ADMINISTRATIVE LAW OUTLINE

1. JUDICIAL REVIEW OF ADMINISTRATIVE DECISIONSa. Congress may sometimes in the agency’s enabling act specify the standard for judicial

review. i. If the enabling act is silent on the grounds for review, § 706 of the APA fills the

gap by providing a laundry list of grounds on which a court may evaluate the agency’s decision.

1. The best way to read § 706 is as a list of possibilities, not probabilities.b. Beyond setting out the list of grounds, the APA says very little about the use of each of

the grounds, how they relate to each other, and how some of the terms ought to de defined.

c. Section 706 provides that a court reviewing the legality of an admin agency’s action may hold that action unlawful if the court finds the action to be:

i. arbitrary, capricious, an abuse of discretion , or otherwise not in accordance with law;

1. This is what was left. Stated differently, the arbitrary/capricious standard is the RESIDUAL ground of § 706.—

2. If the case is reviewable and no other standard fits, a court may always review under the arbitrary/capricious standard.

3. Applies to informal rulemaking. ii. contrary to constitutional right , power, privilege, or immunity;

1. look at cases where Cong tried to deny judicial review (explicitly and implicitly) in statute, but there was a Const challenge left

iii. in excess of statutory jurisdiction , authority, or limitations, or short of statutory right;

1. Statute does not authorize Agency to do what it has doneiv. without observance of procedure required by law;v. unsupported by substantial evidence in a case subject to sections 556 and 557 (of

the APA) or otherwise reviewed on the record of an agency hearing provided by statute; or

1. Only if case is subject to §§ 556 or 557 of APA2. It is only formal rulemaking or an individual trial-type proceeding

that is subject to the substantial evidence standard3. Substantial evidence: something more than a mere scintilla; such

relevant evidence as a reasonable mind might accept as adequate to support a conclusion

vi. unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court

1. A de novo proceeding is normally permissible ONLY when a statute specifically authorizes it.

2. However, even in the absence of a separate statute, de novo review might be warranted under the APA:

a. “when the action is adjudicatory in nature and the agency’s fact-finding procedures are inadequate” OR

b. “when issues that were not before the agency are raised in a proceeding to enforce nonadjudicatory agency action.”

c. *This is almost never invokedvii. *On exam put the question in as many of these as possible

d. Standards of review under the APA

1

i. Overton Park- When reviewing admin decisions that are not supported by formal fact findings, courts should determine the scope of the appropriate official’s authority, whether that authority was abused, and whether all applicable procedural requisites have been observed..

1. Importance of Overton Park is that extraordinary procedure of probing the deliberative processes of administrative agencies is not substantially great, but not beyond the reach of the Court.

2. Also a sufficient record is needed to accommodate judicial review . e. Judicial Review of Questions of Law

i. NLRB v. Hearst (paper boys)-Courts have traditionally shown the greatest deference to agency decisions involving the applications of law to particular facts.

1. where the question is one of specific application of a broad statutory term in a proceeding in which the agency administering the statute must determine it initially, the reviewing court’s function is limited

a. Examplein Hearst Ct determined whether Cong meant c/l of newsboys, Ct defers to agency on its application

ii. Chevron: Where Cong has left an open question in its legislation, judicial review of an agency’s interpretation of that question must be limited to whether the agency’s construction is legitimate.

1. The above involves pure questions of statutory interpretation2. What is a pure question? Those issues that involve only the meaning of

the words of the statute. They do not involve applying those words to a particular situations

3. Chevron 2-stepa. (1) Court looks to whether Cong has spoken on the precise

question at issue (if Cong has spoken neither Agency nor Ct can alter; Ct may use traditional tools of statutory construction to figure intent)

b. (2) If Cong has not addressed the matter (Cong silent or ambiguous) the Ct examines agency’s construction of its statutory mandate

i. Ct must defer to agency if the ct concludes agency action is reasonable.

iii. FDA v. B & W Tobacco: In extraordinary cases, there may be reason to hesitate before concluding that Cong had intended an implied delegation to an agency to filling the statutory gaps left by a statute’s ambiguity.

1. This was where FDA tried to extend regulations of the tobacco industryiv. Skidmore (agency’s interpretation of its own rule)

1. Great deference rule: An agency’s interpretation of its own RULE will both be helpful and perhaps persuasive, but it is NOT necessarily controlling

f. Judicial Review of Question of Fact (or Policy) i. De novo Review

1. This standard leaves no room for doubt. 2. A reviewing court need NOT pay any attention whatsoever to any of the

agency’s findings or conclusions. 3. The case comes into court as if there were no decision at the agency

level.ii. Substantial Evidence Review

1. Formal Adjudication (Universal Camera)

2

a. 2 stages i. Fact gathering stage—proceeding before the ALJ

1. Agencies should be sensitive to the ALJ’s findings on such as the credibility of witnesses, b/c it is the ALJ who hears the testimony BUT

2. The ALJ is not beyond questionii. Final agency determination stage

b. Process of Agency adjudicationi. Initial decisions are made by an ALJ and must be

appealed to a higher level within the agency before judicial review may be sought. The initial decision of the ALJ is part of the record of agency proceedings that are reviewed in court.

ii. Therefore when the agency reverses the decision of the trier of fact (ALJ) on appeal within the agency, the reviewing ct must take the reversal into account in deciding whether the agency’s decisions is supported by SE. The ALJ’s decision weighs against the higher level agency’s decision

iii. A court performing review must review the record as a WHOLE, examining both the evidence supporting & opposing the agency’s decision, to determine whether the decision is supported on the entire record by substantial evidence.

1. A decision might fail the SE test, even though it is supported by some evidence, when that evidence is overwhelmed by other evidence to the contrary.

2. Informal Adjudication a. The usual stdrd of review is the arbitrary & capricious test. (ex:

Overton Park) b. Substantial evidence applies to informal rulemaking ONLY

when provided by a particular statute. (ex: Benzene case)i. Is there a difference?

1. maybe SE allows for greater judicial scrutiny of the scientific or factual bases of agency rulemaking.

c. Benzene: Before promulgating any permanent health or safety standard, the Sec of Labor is required to make a threshold finding that the toxic substance in question poses a significant health risk in the workplace.

i. They did not produce any evidence on the significance of the health risk, which was required by the statute

iii. Arbitrary and Capricious1. State Farm (seatbelt case): When an agency modifies or rescinds a

previously promulgated rule, it is required to supply a satisfactory, rationally analysis supporting its decision.

a. Note that the recession of a rule is subject to the same standard of review as the promulgation of a rule

3

b. “The scope of review under the ‘arbitrary and capricious’ standard is narrow and a court is not to substitute its judgment for that of the agency. Nevertheless, the agency must examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made.”

c. “Normally, an agency rule would be arbitrary & capricious if

i. the agency has relied on factors which Congress has not intended it to consider,

ii. entirely failed to consider an important aspect of the problem,

iii. offered an explanation for its decision that runs counter to the evidence before the agency, OR

iv. offered an explanation for its decision that is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.

d. In State Farm the Agency . . . i. tried to take informal action here, instead of initiating a

new rulemaking.ii. The agency tried to avoid making the record that a new

rulemaking would have made!iii. The “hoops” are meant to focus the attention of all

interested parties on the subject and let them get stuff on the record for judicial review.

iv. But an agency changing its course must supply a reasoned analysis.”

2. AVAILABILITY OF JUDICIAL REVIEWa. Jurisdiction (Can a court hear a claim?)

i. Federal Court Jurisdiction Over Petitions for Judicial Review ii. Specific Review Statutes : Agency enabling acts often grant a right of judicial

review and explicitly create federal court jurisdiction over petitions for review.iii. Federal Question Jurisdiction (most of time court of appeals hear the case)

1. If Congress has not provided for judicial review in an agency’s enabling act, a party who meets APA and constitutional standing rqmts can bring an action for judicial review in the district court under the Judicial Code’s grant of district court jurisdiction over civil actions arising under federal law.

2. Claims for review of agency action can easily meet the test for jurisdiction under § 1331.

b. Reviewability i. Agency Action-longstanding presumption that judicial review of this is available

( unless Cong says no or action committed to agency discretion by law )1. APA sec 704 provides for judicial review of “agency action made

reviewable by statute and final agency action for which there is no other adequate remedy in a court.”

a. This statute creates a strong presumption of reviewability for final agency action

b. Gives judicial review of final agency action when no other statute provides for review

ii. Statutory Preclusion of review

4

1. Sec 701 specifies 2 situations where APA judicial review is not available a. (1) When a statute “precludes judicial review” and b. (2) when “agency action is committed to agency discretion by

law”2. Explicit preclusion

a. Johnson v. Robinson-a statute prohibiting judicial review of the decisions of the Admin of Veterans Affairs does not bar federal courts from deciding constitutionality of veteran’s benefits legislation

i. Sec 701(a)(1) above is applicable. Veterans Admin Act provided that decisions of the VA on any questions of law or fact under any law administered by the VA shall be final and conclusive and no other official court of he US can review it.

ii. General rule Cts are hostile to statutes that purport to restrict people’s access to judicial review. Here beneficiary determination is not subject to judicial review

1. Might read case to suggest that there is a special rule that Cong can preclude review of determinations that aren’t constitutional

2. Better to say that Courts find more persuasive factual reasons for precluding review than they do constitutional reasons

3. Implicit preclusiona. Cts have found that statutes implicitly preclude review when the

statutes channel review in particular ways or on behalf of particular parties

i. Exists only when Congress is very explicit concerning review (i.e. who can obtain review, how review should be sought, etc. . .)

b. McNary v. Haitian Refugee-a statutory bar of judicial review of individual case determinations does not prevent a court from reviewing collateral constitutional challenges .

iii. Committed to agency discretion by law (sec 701(a)(2))1. Very narrow exception which applies “in those rare instances where

‘statutes are drawn in such broad terms that in a given case there is no law to apply.’”

a. Judicial review is not possible b/c there is no discernible statutory standard against which to judge the legality of agency action.

b. B/c Cong usually gives agency statutory guidance, this exception rarely met

2. Webster v. Doe (CIA)-under Nat’l Security Act employee termination decisions made by the CIA Dir are not judicially reviewable because of his broad agency discretion.

a. Const claim was allowed b/c Cong cannot grant the director the discretion to violate Const

b. Short answer-Although statutes can take away the ability to sue over factual/legal determinations, they are not, unless very

5

explicit and clear applicable, to prevent you from suing for deprivation of constitutional rights.

3. Prosecutorial Discretiona. Ct has been reluctant to allow judicial review of agency

decisions involving when to regulate or whom to prosecute for violations w/i the agency’s jurisdictions

b. Heckler v. Chaney (inmates trying to prevent lethal injection)-FDA refrain from enforcement proceedings and was not subject to judicial review

i. There is a presumption of unreviewability; can be overcome by statute (e.g. statute says must prosecute everyone; thus, Cong can put in statute for review)

4. Regulatory Delay p.253a. Questions whether inaction is final agency action? b. APA allows judicial review of agency action that is

unreasonably withheld. i. Unclear of meaning

ii. Means more than just not getting the answer when you like

iii. Also means that you really can’t make an agency act if agency thinks its resources are better spent elsewhere

c. Chao-here OSHA made a finding that a standard was not sufficient, but lagged on promulgating a rule. B/c they openly admitted an insufficiency they put pressure on themselves to do something, but they just kept delaying. Due to the delay the court got suspicious. The Ct, however, did not make OSHA act, but they did give them some encouragement to proceed in the rulemaking.

5. Resource Allocation and Appropriationsa. Lincoln v. Vigil: Rules of an agency organization are exempt

from notice and comment requirements of the APA.. i. In case Cong gave Agency some $ and gave broad

pronouncement to take care of Native Americansii. Ct says that a lump-sum appropriation was a

congressional determination that the agency, within broad parameters, should determine how to spend the money

1. so grants are unreviewable discretions to the agency to decide how to appropriate lump sum

c. Standing to Secure Judicial Reviewi. Relationship between standing and reviewabilitycommitted to agency

discretion b/c no law to apply b/c Cong has given no law/legal rights for the agency to respect

ii. Gov’t did something a person does not like. Ct says, yea, but no rights were violated. When the agency is not doing something directly to you, it is more difficult to get standing.

iii. Basic Rule-you have to suffer some injury in fact and it must be legally cognizable.

1. Must be more than worse off2. Ct must be able to remedy you situation through a ruling3. Must have a legal right

6

a. OR put another wayi. Authorization by Const or legislative enactment

ii. A case or controversy iii. Prudential limitations (e.g. zone of interests)

iv. APA sec 702a person suffering 1. (a) legal wrong b/c of agency action (violation of a legal right) OR 2. (b) adversely affected or aggrieved by agency action w/i the meaning

of a relevant statue is entitled to judicial review (this is zone of interests)v. Legal Rights Test (must allege injury to a legally protected interest)

1. Court’s expansion of the definition of standing to include competitors abandoned this prior approach by the Ct.

2. In Sanders Bros., the Ct acknowledged that the company had no right to be protected from new competition.

a. This case gave express standing to “persons aggrieved;” the court has interpreted this phrase in a manner that expands it to competitors

3. This test goes to whether Cong can give you a legal right by passing a statute or whether it must emanate from the Const

4. Camp-standing to challenge an order of an administrative agency is established by a showing that the interest sought to be protected is arguably w/i the zone of interest to be regulated by the statute or the constitutional guarantee in question.

a. Competitive injury is a legal injury (here) b/c the statute was aimed to protect someone in the plaintiff’s position

5. Barlow-the zone of interest test:a. Very broadb. Develop a factual record to demonstrate concrete harm (think

about the Lujan case below)c. Zone of interest can include “aesthetic, conservational, and

recreational interest as well as economic interest as in Campd. ***The zone of interest test takes a political view of standing b/c

it asks not whether the plaintiff has a legal right at stake but rather whether the plaintiff’s interests were considered by Cong or the regulatory body.

vi. Constitutional Standing Rqmt: Injury Causation, Redressibility1. Lujan-a person may not challenge an administrative regulation unless he

can demonstrate an imminent injury and redressability. a. This is a more narrow zone of interestmust suffer an (1)

injury in fact (a) concrete and particular (b) actual or imminent (2) must be a casual connection between injury and agency conduct (3) injury can be redressed by favorable judicial decision

i. For this must have a substantive impact on the claimant ii. courts are reluctant to find standing when the person is

in a different position from everybody elseb. Petitioners wanted to establish precedent where they would not

need some type of direct connection with the place/animals in order to have standing

vii. Things to know on the exam for standing1. “Associational Standing” Associations have standing two ways:

a. Have standing to represent its own interests.

7

b. Associations are legal entities that are directly affected.c. Have standing to stand in for members.

i. It has to have members.1. “Supporters” are not members.2. Must pay dues, be involved, etc…3. Assert their rights/complaints… if they want to

join, they can… but then assert on their own behalf.

2. “Congressional Standing” No special standings privilege as a member of Congress.

a. Any standing comes because something injures them in their capacity as a member of Congress… NOT because they have some type of special status/broader reach.

b. Could Congress, by statute, grant themselves special standing?c. Probably not… but they could expand their breadth in other

ways.d. Timing of Judicial Review

i. Judicial review may only be sought when (1) the claim is ripe, (2) when administrative remedies have been exhausted, and (3) before the claim becomes moot.

1. Claims may not be brought too early (ripeness), too late (mootness), and (in some cases) without exhausting administrative remedies.

ii. An Examination1. Finality: Focuses on when the agency has completed an action, so as not

to have courts interfere with ongoing agency activities (note that I may have some finality material in the ripeness section)

a. Basically a petitioner has been told NO 2. Exhaustion: hoops petitioner must go through within agency…have

they exhausted these? Allows an agency the initial opportunity to address a challenge to its action. By requiring persons to first appeal their challenges to agency action w/i the agency itself, courts respect the congressional placement of responsibility for administration of the law in agency hands, enable them to cure their own mistake…

3. Ripeness: Too early? Is issue sufficiently developed for judicial resolution or whether the issue would be better considered in a later proceeding

4. Moot is it too late? A case is moot is there is no longer a live controversy between the parties

a. Note last two derive from Const requirement of “case or controversy;” either too early for an injury sufficient for standing or tool late to remedy the decision

iii. Ripeness and Finality1. not a question of whether you can sue, but of whether you can sue now2. Sometimes a statue dictates when action is final or at least reviewable .

a. If none then you must analyze the case in terms of the judge- made doctrines of ripeness and exhaustion to determine when it is permissible to take a dispute out of an agency and into court

3. When are informal actions final?a. When it has the effect of granting or denying permission to take

a requested course of actionb. Informal responses to inquiries

8

c. *Tentative or incomplete decisions should not be reviewed 4. Ripeness

a. *note difference with exhaustionexhaustion doctrine is more concerned with where w/i the agency’s structure the dispute lies.

b. A rule may be ripe upon promulgation (before enforcement) if the issues are

i. (1) fit for judicial review and ii. (2) the party seeking review would suffer substantial

hardship if review was delayed until enforcement1. Essentially a fitness and hardship question

c. Abbot Labs-“where the legal issue presented is fit for judicial resolution, and where the regulation requires an immediate and significant change in the plaintiff’s conduct of their affairs with serious penalties attached to noncompliance, access to the courts under the APA and the Declaratory Judgment Act must be permitted, absent a statutory bar or some other unusual circumstance.”

i. Here review was appropriate because as soon as the rule is implemented, it takes effect, because companies must change and comply to make sure that they do not get struck down and fined for violating the new regulation

d. Gardneri. Pre-enforcement review o.k. if (1) self-executing (2)

has immediate and substantial impact on respondents (3) rules appear “prima facie” susceptible of reasoned comparison w/the statutory mandate OR (3) there is sufficient hardship to warrant pre-enforcement judicial review (i.e. (a) immediately expensive to comply with regulation or (b) special problems (risk of penalties) arise for a party who violated the regulation)

ii. Short way to look at it1. When applying for federal benefits not ripe

until you apply and they tell you no2. When regulations force you to act claims are

usually seen as ripe before regulation acts on the individual

5. Exhaustion of Admin Remediesa. Cts only require complete exhaustion if the statute or regulation

says soi. No general exhaustion requirement beyond APA sec

704’s finality requirement; if an agency is final within that section then judicial review is allowed.

b. Not required in 3 narrow circumstancesi. Exhaustion would cause undue prejudice to the

protection of the rights at issue; ii. The admin agency lacks power to grant effective relief

1. example: in McCarthy-prisoner sues prison officials for damages b/c of alleged unconstitutional conditions in prison

9

iii. exhaustion would be futile because the admin body is biased

c. Can overlap with ripenessi. If court declines to hear an appeal b/c the litigant has not

exhausted available admin remedies, the matter is not ripe for review.

iv. Res Judicata (claim preclusion) and Collateral Estoppel (issue preclusion)1. Mendoza-Collateral estoppel will be applied to cases involving the US

only where the plaintiff was a party to the preceding litigation (this is mutual collateral estoppel (same party); allowed against US )

a. CE may apply against the Gov’t only if it is mutual (i.e. involves litigation b/t the same parties)

b. Nonmutual CE bars a party in a subsequent adjudication from relitigating a point that it lost on in a prior adjudication against a different party. This is not available against the US.

i. Reasonsgov’t would have to appeal all cases of first impression, weaken the cts because they only get one bite of the apple

3. ADMINISTRATIVE POLICYMAKINGa. Policy Making Instruments

i. Rulemaking1. When agencies make policy through RULEMAKING, it is acting like a

legislature, and later the ONLY issue (when the agency brings an enforcement action) is whether the regulated party violated the rule.

2. When agencies make policy in adjudication, they act much like common law courts—announcing new “rules” in the course of deciding the particular case before the agency.

ii. Informal policymaking:1. Agencies often make policy decisions informally, without using either an

adjudicatory or rulemaking process. This is proper as long as it does not appear that the agency was required to use a more formal procedure.

2. In informal decision-making, the agency must give notice of its decision and provide a brief explanation.

3. R: This is MOST of administrative law—informal adjudication—going to the agency and talking them into doing what you want—lots of negotiating, understanding the politics of the situation, maybe even threatening to file a petition, rule, or complaint.

4. “informal” means that there is no clear process prescribed by the APA or the enabling act

iii. Legal Constraints on Choice of Policymaking Models1. Due Process

a. Under certain circumstances, due process requires adjudication.b. In most cases, however, the choice between rulemaking and

adjudication is left to Congress or to the agency under delegation from Congress.

c. Requires notice and an adjudicatory hearing when agency action affects a particular party and is based upon facts specific to the situation of that party. These facts are referred to as “adjudicative facts.”

d. Where agency action is based upon conditions common to many parties in an area, such as the value of all property in a

10

city, such general facts are referred to as “legislative facts,” and a legislative process is constitutionally sufficient.

e. RARE that due process makes them do one or the other2. Statutory Constraints look to p.337 (APA and specific enabling acts to

agencies)a. The APA and the Choice of Policymaking Mode—p.367

i. The APA does NOT explicitly regulate the choice of policymaking mode, but its definition of “adjudication” and “rulemaking” provide some guidance on the choice.

ii. Basically, the APA provides that everything that is not a rule is an order (and adjudication creates an order). So, something cannot be BOTH rulemaking and adjudication.

iii. The APA itself does not explicitly state when agencies must engage in rulemaking or adjudication to make policies.

1. However, agencies must employ an adjudicatory process to issue orders against regulated parties.

2. Agencies make rule-like determinations in both rulemaking and adjudication, and either is proper as long as the agency has the power to use the particular procedure and all the procedural rqmts are observed.

iv. Agency Authority/Discretion to Make Policy by Rule1. Agencies, like common law courts, often announce new rules in the

course of deciding matters in adjudication. However, there are policy reasons favoring RULEMAKING as the procedure for formulating rules.

2. If an agency has statutory authority to make rules, then rulemaking obviously is an appropriate procedure for making policy.

3. B/c rulemaking has several legal and policy advantages over adjudication and informal policymaking, courts prefer policymaking by rule.

4. For advantages and disadvantages look to p.28 of Toni’s outline5. Petroleum Refiners-The Trade Commission Act includes a provision

that specifically provides for rulemaking by the FTC to implement its adjudicating functions

a. FTC decided to make policy by announcing broad generally applicable rules rather than going case by case.

b. The Court allowed even though power not expressly in FTA because FTC needed the power to this and it could be inferred from the administrative scheme.

c. So unless the statute specifically sets forth procedure, agencies can choose between adjudication and rule-making (also look to agency’s enabling statute)

v. Agency Discretion to Make Policy by Order after Adjudication1. Q: To what extent do agencies have a choice between making policy by

rule or order?a. R: They have almost COMPLETE discretion, with limited

exceptions.2. Some agencies, notably the NLRB, make policy primarily through an

adjudicatory process in which new rules of decision are announced in the course of deciding particular adjudicatory matters.

11

3. B/c the APA’s definitions appear to contemplate rulemaking as the procedure for formulating GENERAL rules, general rules stated as part of a decision in an adjudication have been attacked as having been promulgated without a proper rulemaking procedure.

a. The Court has rejected these challenges, although not definitively, stating that the choice between adjudication and rulemaking lies largely within the discretion of the agency.

4. Rulemaking in adjudication: a. Agency has discretion on whether to adjudicate or make a rule;

however, the Court has never definitively approved the making of general rules in an adjudicatory process.

b. Excelsior Underwear-One of the NLRB’s functions is to conduct elections in which employees have the opportunity to cast their ballots for or against representation under circumstances that are free to not only from interference, restraint or coercion, but also from other elements that prevent a free and reasoned choice.

i. NLRB established a prospective rule (did not apply to parties in case) through an order in this adjudicative action.

ii. Ct basically says it is wrong, but allowed it anywayiii. Because it is prospective rule Exclesior will not appeal

because the rule does not affect them in this voting and the Union will not appeal because they could get an unfavorable decision on appeal and the decision as it stands leaves open opportunity for future voting.

c. Wyman-Gordon-the rulemaking provisions of the APA may not be avoided by making rules in the course of adjudication

i. NRLB tried to apply rule announced in NLRB ii. APA requires publication in the Federal Register of

notice of proposed rulemaking and of hearing; opportunity to be heard; a statement in the rule of its basis and purposes; and publication in the Fed Reg of rule adopted.

iii. Problem was that in Excelsior NLRB made a prospective rule in the prior decision above that did not apply to the parties in that adjudicatory hearing

iv. In any event, here W was specifically directed by the NLRB to follow a certain course of action; this direction was part of an order and valid

d. Bell Aerospace-NLRB can make a rule through adjudication, but in adjudicating it cannot read a new and more restrictive meaning to a statute

i. The Board reversed itself on construction of its own statute. The Court said this needs to be done through proper procedures

ii. Thus1. Agencies, in general, are free to make policy

through either a rule or adjudication EXCEPT

12

a. If there has been detrimental reliance on an interpretation then must have rulemaking

vi. Policy by Manual1. Morton v. Ruiz-before an agency may extinguish the entitlement of

potential beneficiaries, it must comply with its own internal proceduresa. Agency chose not to publish its eligibility requirements; it was

only in the manual; thus, before extinguishing rights an agency must comply with own internal procedures.

b. Agency must establish eligibility requirements according to established procedures.

c. Case partly stands for the proposition that limitations on eligibility may not be newly imposed case by case, even on the basis of reasoned opinions, because the limitations must be made known in advance to persons adversely affected by them.

d. Clear that Court disapproves of non-public policymaking when the policy arrived at restricts the rights of members of the public

b. Public Participation in Rulemakingi. Rule-Making

1. Formal (APA §556, 557)a. VERY Slow, time consuming and expensiveb. Involves notice, a hearing, an opportunity to present testimony,

and cross examine witnessesc. Few statutes require (usually when they do Cong likely does not

want many rules promulgated)2. Informal (APA § 553)

a. Notice & Comment b. Fairly loose and not a highly constrained overproceduralized

process. c. Basic requirements

i. (1) publish notice of the proposed rulemaking ii. (2) opportunity for public comment

iii. (3) after consideration of comments, publication of final rule

iv. (4) publication of concise general statement of the rule’s basis and purpose

d. Noticei. Sec 553: “General notice of proposed rule making shall

be published in the Fed Reg. The notice SHALL include . . . either the terms or substance of the proposed rule or a description of the subjects and issues involved.”

ii. Problems1. Affected parties need sufficient notice to alert

them in advance that their interests are at stake2. Notice must be sufficient enough to ensure

comments are informative enough to be useful in its decisionmaking process

3. Original notice may not inform affected parties of the damage the adopted rule would do to their interest

13

4. Final rule must have a direct relation to final (can have notice about lawnmowers then promulgate a rule about tvs)

iii. Notice allows (1) improved quality of rulemaking through diverse public comment (2) fairness by giving affected parties to express their views (3) effective judicial review of the final rule by enabling critics to develop evidence in record to support their objections

iv. Chocolate Manufacturer’s Assoc.-the notice of a proposed rulemaking must contain either the terms or substance of the proposed rule or a description of the subjects and issues involved.

1. Agency does not have a carte blanche to establish a rule contrary to its original proposal simply because the agency receives suggestions to alter the rule during the comment period.

2. If the final rule materially alters the issues involved in the rulemaking or if it substantially departs from the terms or substance of the proposed rule, the notice is inadequate.

3. Explanation of decision: General Concise Statementa. APA § 553 requires the agency to “incorporate in the rules

adopted a concise general statement of their basis and purpose.” i. Essentially repeats the notice of proposed rulemaking’s

explanation of what the agency is attempting to do in the rule and why, as modified in light of further information and comments received during the rulemaking.

b. The statement must contain a reasoned explanation for the agency’s decision.

i. They don’t have to discuss every item of fact or opinion. But, they need to enable the court to see what major issues of policy were ventilated by the informal proceedings and why the agency reacted to them as it did.

4. Integrity of Record: Exparte Contacts a. Ex parte contact is a communication by an interested party to an

administrator made outside the normal comment processb. Can be made by a private person or members of Congc. APA rules

i. Informal rulemaking permitted ii. Formal rulemakingprohibited

1. Why? (1) Deprives parties of meaningful opportunity on other matters considered by the agency (2) violates the requirement that judicial review be based on the whole record before the agency (sec 706)

iii. Ex parte communications that occur before the notice of proposed rulemaking are allowed

d. HBO v. FCC-the public record must reflect the representations made to an agency so that relevant information supporting or

14

refuting those representations may be brought to the attention of the reviewing courts by persons participating in agency proceeding.

i. The presence of secrecy makes it difficult to judge the truth even when later disclosed by the FCC.

ii. Once a notice of proposed rulemaking has been issued, discussion with interested parties should be prohibited, and if made, a written document or a summary of any oral communications must be placed in the public file immediately.

5. Integrity of Record: Political Influencea. Agencies are often contacted by executive branch officials and

members of Cong concerning pending rulemakings and other administrative action

b. B/c agencies are part of the political system, these ex parte contacts have presented courts with special problems

c. Sierra Club v. Costle-Clean Air Amends of 1977 provided that EPA put all relevant documents that became available after a proposed rule has been published be placed in the docket as soon as possible after their availability

i. S objected to meetings b/t EPA and White House and b/t EPA and a Sen. Also complained of EPA accepting 300 late comments. (note that S could not attack rule so attacked the procedure)

ii. Ct says1. Late commentsnothing in statute prohibits or

requires the EPA to accept late comments a. Only thing is if they rely on them they

must put them in the record2. Meetingsstatute says nothing about meetings;

Court stresses importance of these in INFORMAL rulemaking; CT ALLOWS

a. Docketing is needed if meetings were “of central relevance”

3. President has right to info and input in the admin process

4. Cong ex parte contacts also allowed BUTa. The content of the pressure must be

irrelevant or extraneous to the issues the agency is considering AND

b. the agency must not be affected by the pressure

5. So long as the agency offers an adequate and independent basis for its rule, courts are likely to excuse attempts at congressional and presidential pressure

6. ***President and Cong may not attempt to influence the outcome of adjudications

6. Integrity of Record: Agency Biasa. One of the concerns of agency decisionmaking is that the

decisionmaker be fair to all parties concerned

15

b. Rulemaking v. Adjudication (different standards)i. Informal rulemaking does not require same

neutralityii. Adjudicationsmall measure of prejudgment may

be sufficient to disqualify decisionmaker from process

c. Notice and comment rulemaking presupposes that the decisionmakers at least consider the comments submitted

d. Ct standard—whether a disinterested observer may conclude that the decisionmaker has in some measure adjudged the facts as well as the law of a particular case in advance of hearing it

e. Legislative facts are ordinarily general and have no reference to specific parties.

f. Proving a Close Mindi. Must show (by clear and convincing) from public

and/or private statements that the decisionmaker is convinced that the proposed rule is necessary w/o regard to the substance of the comments received. This is a STRICT STANDARD

ii. Assoc. of Nat’l Advertisers-An agency member should be disqualified from decision-making only when it is shown he has an unalterably closed mind

1. Here Comm’r made some statements prior to rulemaking (TV ads for children)

2. Comm’r was considering legislative facts not adjudicative facts

a. Expression of opinion before rulemaking does not mean he can’t keep an open mind during proceeding

7. Hybrid Rulemaking (Not in APA)a. Informal rulemaking w/ Extra Hearings

i. Created by Statute: statute changes rulesii. Non-statutory:

1. Judicial: courts decide that extra procedures are necessary (after Vermont Yankee below this does not happen much)

2. Agencies: usually valid if they decide to do; rare that they do

iii. Natural Resources Defense Council (Vermont Yankee in DC Circuit)-An agency has discretion to select the most effective procedures to compile a record, but it must scrutinize the record as a whole to insure that a genuine opportunity to participate in a meaningful way are provided to all.

1. Essentially, here decided the court decided it can impose a higher standard for notice and comment than the APA required; Ct does not tell them what to do, only to do more

iv. Vermont Yankee (appeal from previous)-The adequacy of the record in agency rulemaking proceedings is not

16

directly dependent on the type of procedural devices employed but turns on whether the agency has followed the statutory mandate of the APA

1. Ct says DC Cir got it wrong; can’t impose higher standard than the APA; that is for the agency to decide

2. If informal rulemaking, so long as agency meets the APA, the courts cannot impose additional procedural devices to their original plan (must come from Agency or Cong)

8. Exemptions from notice and comment sec 553a. (1) military and foreign affairs (2) matters relating to agency mgt

or personnel (3) interpretive rules (4) general statements of policy (5) rules of agency organization or practice (6) when the agency finds that such procedures are “(a) impracticable, (b) unnecessary, or (c) contrary to public interest

i. (3) Interpretive rules(i) whenever a regulation has an impact on how people act it is legislative; (ii) if it merely advises people in the agency on how to view things it is interpretive (these are exempt)

1. 2 tests to determinea. Substantial impact whether the rule

has a substantial impact on the regulated community

b. Legally Binding if the questioned rule is legally binding, it cannot be an interpretive rule

ii. (6)(a) Impracticablegenerally means some emergency dictates immediate rules w/o procedures

iii. (6)(b) Unnecessarymeans public would have no interest in commenting on the rule

b. Sullivan-when an agency promulgates a regulation by notice and comment, it may not subsequently repudiate that announced meaning w/o proceeding through the notice and comment rulemaking normally required for amendments of a rule.

i. This is an example of the interpretive v. legislative rulesii. The agency could not alter, w/o notice and comment, the

abortion regulations in order to permit doctors to give abortion counseling, unless it could be legitimately characterized as an interpretation consistent with language and purpose.

c. Hoctor-a legislative rule is valid only if promulgated after notice and comment. (this is the animal fence case)

i. An agency must utilize APA procedures when promulgating “legislative rules” which involve policy judgments ;

ii. “ interpretive rules ” are those that merely announce how an agency interprets its own regulations , as well as statutes.

iii. May have to look at case for the factsc. ?Strengthening the Analytical Basis of Policymaking?

17

i. Cost-Benefit Analysis1. Gives useful info, but only tells you what it tells you2. Sensitive to measurement/definitional techniques3. Have to determine what is a cost and what is a benefit (note can have

unseen costs or benefits not taken into account)4. Allows some to draw their data to make their policy look the best5. May not match up with the way people think6. The Cotton Dust Case-the OSHA Act requires OSHA to develop

standards that reduce or eliminate risk of health impairment to the extent such standards are technologically and economically feasible.

a. Case dealt with the word “feasible” under OSHA Act” Does it mean

i. “capable of being done” ORii. done within a reasonable amount of money

b. Basically court conducted its own cost/benefit analysisc. *Not sure about this case

ii. Regulatory Impact Statements1. Vermont Yankee-the adequacy of the record in an agency rulemaking

proceeding is not correlated directly to the type of procedural devices employed, but turns on whether the agency has followed the statutory mandate of the APA.

2. Stryker’s Bay-NEPA, while establishing substantive goals for the nation, imposes on agencies a duty that is essentially procedural

a. Supreme Ct says that lower court overstepped its bounds by deciding how the NEPA process should have turned out rather than allowing the agency to do its job.

b. Once an agency has made a decision subject to NEPA’s procedural requirements, the court’s role is to insure that the agency has considered the environmental consequences

4. AGENCY ADJUDICATIONa. Adjudication

i. Formal 1. Just Plain “Adjudication”

a. Have hearing, make decision…ii. Informal

1. Executive Action2. Somebody in an office somewhere makes a decision.3. Basically executive decision-making.4. 98% of what agencies do…5. Must persuade the agency official to exercise discretion in way that

benefits your client… use this with advocacy skills and knowledge of the record.

6. Almost like lobbying.b. Agency Authority to Adjudicate (when agency acts as the judge/jury)

i. Congress can delegate quasi-judicial powers to them. Why?…court’s are overloaded, agency mission may require, agency quicker/cheaper, …real reason…courts don’t want to hear all the crap.

ii. Separation of powers problem. B/c Article III vests the judicial power in the Article III courts, it has been argued that administrative agencies usurp that power when they adjudicate cases. However, the SC has approved a great deal of agency adjudication.

18

iii. Private v. Public Rights—Court makes a distinction on whether agencies can adjudicate

1. Public (Yes)a. The adjudication of public rights may be assigned to

administrative agenciesb. Public rights = claims against the government

2. Private (Limited) a. Private rights = legal disputes between private partiesb. The adjudication of private rights disputes in admin agencies is

suspect and may occur only under certain conditions.iv. Current Law: Pragmatic Test:

1. Today courts use a pragmatic test to determine whether the assignment of adjudicatory functions to an agency violates the sep of powers.

2. Use a BALANCING TEST that weighs:a. The threat to Article III values AGAINSTb. The concerns that led to the assignment of adjudicatory authority

to the agency.i. Primary question: whether the assignment of

jurisdiction to a non-Article III adjudicator threatens the institutional integrity of the federal courts.

v. Factors: Some applied in Schor1. Traditional Article III cases

a. SC’s review will be most exacting when Congress assigns adjudication of a claim to an agency that is of the type traditionally within the jurisdiction of the Article III courts.

b. Thus, in Schor, the Court stated that “where private, common-law rights are at stake, our examination of the congressional attempt to control the manner in which those rights are adjudicated has been searching.”

c. Doesn’t mean they can’t adjudicate common-law rights—agency in Schor did and court approved

2. Scope of Agency’s Jurisdiction : The broader the scope of the agency’s jurisdiction, the more likely there will be a violation of Article III. Conversely, the more an agency’s jurisdiction is confined narrowly to a particular area, the less the perceived threat to Article III values.

3. Congressionally created rights a. Agency jurisdiction over private rights disputes, where the

rights involved are congressionally created, is seen as LESS threatening to Article III values than when the rights involved arise from another source, such as state law.

b. Court analogizes congressionally created rights to public rights.c. Conversely, where common-law or STATE statutory rights are

involved, agency jurisdiction is LESS likely to be upheld against Article III challenge.

vi. Schor-agency adjudication of c/l counterclaims by the CFTC is not unconstitutional.

1. In deciding whether the delegation of quasi-judicial power to a non-Article III court is constitutional, the main question must be whether the delegation tends to encroach on the essential attributes of judicial power

a. Not the case (1) this is a particularized area of law; the CFTC has not been given broad authority t adjudicate c/l cases. (2) the

19

level of review (‘weight of the evidence’) is not excessively deferential; the enabling statute has not expanded the power of the leg or exec at the judiciary’s expense

c. Due Process Hearing Rightsi. Ask (1) is there a life, liberty, or property interest at stake? (2) if so then what

process is due?ii. Look to sec 554, 556, 557, and procedure

1. Has there been sufficient notice? 2. Has the person had opportunity to be heard?

iii. The issue is determined by applying federal due process standards to the procedures already provided and asking whether those procedures are adequate. If they are not then federal due process law mandates ADDING to those procedures to bring them up to constitutional standards.

iv. Due process basics1. requires a hearing at a meaningful time2. specific requirements vary with situation, but essentially requires

following: (1) advance notice of hearing; (2) oral hearing in advance of gov’t action; (3) right to counsel; (4) right to confront; (5) right to neutral decision maker

3. whether more is required depends on Mathews testv. Goldberg v. Kelly-welfare benefits may not be discontinued w/o a pretermination

hearing with the opportunity to present evidence and confront witnesses. 1. Welfare is a matter of statutory entitlement; therefore the

termination of these benefits must comply with procedural safeguards “depending on the nature of the government function and private interest involved.”

a. Welfare provides essential food, clothing, and housing; depriving an individual of this is taking away a means to live

b. Thus they are so important to require a pretermination evidentiary hearing

vi. Roth-there is no 14 th amend or property interest denied a nontenured teacher when he is dismissed, thus, no due process rights accrue

1. Just as welfare payments were created by statute, R’s job was defined and created by his contract, which did not guarantee return after a year

2. This case illustrates the applicability of procedural due process. Before such rights accrue, the party asserting their existence must establish they have been deprived of a liberty or property interest.

vii. Arnett c. Kennedy (“Bittersweet Theory”)1. You get a tenure… you get a “property right.”2. Justice Rehnquist Property right you get is only the procedure you get

before it is taken away… in essence, not a REAL property right.viii. Bishop v. Wood

1. Same as above… Arnettix. Cleveland v. Loudermill

1. Once the government tells you it is a property right, they have to act like you have the whole “bundle of sticks” that goes along with a normal property right.

2. Basically, to give someone a job and tell them they have a property right, but in reality you are lying to them because their job does not have as much due process as normal due process… this is not acceptable.

20

3. The right to due process is conferred by constitutional guarantee, not by legislative grace.

4. It is wrong for employers to give employees hope that they will never lose their job when in fact they can lose their job at any time.

x. Is there a “liberty interest” in one’s reputation?1. No… if there is no legal effect, then you are stuck with it.

xi. O’bannon-nursing home patients have no constitutional right to participate in a hearing concerning the revocation of the nursing home’s right to provide them with nursing care at government expense.

1. The impact of decertifying a facility was indirect to the benefits received by the nursing home patients and not a deprivation of any interest in life, liberty, or property.

2. Fact that some hardship may occur (in this case moving) does not turn it into a harm of property

xii. Requirements of due process1. Mathews v. Eldridge-due process clause does not require a hearing prior

to termination of disability benefitsa. Ct makes a distinction from Goldberg; here disability

benefits are not as essential as welfare benefitsb. Supreme Court basically says here that there is an Eldridge Triad

P.552 (top); must look to i. (1) Private interest affected…

1. the greater the interest (like welfare) the more you need a pretermination hearing

ii. (2) Risk of Erroneous Deprivation….1. compare the costs and error rates of what the

claimants want vs. what the gov wantsiii. (3) Government’s interest… burdens that additional

procedural safeguards will create.1. Gov does not want to waste $

a. Cost of additional proceduresb. Expense of providing benefits to

ineligible recipients pending decision2. Gov is suppose to best serve the public interest

a. Best use resourcesc. Mathematical formula. “A” is the additional procedural

safeguard to which the individual asserts that he is entitled: procedural safeguard, A, will be required IF AND ONLY IF (amount at stake for individual) x (likelihood that administrative error will be reduced by using A) < cost to the government of granting A

2. Ingraham v. Wright-Supreme Court says that a student has a tort remedy if they get wrongfully paddled. Therefore, there is no reason for the student to have a pre-paddling hearing to see if they deserve the paddling.

a. White Dissent: Says this is like throwing someone in jail for speeding before trial and allowing them to bring a claim for wrongful imprisonment if it turns out that they didn’t deserve jail time.

21

3. Town of Castle Rock v. Gonzales: People are not entitled to police protection… there is some discretion to the police officers… it is their option to protect, not really an obligation

xiii. Right to a Neutral Decision Maker1. Most judges cannot be touched by politics, but administrators are

susceptible2. Tumey v. Ohio-A decision maker whose pay depends on the outcome of

a case violates DP3. Ward v. Village of Monroeville-if money can benefit decision maker in

anyway then they are also disqualified (here the judge is the mayor of the city and judgments went into the city’s coffers)

4. Gibson v. Berryhill-Parties with substantial pecuniary interest in legal proceedings should not adjudicate disputes involving those interests.

a. AL gave Optometry Bd power to determine what was unethical; Bd said big stores such as LensCrafters was unethical

b. Bd was composed of private optometrist likely in competition with big stores

5. Cinderella Finishing Schools-where a disinterested observer may conclude that a decision-maker has adjudged the facts and law of a particular case before hearing it, that decision maker must be disqualified. (this is essentially the test)

a. Chairman of FTC had inferred some bad things about C at a conference; C asked that he be recused

b. Note that officials may talk about job-related topics, but can’t go too far

6. Withrow (in notes): as long as Bd doesn’t glue themselves to a stance then they are permitted

7. Cheney: Scalia refused to recuse himself and stated reasons why (this is where he got those plane tickets and went hunting Dick Cheney)

d. Statutory Hearing Rightsi. Evidence and Hearing Process

1. Portland Audubon Society: The APA’s ex parte communications ban applies to the President and White House staff.

a. Why here and not in rulemaking?i. This is an adjudication, determined on the record, and

after the opportunity for an agency hearing (these are questions to be asked regarding the Congressional committee)

ii. President is an interested party in the decision, who may have a strong influence and effect on the agency decision

b. APA sec 557 prohibits ex parte communications during an administrative adjudicatory proceeding between agency officials and interested parties (President is an interested party).

i. An “interested party” is one having a greater degree of persona, financial, or professional interest than a member of the general public

ii. Supervision and Oversight of Administrative Hearing Officers (ALJs)1. Note ALJs not really a judge, just a specialized decision-making

bureaucrat

22

2. Heckler: A program targeting allowance decisions made by administrative law judges violates the rights of the judges to decisional independence pursuant to the APA.

a. ALJs were influenced in their decision making by the Bellmon Review Program that analyzed allowance rates

5. ADMINISTRATIVE ENFORCEMENTa. Questions to be answered

i. How can the demand for individual privacy be reconciled with the govt’s need to monitor regulated behavior and investigate apparent violations?

ii. To what extent may the govt conscript private citizens into the role of policing their own or others’ behavior?

iii. Is it fair to prosecute or punish one wrongdoer while letting others go free?iv. To whom do we entrust the awesome task of judging guilt or innocence?

b. Level of enforcement depends on: p.690 articlei. Resources

ii. whether the violation has a victim c. Monitoring Investigations

i. Done through inspections, reporting requirements, or subpoenas1. For each must have a source of legal authority and will likely be limits

(both defined by statues, Const, regulations, and agency’s policy)ii. Physical Inspections

1. Problems: (1) impose burdens on people and (2) enforcers tend to have to be very selective in choosing inspections

2. Marshall v. Barlow: an administrative search under the OSHA Act may not be conducted without a warrant

a. Probable cause justifying the issuance of a warrant may be based not only on specific evidence of an existing violation but also on a showing that reasonable legislative or administrative standards for conducting an inspection are satisfied with respect to a particular place of business.

b. This is the starting point to administrative searchesc. Note Stevens dissent says that the probable cause of

administrative warrants serves no purpose3. Warrants for administrative inspections MAY issue without

probable cause.a. The Courts in Camara & Marshall stated that PC is NOT

required to obtain a warrant for an administrative inspection.b. Rather, an agency may obtain a warrant merely by showing

that normal legislative or administrative standards for conducting an inspection are met.

c. Q: How do you tell whether the standards for an administrative inspection are “reasonable” (the rqmt for homes/ordinary businesses) or “an adequate substitute for a warrant” (the rqmt for pervasively regulated industries)

i. Factors: 1. objective standards2. rationally related to the purposes for the

inspections3. fairly detailed4. reasonable overall

23

d. Pervasively regulated businesses (no warrant required) (liquor dealers, gun dealers, mining companies, auto dismantlers)

i. 3 rqmts for dispensing with the warrant rqmt for inspecting pervasively regulated businesses:

1. There must be a substantial govt interest underlying the regulatory scheme;

2. Warrantless searches must be necessary to advance the govt interest;

3. The regulatory scheme must supply standards regarding the occurrence and scope of inspections that provide an adequate substitute for the safeguards of the warrant procedure.

ii. People in these industries are so heavily regulated that they have LOWER expectations of privacy than the owners of ordinary businesses.

iii. Compulsory Production of Information and Record Keeping Requiements1. Agencies make businesses, by subpoenas, produce evidence that they are

complying with regulations.2. Rarely do courts refuse to enforce subpoenas as “unreasonable.” 3. Forces companies to make records.4. That way they cannot avoid obeying the laws just by not keeping

records… requires them to keep records of actually keeping record of when they are following the law.

5. Ruckelshaus v. Monsanto: equitable relief is not available to enjoin a taking of private property for a public use, duly authorized by law, when a suit for compensation can be brought against the sovereign subsequent to the taking.

a. Ct agreed M had a property interest in their trade secrets of pesticides

b. But to qualify as a taking it had to have reasonable investment-backed expectations that the EPA would maintain data in strictest confidence, giving M a compensable interest (note court pulled the “ripe” issue of not seeking compensation in a lower court first)

c. Note too that courts are reluctant to get involved in a property right that is essentially granted by the government

d. Prosecution and Private Enforcementi. Agencies (think of prosecutors too) have discretion on targets for enforcement

1. *Agency decisions not to prosecute are not reviewable2. Problems

a. Subversion of legislative intentb. Political favoritismc. Selection of easy targets

ii. Moog Industries: it is not within the scope of the reviewing authority of a court of appeals to postpone the operation of a valid cease and desist order of the FTC against a single firm until similar orders have been entered against that firm’s competitors

1. FTC is alone empowered to develop an enforcement policy best calculated to achieve the ends contemplated by Cong and to allocate its available funds and personnel in such a way as to execute its policy efficiently and economically

24

iii. Universal Rundle Corp.: The Commission’s evaluation of the evidence and its refusal to grant a stay of its cease and desist order should be overturned only where such refusal constitutes a patent abuse of discretion.

1. Even if U had succeeded in demonstrating that all of its competitors were in illegal price discrimination identical to its own Commission would not necessarily have to enforce against the others.

2. Commission may engage in selective enforcement, but cannot institute proceedings that will arbitrarily destroy one of many law violators in an industry

3. Agency only has to articulate some rational basis for its decision here iv. Citizen’s suits to compel public enforcement (or agency fails to enforce own

agency standards)1. typically come from beneficiaries of the regulatory program 2. Problem is that most statutes are discretionary

a. Some statutes do, however, provide nondiscretion3. Citizens’ suits cannot be based on the substance of the regulation, rather

that only can be based on an agency’s mandatory duty4. Scott v. City of Hammond: A citizen’s suit may be brought to compel

agency action only where the act or duty required by statute is nondiscretionary.

a. The Clean Water Act’s requirement that eh EPA promulgate TMDLs where, as here, states have failed to do so within the prescribed time period is nondiscretionary and thus open to challenge through a citizen’s suit

5. Bennett v. Spear (in notes): where statutes prescribe procedures, courts will generally let people sue for failure to consider those things, but courts won’t determine what the decision should be.

6. BUSINESS AND OCCUPATIONAL LICESSINGa. EXAM : In FCC licensing questions, watch for questions raising Ashbacker and Storer

issues. On Storer issues, watch for an argument by the applicant that the FCC’s rule should not apply in the particular case. Note that comparative hearings are no longer required on renewals.

b. Occupational Licensingi. Due Process & the Problem of Self-Regulation

1. Due Process hearing rights govern whether an agency is required to provide a hearing and, if so, what process is required at the hearing. Due process hearing rights attach when the govt deprives or threatens to deprive a person of life, liberty, or property.

ii. Licenses are property interests. iii. Why do we license?

1. The licensing of professions is almost ALL about protecting the professionals (in the name of protecting the public).

2. There are licenses for lots of stuff today. Historically, the laws have not been challenged. R says they are beginning to be in state courts and many are succeeding. (EX: people who sell caskets must be in the funeral home business—“for health reasons”—this makes no sense—strike down as lacking a rational basis—naked favoring of one profession over another); later overturened

c. 3 levels of occupational licensing: i. Registration—if you engage in an activity, tell us.

25

ii. Certification—govt certifies that persons have certain skills, but does not prevent others who don’t have that certification from practicing the profession.

iii. Licensing—to practice a profession, must have a license from the govtiv. NOTE : There can be an overlap between the categories. EX: lawyer in TN must

be licensed and MAY be certified as a civil trial specialist.d. Standards for licensing: HIGH. Standards of discipline for people in the

profession/”club”: LOW.e. What is the main type of regulation of professionals? Advertising. There is a good

reason—consumers want good service at a low price and want to know where to get it. VS. Professionals want you to make decisions based on NON-economic factors—R says this is so you get gouged.

i. Friedman v. Rogers: unless a statutory classification trammels fundamental personal rights or is based on suspect distinctions, the classification is presumed to be constitutional if rationally related to a legitimate state interest

1. Another battle b/t private optometrist and the commercial giants like LensCrafters

2. Licensing Bd reserved 4 seats for private optometrist of TOA and 2 for others; optometrist that wanted commercial outfit complained could not get a fair hearing (different from Berryhill b/c there Bd investigated and prosecuted the claim)

3. The TOA Act was endorsed by the TOA, so the Ct says the legislature can require the Bd be drawn from the organization that has given the legislation consistent support

f. Alternative Constraints on Occupational Self-Reg i. Antitrust p.753

1. Seldom does this work with the learned profession exemption2. Does it apply to the states?

a. Nob. Many times, however, it is not the state that is involvedc. State can farm that power out of private entities, such as the

County Bar Associationi. Then it becomes harder not to apply antitrust laws, but it

is hidden3. Bates (in notes): AZ Supreme is the real party at interest; it is not being

laundered through some other state organization (the bar)a. ABA folded; the court determined that it wasn’t the consumer

interest being looked after, but the interest of law professorsii. First Amendment p.757

g. Business Licensing—Entry Regulationi. Intro

1. Broadcast licensingspectrum of wavelengths is a limited resource (FCC must regulate in the name of “public interest, convenience, and necessity”)

2. If you want a station, convince FCC you deserve a station more than someone else

a. FCC has substantive rules (ex: # of stations, decency) and procedural rules (directs how the FCC is to decide among competitors)

3. Statutory Hearing Rightsmust be a genuine hearing

26

a. Ashbacker Radio Corp.: whenever conflicting applications are made for a radio license, the FCC must hear all the applications together

i. This was where FCC granted one application without a hearing and basically the other applicant had to overcome first applicant’s presumption of a license

ii. Cong granted a right to a hearing; where two applications are mutually exclusive , the grant of one w/o a hearing deprives the loser of the opportunity that Cong chose to give

1. Basically unless the FCC found no substantial and material questions of fact it could not deny

4. Restricting Scope of Hearing Rightsa. Storer: The FCC is not required to hold a hearing before

denying a license to operate a station in a manner contrary to public interest.

i. Cong gave FCC broad powers b/c of growing complexity of communications industry, so their promulgation of a rule preventing vast ownership was not in derogation of hearing requirement

ii. Courts have generally upheld the practice of allowing agencies to use rule-making authority to make substantive rules that effectively limit the issues decided at a hearing.

iii. To get a hearing, you have to file an application that is in proper form… if you have the maximum number of stations already, then this means you must state why the new rule/amendment should be changed to allow what you want.

b. Texaco (in notes): ct says agency can decided by rulemaking that they aren’t going to accept certain kinds of tariffs

c. American Airlines (in notes): allows more expansive rulemaking that alters hearing rights

ii. Licensing Standards (agency can basically do what they want)1. Setting the Standards

a. Reynold’s beginning statement for this section—It:i. Illustrates the problem that agencies have

ii. Illustrates the importance of good lawyeringiii. Provides a realistic view of how agencies are constrained

by law—some but not as much as they contend.b. License renewal has long been one of the most controversial

elements of broadcast licensing. Although the Act long provided that licensees have no property rights in their licenses and that licenses may be revoked or not be renewed whenever such action would be in the public interest, licenses have become very valuable.

2. Tendency to favor incumbent license holders. The idea: If you have a reasonable expectation of keeping the station, you’ll put more into it.

3. Despite the lack of statutory support for the practice, the FCC has basically treated licensees as having a presumptive renewal right (The 1996 Act explicitly gives them the power to do this)

27

4. This is although the statute assumes that the FCC was required to hold a

comparative hearing with the same procedures and standards for renewals as for new licenses .

a. Cowles p.779: basically FCC Commissioners voted 4-3 to grant Cow an application over Cent, who had the advantage on all the comparative criteria. The FCC, however, gave Cow the advantage on the best practicable service standard and said that gave edge.

i. Central Broadcasting: Ct basically says that FCC decision in Cowles was not right concluding that the FCC had created a de facto presumption in favor of renewal. They notice that this is a sham.

iii. Clarity, Consistency, and License Administration1. Jawboning urging people to do something without actually requiring

them to (EX: speeches before broadcasters’ organizations, personal lobbying of the 3 major networks and a private entity that sets “voluntary” guidelines)

a. One view : It’s very real i. If the head of the FCC starts talking…they don’t have to

revoke a license…affiliates start talking to networks (about how the FCC is complaining)…filters up the chaim

b. This is good b/c i. nobody is forced to do anything…you can ignore the

jawboning if you want and nothing will probably happen.

ii. Way for system to be politically responsive…quicker than rule change

iii. Cheaper for govt…don’t have to go through enforcement/revocation proceedings

c. This is bad b/c i. Agencies are able to do stuff by “administrative feel”

(like in Cowles)ii. Don’t have to take a vote—nothing in public—

negotiating public policy while not complying with the procedural safeguards designed to protect the public they serve

iii. Unconstrained power—lots of discretioniv. ABSENCE of a formal process.

d. Writers Guild of America v. ABC (ruling for “jawboning…the line is very vague): No 1st Amd deprivation by the jawboning (freedom of speech) but by official position (put pressure on others)

i. EX: If the agency actually takes action AFTER jawboning—you can say they prejudged the issue—CAN throw it out!

iv. License Awards by Lottery and Auction: Is the Price Right?1. Lotteries

28

a. Advantage: useful when there are large numbers of applicants and the public interest would be served by getting the service started quickly.

b. Problem: they weight them—and if you do too much of that, they aren’t lotteries anymore

2. Auctions a. The great appeal is in the heat of bidding people will pay more

for something than it is worth.b. Problem: They pay too much and they have trouble running

their business profitably. So, it is NOT necessarily in the FCC’s or the public’s interest for them to way overbid.

h. Business Licensing-Rate Regulationi. Here cases really have nothing to do with the issues of business licensing. They

turn more on statutory interpretation.ii. Why regulate? To prevent monopolies (maybe)

1. Real reason is to prevent needless duplication of services to promote efficiency

iii. Regulation1. Regulators decide what is a fair rate of return; the regulated industries

then set their rates to determine their rates so they can meet that rate of return

a. The rate of return can be inflated by the regulated industry (e.g. jets, $200 phones, leather couches, CEO’s salaries, etc..)

b. Regulated industries should not be able to use their rates to meet their rate of returns to subsidize other business (e.g. Bell South engaging in the pizza delivery business)

2. Regulated industries must submit tariffs to the agency. The tariff is the price they will charge and disallows the regulated industry to engage in activities adverse to the tariff.

a. MCI v. AT&T: Case basically was one about interpretation of the word “modify.” The Ct found that FCC, by detariffing the phone industry (to spur competition), went beyond the powers it had been granted to modify.

iv. AT&T v. Iowa Utilities Bd: An agency may regulate a field previously occupied by state and local regulators. Local competition provisions were inserted into the Communications Act and are thus subject to FCC’s rulemaking

v. De-Regulation:1. This is suppose to help the disadvantage obtain services BUT . . .

a. Happens politically when someone has something to gain from it.

b. De-regulation creates phony competition… “Confuseopolies.”2. National Cable TV: A court’s prior judicial construction of a statute

trumps an agency construction otherwise entitled to Chevron deference ONLY IF the prior court held that its construction flows from unambiguous terms of the statute and leaves no room for agency discretion.

a. Case dealt with interpretation of “telecommunications service”b. ***Note Scalia’s dissent p. 825 that Court by this decision

created a doctrine where a judicial decision of the “best” rather than “only” interpretation is subject to reversal by an agency.

vi. Problems with Regulated Industries:

29

1. Sometimes technological advances will make a natural monopoly obsolete.

a. Technology will make it so that the market can be competitive.2. Hard to “half-regulate” industries.

a. Either de-regulate a lot, or not at all… something in between does no good.

vii. Other1. % return on investment…ideally set up to make % profit (no

more/no less)a.

2. (company should do what set up to do (service)…not get into something else to make $ (Bell South pizza delivery)

3. factor in technology change…risk investment…etc. when regulating7. FREEDOM OF INFORMATION ACT

a. Background on p.830-33b. “Agency Records” under FOIA

i. sec 552(a)(4)(B) says that federal district courts have jurisdiction “to order the production of any agency records improperly withheld.”

1. Thus threshold question is “what is an ‘agency record’”2. Kissinger: FOI does not compel an agency to retrieve records no

longer in its possession.a. Statute says “improperly withheld;” that means possessionb. Records of Nat’l Security Advisor are not “agency records”

because part of white house staffi. “Agency” generally refers to cabinet depts. and their

subordinate agencies (So State Dept. is subject to the law)

c. Dissent-this decision encourages agency officials to remove unflattering documents from agency possession

c. Exemptions from FOIA’s Disclosure Requirementi. 552(b) lists nine exemptions

1. Cts have no power to find additional justifications for nondisclosure 2. Exemptions narrowly drawn (so must be narrowly construed) 3. Agencies must disclose “reasonably segregable portions of record”

a. So entire documents not exempt only matters ii. NLRB v. Sears: NLRB App and Advise Memos upholding a decision not to file a

complaint are subject to disclosure, but those reversing such a decision are not1. Intra-agency documents containing thought process of agency gen

counsel is exempted from FOI (like atty work product doctrine)2. Memos that relate to a decision not to file a complaint basically reflect

the ending of a case and for that reason are much like final orders, which are not exempt

3. This was where S tried to get these documents from NLRB to decide their course of action in certain matters

d. Law Enforcementi. Exemptions 7’s 2-step (1) document must be prepared for law enforcement

purposes (2) for exemption must be shown would interfere with law enforcement, admin of justice, or constitute an invasion of privace

ii. FBI v. Abramson: Info originally compiled for law enforcement purposes does not lose its Exemption 7 protection from disclosure if summarized in a new document not created for law enforcement purposes.

30

1. FOIA is silent on the issue, but amendment to this exemption enlarged scope to records from “former files”

a. Somewhere (maybe in leg history) Cong also indicated that harm of disclosing outweighed public benefits

b. Note the info was placed in a document not covered by the exemption, but the info was taken from sources that were

2. This is where the journalist sought a compilation of records of individuals who had criticized the Nixon Admin

3. Dissent: Cong explicitly mandated that FOIA exemptions are to be narrowly construed. Ct has not done that here

e. Privacyi. DOJ v. Reporters: Disclosure of he contents of law-enforcement records (i.e. rap

sheets) to a 3 rd party constitutes an unwarranted invasion of personal privacy 1. Exemp 7(c) requires balancing of privacy interests with maintaining

“practical obscurity” of rap sheets against public interest for release2. DOJ has 2 exceptions (1) subject of rap sheet may obtain a copy (2) rap

sheet may be used in prep for a press release to assist in arrests3. Info on rap sheets may be available through diligent searches but not in

this DOJ’s type of summaries4. When a 3rd party seeks no “official info” about a government agency,

but merely seeks records that the gov happens to be storing, the invasion of privacy is unwarranted

5. Concurrence: agrees with judgment, but disagrees that Exemp 7(c) requires balancing

6. Note-FOIA is so citizens can see what the gov is up to not to get info about private individuals the gov might be tracking.

31