GOVERNMENT AGENCIES GOVERNMENT AGENCIES AND ADMINISTRATIVE AND ADMINISTRATIVE

PROCESSPROCESS

Chapter 6Chapter 6““The rise of the administration bodies probably The rise of the administration bodies probably has been the most significant legal trend of the last has been the most significant legal trend of the last century and perhaps more values today are century and perhaps more values today are affected by their decisions than by those of all the affected by their decisions than by those of all the courts . . . .They have become a veritable fourth courts . . . .They have become a veritable fourth

branch of the government. . . .branch of the government. . . . Supreme Court in F.T.C. v. Supreme Court in F.T.C. v. Ruberoid Company (1952)Ruberoid Company (1952)

Chapter IssuesChapter Issues

The development of administrative The development of administrative agenciesagencies

Powers delegated to agencies by Powers delegated to agencies by CongressCongress• Legislative Legislative • Executive - Investigative and EnforcementExecutive - Investigative and Enforcement• Judicial - Adjudicatory Judicial - Adjudicatory

• Judicial review of an agency’s actions or Judicial review of an agency’s actions or decisionsdecisions

The Rise of The Rise of Administrative AgenciesAdministrative Agencies

The first federal regulatory agency was the Interstate The first federal regulatory agency was the Interstate Commerce Commission (ICC,1887)Commerce Commission (ICC,1887)

Early 1900s -- the Federal Trade Commission (FTC) and the Early 1900s -- the Federal Trade Commission (FTC) and the Food and Drug Administration (FDA)Food and Drug Administration (FDA)

1930s – Securities & Exchange Commission (SEC) and 1930s – Securities & Exchange Commission (SEC) and Federal Communications Commission (FCC)Federal Communications Commission (FCC)

Late 1960s & early 1970s – Environmental Protection Late 1960s & early 1970s – Environmental Protection Agency (EPA) and Equal Employment Opportunity Agency (EPA) and Equal Employment Opportunity Commission (EEOC)Commission (EEOC)

See Exhibit 6.1 for more agencies & websitesSee Exhibit 6.1 for more agencies & websites Agencies are tools for government regulatory functionsAgencies are tools for government regulatory functions

Creating An Administrative AgencyCreating An Administrative Agency

Congress gives an agency power & authority through Congress gives an agency power & authority through legislative delegationlegislative delegation

Congress delegates power to the agency to perform Congress delegates power to the agency to perform the regulatory purposethe regulatory purpose

Congressional statute delegates powers to the Congressional statute delegates powers to the agency through an agency through an enabling statute; this statute enabling statute; this statute limits the area in which the agency can act.limits the area in which the agency can act.

Agencies are created to have expertise and Agencies are created to have expertise and supervision over problems Congress wishes to supervision over problems Congress wishes to controlcontrol

Administrative LawAdministrative Law

Administrative law consists of legal rules that define Administrative law consists of legal rules that define authority & structure of an agencyauthority & structure of an agency

Sources includeSources include• Enabling statutes of administrative agenciesEnabling statutes of administrative agencies• Administrative Procedures Act (APA, 1946)Administrative Procedures Act (APA, 1946)• Court decisionsCourt decisions

– Review validity of agency actionsReview validity of agency actions– Enforce the lawEnforce the law

The structure of administrative law is defined by the APAThe structure of administrative law is defined by the APA An agency must abide by APA requirementsAn agency must abide by APA requirements Congress may impose different or additional requirements Congress may impose different or additional requirements

than the APAthan the APA

ADMINISTRATIVE ADMINISTRATIVE REGULATORY POWERSREGULATORY POWERS

Legislative (or Rulemaking)Legislative (or Rulemaking) Executive - Investigative and Executive - Investigative and

EnforcementEnforcement Judicial - AdjudicatoryJudicial - Adjudicatory Most powers of the three branches of Most powers of the three branches of

the government are incorporated into the government are incorporated into an agencyan agency

Enforcing RulesEnforcing Rules

Gathering of information and investigating violationsGathering of information and investigating violations Broad investigative powers of agencies throughBroad investigative powers of agencies through

• Monitoring and self reporting by businessMonitoring and self reporting by business – Business is concerned with 5th Amendment Business is concerned with 5th Amendment

violations re: self incrimination (see following slide)violations re: self incrimination (see following slide)• Direct observation by agencyDirect observation by agency

– See See Dow Chemical v. USDow Chemical v. US• Agency obtains information through subpoena powerAgency obtains information through subpoena power

Refer also to Refer also to “Regulators Protecting Consumers?”“Regulators Protecting Consumers?” regarding Japan & Germany consumer regulations regarding Japan & Germany consumer regulations

5th Amendment Self 5th Amendment Self Incrimination Concerns Incrimination Concerns

of Businessesof Businesses

This privilege applies to This privilege applies to individualsindividuals Privilege Privilege does not applydoes not apply to corporations or other legal to corporations or other legal

entitiesentities Corporations MUST produce documents requested by Corporations MUST produce documents requested by

an administrative agencyan administrative agency• If business doesn’t comply, will receive fines and If business doesn’t comply, will receive fines and

penalties for non-reporting under the lawpenalties for non-reporting under the law• If they do comply, information may incriminate If they do comply, information may incriminate

business or persons within an organizationbusiness or persons within an organization

• Sometimes compliance places business “between Sometimes compliance places business “between

a rock and a hard place”a rock and a hard place”

Dow Chemical v. USDow Chemical v. US

Supreme Court HOLDS: Supreme Court HOLDS: Aerial photographs from Aerial photographs from navigable airspace are not navigable airspace are not a 4th Amendment violationa 4th Amendment violation

Photographing is lawful, if Photographing is lawful, if area is observable by the area is observable by the general public general public

However, cannot “penetrate However, cannot “penetrate walls”; that would violate walls”; that would violate trade secrets or trade secrets or confidentiality confidentiality

Use of highly sophisticated Use of highly sophisticated technology such as satellite technology such as satellite is questionable as wellis questionable as well

Dow denies EPA entry to Dow denies EPA entry to its complex for an on-site its complex for an on-site inspectioninspection

EPA hires aerial photog EPA hires aerial photog who uses a precision who uses a precision camera to view 2000-acre camera to view 2000-acre manufacturing facility area manufacturing facility area

Dow claims there is a 4th Dow claims there is a 4th Amendment Constitutional Amendment Constitutional violation re: warrantless violation re: warrantless search & seizuresearch & seizure

District Court rules for District Court rules for Dow; Court of Appeals Dow; Court of Appeals reverses for EPAreverses for EPA

General Principles of 4th Amendment General Principles of 4th Amendment Search & Seizure Guidelines of Search & Seizure Guidelines of

Administrative AgenciesAdministrative Agencies

NeedNeed Warrant-- “Routine inspections” Warrant-- “Routine inspections” NoNo Warrant-- “Open field observation” Warrant-- “Open field observation” NoNo Warrant--Consent by management for agency Warrant--Consent by management for agency

to look over or search the premisesto look over or search the premises NoNo Warrant--Closely regulated industries, i.e. Warrant--Closely regulated industries, i.e.

• Pharmaceuticals industryPharmaceuticals industry• Nuclear facilityNuclear facility

• Even junk yards (if protection of evidence is Even junk yards (if protection of evidence is

necessary)necessary)

Enforcement PowerEnforcement Power

Agencies have an array of enforcement tools in civil and Agencies have an array of enforcement tools in civil and criminal penalties, plus the use of injunctionscriminal penalties, plus the use of injunctions

Possible sanctionsPossible sanctions• Prohibitions, requirements, limitationsProhibitions, requirements, limitations• Withholding of relief; penalties & finesWithholding of relief; penalties & fines• Destruction, taking, seizing, withholding of propertyDestruction, taking, seizing, withholding of property• Assessment of damages, reimbursements, restitution, Assessment of damages, reimbursements, restitution,

compensation, costs, charges or feescompensation, costs, charges or fees• Requirement, revocation, suspension of licenseRequirement, revocation, suspension of license

Informal proceduresInformal procedures (i.e. tests, inspections, permits, (i.e. tests, inspections, permits, negotiations, advice, settlements) negotiations, advice, settlements) vsvs Formal proceduresFormal procedures (i.e. (i.e. adjudicatory hearings--adjudicatory hearings--see Exhibit 6.3)see Exhibit 6.3)

Businesses sometimes request a jury at an admin. hearingBusinesses sometimes request a jury at an admin. hearing See See “Administrative Agencies in Japan”“Administrative Agencies in Japan”

Agency Hearings and the Right to Agency Hearings and the Right to Trial By Jury Trial By Jury

Hearings are held before Hearings are held before Administrative Law Administrative Law Judge (ALJ)Judge (ALJ)

QuestionQuestion: Is there a right : Is there a right to trial by jury at such to trial by jury at such hearings?hearings?

Answer: Answer: The Supreme The Supreme Court has held that there Court has held that there is no right to a jury trail is no right to a jury trail since these are neither since these are neither criminal nor common-criminal nor common-law caseslaw cases

““Administrative AgenciesAdministrative Agencies In Japan” In Japan”

Very regulatedVery regulated Administrative “guidance Administrative “guidance

system” system” (gyosei shido)(gyosei shido) They only give “guidance by They only give “guidance by

direction” direction” (shiji)(shiji) or or “suggestions” (“suggestions” (kankoku)kankoku)

Have requests Have requests (yobo) (yobo) Give warnings Give warnings (keikoku)(keikoku) Give “encouragement” Give “encouragement” (kansho)(kansho) Theoretically, businesses are Theoretically, businesses are

not forced to complynot forced to comply Practically, non-compliance Practically, non-compliance

creates problems for creates problems for businessesbusinesses

If businesses don’t comply If businesses don’t comply there may be subtle, unrelated there may be subtle, unrelated ways that make doing ways that make doing business more difficultbusiness more difficult

““Voluntary” nature of the Voluntary” nature of the system saves face for system saves face for everyone everyone

Unlike the U.S., a Japanese Unlike the U.S., a Japanese agency does not actually agency does not actually confront violatorsconfront violators

The Japanese judiciary has a The Japanese judiciary has a “hands-off” policy toward this “hands-off” policy toward this administrative guidance administrative guidance system and its effects on system and its effects on businessesbusinesses

““Judicial Review Of AnJudicial Review Of AnAgency Action”Agency Action”

APA sets out procedural requirements for court reviewAPA sets out procedural requirements for court review JurisdictionJurisdiction is needed by the court to hear the case is needed by the court to hear the case Action must be Action must be reviewablereviewable by the courts (sometimes review is by the courts (sometimes review is

prohibited by statute, i.e. Dept. of Veterans Affairs actions prohibited by statute, i.e. Dept. of Veterans Affairs actions regarding benefits for veterans, their dependents or survivors)regarding benefits for veterans, their dependents or survivors)

A party must have A party must have standingstanding to seek court review of an agency to seek court review of an agency actionaction• See See Lujan v. Defenders of WildlifeLujan v. Defenders of Wildlife (within text) (within text)

The agency action must be final to warrant judicial review under The agency action must be final to warrant judicial review under the the ripeness doctrineripeness doctrine

Parties must complete all agency appeals before turning to Parties must complete all agency appeals before turning to the courts under the the courts under the exhaustion doctrineexhaustion doctrine

Scope of Judicial ReviewScope of Judicial Review

Review of substantive Review of substantive determinationdetermination• Usually the courts yield Usually the courts yield

to an agency’s to an agency’s judgment unless judgment unless decisions are decisions are arbitrary, arbitrary, capricious, or an abuse capricious, or an abuse of discretion of discretion or or rulemaking is vague or rulemaking is vague or unduly burdensome on unduly burdensome on businessbusiness

See See Georgia-Pacific v. Georgia-Pacific v. OSHAOSHA

Review of statutory Review of statutory interpretationinterpretation• Courts determine if the Courts determine if the

agency has gone agency has gone beyond Congressional beyond Congressional authorityauthority

Review of procedural Review of procedural requirementsrequirements• Courts ensure that an Courts ensure that an

agency has not acted agency has not acted unfairly or disregarded unfairly or disregarded procedures (has not procedures (has not violated “procedural violated “procedural fair play”)fair play”)

CONTROLS ON AGENCY POWERSCONTROLS ON AGENCY POWERS

Direct ControlsDirect Controls• Agency Appropriations & Reporting RequirementsAgency Appropriations & Reporting Requirements• Sunset LawsSunset Laws• Cost-Benefit and Risk AnalysisCost-Benefit and Risk Analysis

Indirect Controls Indirect Controls • Freedom of Information ActFreedom of Information Act• Privacy ActPrivacy Act• Government in the Sunshine ActGovernment in the Sunshine Act• Executive Orders to instruct agencies to undertake Executive Orders to instruct agencies to undertake

certain taskscertain tasks– EX: Pres. Johnson’s order to agencies re: affirmative action EX: Pres. Johnson’s order to agencies re: affirmative action

programsprograms

END OF CHAPTER 6END OF CHAPTER 6

Rulemaking PowersRulemaking Powers(Types of Rules)(Types of Rules)

Substantive or LegislativeSubstantive or Legislative• Same force as statutes of CongressSame force as statutes of Congress• Agency usually must give public notice of these rulesAgency usually must give public notice of these rules

InterpretativeInterpretative• Statements issued by an agency to provide guidance Statements issued by an agency to provide guidance

regarding interpretation of a substantive rule or regarding interpretation of a substantive rule or Congressional statuteCongressional statute

• These rules may be created without public noticeThese rules may be created without public notice ProceduralProcedural

• Rules that outline the method of agency operationRules that outline the method of agency operation• Procedures used to deal with the public regarding Procedures used to deal with the public regarding

enforcement, investigation & adjudicatory reviewenforcement, investigation & adjudicatory review

United Technologies Corp. (UTC) v. U.S.United Technologies Corp. (UTC) v. U.S. EPAEPA

RCRA instructs the EPA to RCRA instructs the EPA to require hazardous waste require hazardous waste disposal facilities to meet disposal facilities to meet design/operating standardsdesign/operating standards

Regulations impose detailed Regulations impose detailed requirementsrequirements

UTC challenged new rules as UTC challenged new rules as legislative, not interpretative, legislative, not interpretative, and therefore there must be and therefore there must be public review before EPA public review before EPA enacted themenacted them

Legislative rules:Legislative rules: those based those based on an agency’s power to on an agency’s power to exercise its judgment & exercise its judgment & implement statutory implement statutory mandatesmandates

Interpretative rules:Interpretative rules: those those based on how to interpret based on how to interpret statutory provisionsstatutory provisions

Court says that the APA Court says that the APA excludes interpretative excludes interpretative rules from public notice rules from public notice and commentand comment

Held: This rule is EPA’s Held: This rule is EPA’s “view of what Congress “view of what Congress intended” under RCRA. intended” under RCRA. Hence, it is interpretative, Hence, it is interpretative, not legislative. No public not legislative. No public notice is requirednotice is required..

RulemakingRulemaking

Proposed rule drafted by the agency staffProposed rule drafted by the agency staff Internal review of the ruleInternal review of the rule Rules approved by the head of the agency for public Rules approved by the head of the agency for public

considerationconsideration Publishing of the proposed rules in the Publishing of the proposed rules in the Federal RegisterFederal Register Interested parties may submit written comments to agencyInterested parties may submit written comments to agency After public comment period (60-90 days), agency reviews After public comment period (60-90 days), agency reviews

comments and finalizes the rulecomments and finalizes the rule Formal RulemakingFormal Rulemaking: Formal hearings held & interested : Formal hearings held & interested

parties may present formal exhibits, witnesses, etc.parties may present formal exhibits, witnesses, etc.• Occurs in small fraction of rules issuedOccurs in small fraction of rules issued

Once agency issues final rule, it may be appealed through Once agency issues final rule, it may be appealed through agency, then to the US Court of Appealsagency, then to the US Court of Appeals

Cyberlaw: Cyberlaw: Do Old Regulations Apply to Do Old Regulations Apply to New Forms of Competition?New Forms of Competition?

Problems with regulating Problems with regulating technology related to the technology related to the InternetInternet

If a new technology is not If a new technology is not covered in a regulation that covered in a regulation that governs existing competitors, governs existing competitors, are the new competitors are the new competitors covered?covered?

Existing firms want new web-Existing firms want new web-based competitors subject to based competitors subject to the same rules the same rules

Problem: the way the Problem: the way the regulations are written does regulations are written does not envision new inventions--not envision new inventions--are they really covered under are they really covered under the regs?the regs?

Lujan v. Defenders of WildlifeLujan v. Defenders of Wildlife“Legal Standing”“Legal Standing”

Environmental groups Environmental groups argue that US should stop argue that US should stop providing aid to Egypt to providing aid to Egypt to build dams on Nile River build dams on Nile River as that endangers the rare as that endangers the rare Nile crocodileNile crocodile

Groups assert providing Groups assert providing aid should comply with US aid should comply with US Endangered Species ActEndangered Species Act

Court holds: Plaintiffs Court holds: Plaintiffs lack lack standingstanding and have and have suffered no “injury in fact”suffered no “injury in fact”

Disagreement with agency Disagreement with agency policy is not = to an injurypolicy is not = to an injury

Georgia-Pacific Corp. v. OSHAGeorgia-Pacific Corp. v. OSHA

Substantive RulingsSubstantive Rulings

Forklift strikes and kills employee who was painting and Forklift strikes and kills employee who was painting and out of sight of the forklift driverout of sight of the forklift driver

OSHA cites a violation and imposes a $480 fineOSHA cites a violation and imposes a $480 fine OSHA’s regulation requires forklifts must drive in reverse OSHA’s regulation requires forklifts must drive in reverse

with “load trailing” when carrying loads that “obstruct with “load trailing” when carrying loads that “obstruct forward view”forward view”

G-P says rule is vague, as any load in front may “obstruct G-P says rule is vague, as any load in front may “obstruct forward view” in some mannerforward view” in some manner

Unions say load trailing is unsafe, since driver’s field of Unions say load trailing is unsafe, since driver’s field of vision is limitedvision is limited

Is language “obstructs forward view” unreasonably vague?Is language “obstructs forward view” unreasonably vague? HELD: Yes. Court vacates fine. HELD: Yes. Court vacates fine. OSHA must create a more specific standardOSHA must create a more specific standard

““Through the Smog: What the Court Through the Smog: What the Court Actually Ruled”Actually Ruled”

Deeper Meanings of Seemingly Minor CasesDeeper Meanings of Seemingly Minor Cases

Some Supreme Court cases appear to involve small mattersSome Supreme Court cases appear to involve small matters But, it’s not always the details of cases that are the focus, but But, it’s not always the details of cases that are the focus, but

rather legal principles that have broader applicationsrather legal principles that have broader applications In In Whitman v. American Trucking Assn., Whitman v. American Trucking Assn., the trucker’s lost, but the the trucker’s lost, but the

court’s decision provided new opportunities for attacks on other court’s decision provided new opportunities for attacks on other regulatory rulingsregulatory rulings

Issues concerning the delegation of Congressional powers look at Issues concerning the delegation of Congressional powers look at “ill-formed” statutes like Clean Air Act, that allow much regulatory “ill-formed” statutes like Clean Air Act, that allow much regulatory action by the EPA (big government concerns)action by the EPA (big government concerns)

If a statute is “silent or ambiguous” the court has allowed If a statute is “silent or ambiguous” the court has allowed “reasonable interpretation made by the administrator of any “reasonable interpretation made by the administrator of any agency” agency”

The application of the The application of the nondelegation doctrine nondelegation doctrine in in WhitmanWhitman may cut may cut into an agency’s broad legislative powers into an agency’s broad legislative powers