CONGRESS ENACTS A STATUTE TO SOLVE A PROBLEM

Does the statute include rulemaking authority? Is disclosure of comments for notice and comment rulemaking required? Does the statute contain on the record language? Does the statute grant the power to act retroactively? Does the statute create a cause of action? Does the statute preclude review? Is the plaintiff within the zone of interest? Does the statute specify when a rule is final and/or reviewable? Does the statute expressly require exhaustion? Does the statute delegate interpretive authority to the agency? Mead Is the statutory provision clear and unambiguous? Chevron

AGENCY INTERPRETS ACT AND ISSUES RULES

Notice and Comment Rulemaking [DEFAULT] o Goal: reasoned decision-making o Initiation Congress mandates rulemaking by legislation Top down: proposed by Congress or the President Bottom up: proposed from within the agency Private initiative o Informal lobbying o Formal petition (APA 553(e), 555(e)) o Exceptions Exceptions to APA 553(b) notice and comment process No force of law No requirement of legislative authorization Must be published (usually in the Federal Register) pursuant to APA 552(a)(1) (D) (FOIA) Advantages to non-legislative rulemaking o More efficient o Creates uniform application of the regulations across the field offices o Gives regulated entities notice of possible future action (avoiding due process claims later on) Problems with non-legislative rulemaking o Not legally binding o Regulated entities dont contribute to the process o Agencies may have incentive to try to slip things through quickly or change interpretation regularly o Difficult to get judicial review Challenging non-legislative rules: The rule should have been formally promulgated in accordance with notice and comment requirements. APA 553(b)(3)(A) exceptions Procedural rules o Set forth the mechanisms for enforcing or affording substantive rights, but are not substantive rights in themselves o JEM Broadcasting Co., Inc. v. FCC (1994): hard look rules prohibiting a revised application and promulgated without notice and comment were procedural and did not invoke 553 because the applicants rights were not so significant as to require notice and comment safeguards 1

Overruling Air Transport Assn of America v. Dept of Transportation (1990): even though the rule in question was procedural, 553 notice and comment were required because the agency applied a substantive value judgment (citing American Hospital Assn v. Bowen (1987)) Does the rule alter substantive rights? Are those rights of sufficient gravity to outweigh the agencys efficiency concerns and invoke notice and comment requirements?

Test

Good cause o Impracticable o Unnecessary o Contrary to public interest Balancing test: agency expertise versus public participation Must be substantiated on the record (APA 553(b)(3)(B)) Interim final rule: time sensitivity requires a rule to be published before notice and comment, with amendments later on Direct final rulemaking: rule is published with a deadline; if there are objections before the deadline, then the rule will go through the normal notice and comment procedure; if no objections, rule will be final as is without notice and comment Military and foreign affairs Agency management, personnel, public property, loans, grants, benefits, contracts Interpretive rules (statements of interpretation of the regulations) When is something an interpretive rule that does not require notice and comment? o (1) New Duty Test: Metropolitan School District v. Davila (1992) Does the agency action create a new legal duty? How does the agency characterize the statement? Is the agency action intended to create new law, rights, or duties? o (2) Other New Duty Test: American Mining Congress v. Mine Safety & Health Administration (1993) Does the agency action create a new legal duty? Does the agency have rulemaking authority? Does the rule contradict or revise a prior legislative rule? Is the rule published in the Federal Register or CFR? o (3) When the agency lacks authority to undertake 553 rulemaking Policy statements (statements of intention to enforce the regulations in a particular way) When is an agency action a policy statement that does not require notice and comment? o (1) Force of Law Test (New Duty/Binding Effects): American Hospital Assn v. Bowen (1987) Does the agency action have the force of law? What is the present effect? Does the action prevent future discretion by agency decision-makers (are they bound by it)? The reviewing court will also consider how the agency characterizes its own conduct o (2) When the agency lacks authority to undertake 553 rulemaking 2

o Notice of Proposed Rulemaking (NPRM)

Affected parties must have sufficient notice to alert them that their interests are at stake if there is to be a meaningful opportunity to participate in rulemaking Method of notice (APA 553(b)) Publishing the proposed rule; OR Description of the subjects and issues involved o Fair notice must be given to those whose interests may be affected Test for adequate notice: (1) The rules ultimately adopted must be a logical outgrowth of the proposal; OR o Chocolate Manufacturers Assn v. Block (1985) (chocolate milk was originally exempted from the rule, but then included on a list of prohibited foods in the final rule) (2) The final rule may not materially alter the issues involved in the rulemaking and may not substantially depart from the proposal Subject to judicial review o Includes Preamble and Proposed Rule Comment APA 553(c) Flexible comment requirements with a focus on fairness Policy: public participation and diversity of viewpoints Ex parte communications: no ban on ex parte communications in APA 553 But see o Sangamon Valley Television Corp. v. United States (1959): due process prohibits ex parte contact when rulemaking involves conflict claims to a valuable privilege o HBO v. FCC (1977): any communication prior to NPRM is permissible, but if it affects the outcome, it has to be on the record; after NPRM, all communication has to be through formal comment or on the record A broad reading of Vermont Yankee Nuclear Power Corp. v. NRDC (1978) may require a very narrow reading of APA 553 provisions, therefore casting doubt on decisions like HBO that affect agency action by interpreting 553 to require more or something other than what the agency did in those cases Agency may voluntarily ban ex parte communications o Easier to apply a blanket ban than try to figure out when they are allowed and when they are prohibited (e.g. during hybrid rulemaking) Sierra Club v. Costle (1981): court chose not to follow HBO v. FCC (informal rulemaking did not ban ex parte communications, but the Clean Air Act in this cases did require docketing and evaluation of ex parte communications) o Agency may want to avoid appearance of impropriety o Ex parte communications will generally be allowed during informal rulemaking unless the court finds undue pressure. DC Federation of Civics Assn v. Volpe (1971) Two conditions must be met before undue pressure found: (1) The content of the pressure on the administrator must be designed to force him to decide upon factors not made relevant by Congress in the applicable statute 3

(2) The administrators determination must be affected by those extraneous considerations

Final Rule APA 553 (b), (c) Agency re-evaluation and amendments General statement of basis and purpose included in the final rule The rules ultimately adopted must be a logical outgrowth of the proposal. Chocolate Manufacturers Assn v. Block (1985) 30 days notice required before rule may be enforced o Application Adjudication Judicial Review o Agency fails to act APA 551(13) o Agency delays in acting APA 706(1) Telecommunications Research & Action Center (TRAC) v. FCC (1984): available remedies for agency delay are mandamus (forcing the agency to act immediately) or issuance of an order setting another timetable (and case dismissed without prejudice) Common law factors when deciding whether agency delay requires remedy o (1) Time taken to make decision must be reasonable o (2) Congress has provided a timetable o (3) Economic regulation where health and welfare are at stake o (4) Issues of competing priorities o (5) Nature and extent of interests produced by delay o (6) The court does not need to find any impropriety to find that agency delay is unreasonable o Agency denies request APA 706(2)(A) Arbitrary and capricious standard of review Formal Rulemaking o APA 556-557 o APA 553(c) Adjudicatory process (cf. informal rulemaking which is more legislative than judicial) Pleading stage: proposed rule; written response Trial stage: testimony; documentary evidence; cross-examination Decision: formulation of final rule Only invoked if statute requires a hearing on the record United States v. Allegheny-Ludlum Steel Corp. (1972): statutory hearing requirement is not sufficient to require formal rulemaking without a requirement that rules be made on the record o The transcript is the record in formal rulemaking United States v. Florida East Coast Rwy. Co. (1973): formal rulemaking requires an unambiguous and express statutory mandate such as on the record after agency hearing; there is a presumption against formality Hybrid Rulemaking o Organic statute exists that governs agency rulemaking in addition to the APA **Always look to enabling statute when determining what notice and comment procedures govern rulemaking Often referred to as the ossification of rulemaking (hardening or calcification) 4

o
Other

Vermont Yankee Nuclear Power Corp. v. NRDC (1978): courts may not require procedures in addition to those specified in the APA or other applicable statutes (e.g. the enabling act); hybrid rulemaking remains unaffected A broad reading of Vermont Yankee may require a very narrow reading of APA 553 provisions, therefore casting doubt on decisions like Chocolate Manufacturers and HBO that affect agency action by interpreting 553 to require more or something other than what the agency did in those cases Regulatory Flexibility Act: requires agencies to consider the economic impact of its rulemaking activities on small businesses Agencies must create Regulatory Flexibility Analysis when triggered by a significant economic impact on small entities. 603(a) Final RFA must be included with the promulgation of the final rule. 604 RFA compliance is subject to judicial review pursuant to 611 and APA 706 Executive Order 12866: requires agencies to assess the benefits and costs of all major rules or significant action. 3(f) Ensures that agencies promulgate rules only when necessary (centralized review of agency action). 6 require steps by agency in addition to providing notice and enabling comment Office of Information and Regulatory Affairs (OMB) is responsible for approving or disapproving agency compliance with regulatory requirements, including EO 12866 EO 12866 compliance is not subject to judicial review Information Quality Act: requires agencies to issue guidelines and establish mechanisms allowing affected persons to obtain correction of information or complain about the accuracy of the information disseminated by the agency The agency must then report on any complaints and responses to the OMB Director Office of Management and Budget: serves as tribunal before which agency conflicts are resolved

o Negotiated Rulemaking (NR) Agency decides whether NR is in the public interest Agency publishes notice in Federal Register of intent to use NR
Public has 30 days to comment on issues and nominate the negotiating committee If agency does not go forward wit NR, it must publish its decision and reasons in the Federal Register If agency does go forward with NT, it establishes a negotiating committee (agency nominates a facilitator and committee consents) Agency responsibilities Pay for facilitator Pay for expenses of necessary parties who lack funding Provide administrative support Possible outcomes Full consensus: committee presents proposed rule to agency, which decides whether to accept or reject ( 553 notice and comment rulemaking commences if accepted) Partial consensus: committee may or may not present proposed rule to agency No consensus: agency decides whether to go forward with 553 notice and comment rulemaking When does NR apply? Is the dispute mature and ripe? Must participants compromise fundamental tenants? Can affected interests be represented? 5

Are there numerous diverse issues at play? Will one interest dominate negotiations? Why wouldnt participants operate in good faith? No judicial review of agency actions under NR Rulemaking by adjudication Can the agency formulate and apply general policy standard for the first time in adjudication? Advantages o Avoid influence by interest groups (insulated from political pressure) o More efficient/cost-effective o Narrow policy movements rather than grand pronouncements by rulemaking Conditions at issue are not static Issues may not be ripe for global judgments Too hard to weigh competing interests Problem is so technical and specialized that it cant be summarized in one rule o Agency can select the defendant Disadvantages o Less predictable o Less consistency o Less agency accountability o Problems with notice to affected non-parties o Unable to make broad policy o Public input may be desirable Legal constraints on choice of rulemaking versus rulemaking by adjudication Agency can use APA 553 only if Congress authorizes agency to promulgate substantive rules (shall promulgate regulations) The ultimate choice cannot violate individual due process rights: sufficient notice of legal obligations? o Injunctions usually do not trigger due process rights because property is not being taken from the regulated entity o General Electric Co. v. EPA (2002): guidance documents issued by the agency were invalid absent notice and comment because the applicant following the agency guidance was assured it had satisfied certain requirements for a permit; agency could not issue a fine o Appalachian Power Co. v. EPA (2005): guidance document significantly broadened agency rule and thus was invalid absent notice and comment Precedent: SEC v. Chenery Corp. (1947): agency not precluded from choosing adjudication over rulemaking merely because adjudication had a retroactive effect o Balancing test: the retroactive effect must be balanced against the mischief of producing a result which is contrary to a statutory design or to legal and equitable principles o Agencies have discretion to fill the gaps in regulation through adjudication NLRB v. Wyman-Gordon Co. (1969): adjudication serves as a vehicle for developing policies which are later announced as rules Rule: NLRB v. Bell Aerospace Co. (1974): it is within the agencys discretion to choose between rulemaking or adjudication to announce new rules, but such a decision is still subject to judicial review if it amounts to an abuse of discretion (hard to prove) or a violation of the enabling act 6

Factors for judicial review: Could a generalized standard be framed with more than marginal utility? Is a case-by-case manner the best way to develop standards?

Retroactivity Simply another factor in determining appropriateness of rulemaking by adjudication versus rulemaking o Retroactivity of APA 553 rules is usually prohibited unless expressly permitted by Congress. American Hospital Assn v. Bowen (1987) Balancing test from SEC v. Chenery Corp. Retail, Wholesale and Department Store Union v. NLRB (1972): identified factors for the Chenery balancing test (the agency will usually prevail on this balancing unless there is already a rule in place which the agency is changing inappropriately) o Whether the particular case is one of first impression o Whether the new rule represents an abrupt departure from well established practice or merely attempts to fill a void in an unsettled area of law o The extent to which the party against whom the new rule is applied relied on the former rule o The degree of the burden which a retroactive order imposes on a party o The statutory interest in applying a new rule despite reliance of a party on the old standard

AGENCY ENFORCES PRIVATE PARTY COMPLIANCE Adjudication o APA 551 o APA 555 Applies to all adjudications Requirements Persons appearing before the agency can be represented by counsel An interested person can appear before an agency so far as the orderly conduct of public business permits Agencies must conclude matters presented to them 555(e) requires that agencies give prompt notice of denials with a brief statement of the grounds o Formal Adjudication [Exhaustion of Administrative Remedies] Triggered by 554(a): required by statute to be determined on the record after opportunity for an agency hearing What does on the record mean (i.e. when is formal adjudication required)? Formal rulemaking context: o United States v. Allegheny-Ludlum Steel Corp. (1972): statutory hearing requirement is not sufficient to require formal rulemaking without a requirement that rules be made on the record o United States v. Florida East Coast Rwy. Co. (1973): formal rulemaking requires an unambiguous and express statutory mandate such as on the record after agency hearing; there is a presumption against formality Seacoast Anti-Pollution League v. Costle (1st Cir. 1978) (presuming formality without congressional denial): even when a statute does not require a hearing on the record, formal adjudication requirements depend on the substantive nature of the proceedings; Congress must clearly deny formality 7

City of West Chicago v. NRC (7th Cir. 1983) (presuming informality without congressional intent): when a statute does not require a hearing on the record, formal adjudication will not be required unless there is clear congressional intent to require such Chemical Waste Management, Inc. v. EPA (DC Cir. 1989) (Chevron deference): when a statute does not require a hearing on the record, formal adjudication may be required in certain circumstances; the agencys interpretation of the level of formality will be determined under Chevron Review Investigation Notice ( 554(b)) Understanding the nature of the charges with an opportunity to respond Administrative complaint sent to potential defendant (often as a letter) Due process challenge (see below) Settlement (?) Consent decree Hearing Before ALJ ( 556(b)) or agency head o Employee of the agency o ALJ only removed for cause 556(c), (d) governs rights and responsibilities of presiding officer, evidence, and burdens of proof o No discovery rights o Agency has statutory subpoena power o FRE do not apply (agencies may make their own rules of evidence) Different procedural rules Opportunity to cross-examine Ban on ex parte communications ( 554(c), 557(d)) [see also separation of functions] o Elements Ban on ex parte contacts relevant to the merits of the proceedings By interested parties outside the agency (or agency insiders?) o Key inquiries: Is this an impermissible ex parte communication? If so, what is the remedy? (1) Place the prohibited communication on the public record ( 557(d)(1)(C)) (2) ALJ or presiding officer may require the offending party to show cause why it should not be sanctioned (i.e. have its interest voided in some way) ( 557(d)(1)(D)) o PATCO v. FLRA (1982): test is whether the agencys decision-making process was irrevocably tainted so as to make the ultimate judgment of the agency unfair, either to an innocent party or to the public interest that the agency was obliged to protect o Factors to determine whether decision should be voided: Gravity of ex parte communications Whether the contacts may have influenced the agencys ultimate decision

Whether the party making the improper contacts benefited from the agencys ultimate decision Whether the contents of the communications were unknown to other parties (with no opportunity to respond) Whether vacation of the agencys decision and remand for new proceedings would serve a useful purpose

Why is there a ban? Adjudication affects individual rights, so there is a due process concern Protect the exclusivity of the record Ensure no appearance of impropriety

Decision Made on the record ( 556(e)) 554(d), 557 If not appealed, the ALJs decision becomes the decision of the agency Separation of functions requirement ( 554(d)) o Prohibits ALJ/decision-maker from consulting with a person or party on a fact in issue o Unless the remaining parties are put on notice and given an opportunity to participate o Applies to intra-agency communications Persons outside the agency ( 557(d)) Agency Review APA 557 De novo review (no deference for ALJ decision) The ALJ decision becomes part of the record for review o Informal Adjudication (non-APA) APA 555 No APA ban on ex parte communications Informal adjudication is outside the APA or bound by hybrid procedures Technically includes all agency actions that are not 553 rulemakings or APA formal adjudications o Government grants o Licensing decisions o Contract determinations o Determinations under entitlement programs o Responses to requests for exceptions, waivers and exemptions o Responses to requests for interpretations, clarifications, and modifications to/or existing agency rules Also include informal preliminary decisions in 553 rulemakings and formal adjudications o Briefing schedules o Hearing dates o Settlement negotiations o Consent decrees Elements/requirements Reasonable time Prompt notice of decision Grounds for decision 9

 Participation o Due Process challenge Constitutional basis Prohibits the federal government and the states from depriving anyone of life, liberty, or property without due process of law o 5th Amendment (federal government) o 14th Amendment (states) Procedural due process: government officials may deprive people of life, liberty or property only if fundamentally fair procedures are followed Key inquiries (1) Is process due at all? o Applies only during adjudication (not rulemaking) Small number of people affected (adjudication) versus equally applicable to populace (rulemaking). Londoner v. Denver (1908) (an agency decision particularized to the situation of each property owner affect required a hearing with the right to present arguments and evidence); Bi-Metallic Investment Co. v. State Board of Equalization (1915) (when an agency imposes a tax on an across-the-board basis without attention to the particulars of any taxpayer, due process does not require individualized hearings) Extent of impact on each person Individualized determination (adjudication) versus generalized determination (rulemaking) o Traditional model: due process violated only if government infringed a right that was recognized at common law Property interest in tangible property, fines, taxes Liberty freedom from bodily restrain, right to contract, right to engage in common occupations of life, right to acquire useful knowledge, right to marry, right to establish a home and raise children. Meyer v. Nebraska (1923) No right to individual entitlements created by statute o Modern additions: Property a legitimate claim to statutory entitlement Board of Regents v. Roth (1972): constitutional property interest hinges on the terms of a law creating rights and recognizing an entitlement o Even if a statute includes no individual entitlement, a good lawyer would still argue that there is a reasonable expectation of entitlement under state law as long as eligibility requirements are met Perry v. Sindermann (1972): in the absence of entitlement, less formal assurances or state practices may create an entitlement and, therefore, a property interest Note: Roth-type statutory entitlements have become precarious in light of (1) increased state discretion; and (2) private administration and enforcement Liberty interest in reputation. Wisconsin v. Constantineau (possible right to reputation); Paul v. Davis (1976) (stigma plus test: damage to reputation through defamation, without an actual altercation of the persons legal status, did not amount to a deprivation of liberty); Shands v. City of Kennett (1993) 10

(employers accusations must be so damaging to reputation as to make it difficult or impossible to escape stigma, or to foreclose other employment opportunities) (2) If some process is due, what kind of process is due? o Essential elements Notice Must give sufficient information to apprise parties of the action and enable them to present their objections Actual notice not always required o What is reasonable notice under the circumstances? Mullane v. Central Hanover Bank & Trust Co. (1950) An opportunity to be heard Usually, a meaningful opportunity to be heard must be available before deprivation of liberty or property (prior hearing) Exceptions: exigent circumstances or impracticality Paradigm: the judicial trial o Is the process adequate? Mathews v. Eldridge (1976) (balancing test for determining what process is due) (1) Individuals interest How weighty is the individuals interest and what are the consequences if not additional procedures are granted? The stronger the interest, the more procedure is required (2) Risk of erroneous deprivation through procedures used Will added procedures improve accuracy? The greater the risk, the more procedure is required (3) Governments interest How much will additional procedures cost (fiscally and administratively)? The stronger the governments interest, the stronger the argument in favor of minimizing procedures o The exception to the rule Goldberg v. Kelly (1970): welfare benefits could not be terminated without a hearing prior to termination (even though a hearing was available after termination) because of the grievous loss likely to be suffered by a person facing wrongful termination of benefits (balancing grievous loss versus states interest) Note: Goldbergs grievous loss test goes only to the amount of process due, not whether the property or liberty interest exists in the first place; so the property interest is still determined by whether the statute creates an entitlement (see Roth) o See also: Univ. of Missouri v. Horowitz (1978) (dismissal for academic reasons did not require a formal, advance hearing); Osteen v. Henley (1993) (no right to require counsel in a student disciplinary proceeding) o Bottom line: something short of a trial-type hearing is generally okay; the required formality of an administrative process is still unclear Minimum requirements for entitlement benefits: Pre-termination notice Pre-termination hearing Right to an attorney (but not court-ordered) Right to present and cross-examine evidence 11

 JUDICIAL REVIEW

Right to oral presentation of evidence and arguments

Judicial Review in general o Reasons for review Did the agency act in excess of its authority? APA 706(2)(C) Did the agency act unconstitutionally? APA 706(2)(B) Did the agency act in violation of procedural requirements? APA 706(2)(D) Did the agency unlawfully fail to act? APA 706(1) Did the agency improperly exercise its substantive authority? o Balancing of judicial review Ensuring legality and legitimacy of agency action affecting individuals rights Ensuring that courts do not usurp agency authority o Questions for review Questions of fact Questions of law Mixed questions of fact and law Cause of action o Common law Courts create causes of action o Organic statute May provide for right of review directly in court, e.g., DC Circuit o APA 702 A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof Creates a fallback cause of action for judicial review Who can bring a suit under 702? Plaintiffs who can show injury in fact Court may still dismiss the claim on prudential grounds Exclusions o Narrowly construed Presumption of review Abbott Laboratories v. Gardner (1967): there is a presumption of judicial review, and there must be clear and convincing evidence of contrary legislative intent; here, the statute did not foreclose pre-enforcement review simply by omission (based on legislative scheme) Unless it is fairly discernible that Congress intended otherwise. Block v. Community Nutrition Institute Presumption against review of agencys failure to take enforcement action. Heckler v. Chaney o APA 701(a) (1) Statute precludes judicial review [applies when statute mentions judicial review] Specific statute prevails: If there is a statute that explicitly precludes review or provides another form of review, the specific statute trumps APA 702 cause of action When does a silent statute create an implicit preclusion of review? o Block v. Community Nutrition Institute (1984): judicial review on behalf of parties other than the milk handlers was implicitly precluded by the statute that explicitly granted review only to milk handlers 12

*Note: court changed clear and convincing standard from Abbott Labs to fairly discernible, making is easier to find an implied preclusion of judicial review (2) Agency action is committed to agency discretion by law [applies when statute does not mention judicial review] Citizens to Preserve Overton Park v. Volpe (1971): judicial review is not available when statutes are drawn in such broad terms that in a given case there is no law to apply (i.e. no discernible statutory authority against which the court can determine the legality of the agency action) o But see Webster v. Doe (1988): although the statutory clause allowing termination based on the agency directors discretion was too vague to allow judicial review, plaintiffs constitutional claim was still reviewable even if his statutory claim was not Heckler v. Chaney (1985): judicial review is not available when there is no meaningful standard against which the court can review agency action o There is a presumption against review of non-enforcement decisions o J. Brennan concurrence: possible exception to the presumption against reviewability of non-enforcement actions (1) Agency claims it has no statutory jurisdiction (2) Agency engages in a pattern of non-enforcement in the face of clear statutory language (3) Agency refuses to enforce a lawful regulations (4) Non-enforcement decision violates constitutional rights (e.g. Webster v. Doe) Constitutional challenges o Article III, 2: case and controversy Cases arising under the Constitution, the laws of the US, treaties, or cases affecting ambassadors and other public ministers or consuls Controversies between two or more states, between a state and citizen of another state, between citizens of different states, and between a state or citizens and foreign states or foreign citizens o Standing (Jurisdictional) Whether the plaintiff is the appropriate person to represent a dispute to the courts Requirements (1) Injury in fact; THAT IS o Must be distinct and palpable, not abstract or conjectural or hypothetical o Must be particularized o Must be imminent (2) Fairly traceable to the defendants allegedly unlawful conduct (causation); AND o Concerns the causal connection between the unlawful conduct and the injury o Claimed causal connection may be one possibility among many possibilities (3) Likely to be redressed by the relief requested (redressability) o Concerns the causal connection between the relief requested and the injury Lujan v. Defenders of Wildlife (1992) (redressability would require an order against agencies not a party to the case) Redressability may not be met if there is not a continuing harm and if plaintiff is not entitled to compensation for past harm

13

The deterrent effect of a civil penalty toward future violations has been held sufficient to satisfy redressability. Friends of Earth, Inc. v. Laidlaw Environmental Services, Inc. (2000) Lack of standing dismissed as lack of subject matter jurisdiction Standing must be shown with the same level of proof as is required for that stage of litigation Primary standing issue under the APA is the missing step: a lack of regulation is not redressable, so the court will have to command the agency to act, which will force regulated entities to comply, which may then create the proper case and controversy Citizen suit provisions Modern statutes, especially environmental statutes, include citizen suit provisions: private parties are authorized to bring suit against other private parties and government officials for violating the statute and regulations Can only be used when the agency has failed to fulfill a mandatory duty; the citizen suit can be used to compel agency action (not a substitute for judicial review) Article III standing requirements must still be met Associational standing In what capacity is the organization suing? Suing for harm to the organizations own interests? o Regular standing test applies Suing in a representative capacity? Hunt v. Washington State Apple Advertising Commn (1977) o (1) Members must otherwise have had standing to sue in their own right o (2) The interests the organization seeks to protect must be germane to the organization o (3) Neither the claim asserted nor the relief request requires the participation in the lawsuit of the individual members (i.e., the organization is fully equipped to handle the lawsuit, all members share the same claim, and all members would benefit equally from the relief) Prudential standing doctrines Third-party standing Generalized grievances This is a constitutional doctrine and cannot be overridden by Congress pursuant to a citizen suit provision. Lujan v. Defenders of Wildlife (J. Scalia) o But see FEC v. Akins (1998): court found that plaintiff had injury in fact and that voters are in the zone of interests of election laws requiring political committees to disclose information; suit also permitted under the citizen suit provision No taxpayer standing No concerned citizen standing Rationale o Separation of powers: we dont want the courts to turn into a central enforcement body hovering over the agencies o Counter-argument: foreclosing judicial enforcement transfers power to the executive at the expense of Congress (from which the agencies power emanates); some hard would go without redress o Massachusetts v. EPA: Court found state had standing to challenge the EPAs failure to regulate CO2 emissions from domestic cars as a contributing factor to global warming Zone of interest Is the plaintiff within the zone of interests protected by statute?

14

o This is a political, rather than legal, look at standing because it asks not
whether plaintiff has a legal right, but whether the plaintiffs interests were considered by Congress of the regulatory body Applies only in statutory cases Context: plaintiffs actions were not directly controlled by the challenged administrative action Test: look to congressional intent o Air Courier Conference of America v. American Postal Workers Union (1991): postal workers were not within the zone of interests of the statute because the statute reflected Congress sole concern with the public interest in an efficient mail service o But see National Credit Union of America v. First Natl Bank & Trust Co. (1998): competing banks are within the zone of interests of the statute regulating the scope of credit unions business **Court lowered the standard of clear congressional intent to arguably within the zone of interests Mootness Whether a case is stale or too ripe Political question Whether courts should refuse to adjudicate a dispute because the Constitution commits its resolution to other branches of government that are better suited to resolve it o Ripeness/Finality (both a prudential and timing consideration) Definition: the dispute has become a concrete case or controversy that is ready for a judicial determination Test for ripeness (Hobsons Choice): Abbott Laboratories v. Gardner (1967) (1) Fitness for judicial review o Finality of decision (final order) o Purely legal question (the more factual the questions, the less ripe) (2) Hardship to party in delaying judicial review o Plaintiff should show they will suffer harm by waiting longer for judicial review **Note: an agency decision may be final, but not yet ripe Application of Abbott Labs test Ohio Forestry Association, Inc. v. Sierra Club (1998): Sierra Clubs claim to preenforcement review of logging plan could benefit from further development because a number of things would have to happen before it would be harmed o Due process Timing o Finality Definition: agency has completed its decision and the decision has a direct and immediate effect APA 704: two kinds of agency actions subject to judicial review (1) Agency actions made reviewable by statute (2) Final agency action for which there is no other adequate remedy in court When is an agency action final? Franklin v. Massachusetts (1992): o Whether the agency has completed its decision-making process (definitive agency position) o Whether the result of the process will have a direct legal effect on the parties 15

Bennett v. Spear (1997): final action is that by which rights or obligations have been determined, or from which legal consequences will flow (is the rule legally binding on affected parties?) Even if an agency action is labeled as tentative or not binding, it will be considered final and binding by looking at these factors (Appalachian Power Co. v. EPA (2000)): o If the agency acts as if a document issues at headquarters is controlling in the field o If the agency treats the document in the same manner as it treats a legislative rule o If the agency bases enforcement actions on the policies or interpretations formulated in the document o If the agency leads private parties or state to believe that it will declare conduct invalid unless they comply with the terms of the document The questions of finality and whether a rule should have gone through notice and comment are substantially similar, but finality is a jurisdictional question and therefore should be addressed first. Taylor-Callahan-Coleman Counties District Adult Probation Department v. Cole (1991) o Exhaustion of administrative remedies Definition: plaintiff has pursued all available administrative remedies before coming into court Corollary: issue exhaustion When is exhaustion required? Under the APA, there is no general exhaustion requirement beyond 704s finality requirement; if agency action is final within that section, judicial review is timely o Darby v. Cisneros (1993): APA requires statute or regulation to expressly require exhaustion (and provide that the rule is meanwhile inoperative) In non-APA cases, exhaustion is required unless o (1) Exhaustion would cause undue prejudice to the protection of rights at issue o (2) The agency lacks power to grant effective relief o (3) Exhaustion would be futile because the agency is biased McCarthy v. Madigan (1992): balancing institutional interests in exhaustion versus individual interests in prompt access to a judicial forum

Fact Substantial evidence

Law De novo Chevron

Mixed Substantial evidence Chevron Combination

APA Judicial Review o APA 706 Agency action must be in accordance of the law Agency action must not be in excess of statutory authority o POLICY: Chevron Review: does the statute permit the agencys policy choice? Chevron, Inc. v. NRDC (1984): unless Congress has directly spoken on the precise issue in question, courts should defer to agencies on pure questions of statutory interpretation as long as the agency arrived at a reasonable or permissible construction of the statute 16

Applies (1) during judicial review of informal rulemaking, formal rulemaking, nonlegislative rules, informal adjudication, and formal adjudication; (2) when the agency whose interpretation is at issue is the agency responsible for administering the statute; (3) even if the court interprets a statute first (agency not bound) Does not apply to agencys interpretation of its own regulations; an agencys interpretation of its own regulations is entitled to deference unless it is plainly erroneous or inconsistent with the regulation. Bowles v. Seminole Rock & Sand Co. (1945); Martin v. OSHRC (1991) o Note: but the agency cannot simply restate the language of the statute and then re-interpret that language to claim complete deference. Gonzales v. Oregon Does not apply if the agency interprets a statute for the first time in the course of litigation to which it is a party Step Zero: is there an explicit or implicit delegation of authority to interpret a statute from Congress? United States v. Mead Corp. (2001): Chevron deference will apply to an informal agency determination if it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and the agency interpretation claiming deference was promulgated in the exercise of that authority (in that case, the letter rulings did not have the force of law, but there was at least room to claim Skidmore Deference) o Standard: Is there express intent to grant lawmaking authority, or is it reasonable to infer from the statute the authority to act with the force of law (i.e. how binding is the action)? Usually straightforward inquiry if the agency went through the notice and comment process o If neither, go with Skidmore Deference Key context is whether agencies get deference for informal adjudication and nonlegislative rulemaking Barnhart v. Walton (2003): prior informality of the promulgation of agency guidance later memorialized in a formal rule was irrelevant, but the following factors (totality of the circumstances) were considered in whether to apply Chevron Review: o Interstitial nature of the legal question (narrow interval between other things) o Related expertise of the agency o Importance of the question to the administration of the statute o Complexity of the administration o Careful consideration the agency has given the question over a long period of time Step One: has Congress spoken directly on the issue (i.e. is the statute clear)? Factors o Plain meaning o Canons of construction o Overall design of the statute o Legislative purpose, intent, and/or history o Textualism (the only meaningful legislative intent is reflected in the final statutory text) versus Intentionalism (legislatures have coherent and identifiable policy intentions) If yes, the agencys interpretation is overruled in favor of congressional intent If no, proceed to Step Two 17

Step Two: when there is implicit delegation of interpretive authority due to inadvertent ambiguity in the statute, is the agencys interpretation permissible? Factors o Same factors as Step One o Is agency interpretation supported by a reasonable explanation, and is it logically coherent? Rationale o Agencies have special expertise o Congress chose to delegate authority to the agency (prevailing view) o Beware of different interpretations per court (Balkanization) o Separation of Powers (courts should not be legislating) The agency interpretation will be permissible if it is a sufficiently rational one to preclude a court from substituting its judgment for that of the agency. Chemical Manufacturers Association v. NRDC (1985) Extremely deferential standard o POLICY: Skidmore Deference Skidmore v. Swift & Co. (1944): in informal agency action or action where the agency did not have the authority to act with the force of law, agency interpretations are entitled to respect, but only to the extent that those interpretations have the power to persuade Factors for the level of deference calculation (totality of the circumstances): Thoroughness evidence in the agencys consideration Validity of the agencys reasoning Consistency with early and later pronouncements All other factors giving the agency the power to persuade, if not control See also Christensen v. Harris County (2000): Chevron deference did not apply to an interpretation contained in an Opinion Letter that an agency wrote in response to a letter from a regulated party regarding a particular course of conduct Less deferential than Chevron Review (closer to arbitrary and capricious review) Problem with a bright-line rule between Chevron and Skidmore is that Congress may have authorized the agency to do more than just legislative rulemaking o POLICY: Arbitrary and Capricious standard: does the factual record permit the policy choice? APA 706(2)(A): the court shall hold unlawful agency actions that are arbitrary, capricious, or reflect an abuse of discretion Standard of review (Citizens to Preserve Overton Park v. Volpe (1971)) Agencies must make decisions: o Based on a consideration of the relevant factors, including alternatives to the agencys proposal suggested by the record o Without a clear error of judgment o Under the correct legal standard Example of different interpretations of the standard o High deference The agency must provide an (1) explanation of the facts and policies it relied on in its decision, (2) with some basis in the record. Arkansas Power & Light Co. v. ICC (1984) o Low deference The agency must (1) provide a substantial inquiry into facts; (2) show rational connection between facts and determination; and (3) articulate a reason for decision. Northern Spotted Owl v. Hodel (1988) o Both construe arbitrary and capricious but dealt with different types of records (the former being less fact-based than the latter) 18

Narrow standard Court cannot substitute its judgment for that of the agency Examine relevant data only Articulate a satisfactory explanation: rational connection between the facts and the choice made by the agency. Yepes-Prado v. INS (1993) (reasoned explanation required when reviewing for abuse of discretion) Precedent must be overruled or distinguished. Davila-Bardales v. INS (1994) Examples of arbitrary and capricious: the agency Relied on improper facts Entirely ignored an important aspect Provided an explanation counter to the evidence Made an implausible determination Applied to informal rulemaking [**but can apply to ANY agency action**] Hard Look Review (for police determinations) o Motor Vehicles Assn v. State Farm Mutual Ins. Co. (1983): an agency must provide some degree of factual support for a rule (even though the APA does not require that an agency provide factual support for a rule) o Compare to Chevron Review Step Two: both inquiries address the propriety of the agencys policy choices reflected in the final rule Substantial Evidence Review is only applied to informal rulemaking when specified by a particular regulatory statute Applied to informal adjudication (aka informal agency action) Citizens to Preserve Overton Park v. Volpe (1971) o FACTS AFTER AGENCY ADJUDICATION: Substantial Evidence standard APA 706(2)(E): the court shall hold unlawful agency actions that are unsupported by substantial evidence in a case subject to 556 and 557 Standard of review (Consolidated Edison Co. v. NLRB (1938)) The agency decision must be reasonable, (reasonable person standard) OR The record must contain such relevant evidence as a reasonable mind might accept as adequate to support a conclusion The court performing substantial evidence review must look at the whole record Narrow standard Court cannot substitute its judgment for that of the agency Most deferential when agency is making policy choices within its expertise Applied to formal rulemaking and adjudication (1) Agency witness credibility determinations: entitled to great deference because reviewing court only reviews the paper record and not demeanor; significant amount of contrary evidence required (2) Agency reversal of ALJ decisions (on appeal): court will review the initial ALJ decision as part of the record, and therefore the reversal of the ALJ decision weighs against the agencys decision in the courts determination of whether the agency decision is supported by substantial evidence o Universal Camera Corp. v. NLRB (1951): the reviewing court must take the initial decision-makers opinion into account when deciding whether the agencys conclusions are supported by substantial evidence (indicating the importance of live credibility determinations) o Penasquitos Village, Inc. v. NLRB (1977): when the agency reaches a different conclusion from the ALJ on appeal, the reviewing court will defer to the ALJs determinations of credibility (demeanor evidence), and will defer to the agencys factual conclusions based on expertise (derivative evidence) 19

o Jackson v. Veterans Administration (1985): when the agency rejects the

ALJs credibility determinations, the agency must articulate a sound reason based on the record (substantial evidence) for its contrary conclusion Hybrid rulemaking may also specify a substantial evidence standard o FACTS: De Novo review of fact APA 706(2)(F): the court shall hold unlawful agency actions unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court Standard: reviewing court considers the facts and reaches its own decision without referring to the conclusions of the agency Only applies in two rare circumstances (formal adjudication) (1) Agency adjudicatory fact-finding procedures are inadequate (2) New factual issues arise in an action to enforce non-adjudicatory agency action o LAW: Review of questions of law The choice on the spectrum between agency deference and de novo review is dependant on circumstance: more deference may be appropriate if the question is based in fact or policy De novo: it is the role of the judiciary to declare the law Judges will apply de novo standard to pure questions of law De novo review is usually preferable also if the legal question controls, or if a generalized perspective is necessary to cut against agency focus Deferential: courts defer to reasonable agency interpretations of law because agency expertise assists in understanding Congresss statutory commands and other legal issues within the agencys jurisdiction Judges will defer to the agency on the application of the law to facts NLRB v. Hearst Publications, Inc. (1944): the definition and interpretation of statutory terms is for the court and the application to particular facts is for the agency; agency decisions involving the application of law to facts will be affirmed if they are supported by the record and find a reasonable basis in law o Parallel framework to Chevron: Chevron (rulemaking): (1) Has Congress unambiguously indicated its intent? (2) If not, is the agencys construction permissible? Hearst (adjudication): (1) Did Congress define the term? (2) If not, does the agencys interpretation have warrant in the record and a reasonable basis in the law? o FACTS AND LAW: Review of mixed questions of law and fact Substantial evidence or Chevron or a combination Some courts have seen substantial evidence standard as a subset of Chevron: when applying its interpretation, the agency must support its decision with substantial evidence in the record Common law o Challenging non-legislative rulemaking An agency cannot use less formal procedures to change a binding policy (e.g. a legislative rule cannot be repealed by adjudication or by a non-legislative rule) An agency can change a policy using the same procedures it used to adopt it (e.g. a legislative rule can change a legislative rule) Non-legislative rules become binding once embodied in notice and comment rulemaking APA does not address changing policy statements at all o Reliance: changing a non-legislative rule What happens when a regulated entity relies on a non-legislative rule, and then the agency refuses to follow it? 20

Alaska Profession Hunters Assn v. FAA (1999): notice and comment required if regulated entities relied on the agencys (or field offices) interpretation and they would have taken advantage of the comment period during 553 rulemaking o This holding essentially creates a requirement to change non-legislative interpretive rules by means of notice and comment, which may be at odds with Vermont Yankee Assn of American Railroads v. Department of Transportation (1999): notice and comment required only if prior non-legislative agency action was a definitive understanding of the rule at issue; does the agency action constitute an abrupt departure from prior interpretation? (no creation of administrative common law)

Estoppel Elements of common law estoppel: (1) Reasonable reliance (2) Detrimental change Agency action created detrimental reliance Difficult to prevail Agencies are not normally estopped by the conduct or statements of agency officials Common law theory is that the government should not be bound by the misleading statements of lower level employees Principles of estoppel cannot override the limitations placed by Congress on the expenditure of government funds. Office of Personnel Management v. Richmond (1990) When the public has ample notice of regulatory requirements, reliance on oral advice from an agency employee to the contrary may not be reasonable reliance (and, in this case, the detriment was not sufficient to justify estopping the government). Heckler v. Community Health Services (1984). But see Appeal of Eno (1985): when the plaintiffs claim is for a statutory entitlement, and the interaction with the agency employee demonstrates a pattern of approval, the government may be estopped from denying due process Non-delegation doctrine o Non-delegation doctrine prohibits excessive delegation of discretionary powers by Congress to federal agencies Stems from separation of powers Art. I, 1: All legislative powers shall be vested in a Congress of the United States. How do agencies fit within the separation of powers? o Adopt regulations with the force of law o Enforce those regulations o Apply those regulations in individual cases and adjudicate them Core delegation issues (1) Delegation of legislative authority to agencies (2) Delegation of judicial authority to agencies (3) Lack of executive control over certain agencies o Test for no violation of the non-delegation doctrine (presumption of permissible delegation) Intelligible Principle Test J.W. Hampton, Jr. & Co. v. United States (1928): a delegation is permissible when Congress lays down by legislative act an intelligible principle to which the agency or other entity is directed to conform Court has rarely struck down congressional statutes for a violation of the non-delegation doctrine o

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Panama Refining Co. v. Ryan (1935): statutory provision declared unconstitutional because it contained no standards guiding the Presidents decision of whether to invoke his powers in a particular case Schechter Poultry Corp. v. United States (1935): statutory provision declared unconstitutional because it contained insufficient standards guiding the Presidents discretion over whether to approve a particular code of fair competition o When a statute might otherwise violate the non-delegation doctrine, the court will narrowly construe the legislation in a way that articulates a sufficiently intelligible principle (saving the statute). Industrial Union Dept, AFL-CIO v. American Petroleum Institute (Benzene Cases) (1980) Whitman v. American Trucking Associations, Inc. (2001): Court rejected DC Circuits lower holding that an agency could cure a violation of the non-delegation doctrine by adopting a construction of the statute that limits its own discretion; instead, the Court reaffirmed the traditional intelligible principle test J. Stevens concurrence: there is no strict compliance with the Constitution here; there is no reason to pretend this agency action is not legislative. However, we should just admit that well accept this legislative action within the executive branch so long as the statute sufficiently limits that action. Quasi-judicial activities o Agencies and courts: Article III Art. III, 1: The judicial power of the United States shall be vested in one Supreme Court and such inferior courts as the Congress may from time to time ordain and establish. Problem with agency adjudication: federal judges are immune from political influence Agency adjudication is permissible so long as it does not threaten the policies and values underlying Art. IIIs assignment of the judicial power to the federal courts Murrays Lessee v. Hoboken Land and Improvement Co. (1855): when the dispute concerns public rights and the government waives sovereign immunity, it may dictate the terms of adjudication (justification for specialized courts) o Private rights: disputes between individuals o Public rights: disputes between a person and the government Crowell v. Bensen (1932): Congress may create tribunals to adjudicate private rights as well, so long as Article III courts retain sufficient authority to make the final decision Core Functions test: Commodity Future Trading Commn v. Schor (1986): Court rejected the public/private rights distinction; an agency tribunal is not unconstitutional as long as the core function of the Art. III court is no compromised o Factors Jurisdiction is particularized There is reviewability in Art. III court Litigants can still choose between the tribunal and an Art. III court o Agencies and courts: 7th Amendment 7th Amendment: In suits at common law, where the value in controversy shall exceed $20, the right to trial by jury shall be preserved. When Congress creates a statutory cause of action, the statute may be challenged if Congress explicitly denies a jury trial Test for 7th Amendment right to jury trial (Granfinanceria v. Nordberg (1989)) (1) Was the claim heard in a court of equity or law at common law? (2) What kind of relief is being sought? 22

(3) Is the right at issue a private right so closely integrated into a public regulatory scheme that it is a matter more appropriate for agency resolution (and no jury trial)? Quasi-legislative activities o Legislative veto Definition: Congress reserved the power to reject agency action (usually regulations) with a vote by both houses of Congress, by one house of Congress, or even by a single congressional committee The legislative veto is unconstitutional INS v. Chadha (1983): Congress may only nullify agency action through the constitutional legislative process (bicameralism and presentment) How else does Congress control agency action? Corrections Day Congressional Review Act Hearing and subpoena powers Budget Day-to-day oversight Legislation o Appointment: can Congress transfer executive power to itself? Art. II, 2, cl. 2: President shall nominate and appoint with advice and consent of Senate; but Congress may vest the appointment of inferior officers in the president, courts, or heads of departments. This says nothing about scope of presidential appointments or removal Officers o Principal o Inferior o Mere employees Exclusivity of Art. II appointment power Buckley v. Valeo (1976): Congress may not rely on necessary and proper to make appointments; appointments may only be made pursuant to Art. II o Executive officer defined: whether officer exercises significant authority under the law of the United States Principal versus inferior officers Morrison v. Olson (1988): independent counsel is an inferior office and can be removed by Attorney General for cause o No independent counsel statute anymore so why does this matter? o Three kinds of agencies Departments (cabinet-level) (principal officers) Executive agencies outside Departments (principal officers) Independent agencies (Court has never said these are constitutional) Insulated from executive influence Headed by bi-partisan commissions Executive officers: President has to appoint (Buckley) The distinction is in removal power o Removal Bowsher v. Synar (1986): if Congress wants to remove, it must be through impeachment Can Congress statutorily hamper the Presidents power to remove? Myers v. United States (1926): President has complete removal power that cannot be limited by Congress (~appointment power) 23

Humphreys Executor v. United States (1935): FTC Commissioners are not purely executive; they also have quasi-legislative and quasi-judicial power, so presidential power to remove can be limited Morrison v. Olson (1988): can independent counsel removal be limited to being fired for cause? o Court looked to whether the essential functions of the executive are preserved: is the president still able, through limited removal power, to ensure that appointees are faithfully executing the laws? o The Court holds yes here (AG must still make cause determination)

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