. NRC (Opposite view of Seacoast (split in
the circuits). Assumes informal adjudication by simply citing to Alleghany and Florida East Coast —unless precise language displays
clear indication of Congressional intent, a presumption towards
informal proceedings will be asserted)1. Facts: Atomic Energy Act. Commission regulations provide that
a notice of hearing will issue when a hearing is required by
Act/this chapter or when the Commission finds that a hearing isrequired in the public interest. NRC denies the city’s request for a
formal hearing. NRC had adopted a section in the AEA on its own
which requires a formal public hearing. However, court allows the
agency to interpret its own regulations in case of ambiguity.2. Issue: Did the agency violate the organic statute (AEA)?
3. Holding: No. Court says that the particular license amendment in
question does not trigger notice of hearing or formal procedures.
4. Rationale: Court uses legislative history, and finds no intention inlegislative history for formal procedures. Debow asks why not use
the language of the statute?a. Ultimately presumes that the restrictive rule of the Florida
East Coast case applies to adjudications as well as
rulemakings b. This case responds to the criticism that formal rulemaking
was getting out of hand (ex., the long process of determining
what percentage of peanut butter must be peanuts).
c. In absence of literal “on the record” language, no formalhearings.
d. Case line up with Fl. East Coast .
iii. Chemical Waste Mgm’t Inc. v. US EPA (235) (represents a third lineof analysis for formal adjudication. The court uses the Chevron
analysis, finds Congressional intent to be ambiguous, and then defers
to the agency’s interpretation.)1. Holding: DC Circuit holds that where the Resource Conservation
and Recovery Act required the EPA to hold a “public hearing”
before issuing certain orders, the nature of the required hearing
was ambiguous. Thus, the Court, under Chevron, defers to theagency’s interpretation that the language did not require formal
adjudication, because that interpretation was reasonable in light of
the issues likely to be considered in such proceedings.a. Thus, rather than trying to determine itself what the statutory
language meant, the court would defer to the agency’s
interpretation of the language. b. This represents another line of analysis for formal
adjudication.
2. Chevron Analysis (2 steps):
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a. If Congress directly speaks to the precise question at issue,
the court must give effect to the expressed intent of Congress
(no deference to agency). b. If the statute is silent/ambiguous w/ respect to the specific
issue, then the court must ask “whether the agency’s answer
is based on a permissible construction of the statute”; if so,then the court must defer to the agency’s construction
3. If the agency determines that the proceeding is to be informal, the
court will then evaluate the reasonableness of the agency’sinterpretation using the normal tools of statutory interpretation—
such as legislative history, structural inferences, or exceptional
circumstances
a. Basically, if the agency’s reasoning is not “arbitrary &capricious,” then it will be upheld
b. Court must give deference to agency interpretation of
i. Its own regulations
ii. Its organic statuteiii. This is strange, b/c shouldn’t judges be deciding this?
4. Legislative history: it shouldn’t be very important, b/c you can findanything that some senator said to support your view, just as the
other side can do that
d. Informal Rulemakingi. The Rise, Fall, and Rise of Hybrid Rulemaking
(Hybrid=somewhere in between informal procedures and formal
procedures. Problem is, the APA only speaks to these two categories.
While it might be a good idea to have a hybrid category, it’s not up tothe D.C. Circuit to amend the APA & create it.)
ii. The Supreme Court Speaks
1. Vermont Yankee Nuclear Power Corp. v. Natural Resources
Defense Council, Inc.
a. Facts: The agency in question granted licenses to petitioner
(Vermont Yankee) after following an informal rulemaking procedure. D.C. Circuit overturned: despite the fact that the
agency employed all the procedures required by §553 &
more, the court determined the proceeding to be inadequate
and required a trial-type hearing. b. Holding: Supreme Court vigorously reversed in favor of the
agency. Court holds that courts may not require procedures
in addition to those specified in the APA or other applicablestatutes. While agencies were free to adopt additional
procedures voluntarily, courts are not authorized to require
agencies to use the courts’ notions of appropriate procedures.c. Rationale:
i. Absent constitutional constraints or extremely
compelling circumstances the admin agencies should be
free to fashion their own rules of procedure and to
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pursue methods of inquiry capable of permitting them
to discharge their multitudinous duties
ii. Congress intended that the discretion of the agenciesand not that of the courts be exercised in determining
when extra procedural devices should be employed
iii. The court should not stray beyond the judicial provinceto explore the procedural format or to impose upon the
agency its own notion of which procedures are “best”
or most likely to further some vague, undefined publicgood
2. The End of an Era? Vermont Yankee and the Rise of Hybrid
Rulemaking 1968-78.
a. It was odd for the Supreme Court to have taken this case,since the issues were muddy & it seemed to turn on a
question of fact (sufficient evidence) rather than a question of
law. Further, it was clear to everyone that the agency had
followed §553 & even went beyond that, having more procedures
b. Historical Explanationi. As agencies were increasing in scope & authority, trust
in them was weakening. There was widespread belief
in the “agency capture” model (i.e., that agencies were pawns of special industry interests).
ii. Further, there was a solid majority of proudly activist
liberal judges on the D.C. Circuit Court. David
Bazelon, Skelly Wright, Carl McGowan, & HaroldLeventhal. They believed in the agency capture model
& watched dourly as President Nixon appointed
administrators to run the agencies. They madethemselves gatekeepers.
iii. The D.C. Court was more important than the Supreme
Court when it came to admin law, since venue wasalmost always proper in D.C. & since the Supremes
rarely took admin cases.
iv. Since it would have been too brash for the judges to
second-guess the substantive decisions of the agenciesoutright, they went about concentrating on the agencies’
decision-making procedures. Of course, the end was
both substantive & procedural activism.1. If the courts can really attack the substance of the
agencies’ decisions, agencies are meaningless.
That means the court is now legislating. It’s like ahot potato, passing around who can legislate,
when the Const. clearly says the Legislature
should legislate.
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2. The court REALLY stretched the meaning of the
phrases in §553 (for example, “opportunity for
meaningful participation by interested parties”meant extremely meaningful).
i. The result of all these factors was hybrid APA
rulemaking—the judges required much more than theinformal procedures of the APA demanded, but they
stopped short of requiring absolute formal procedure.
ii. Oral hearings and cross-examination were among themost common judicially imposed procedures.
iii. For example, the APA requires a “concise general
statement of basis & purpose.” However, it soon
became clear to the agencies that if they didn’t wanttheir decisions overturned (or to be taken to court),
they had to respond in detail to every significant
comment made by private parties participating in the
rulemaking, which could include thousands of pagesof supporting documents.
iv. Further, the judges expanded the meaning of therequirement of a “general notice of proposed
rulemaking.” If the agencies did not want their
decisions tied up in court for years to come, theylearned that they had to put a whole lot more info in
their notices (ex., all relevant underlying studies &
data).
v. It was definitely not enough to have just a“description of the subjects and issues involved,”
even though the APA literally gives that option (the
other option is “the terms or substance of the proposed rule).
3. Then came the S.C. decision in Vermont
Yankee. However, the DC Circuit will still findways around Vermont Yankee through steps one
and three, though Vemont Yankee did plug up the
hearing requirement.
3. So They Spoke. Did anyone listen?a. Conneticut Light and Power Co. v. NRC (DC Cir. 1982)
i. Claim One: NRC not helpful in providing the
technical studies upon which they based their decisionson proposed rules. (concise statement)
1. Holding: Technical background of rules
sufficient for meaningful comment.ii. Claim Two: Differences b/t fire protection program as
proposed and as adopted. (Notice)
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1. Holding: Court bears down on this one—notice
must be clear so that other side will be able to
comment effectively.iii. Summary: Court begrudgingly holds that the NRC met
the notice and comment rulemaking standards required
by §553, but chides them for “just barely” meetingthem. Lower Courts had listened to Vermont Yankee,
but only to hearing stage.
iv. Current view: the purpose of the comment is to allowinterested members of the public to communicate
information, concerns, and criticisms to the agency
during the rule-making process, which is why the
agency should be detailed in its notice.1. Proposed rule must provide sufficient info to
permit informed adversarial critique
2. Rule adoption rather than rulemaking.
3. Original idea behind APA was that the agencywould announce that it was thinking about a
problem and wanted to develop a rule around it. Now, agency has a rule in mind and in the first
state, expect an adversarial critique.
v. Agencies fight with Information Cascade: InformationCascade: if you try to get too much disclosure, the
incentive is to overflow the requester w/ volumes of
info. Therefore, this is what the agencies do—flood w/
infovi. An agency adopting final rules that differ from its
proposed rules is required to renotice when the changes
are so major that the original notice did not adequatelyframe the subjects for discussion.
vii. The statement of basis & purpose doesn’t have to be
comprehensive, according to the court, but it mustindicate sufficiently the agency’s reasons for the rules
selected so that the reviewing court doesn’t have to
“rummage through” the record to find a rationale.
b. Informal Rulemaking Procedure Steps (3)i. Notice—issuance of a notice of proposed rulemaking.
ii. Opportunity for Public Comment—the conduct of the
rulemaking itself, during which the agency receivescomments and formulates its rules.
iii. Issuance (or not) of a final rule, along with a statement
of basis and purpose for any rule adopted.c. Vermont Yankee (that the courts cannot require agencies to
use specific procedures during a rulemaking proceeding
simply b/c the courts consider them a good idea) only applies
to the 2nd part.
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i. Courts have not read Vermont Yankee as broadly as the
language permit; i.e., have not extended its ruling to the
1st & 3rd parts.ii. Therefore, hybrid rulemaking is still very much alive.
4. The Notice of Proposed Rulemaking (did not discuss in class)
a. The purpose of informal rulemaking as contemplated by theAPA in 1946 was to allow the agency to educate itself about
the subject matter or its rulemaking so it could formulate
intelligent rules. b. In the post-1986 era, however, the rulemaking process is
viewed more as a check on agencies than as a facilitative
device. Under this model, it’s essential that the agency give
detailed proposed rulemakings so that public comments can be directed at the agencies’ actual proposals.
i. Turned from a rule-making process to a rule-adopting
process. Agency now decides what it wants to do (has
its rule in hand), then gives the notice & is already in anadversarial mode w/ those who will comment.
c. Challenges to the adequacy of the notice are common & takedifferent forms
i. A party might object that an agency’s notice of
proposed rulemaking failed to disclose all of therelevant data that animated that agency’s thinking and
therefore did not give the public an adequate
opportunity to address the agency’s proposals. Two
potential focuses:1. Focus on what the agency knew when it issued its
notice
2. Focus on what the agency knew when it issued thefinal rule
d. Does the agency have to have a new comment period if it
bases its decision on info acquired after the initial notice?i. Rule: To avoid perpetual cycles of new notice &
comment periods, a final rule that is the logical
outgrowth of the proposal does not require an additional
round of notice and comment even if the final rulerelies on data submitted during the comment period
(i.e., after the initial notice). But if the final rule
departs too drastically from the original proposals, thena new notice and a new comment period is required.
1. How much of a departure is too much? Don’t
really know.e. Another type of challenge argues that the agency’s final rule
concerns a subject that was not adequately “flagged” by the
notice. (case below)
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i. Rule: Agencies cannot give notice that they are
considering A, B, & C and then adopt a rule concerning
D. The public must be made aware of the agency’s proposals.
5. MCI Telecommunications Corp v. FCC
a. Facts: Court held that the agency’s notice failed to meet therequirements of the APA
b. Issue: whether the notice was adequate to afford interested
parties a reasonable opportunity to participate in therulemaking process.
c. Holding: The “notice” was insufficient because it was in a
footnote in the “Background” section, and the corresponding
text had nothing to do w/ the people who are nowcomplaining (an IXC). This footnote was the only thing in
the whole notice that had anything to do w/ the IXCs (the rest
of it covered a proposed rulemaking for ESPs)
iii. The Statement of Basis & Purpose (did not discuss)1. Modern statement
a. Monstrously long & complex document that contains adetailed exposition of the agency’s reasoning and the
agency’s response to the views expressed by commenters
during the rulemaking.i. They’re long b/c courts don’t look at anything else in
making their determination—agencies use the B & P to
convince an appellate court that they’ve behaved
reasonably. b. An agency need not address every comment, but it must
respond in a reasoned manner to those that raise arguably
significant problemsi. The level of detail required in a response depends on
the subject of the regulation and the nature of the
comments received.ii. An agency doesn’t have to address every comment b/c
some of the comments are goofy ones from crazy
people. However, agencies do have incentive to
address every sensible comment.c. Although an agency is not required to discuss every item of
fact or opinion included in the submissions it receives in
response to a Notice of Proposed Rulemaking, it mustrespond to those comments which, if true, would require a
change in the proposed rule. This is really the minimum.
d. Commenters have a right to comment on proposed regs, notto comment in a never-ending way on the agency’s responses
to their comments
i. I.e., courts are reluctant to order new rounds of notice
and comment simply b/c material that shows up in the
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statement of basis & purpose was not mentioned in the
notice of proposed rulemaking.
ii. However, the agency would be wise to err on the sideof disclosure, & put anything that they think they might
use in the notice of proposed rulemaking.
iv. Statutory Hybrid Rulemaking (did not discuss)1. By adding statutory procedures to the basic informal rulemaking
package, Congress can produce any level of procedural formality
that it desires on a case-by-case basis.2. One statute (Clean Air Act) expressly provides that the APA’s
procedural provisions are inapplicable expect to the extent that
they are specifically made applicable by the statute. The statute is
thus a self-contained substitute for the APA’s rulemaking procedures.
3. Presidents can also affect the rulemaking procedure. Executive
Order 12,866 (under Clinton) (pg. 994). Allows agencies when
evaluating costs & benefits to use both quantitative measures &qualitative measures (which are much harder to quantify; ex.,
measuring the aesthetic benefits of reducing pollution). Says theagencies need to maximize net benefits, unless another statute
requires otherwise.
v. Exemptions from Informal Procedures1. Informal rulemaking procedures do not apply
a. To interpretative rules (i.e., interpretation of the organic
statute), general statements of policy, or rules of agency
organization, procedure, or practice; (these do not have alegally binding effect on the conduct of the public) or
b. When the agency for good cause finds (& incorporates the
finding and a brief statement of reasons therefore in the rulesissued) that notice & public procedure are impracticable,
unnecessary, or contrary to the public interest.
2. Exemptions are much more important today: since notice andcomment rulemaking is so involved, agencies would like to claim
an exemption so as not to have to fool w/ it.
3. Procedural Rules
a. Air Transport Association of America v. Dept. of
Transportation
i. Issue: whether the agency (FAA) was obliged to
engage in notice & comment procedures before promulgating a body of regs governing the adjudication
of administrative civil penalty actions
ii. Agency argued that the exception applied b/c thesewere clearly procedural rules, not substantive. Majority
disagreed.
iii. Holding: The court of appeals held that although the
rule appeared to be procedural, it did not fall within the
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§ 553 exemption because it affected the civil violators
rights, including the right to a hearing
1. Where nominally procedural rules encode asubstantive value judgment or substantially alter
the rights or interest of regulated parties, the rules
must be preceded by notice & comment.2. The penalty rules fall outside the exemption b/c
they substantially affect a civil penalty
defendant’s right to an admin adjudication.3. Narrowing of APA
iv. Dissent (Debow Agrees with): Argued that, in effect,
the majority had mischaracterized the procedural right
to a hearing as a substantive right.1. advocates a bright line test between substantive &
procedural:
2. Substantive: when a given reg purports to direct,
control, or condition the behavior of thoseinstitutions or individuals subject to regulation by
the authorizing statute3. Procedural: when the regs deal w/ enforcement or
adjudication of claims of violations of the
substantive norm but which do not purport toaffect the substantive norm.
4. Interpretive Rules and Policy Statements
a. Interpretive Rules —Interpret statutes or other regulations, but
do not have legal binding power and so do not require noticeand comment.
b. Policy Statements —Also do not have legal binding power,
and thus do not require notice and comment. Occur mainly insituations when agency indicates that it will take
investigative or enforcement action, or when the agency
intends to act under certain circumstances in agencyadjudication.
c. 4 different tests for distinguishing substantive rules from
interpretative rules or policy statements
i. Legal effects test : if the rule creates a binding norm onregulated parties (if the rule standing alone affects
regulated parties), it is substantive; otherwise, it’s
interpretative (merely offering the agency’s opinion onmatters of law or policy)
1. This test is easy to administer (bright line)
2. Does the agency use interpretive tools? (leg.history, statutory construction, etc.)
3. Is the claimed interpretive rule consistent with the
legislative rule it is supposedly interpreting? (If
not, then not interpretive)
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4. Practical Effects of this test:
a. A properly adopted substantive rule
establishes a standard of conduct which hasthe force of law
b. A policy statement announces the agency’s
tentative intentions for the future (cannot usethe rule as binding law in subsequent
adjudications; no present legal effect); it’s a
glorified press release; have to prove thatsomeone violates the statute; not enough that
they violate a policy statement.
ii. Problem: the practical effect of such rules on regulated
parties may be hard to distinguish from the practicaleffect of leg. rules (if you’re a regulated party, you’ll
try to comply w/ their policy statements as well as
rules).
d. Substantial impact test (invalidated by Vermont Yankee)i. Courts look to the practical effect of the rule to
determine whether it had a substantial impact on theregulated community. If it does, then it held that the
rule requires notice and comment. Thus, even if sec.
553 did not require notice and comment, the court couldrequire it.
ii. Says notice-and-comment procedures are required for
rules that have a substantial impact on regulated parties,
even if those rules didn’t satisfy the formal legal effectstest.
e. Impact on Agencies Test
i. Look at how the agencies treat the rule: if the agenciestreat the rule as substantive, it is; if the agencies treat
the rule as discretionary, it’s interpretative.
5. U.S. Telephone Ass’n v. FCC
a. Holding: The penalty schedule is not a policy statement and
should have been subject to notice and comment procedures.
b. Rationale: The schedule of penalties is detailed & is
applicable to specific infractions & has adjustments for specific situations
i. The # of times the agency adhered to the policy makes
the case easy to decideii. The agency treated the rule as substantive (impact on
agencies test)
6. Professionals and Patients for Customized Care v. Shalala
a. Facts: : FDA compliance policy guide describes pharmacy
practices that give rise to enforcement actions that make
pharmacies lose their retail capabilities
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b. Contention: District court erred in concluding FDA
compliance policy guide is not a substantive rule and not
subject to notice and comment.c. Holding: Affirmed. Procedural—not substantive. Court
finds that the policy guide merely identifies some indicia of
drug manufacturing.d. Policy matter: you don’t want to discourage agencies from
promulgating these policy statements—at least you know
what the agency’s thinking & whether they might sue you.i. If we force agencies to have notice and comment these
types of guides won’t be used.
e. Problem w/ the impact on agencies test: requires considerable
experience w/ an agency’s application of a rule before youcan determinatively say whether the rule is interpretative or
sub. In other words, you don’t know at the moment its
promulgated whether it’s substantive or interpretative
f. Debow says we should go back to the legal effects test.
vi. Modern Test1. American Mining Congress v. Mine Safety & Health Admin
(barely discussed)
a. Court here attempts to make a distinction betweeninterpretative rules & statements of policy
i. Interpretative rule: rules/statements issued by an agency
to advise the public of the agency’s construction of
rulesii. General statements of policy: agency statements that
advise the public prospectively of the manner in which
the agency proposes to exercise a discretionary power iii. Distinction is vague
2. Syncor International Corp. v. Shalala
a. Facts: FDA indicated (w/out notice & comment) that itwould require PET manufacturers to comply w/ the Act (they
were exempt under the 1984 Act, but not under this new
1995 publication). Held: substantive
i. By issuing a policy statement, an agency simply lets the public know its current enforcement or adjudicatory
approach (it’s not binding on the public or agency)
ii. An interpretative rule, on the other hand, typicallyreflects an agency’s construction of a statute that has
been entrusted to the agency to administer.
iii. A substantive rule modifies or adds to a legal norm based on the agency’s own authority.
1. Debow still says this is vague and we should
use legal effects test.
vii. Good Cause
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1. Most common exception invoked by agencies is for “when the
agency for good cause finds that notice and public procedure
thereon are impracticable, unnecessary, or contrary to the publicinterest.” Agency must put this finding in the rule and the reasons
for it when rule is adopted.
2. Tennessee Gas Pipeline Co. v. FERC(did not discuss)a. Law
i. The good cause exception should be narrowly
construed & should be limited to emergency situationsand
ii. The grounds justifying the agency’s use of the
exception should be incorporated within the published
rule. b. FERC fails b/c they claimed good cause without offering any
evidence, beyond its asserted expertise, as to why the public
interest is served by the immediate implementation of the
interim rule.e. Informal Adjudication
i. Citizens to Preserve Overton Park v. Volpe
1. Facts: Secretary of Transportation approved, w/out any factual
findings, a plan to build a highway through the park
a. Statute said that the Secretary shall not approve of anythingthat interferes w/ a public park unless
i. There is no feasible & prudent alternative
ii. Such program includes all possible planning to
minimize harm b. There are no procedural standards in the statute: it’s informal
adjudication
2. Citizen Group Argument: Secretary violated the statute. TheSecretary found that there was no feasible or prudent alternative
routes, but did not indicate why; instead he relied totally on the
city council. They think it is possible to go around the park or usetunneling methods.
3. Sec. of Transportation Argument: It was unnecessary for the
secretary to make formal findings, and that he did, in fact, exercise
his own independent judgment which was supported by the facts.Introduced affidavits from the Secretary’s office that say that
Secretary’s decision were supportable for certain reasons
4. Holding: to review the decision, the court needs more than theaffidavits (which are just post hoc rationalizations)—it needs the
full admin record that was before the Secretary at the time he made
his decision. “Arbitrary and Capricious” standard of reviewinterpreted to mean a “substantial inquiry” and a “thorough,
probing, in depth review.” Reversed & remanded to District
Court (dissent says it should have been remanded to the Secretary).
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5. Law: §706(2)(A): An agency action must be set aside if the action
was arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with the law OR if the action failed to meetstatutory, procedural, or constitutional requirements
a. Original understanding of “arbitrary & capricious”: absolute
insanity b. New understanding: court invades; court will decide whether
it’s arbitrary & capricious based on
i. Findings from the agency (a record)1. Also, must be contemporaneous record—agency
records as it goes along, not after the fact.
c. Standard of Review: Not de novo or substantial evidence.
Use “substantial inquiry” instead (Debow says this is not in706). Will do a “thorough, probing, in depth review
6. Most agency decisions are made through informal adjudication.
This case puts procedural requirements that don’t exist in the APA
on agencies conducting informal adjudication.7. After Overton Park: Agencies will submit a record of their
actions. This is good because it keeps them in check and forcesthem to be more thoughtful, but bad because it is expensive to do
this
8. Overton Park & Vermont Yankee are in conflict w/ each other.Apparently, as long as the court’s vague enough w/ what they want
(not directive), court can require more from the agencies.
a. Basically, Vermont Yankee doesn’t have a lot of clout.
ii. Pension Benefit Guaranty Corp v. LTV(did not discuss)
1. Issue: whether PBGC’s decision to restore the ERISA pension
plans to LTV after LTV became financially viable again was
arbitrary & capricious. No.2. Held: the lower court that struck down PBGC’s decision did not
point to any provision in ERISA or the APA which gives LTV the
procedural rights the court identified. Thus, the holding runs afoulof Vermont Yankee and finds no support in Overton Park (which
merely held that the admin record was inadequate to enable the
court to fulfill its duties; here, the court focused on “fundamental
fairness”).3. Vermont Yankee stands for the general proposition that courts are
not free to impose upon agencies specific procedural requirements
that have no basis in the APAf. The Strange Saga of C.T. Chenery
i. SEC v. Chenery Corp. (Chenery I)
1. Facts: Respondents bought preferred stock in their own company(at market price) so as to protect their interests in it during a
reorganization period. The Commission said that Chenery could
not do this, that its shares could not be placed on par w/ others b/c
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it had a duty of fair dealing not to trade in the securities of its corp
while undergoing reorganization
2. Holding: Since the Commission professed to decide the caseaccording to settled judicial doctrine, the court must judge its
action by the standards the commission invoked. Since there is no
law/rule that prohibits officers/directors from purchasing their owncompany’s stock, the Commission’s order can’t stand. Remanded.
a. “We merely hold that an admin order cannot be upheld
unless the grounds upon which the agency acted in exercisingits powers were those upon which its action can be
sustained.”
b. “The grounds upon which an administrative order must
be judged are those upon which the record discloses that
its action was based.”
c. A reviewing court will not look at the record and try to find
another explanation that would work—they would simply
remand it.d. “An appellate court cannot intrude upon the domain which
Congress has exclusively entrusted to an administrativeagency” (expert agency point) (there is also a division of
labor point.
ii. In Re Federal Water Service Corp.1. On remand, Chenery group proposed the same plan, which the
Commission again rejected and reaffirmed its original order.
Commission “reserved for future consideration the question of
whether or not a rule should b adopted” (i.e., they kept it as anadjudication for now).
a. Commission gives no legal authority in its decision
iii. Chenery Corp. v. SEC
1. Court of Appeals holds against the Commission, saying the SEC
cannot apply to this specific case a standard which has never
been promulgated, either by agency regulation or the legislature,and which the SEC says cannot fairly be generally applied.
a. Court says Commission can’t just up & say to Chenery,
“You can’t do this thing, even though it’s legal.”
iv. SEC v. Chenery Corp. (Chenery II) (1947: the dissenting judges inChenery I write the opinion in Chenery II)
1. Reverses & holds for the SEC, saying this is the type of
judgment that agencies, not courts, are best equipped to make.Basically, the court just defers to the SEC in this terrible opinion,
although under the APA, this is probably what people wanted the
court to do (this type of review).
2. Dissent (Jackson):
a. The decision puts most admin orders over & above the law.
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b. Both the Commission and the Court admit that these
purchases were not forbidden by any law, judicial
precedent, regulation or rule of the Commission.c. It literally takes valuable property away from its lawful
owners for the benefit of other private parties without full
compensation and the Court expressly approves the taking.d. The Court’s reasoning adds up to this: the Commission
must be sustained b/c of its accumulated experience in
solving a problem w/ which it had never before beenconfronted!
v. The Law of Chenery I
1. “Chenery I Principle”
a. Difference between judicial review of lower court & judicial review of agencies:
i. Lower court judgments can be sustained on any
grounds properly supported by the record, even if the
lower court expressly rejected those groundsii. Agency decisions, however, can be sustained only on
the grounds specifically relied upon by the agencies.(*The reasoning has to come from the agency, not the
court.*)
1. If there are grounds that could support theagency’s decision but were not in fact relied
on by the agency, courts ordinarily give the
agency the option of relying on those grounds
(by remanding, not outright reversing).2. Courts must understand the agency’s reasons
for action before they can decide whether
those reasons are adequate (this corollary isnot enforced w/ much rigor).
vi. The Law of Chenery II
1. Too much adjudication?a. Rule: **the choice between rulemaking & adjudication lies
primarily in the informed discretion of the agency. I.E., the
agency CAN create a new principle of law other than thru
rulemaking & courts won’t second guess. b. Caselaw clearly supports a very wide agency power to
choose its mode of proceeding.
2. Too much rulemaking?a. Example: if an organic statute guarantees you the right to a
formal adjudicatory hearing on application for a broadcast
license, then the FCC adopts a rule that says no one whoalready owns more than 5 stations will receive any further
licenses, and you own more than 5 stations, can the agency
summarily dismiss your application w/out hearing?
i. Absolutely.
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3. Adjudication permits flexibility, but it also allows the agency to
be arbitrary. A rulemaking approach would limit the scope for
arbitrariness.vii. A Note on Retroactivity
1. When an agency substitutes new law for old law, court should
deny retroactive effect.2. When there are new applications of existing law, clarifications,
& additions, the courts start w/ a presumption in favor of
retroactivity.3. However, retroactivity will be denied when applying the new
rule to past conduct/prior events would work a manifest injustice.
II. Scope of Judicial Review of Agency Action
a. Introi. Degrees of Difference
1. Four standards of judicial review (from most deferential to least)
a. Jury standard: only overturn jury’s factual conclusions
when no reasonable person could have possibly reachedsame result
b. Abuse of discretion: highly deferential standard for reviewof procedural matters (admissibility of evidence, etc.)
c. Clearly erroneous: only overturn judge’s findings of fact if
clearly erroneousd. De Novo: no weight given to the lower court’s legal
findings
2. Judicial review of agencies employ NONE of the benchmarks
familiar from appellate review of lower court decisionmaking; allconclusions are basically just reviewed deferentially... even
decisions of law!
ii. Is this for real?1. The rules governing judicial review have no more substance at
the core than a seedless grape. However, in practice, judges do
try (or at least think that they try) to use these standards.iii. Is there a better way?
1. Alternative approach: legal process/institutional competence
approach—on this view, scope of review doctrine should self-
consciously seek to determine whether, and to what degree,courts or agencies are best suited to decide the specific issue
under review.
b. Review of Findings of Fact in Formal Proceedingsi. In reviewing formal proceedings, reviewing court shall review the
whole record & shall reverse decisions not supported by substantial
evidence.
ii. Universal Camera Corp. v. NLRB
1. Law
a. Substantial Evidence Test-- The overall level of deference
required by the substantial evidence test is less deferential
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than the jury standard but more than the clearly erroneous
standard.
i. The Court uses this standards when the agency actionwas formal rulemaking or formal adjudication.
ii. “Such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.”iii. Prior to this case, the jury standard was the level of
deference.
b. Under the APA, reviewing courts must consult the “wholerecord,” not merely those parts of it that tend to support the
agency’s decision.
c. The findings of initial adjudicators are part of the record,
and agencies & reviewing courts must give them dueconsideration.
2. Congress expressed “a mood.” Basically, judges should be in a
nastier mood than the jury standard & a kinder, gentler mood
than the clearly erroneous standard. (So why not just call it abuseof discretion standard?)
3. New formulas attempting to rephrase the old aren’t going tochange the way judges operate. It won’t be perfectly
implemented, but it will still be better than nothing, says the
judge.
iii. Kimm v. Department of the Treasury
1. Facts: Kimm was suspended for willfully using a gov’t owned
vehicle for other than official purposes. Reviewing court
reversed agency’s decision.a. AJ found in favor of Kimm, a highly decorated,
experienced investigator, who used the vehicle to take his
son to day care while he was on call & his wife was bedridden. Board overturned AJ, but reviewing court
deferred to AJ.
2. Holding: The finding of the board that Kimm willfully used aGOV for other than an official purpose is not supported by
substantial evidence Held that if a board reverses AJ’s finding of
a witness’s credibility, court will reverse the board on appeal
unless board gives sound reasons for its contrary evaluation of the testimonial evidence.
3. Significance: *This case illustrates how credibility findings of
initial adjudicators can count for a great deal. So, appellate courtis going to usually give determinative weight to the demeanor
evidence that the ALJ had access to.
a. Demeanor Evidence—What did the person look like? Washe believable? AJ buys the story here
b. The demand for reasoned agency explanation is a hallmark
of modern admin law.
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4. Substantial Evidence Standard: This and the next case in to
show the substantial evidence standard. This is laid out on page
387. This is in the organic statute, so it controls over the APA.a. Under this standard, “we will reverse the board’s decision
if it is not supported by “such relevant evidence as a
reasonable mind might accept as adequate to support aconclusion.”
i. Debow says this does not really help too much—
vague.5. As related to Univ. Camera: Court puts more weight here on
the fact that the judge found in favor of the employee in the first
instance. Agencies are not formally bound to refer to the
decisions of ALJ. In Universal Camera, the court said it countedfor something, and this case says it counts for a great deal.
Moral of story is you want the initial fact-finder on your side
iv. Laro Maintenance Corp. v. NLRB
1. Facts: : Fight b/t which union workers will be hired to aworksite. Workers of Prompt clean govt building. Laro is then
hired to do the job. Laro is asked to hire the old Promptemployees. Laro observes some of them sleeping on the job. Do
however, end up hiring 14 of them. Laro will have unionized
workers, but ends up not hiring any workers from one of theunions. ALJ finds him to be in violation of statute Court upheld
ALJ/Board’s decision to find Laro in violation of the NLRA by
discriminating against certain applicants for employment based
on their union membership. Laro hired “only” 10 people fromthe union (he needed to hire 18), and apparently, this was
discriminatory (regardless of the fact that the ones he didn’t want
to hire had a reputation for sleeping on the job). What?????2. Holding: The Court’s review of the board’s factual conclusions
is highly deferential, upholding a decision if it is supported by
substantial evidence considering the record as a whole.a. So long as the board’s findings are reasonable, they may
not be displaced on review, even if the court might have
reached a different result had the matter been before it de
novo. b. The courts review of the board’s determination w/ respect
to [Laro’s] motive [for not hiring the applicants] is even
more deferential. So, give the board even more deferenceto inferences the board makes than to factual evidence.
What??????
3. Dissent said there was no substantial evidence: “My colleaguesdeeply bow in deference to the Board when they should be
furrowing their brows at what the Board offered.” Dissent
definitely got it right.
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a. This case is in opposition of Kimm w/ regard to the
substantial evidence standard (although the court does
affirm the ALJ in both cases). Basically, when theappellate court wants to affirm the board, they’ll pull out
the “expertise of the board” defense, but when the want to
reverse (like in Kimm), they won’t look to that expert4. Significance: : Reviewing courts are very deferential to ALJ
inferences drawn from findings of fact. In most cases, these
inferences don’t have to be very good under the substantialevidence standard
c. Review of Findings of Fact in Informal Proceedings (not much difference
from formal)
i. Ass’n of Data Processing Service Orgs., Inc. v. Board of Governors
of the Fed Reserve (DC Circuit)
1. Facts: Board of Governors run the Federal Reserve. They have
regulatory power over federal banking system. Citicorp wants to
develop a subsidiary and want to ask permission from FederalReserve. This is a hangover from the New Deal. One of
criticisms from 30s was bank was engaging in non-bank business. Data processing sells their services to banks. If the
bank doesn’t need them anymore, they will be out of business;
thus the conflict.2. Scalia’s whole opinion as presented in the text is dicta, b/c the
APA wouldn’t apply to this situation (it’s an informal proceeding
& the standard of review is set forth in the organic statute).
3. The “substantial evidence” test and the “arbitrary & capricious”test, in their application, are one and the same.
a. Though 5th Circuit says they are not.
4. Sometimes, the agency’s organic statute will prescribe a standardof review
a. Scalia notes the possibility that substantial evidence
provisions in some organic statutes may call for a different —either more or less deferential—standard of review than
is found in the APA.
d. Review of Agency Legal Conclusions
i. Theory and History1. Intro
a. Not an issue till after the New Deal.
b. Congress has punted the issue of interpretation to theagency.
i. How much deference should the court give these
decisions.c. Two lines of decisions. Gray, Hearst and O’Leary ruled
similarly. And then Packard and Skidmore were held
differently
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d. Anything Pre-1984 might not be good law in these
situations.
e. Basically these cases lead into Chevron. If Chevron isoverruled, it will return back to some of this caselaw.
Under Chevron there is a high degree of deference.
2. One Line of Reasoning: Gray v. Powell; NLRB v. Hearst Publications, Inc. (the “Newsies” case); O’Leary v. Brown-
Pacific-Maxon, Inc. (See Pages 428-430 ).
a. (Note: New Deal Economic philosophy: prop up prices toget out of the depression. What in the world were they
thinking?)
b. In each of these cases, the court gave deference to
the agency on one kind of legal question, but no deferenceat all on the other
c. **In each of the three cases, the issues on which the court
gave deference to the agency were issues involving the
specific application of a statutory term to a particular set of facts. On the other hand, the issues that the court reviewed
de novo were abstract legal questions that one could ask &answer w/out knowing anything about the facts of any
particular case.
i. Spectrum—at one end, abstractly framed questions of law—then less deference to agency. More that
application of term to a specific amount of facts, the
more deference will be given. (Newsies)
ii. *Under pre-Chevron case law, the more abstract thelegal question, the less deference the agency gets. If
the question is bound up w/ the facts of a particular
case, the courts are more deferential (when applying avague statutory term to a specific set of facts).
d. The same reasons that justify deference to agency
factfinding also, at least to some extent, justify deference toagency lawfinding when the legal analysis necessarily
involves attention to particular circumstances w/in the
agency’s area of expertise
e. When the issue is one of pure interpretation, the courts areat least as well situated as are the agencies to determine the
correct meaning of statutory terms, so agencies get no
deferencei. When, however, the issue is one of law application,
and one must determine whether an ambiguous statute
should be extended to cover a specific fact pattern,then the twin considerations of agency expertise and
probably congressional intent justify giving agency
decisions a level of deference comparable to the level
afforded to agency factfinding
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1. I.E., instead of the court asking whether the
agency interpreted the statute correctly, they’ll
look at whether the agency interpreted it plausibly or reasonably
f. Separation of powers applied here too.
g. Gray v. Powell i. Railroad is looking for a tax exemption.
Supreme Ct. had invalidated a coal statute, and
then Congress rewrites it. Congress is trying to prop up the coal industry by pegging prices at a
higher level than market will dictate. While this
is going on, the Railroads are trying to cap the
prices. Railroad (Seaboard) seeks exemption fromcoal statute since it is both producer and
consumer.
ii. Seaboard not held to be producer largely b/c
agency had already made this determination.iii. Note pg. 415—Courts fulfill their
obligations on review “when they determine thatthere has been a fair hearing, with notice and
opportunity to present the circumstances and
arguments to the decisive body, and anapplication of the statute in a just and reasoned
matter.”
iv. Agency is the expert—not the courts, unless
the court can say that a set of circumstancesdenies a sensible exercise of judgment…
v. First question—was railroad a producer
within the act?1. Question of law. Rely on expertise. (specific
statutory question)
2. Second Question—has there been a salewithout a transfer of title? (abstract)
a. Question of law—but use different
grounds for decision.
h. Hearst Publications1. Musical called “Newsies”—are news boys
employees? Exclusions in statute, but
newsboys is not an exclusion. Paper extendscredit to them and they sell what they can.
2. Question of law—are newsboys employees.
Also a fact question involved as well however involving their work.
a. Two questions
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i. Did Congress want to rely on
old common law definition of
employee?ii. Court says no—does not refer
to expertise of agency however.
Use Congressional intent.(abstract)
iii. What about these particular
newsboys—are theyemployees?
iv. This time they defer to the
agencies, saying they are the
experts. (specific application)i. O’Leary (Post-APA)
1. Question is scope of the longshoremans act.
Employee drowns trying to save someone in
Guam near recreation scene provided by theemployer.
a. Is this in the course of employment? Company says no.
b. Deputy commissioner treats it as a
question of fact. Debow questionsthis—aren’t we trying to decide
what Congressional intent was?
c. If this was a normal appellate court
review and not review of anagency, it would be a de novo
review.
i. Court here is satisfied with theDeputy Commissioner’s
findings.
ii. Treated as specific application.2. Dissent (Jackson): He writes Packard
3. Packard Motor Car Co. v. NLRB (Jackson writes)
a. Facts: Unionizing question—foreman are in between
management and labor. If you let foremen unionize, theywon’t be in management anymore. Congress addresses this
in the Taft-Hartley act, which excluded Foremen from
unionizing. b. The court frames the question as a matter of pure, abstract
question of law (whether foremen are employees or
employers) (this would fit with Gray, Hearst, etc).However, the real question was one of legal application that
requires careful attention to the facts (what level of
supervisory authority is enough to place persons in the
employer rather than employee category).
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i. The court had plausible normative justifications for
declining to give deference to the agency’s decision
(more so than Hearst) (the importance of the issue,the bad rep of the agency, and the agency’s
consistency).
ii. However, now every case involving judicial review of an agency legal interpretation becomes an invitation
for a many-factored inquiry into the appropriateness
of deference (see pg. 439 note 95)iii. This and Skidmore open up possibility of courts
taking a lot of things into account before giving
deference (case-by-case standard of review)
c. Dissent: Notes that agency does not give its degree of deference.
4. Skidmore v. Swift & Co.
a. The court said that deference can be appropriate even when
an agency does not have formal responsibility for administering a statute.
b. The court expressly articulates a sliding scale for theamount of deference to which an agency might be entitled.
i. Thus, not only are we faced w/ an indeterminate list
of factors that can affect whether we defer to agencylegal conclusions, but the same factors can affect, in
an indeterminate way, the level of deference that is
appropriate in any given case
c. Leads to Chevron….5. Chevron USA v. Natural Resources Defense Council, Inc. 441
US Supreme
a. Clean Air Act as amended in 1977 is at issue. “such (statecompliance) plan provisions shall require permits for the
construction and operation of new or modified major
stationary sources anywhere in the nonattainment area.”Each state must draw up implementation plan. EPA sets
targets for compliance with regard to major air pollutants.
State must have permitting program for operation of new or
modified major stationary sources. Can EPA read this toinclude multiple smokestacks in a single plant as a single
stationary source? Pre 1981, each smokestack is a
stationary source. In 1981, EPA comes up with “bubbleconcept” where they measure the entire plant as a whole—
as one stationary source. Congress did this because it is
cheaper to work on newer equipment than old equipment.Point is, if you hit the target, who cares how you do it.
i. Congress did not define the term “stationary source”
ii. National Resources is upset about bubble concept—
Debow does not know why.
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iii. So EPA has read its own statute to define stationary
source under a bubble concept
b. Holding: Reverses the DC Circuit 6-0.
c. Rationale: The Chevron Two Step (VERY
IMPORTANT)
1. Has Congress spoken to the precise questionat issue?
a. In this step, the Court uses
traditional tools of statutoryinstruction.
b. If intent of Congress is clear, that
is the end of the matter.
c. If intent is not clear, proceed tostep two
2. If the statute is silent or ambiguous with
respect to the specific issue, the question for
the court is whether the agency’s answer is based on a permissible (reasonable)
construction of the statute.a. BUT is this the rationale that the
court intended?
b. See notes below.d. Two lines of cases—
i. Gray,OLeary and Hearst did not grant much
deference on pure questions of law but did in specific
situations (rather than abstract)1. What is this case? Debow says very abstract,
so according to Gray, etc. should not grant
deference.ii. Under other line of cases, (Skidmore, etc.)
1. See page 447 first paragraph—it sounds like
Skidmore.2. So maybe can read Chevron as an extension of
Skidmore.
e. Court probably saw this as a case of DC Circuit
overreaching in its control over agencies.
f. Notes
i. Lawson says that “there is little doubt that the Court
in 1984 intended the second, or weak, reading of Chevron.
1. Court did not realize the nature of the decision
that they were making.2. Possible to read the case as a straight forward
application of settled principles (Skidmore) of
judicial review of agency legal conclusions,
with the case presenting one of the unusual
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but not unheard of situations in which the
traditional panoply of factors warranted
granting an agency deference on a purequestion of law.
ii. After this case, the DC Circuit begins to fashion the
Chevron opinion itself. The strong reading of thecase, which is the two step, is the one that the DC
Circuit focuses on.
1. This is partly Scalia’s fault—giving the courtsless of a role in review. See essay page 529
iii. Amazing how important this case is when considering
what Stevens intended through the case.
6. INS v. Cardoza-Fonseca (US Supreme)a. P was an illegal alien who requested w/holding of
deportation pursuant to one INS statute & asylum as a
refugee pursuant to another statute. She dropped the
former claim, but held the latter. She argued on appeal thatthe agency should applied the “well-founded fear” standard
(which is more generous & subjective) rather than the“more likely than not” standard. Court agreed.
b. Holding: Court finds that agency interpretation does not
match up with plain meaning of statute.c. RationaleThus, in accord with Chevron, the agency failed
the first step. Court looks at legislative history, saying the
history is consistent w/ the plain language of the statute
(which actually sets the “well-founded fear” standardi. However, Court goes on to discuss deference (under
Chevron, there would be no need for this) “the
question of whether Congress intended the twostandards to be identical is a pure question of
statutory construction for the courts to decide. (This
is Gray/Oleary , Hearst line). See also indented quote pg. 453
1. He is trying to de-emphasize Chevron.
d. Scalia’s concurrence says part four of Stevens is dicta
because Scalia wants to protect Chevron.i. Scalia says in Chevron we showed deference because
it was a pure question of law. Says it is a new
standard.ii. Says court misinterprets Chevron. Says since the
Court quite rightly concludes that the INS’s
interpretation is clearly inconsistent w/ the plainmeaning of that phrase and the structure of the Act,
there is simply no need and thus no justification for a
discussion of whether the interpretation is entitled to
deference.
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7. Summary of these cases….
a. Courts are deferring to others for interpretations of statutes
—this is generally not the norm. b. Chevron states new rule of deference on matters of law to
agencies.
e. Dancing the Chevron Two Stepi. United States v. Mead
1. Statute that Congress passed that provides for the existence of
tariff classifications for particular imports. What is a day planner? Is it a diary/notebook? Initially it was categorized
under the “other” category. Then it was moved to the diary,
notebooks, etc. category. Now Mead must pay an import tax on
their day planners. This customs decision was entered pursuantto “ruling letters” that are entered at customs offices. Mead
protests the ruling letter, the customs people reject it, and so
Mead files appeal in a specialized court (court of international
trade). Appeal from this goes to Federal Circuit Court of Appeals.
2. Issue: Does Chevron deference apply?a. Fed. Circuit gives no deference to the treasury dept.
because was not subject to notice and comment—it was an
interpretive rule. The rule did not apply to anyone else andthis decision did not carry the force of law (someone else
could bring in a planner and customs could decide
differently).
3. Holding: Resurrects Skidmore by remanding back to court toconsider Skidmore.
a. Makes a dictinction b/t application and construction.
b. “The Court’s choice has been to tailor deference tovariety.” Basically Skidmore
i. Debow says it is this tailoring that makes it difficult
for Congress.4. Scalia Dissent: All authoritative agency interpretations of
statutes that are charged with administering deserve deference.
Does not matter if legally binding. Chevron sets forth an across-
the board presumption, which operates as a background rule of law against which Congress legislates: Ambiguity means
Congress intended agency discretion. By dragging back in the
Skidmore approach, the majority has clouded up the clarity of Chevron.
a. Scalia wants Chevron to be applied consistently so that
Congress can use it as a background rule of law. If leftambiguous, agency will fill in this gap.
b. Scalia Law Review Essay —“If the Chevron rule is not a
100% accurate estimation of modern congressional intent,
the prior case-by-case evalution was not so either. In vast
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majority of cases Congress either 1) intended a single result
2) meant to confer jurisdiction on the agency or 3) didn’t
think about the matter at all.i. Chevron could clarify things—Congressmen need to
know what is going to happen in the event of an
ambiguity. “Congress now knows that the ambiguityit creates, whether intentionally or unintentionally,
will be resolved, within the bounds of permissible
interpretation, not by the courts but by a particular agency, whose policy biases will ordinarily be known.
Ideally, the background rule of interpretation tells
Congress if you write with ambiguity, we will assume
that you want the agency to fill in the gaps. If theydon’t like the fact that the agency will be decided,
they should step up to the plate and write a clearer
statute.
5. Overton Park Example: In legislature, water down your bill sothat you get just enough to win. This is one reason why statutes
are vague. May hope that agency will define terms in a way thatthe supporters intended. However, you never know about the
courts. By following Scalia’s view, you take the gamble of the
courts out of it. Under Skidmore, who knows what will happen?6. Decision may show that Chevron is not that important anymore
and that the court is headed in a different direction, at least for
interpretive rules. Does not undermine Chevron’s deference to
legislative rules.ii. How Clear is Clear?
1. FDA v. Brown & Williamson Tobacco Corp pg. 500
a. FDA claims that nicotine is a drug according to FDCAfrom 1938. After having disavowed since its inception
jurisdiction over tobacco products, the FDA claimed just
that in 1996. Court held that Congress has clearly precluded the FDA from asserting this jrd. Under the
original statutes ’06 and ‘38, drugs were therapeutic—
Congress was thinking about medicine.
b. Holding: “We believe that Congress has clearly precludedthe FDA from asserting jurisdiction to regulate tobacco
products.” : In keeping w/ the first step of Chevron, court
is obliged to defer not to the agency’s expansiveconstruction of the statute, but to Congress’ consistent
judgment to deny the FDA this power
c. Rationale:i. First Step of Chevron, there are two possible
meanings of “directly spoken” (though court does not
directly address their form)
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1. On its face —Breyer’s dissent says it is
obvious from the statute, and that they have
spoken directly to this because nicotine affectsthe body. (cursory)
2. Thorough statutory construction --After you go
through statute and use all tools of statutoryconstruction, are you convinced that Congress
has directly spoken to the issue. (intensive)
a. O’Connor’s majority reading usesthis approach.
i. Court uses the “whole act” rule
—reads the statute as a whole
in interpreting it.ii. Reading this to allow jurisdiction would require them
to remove it from the market entirely.
iii. Ban would contradict Congress’ clear intent as
expressed in its more recent tobacco-specificlegislation. (since 65 Congress has passed 6 statutes
on cigarettes but have not banned them.)1. Problem with this is that Congress from 38
was not around in 65 when these statutes were
being passed, so still don’t know intent.iv. The inescapable conclusion is that there is no room
for tobacco products w/in the FDCA’s regulatory
scheme. If they cannot be used safely for any
therapeutic purpose, and yet they cannot be banned,they simply do not fit.
d. Dissent: FDA does have jrd.
1. Tobacco products fall w/in the scope of thestatutory definition, read literally.
2. The statute’s basic purpose—the protection of
public health—supports the inclusion of cigsw/in its scope.
3. The statute’s language permits the agency to
choose remedies consistent w/ its basic
purpose (the overall protection of publichealth). So, the FDA was reasonable in
concluding it had jrd, then refusing to
immediately ban cigs, b/c of the health problems that would lead to (even less safe
cigs being sold on the black market).
4. Notes problems with using statutes from 65for interpreting 38 statute.
5. Purposivism —as backstop for plain meaning
—purpose is to protect public health.
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III. Timing and Availability of Judicial Review
a. “Whom” : The Problem of Standing
i. Constitutional Element1. Standing is a doctrine that comes from the construction of the
Constitution, in particular, the Separation of Powers Doctrine. It
keeps cases out of the judicial branch that ought to be decided bythe political branches.
2. We don’t want disputes over policy in the court system. Courts
were originally designed to address “cases and controversies”3. Frothingham v. Mellon
a. Sup. Ct. said there is no such thing as taxpayer standing.
There has to be a case brought before the court for it to
decide (must be a “case or controversy”).i. Party must be able to show that he has sustained or
will immediate sustain some direct injury as a result
of the enforcement. Can’t sue gov. over some
regulatory issue just because you are a taxpayer.ii. The theory behind this case has been superceded by
an elaborate multi-part analysis for determiningwhich claims are cognizable in the federal court.
4. Lujan v. Defenders of Wildlife (Scalia)
a. Alleges environmental harm to endangered species.Endangered Species Act. Interior dept. sets out regulation
in 1978. Question is does this apply overseas. AID is
building a dam on the Nile in Egypt and developing in Sri
Lanka. American Agencies thus are helping. Statute onlysays “any action”. No exclusion for overseas. During
Carter admin. Agencies said is does extend but in Reagan it
said it does not. b. Issue: Do these agencies have to consult with Dept. of
Interior regarding environmental impacts of their projects?
(Why didn’t Congress address this?)c. Holding: No standing. Scalia says they 1)have not shown
injury and 2)that they have failed to demonstrate
redressability.
d. Rationale:
i. Can’t have associational standing unless members
have personal standing. Respondents here claim to
have standing because they have been to these placesand that they plan to visit again. This is not enough.
ii. If you have a party affected directly, there is no
problem. But, as here, when government regulationaffects someone else, it is a different story. Though
standing is not precluded, it is more difficult to
establish.
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e. Questioning of Citizen Suits: Scalia questions the
constitutionality of citizen suits b/c quoting Marbury, “the
province of the court is solely to decide on individuals.”Vindicating the public interest is the province of Congress
and Executive.
5. Friends of the Earth, Inc. v. Laidlaw Environmental Services(Ginsberg)
a. Clean Water Act. Waste water treatment plant license is
repeatedly violated (489 times). Friends files citizen suitand seek attorneys fees.
b. Holding: Standing. May be brought by any citizen:
defined as a person having an interest which is or may be
adversely affected.
c. Rationale:
i. Ginsberg notes the deterrent effect as a remedy for
citizens, and this supports standing.
ii. Notes that they have proven redressability as well asinjury.
d. Constitutional Issue: If P is bringing suit sort on behalf of government, recovery should go to the government. Thus,
there is no standing according to Laidlaw
e. Dissent (Scalia): Says allowing standing raises separationof powers problems.
f. Can you reconcile this case with Lujan?
g. Should people be able to sue due to agency inaction?
b. Statutory Standing and the Zone of Interests Test
i. Section 702 APA—A person suffering legal wrong because of the
agency action, or adversely affected or aggrieved by agency action
within the meaning of a relevant statute, is entitled to judicial reviewthereof.
1. In 1946, a legal wrong was simply any kind of injury that was
traditionally cognizable by courts. A person whose freedom of movement was restricted, or whose contract was breached, or
whose chickesn were seized and destroyed could assert a legal
wrong. This was the injury in fact test.
2. Thus, at common law, if competitor functioned under a faultylicense, you would not have standing simply because of that.
(Competitive injury was not a legal wrong unless the
competitive acts were illegal themselves.3. Prior to 1970, we stuck to the standing definition of 702, which
relied on the common law…then these cases came along…
ii. Bringing Down the House1. Association of Data Processing Service Organizations v. Camp
a. Douglas invents phrase “zone of interests” in this decision.
This upends the standing analysis up to this point. Data
Processing objects to the decision to allow banks (in two
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separate acts) to tap into data processing services. Data
Processing’s concern was that companies they worked for
would take their business to banks. Under the prior standing analysis, they would not have standing b/c not
covered under common law injury and fact, and the acts
here do not extend standing. b. Rationale: The question of standing…concerns…the
question whether the interest sought to be protected by the
complainant is arguably within the zone of interest to be protected or regulated by the statute or constitutional
guarantee in question.
i. Did Congress consider the competitive impacts of
these two acts? Perhaps—must look at text andlegislative history. Did Congress seek to protect the
people of the class in which the plaintiff here falls?
ii. Rejection of legal effects test.
iii. This creates more of a judicial presence in review because more plaintiffs are allowed. Beginning in the 1960’s judges started taking
back power from the agencies.1. Clarke v. Securities Industry Ass’n (1987)
a. Banks want to open stock brokerage offices for less than
old line firms. Controller of currency approves this byconcluding this does not violate branching provisions.
Stock brokerages sue.
b. Holding: Standing.
c. Rationale:
i. Should not construe zone of interest narrowly, but to
serve a broad remedial purpose.
ii. Zone of interest test is a guide for deciding whether,in view of Congress evident intent to make agency
action presumptively reviewable, a particular plaintiff
should be heard to complain of a particular agencydecision (This is not what common law says remarks
Debow)
iii. The test is not meant to be especially demanding, in
particular, there need be no indication of congressional purpose to benefit the would-be
plaintiff. (What? Debow says this is messy and
horrible)1. Thus don’t even need Congressional purpose.
2. Thinks don’t need more than the case or
controversy requirement.iv. Expert agency does not get deference (what about
Chevron?)
v. Lower courts ignore this ruling.
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2. Air Courier Conference of America v. American Postal Workers
Union
a. First time in history a zone of interests P does not havestanding. Postal workers do not want postal service to
compete with private courier services.
b. Distinguishes Clarke on the facts.