ADMINISTRATIVE LAW

I. Introduction: What are Administrative Agencies? The federal govt encompasses 15 cabinet-level dept. and dozens of other agencies, boards, commissions, bureaus, and dept. divisions that commonly fall under the heading of admin. agencies that operate in conjunction with and independently of Congress, the President and the courts. Traditionally, agencies are viewed as having executive power under the Office of the President rulemaking a high proportion of agency rulemaking seems to consist of the exercise of legislative power by filling in the statues (Art. I 1) 1. What is legislative power? power to make binding rules of conduct to resolve major policy issues 2. Main Principle Congress can delegate, but it has to be limited (i.e. defined specifically and sufficiently) adjudication similarly, a substantial number of agency adjudications seem to entail exercise of judicial power (Art. III) 1. What is judicial power? power to adjudicate the rights and obligations of regulated parties under various statutory provisions 2. Main Principle Congress cannot delegate adjudicative powers over private rights HOWEVER, Congress imposes numerous procedural rules to curtail discretionary exercise of these powers. Thus, questions ensue whether these delegations of policymaking and adjudication responsibilities constitution an unlawful delegation of duties proscribed to Congress, the President and the judiciary. BUT this is really a balancing act because, practically speaking, agencies need to assert legislative authority in order to carry out programming proscribed by Congress in the organic statute. II. Relationship between Administrative Agencies and Other Branches of Govt A. Congress and Administrative Agencies 1. Is Congress Delegation of Legislative Authority to Agencies Constitutional? (The Non-Delegation Doctrine) Introduction Congress is vested with the power to legislate in order to (1) maintain accountability inherent in the democratic process and (2) because legislation is a decision of social policy (i.e. a fundamental policy decision) Art. 1, 1 All legislative power herein granted shall be vested in the Congress of the United States. 1

 However, the tradition of creating agencies to facilitate government functioning by granting agency power issue legally binding rules dates back to 1789. Congress delegates authority to agencies because of (1) the difficulty in negotiating the legislation, (2) the impracticality of settling all of the details in a timely fashion (3) the limited expertise of the Congressmen and (4) the inability of Congress to address all unanticipated facts that the law will need to address The checks and balances on agency regulation include: a. organic statutes stated limit of authority, 1, procedures, advisory committees (i.e. front end checking by Congress) b. generic statutes general policies and procedures that agencies must follow (i.e. APA) c. Other Congressional oversight, judicial review, removal power of the President, self-regulation (But see American Trucking) The Court has tried to reconcile this reality with the non-delegation doctrine in several ways: a. The Brig Aurora (1813) SCOTUS justified Congress act of giving the President the authority to lift trade embargos on France/England when those countries ceased to violate neutral commerce as a mere finder of fact that triggers congressionally defined consequences. b. Field v. Clark SCOTUS upheld legislation giving the President the power to impose tariffs upon a finding of fact that free trade with the country would be reciprocally unequal and unreasonable because the Presidents authority was limited to a specific action when a named contingency occurred. c. Butterfield v. Stranahan SCOUTS upheld statute that authorized the Secretary of Treasury to fix uniform standard of purity for imported tea on the basis of the legislative standard test (i.e. sufficiently limited scope of discretion). [In sum, as long as Congress made the major policy decision, it could delegate gapfilling to an agency.] d. J.W. Hampton v. U.S. SCOTUS confirmed legislation that allowed the President to increase tariff by an amount he deemed necessary to equalize differences in costs of production via an argument that the statute provided an intelligible principle to guide the Presidents actions. e. Another alternative is for the agency to declare the limit of its powers in advance. However, the problem with this approach is that the agency can always change the limit f. Finally, some look to the court to limit agency power via its interpretation of the statute. However, it is now within the courts authority to correct the democratic process. In sum, SCOTUS went to great lengths to avoid declaring a statute unconstitutional on the basis of the non-delegation doctrine. SCOTUS has only held delegations of powers unconstitutional in two cases under the 1935 National Industrial Recover Act (NIRA) because a. NIRA delegated powers to agencies to cartelize virtually all sector of the economy 2

b. many of the powers created by the NIRA were delegated to groups in the private sector that had economic interests in the markets they were assigned to regulate c. the Justices were extremely skeptical of the Presidents plan for economic recovery A.L.A. Schechter Poultry A.LA. Schechter Poultry Corp. v. United States held statute unconstitutional on the basis that Congress cannot delegate its legislative authority to a trade or industrial association with a financial interest in the sector to enact laws that the associations deem necessary or wise even imposes limits that specify: (1) that there should be no inequitable restrictions on admission to the trade or industrial association, (2) that the association must not be designed to promote monopolies or oppress SMEs and (3) that the President has the discretion to approve and amend code recommended by the association i.e. no intelligible principle guiding the President In sum, the delegation of power to the President in Schechter Poultry was found to be unconfined and vagrant. The delegation of authority to an agency is less objectionable than to a private group, because under the former there is at least some check on administrative agencies via procedures laid out in the APA and the organic statute. When you delegate to an individual private sector group, there is not even this check on procedure. Decline of the Non-Delegation Doctrine Since 1935, SCOTUS has employed other tenuous justifications to avoid holding statues unconstitutional on the basis that: a. the statute will only be effective for a limited time b. there are procedural safeguards that the agency is required to employ c. actions under the statute are subject to judicial review d. the statute contains a reference to avoid gross inequality by using a fair and equitable standard e. although the statute does not contain an explicit standard, the agency and reviewing courts can employ standards used during war time or other emergencies (i.e. a culture of limitation f. Congress must have a broad leeway to legislate in areas that effect national security and foreign relations OSHA Benzene Case In the 1970s, the Courts seemed to indicate a renewed interest in the non-delegation doctrine a. The Benzene Case (J. Stevens) SCOTUS stated in dicta that if as argued by the govt - the statute did NOT significantly qualify that standard (i.e. merely a finding of a significant health risk) and that therefore the Secretary is arbitrarily setting the standard using a cost-benefit approach (i.e. lowest technologically feasible level) then the statute COULD be held unconstitutional under the Courts reasoning in A.A. Schechter Poultry Corp. [Note that J. Stevens is limiting the authority of the agency without declaring the statute unconstitutional] Rehnquist (concurring) In answer the question of what the balancing of costs and benefits of limiting benzene in the workplace, Congress is best suited and most 3

obligated to make the choice and has improperly delegated that choice to the Secretary of Labor. [Note that Rehnquist would have held the statute unconstitutional.] Marshall (dissenting) The court exceeded its authority in this decision. The judicial inquiry should be confined to making a determination that the statutory language and legislative intent is plain. Unwise legislation should be corrected by the democratic process and NOT the court. The Non-Delegation Doctrine Today American Trucking Whitman v. American Trucking (reversed that Court of Appeals decision that only the EPAs interpretation of the Clean Air Act violate the Constitution and held that an agency may not cure a piece of legislation that lacks an intelligible principle by limiting its own powers). The case was remanded for reinterpretation that would avoid a supposed delegation of legislative power. SCOTUS stated that the scope of discretion (i.e. setting how much pollutant is too much) is well within the outer limits of the non-delegation doctrine. Today, the non-delegation doctrine does not pose big issue for delegation of legislative powers. All that is needed is an intelligible principle. In the words of Scalia in Whitman, SCOTUS has almost never felt qualified to second guess Congress regarding the permissible degree of policy judgment that can be left to those executing or applying the law. 2. Is Congress Delegation of Adjudicatory Authority to Agencies Constitutional? Introduction Art. III, 1 vests the judicial power is one Supreme Court and other inferior courts as Congress shall ordain. Am. VII In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law. Although the Constitution clearly designates the adjudicatory function to the courts, officials of the executive branch exercise judicial power every time they determines how to faithfully executive the laws by going through a process of fact finding and determining the meaning and application of the law. Note the distinction between public and private rights: a. public rights rights that do not exist under common law, but are created by Congressional statutes (e.g. social security disability cases involving only the applicant and the govt) b. private rights rights established pursuant to state common law (e.g. workers compensation that pit private parties against each other) Put simply, public rights are created by Congress and can therefore be assigned to a nonArt III court for adjudication Also note that given the magnitude of adjudicatory functions performed by agencies, the agencys adjudicative function relieves the courts from a task that would be impractical if not impossible to perform. 4

 There are two main questions the Court addresses to answer Art. III and Am. 7 challenges to agency adjudication: a. In what circumstances does Art. III compel adjudication by a life-tenured federal judge? b. In what circumstances does the 7th Am. require a trial by jury? CFTC v. Schorr Commodity Futures Trading Commission v. Schor (holding that the limited jdx (i.e. reviewable by another court) that the agency holds over state law claims is a necessary incident to the adjudication of federal claims willing submitted by the parties to the agency and therefore does not contravene separations of powers principles.) Main principle adjudicatory authority may be delegated: we decline to endorse an absolute prohibition on such jdx out of fear of where some hypothetical slippery slope might deposit us. Factors to consider (1) extent to which the essential attributes of judicial power are reserved to Art. III courts, (2) extent to which the non-Art. III forum exercises the range of jdx and powers normally vested only to Art. III courts, (3) the origins and importance of the right to adjudicate, and (4) the concern that drove Congress to depart from the requirements of Art. III (i.e. agency jdx to adjudicate is critical to accomplish the purpose behind the program). Granfinanciera v. Norberg Granfinanciera v. Nordberg (holding that the bankruptcy trustees right to recover a fraudulent conveyance under the federal bankruptcy law is a private right that requires the VII Am. right to a trial by jury.) private Am VII right IF (1) legal in nature and (2) private, i.e. NOT a novel cause of action THUS, if NOT a public right, THEN Congress may not assign its adjudication to a specialize non-Art. III court lacking the essential attributes of the judicial power. (i.e. employing juries as fact finders) Main Principle Am. VII doesnt always applyand maybe it sometimes depends 3. Other Means by which Congress Influences Administrative Agencies The primary means that Congress exercises control over Agencies is by limiting the scope of power delegated in the organic statute. Other mechanisms include: (1) other statutes that shape the agencies actions, (2) litigating authority of the DoJ, (3) confirmation process for Agency officers, (4) appropriation process, (5) oversight hearings, and (6) appointment and removal powers. a. Other Statutes i. Administrative Procedures Act specifies the procedures that agencies must use to make various categories of decisions and the standards court apply in reviewing those decisions. Freedom of Information Act requires each agency to publish its rules in the Federal Registry, to make its final decisions in adjudications available at a

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publicly accessible location and to disclose information contained in its records to any person who requests that information subject to nine exceptions. a. exemptions for duty to disclose circle around potential abuses of the FOIA by criminal organizations and national security concerns b. technically Agencies are required to respond within 20 days of request, but many agencies fall short of this goal due to the difficult task associated with screening requests for exemptions, the high cost, etc. iii. National Environmental Policy Act requires every agency to prepare an environmental impact statement before it take any major federal action that has a significant effect on the environment a. However, SCOTUS has repeatedly held that that NEPA has no substantive standard. Does this mean that NEPA does not affect agency decision making? b. Consider that every Agency action is subject to judicial review through application of the arbitrary and capricious standard of review c. NEPA increases the cost of engaging in many socially beneficial actions and delays implementation of such actions. iv. Civil Service Act eliminated the prior practice of hiring and firing based on patronage and requires the govt to employ a meritocratic system of hiring, evaluating and promoting employees. a. BUT, note the trend in increased outsourcing of various govt functions to private contracts b. ALSO, political appointees tend to fill leadership roles and thus influence the people who fill up the bureaucracies. So, how much does this really help? v. Information Quality Act Requires agencies to act only on the basis of high quality information. But, critiques point out that IQA merely instructs the Office of Mgt. and Budget to publish implementing guidelines and enforce the IQA against agencies. a. inspired in part by the EPA rulemaking upheld by SCOTUS in Whitman v. American Trucking Assns in which the EPA relied heavily on a study by researchers from Harvard in which the researchers where not willing to make their findings public. b. possible negative consequence of the act is that is allows special interests to harass agencies by raising frivolous challenges against scientific studies that support particular policy preferences b. Allocation of Litigating Authority i. ii. Some agencies have the statutory authority to go to court to enforce their statutes, whereas others do not. Those agencies that do not have this authority must rely on the DoJ to enforce the statute and the Solicitor Generals Office to argue the case before the Supreme Court Very few agencies have this power and therefore must rely upon the Solicitor General to litigate for them and to take positions held by the agencies.

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c. Confirmation Process i. ii. iii. iv. Art. II 2 gives the President the power to nominate, and by and with the Advice and Consent of the Senate,appointOfficers of the United State. Art. II 2 also grants Congress the authority to vest the President with the power to appoint inferior Officers. any agency official who has the power to make a final, legally binding decision must be an Officer. Thus, the Senate can wield considerable power through the confirmation process via veto, extraction of leverage from nominees, threats of embarrassment, etc. All funds spent by the govt must be appropriated by Congress. See Environmental Defense Center v. Babbitt (holding that DOIs statutory duty to act on the petition to enlist a species as endangered under the ESA was suspended during the periods in which it was prohibited from using appropriated funds for that purpose.) Also note that there are multiple committees with jdx to conduct hearings to evaluate an agencys peformance

d. Appropriation Process and Oversight i. ii.

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e. Casework communications by members of Congress with agencies to assist constituents in obtaining the results they desire from agencies in a timely manner 4. What are the Constitutional Limits on Congress Influence on Administrative Agencies? Legislative Due Process a. The due process clause prescribes the manner in which Congress may take legislative action b. But, at what point is Congress barred from interfering with Agency action? i. ii. Congress MAY express views on rulemaking b/c it is an informal legislative process HOWEVER, Congress MAY NOT express views/involve itself in the adjudicative process b/c this interferes with the formal rules of due process ( Note: the same rule applies to the President).

c. The due process clause of the Fifth Amendment limits the ability of Congress to act in certain ways that are designed to influence agency action in some contexts. d. See Pillsbury Co. v. Federal Trade Commission (holding that Congressional hearings where the Pillsbury case was mentioned more than 100 time and a final decision had not yet been rendered constituted an improper intrusion into the adjudicatory processes of the Commission) Constitutional Legislative Procedure a. No provision of the Constitution explicitly authorizes Congress to use informal means to persuade agencies to act in ways that are preferred by members of Congress. b. HOWEVER, the ability of Congress to influence informally is a by-product of the formal powers conferred on Congress in the Constitution. 7

c. So, what are the requirements when Congress takes formal action??? they must act legislatively Separation of Powers B. The President and Administrative Agencies 1. Introduction (p. 141-143) Art. 2, Sec. 1, Cl. 1 The executive power shall be vested in the President. Art. 2, Sec. 2, Cl. 1 empowers the President to require the opinion, in writing, of the principal officer in each of the executive departments, upon any subject relating to their respective offices Art. 2, Sec. 3 the President shall take care that the law be faithfully executed. formalists a separation of powers principle is violated whenever a categorization of the exercised power and the exercising institution do not match and the Constitution does not specifically permit such blending functionalist infers that Congress is free to allocate as it pleases among subordinate institutions, as long as the overall character and quality of the relationship between those institutions and the named heads of the government is consistent with the latters performance of their core functions 2. Presidents Appointment Power Note that officers of the United States must be appointed in accordance with the Appointment Clause, whereas other federal government employees do not. Issues arise in broad categories including: other public Ministers and Consuls and all other Officers Buckley v. Valeo (holding that any appointee exercising significant authority pursuant to the laws of the United States is an Officer of the United States and must therefore be appoint in the manner proscribed in Art. 2, Sec. 2, Cl. 3 of the Constitution). NOTE: dealt w/ the appointment of Officers to the Federal Election Commission a. Appellant (formalist) argument Congress is precluded under the principles of separation of power from vesting in itself the authority to appoint who will exercise such wide ranging rulemaking and substantive enforcement powers (i.e. the President nominates and with the Advice and Consent of the Senate appoints) b. Appellee (functionalist) argument The Framers had no intention of denying the Legislative Branch authority to appoint its own officers. Congress can either use the appointment clause OR under grants of substantive legislative authority and the Necessary and Proper Clause appointment that is appropriate to its legislative function. c. In its rationale, the Ct. noted that that powers given to the Commission that are investigative and informative in nature could be delegated to a Congressional appointee, BUT the more substantial powers exercised by the Commission place its appointment within the Confines of the Appointment Clause. Morrison v. Olson (upholding appointment procedures for an independent counsel to investigate and prosecute certain high-ranking government officials on the basis that the Counsel is merely an inferior officer and therefore can be appointed by the court). 8

a. Put simply, the Court found that the independent counsel was inferior because the tenure, duration and duties of the position were jurisdictionally confined to one investigation. b. J. Scalia argued fervently that the Court should have put more emphasis on the scope of the positions authority and the fact that the Officer was not subordinate to another officer. Freytag v. Commissioner of Internal Revenue (holding that special trial judges of the US Tax court are inferior officers who can be appointed by the Chief Judge of the Tax Court, BUT disagreeing on the rationale) a. Main Issue on Rationale Is the Chief Judge the Head of the Department OR is the Tax Court a court of law? b. Majority Appointment Clause was intended to limit strictly the potential diffusion of the appointment power, thus no Agency can be a Department for the purposes of the Appointment Clause unless it is a cabinet-level Agency. As such, the Chief Judge must be a court of law despite the fact that it is an Art. I court. i. BUT: makes explicit exception for FTC, SEC, Federal Agency Regulation Commission, the Federal Reserve Bank

c. Concurrence the Framers were attempting to limit congressional involvement in the appointments process by centralizing the power in the President and his direct appointees d. Note D.C. Circuit holding that SEC is sufficiently Cabinet-like to be a department for Appointment Clause purposes b/c it exercises executive authority over a major aspect of government policy, and its principal Officers are appointed by the President with the advice and consent of the Senate and subject to removal by the President. Presidents Recess Appointments a. Art. II, Sec. 2, Cl. 3 The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session. b. Issues i. ii. what constitutes a recess appointment? only during intra session recess b/w sessions? what does the requirement that vacancies happen during the recess mean? (e.g. create Executive paralysis and do violence to the orderly functioning of our complex govt?) where a statute contains a holdover clause (e.g. FTC, serve until successor takes office) can the President use a recess appointment? Does the Constitution allow Congress to constrain presidential exercise of the recess appointment power with the holdover clause????

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3. Presidents Power to Remove Unlike the Appointment Clause, the Constitution does not mention the power to remove officers at all

 As such, the Courts have been required to draw inferences w/r to the removal power based on the characteristics of the Constitution. Meyers v. U.S. (holding the provisions in the Tenure in Office Act that require the approval of the Senate for removal of executive officers unconstitutional on the basis that that power of removal extends by necessity to the President to execute the law.) a. a veto by the Senate on nominations for appointment is not the same thing as a veto on removal b. when a nomination is made, the President may still choose someone else that can appropriately serve as his alter ego or trusted subordinates in executing the law c. further, in a very practical sense the President who has work with the person in question is in a better informed that the Senate as to whether the individual in question can faithfully execute his duties . d. ONLY GOVERNS UNDER CURRENT LAW where the officer is purely executive Humphrey v. U.S. (departs from Meyers holding that the limitations place on the President to remove a Commissioner from the FTC only for inefficiency, neglect of duty, or malfeasance in office do not conflict with the Constitution because the Commissioners duties do not coincide with purely executive functions. Instead, the Commissions function is more in the realm of quasi-legislative and quasi-executive in nature). Morrison v. Olson (holding that the since the independent counsel may be terminated for good cause that the Executive through the Attorney General retains ample authority to assure that the counsel is competently performing his or her statutory responsibility ability to make policy decisions an indication that authority is not sole executive and therefore may be subject so some limitations) a. States that the real question is whether the removal restrictions are of such a nature that they impede the Presidents ability to perform his constitutional duty and that the functions of the officials in question should be analyzed in that light. b. Scalia (dissent) There are now no lines. If the removal of a prosecutor, the virtual embodiment of the power to take care that the laws be faithfully executed, can be restricted, what officers removal cannot? Free Enterprise Fund v. Public Company accounting Oversight Board (held unconstitutional a provision of the Sarbanes-Oxley Act that protects members of a newly created Public Company Accounting Oversight Board from removal except for good cause). a. first principles the Constitution give the power to the President to faithfully execute the law which includes hoosing, supervising, and if necessary firing inferior government officials b. HOWEVER, the Court has two varieties of good cause limitations (1) a limit on the Presidents power to fire high-level officials (like the Commissioners of the Federal Trade Commission) except for good cause, and (2) laws that protect lower level employees from termination except for good cause when good cause is judged by higher-level officials whom the President can fire at will

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c. But this case, the Court holds, is different. Here, the SEC cannot remove members of the Board without good cause, and the President cannot remove members of the SEC without good cause. This two-tiered scheme, the majority concludes, goes too far. 4. Presidents Tools to Control Agencies (211-215) Presidential Signing Statements formal statements issued by the President offering their views regarding the legislations constitutionality and meaning a. Art. I, Sec. 7 calls for bills that have passed both the House and the Senate to presented to the President who, if he approves.shall sign it. b. BUT, it doesnt mention signing statements c. critics argue that the President should not sign bills that he thinks are unconstitutional d. defenders point out that these statements are not legally binding and that Constitutional concerns expressed the President typically relate to potential applications of the provisions in question Executive Orders presidential directives that govern the actions of government officials and agencies that often carry the force of law a. The Constitution does not explicitly authorize the President to issue executive orders b. Presidents often claim that the provisions of Art. II or more ambiguous statutory language authorize a particular executive order Office of Management and Budget Control(OMB) and Office of Information and Regulatory Affairs (OIRA) a. established to assemble, correlate, revise, reduce or increase the budget estimates of the several departments or establishments b. evolved to an information clearinghouse that helps the President know about what the various government agencies are doing and to influence their actions c. Under Pres. Reagan the role of OMB expanded to include supervision that directs agency rulemaking efforts. III. Agency Rulemaking A. Introduction to Rulemaking There two main categories of rules: (1) legislative and (2) non-legislative Non-legislative rules (categories) (a) interpretive, (b) procedural and (c) policy statements APA 553(b) and (c) describe three step process for adopting a rule (i.e. notice and comment rulemaking/formal) 1. issuing notice of proposed rulemaking 2. soliciting comments on the proposal 3. publishing final rule w/ an accompanying statement of basis and purpose APA 553(b) BUT, interpretive rules, general statements of policy, or rules of agency organization, procedure or practice are EXEMPT from these procedural requirements 11

 Whether a rule is legislative or non-legislative is also significant in terms of the scope and availability of judicial review Legislative rules carry the same legally binding effect as a statute. In contrast, nonlegislative rules may bind agency employees, but are not legally enforceable against the public One issue that comes up is whether an agency has the power to adopt legislative rules in the context of a statute that is not clear on the issue. National Petroleum v. FTC (holding that the FTC had the power to issue legally-binding legislative rules, despite the fact that it had only issued procedural rules for the first fifty years of the statutes application and the organic statute was not explicit on the issue.) Note that Congress later enacted legislation that affirmed the FTCs power to issue legislative rule, BUT required the FTC to use procedures that differ from the three step process (i.e. required opportunity to present oral evidence and cross examination on disputed material facts when necessary for fair determination of the rulemaking proceedingsimilar to the on the record after opportunity for an agency hearing standard in formal rulemaking proceedings. B. Relationship between Agency Rulemaking and Adjudication Why would an agency promulgate legally binding rule (considering the burdensome requirements in APA) when it much easier to adjudication on a case by case basis? Rules provide a means through which agencies can limit the discretion of an Administrative Law Judge (ALJ) by resolving one or more issues that frequently come up Thus leading to greater accuracy, consistency, and/or efficiency in administering a particular statutory scheme 1. Heckler v. Campbell (holding that HHS may rely on published medical vocational guidelines to determine a claimants right to social security benefits) Guidelines promulgated by the rule, relieved HHS of the need to rely on vocational expert by establishing via rulemaking the type and numbers of jobs opportunities that existed for the class of applicant in question standard of review arbitrary and capricious 2. Bowen v. Yuckert (holding that both the language of the Social Security Act support the Secretarys decision to require disability claims to make a threshold showing (i.e. via 5-step severity regulation) that their medically determinable impairments are severe enough to satisfy the regulatory standard). Plaintiffs argument is that the agencys rule does not comport with the statutes requirement that the agency consider BOTH (1) the severity of the disability and (2) the applicants age, education and work experience. Since the Severity Regulation dismissed the inquiry upon a finding that the applicants disability is not sufficiently severe, it failed to apply the balancing approach that the Social Security statute intended and thus, the regulation should be invalidated. 3. SEC v. Chenery (holding that an agency has that the power to issue rules through the rulemaking process has the discretion to use the traditional common law rulemaking instead (i.e. to announce broad rules of conduct in the course of resolving a particular adjudication and then apply the rules as binding precedent in subsequent cases)). 12

 In sum, an administrative agency retains the power to deal with problems on a case-bycase basis. That such an action has a retroactive effect is not necessarily fatal to the adjudications validity. Chenery is also cited to support the proposition that the court is powerless to affirm [an] administrative action by substituting what it considers is a more adequate or proper basis because to do so would propel the court into the domain which Congress has set aside exclusively for the administrative agency. 4. Bowen v. Georgetown U. Hospital (holding that an agency cannot use the APA 553 process to issue a rule that has any retroactive effect except in the rate case in which Congress has explicitly authorized an agency to issue retroactive rules) However, as in Chenery II, the Court recognized than an agency can use the adjudication process to issue a rule that has retroactive effect BUT, this ability to act retroactively via adjudication is not unlimited. Chenery II indicated that such adjudication may be impermissible if the ill effect of the retroactive application of a new standard outweighs the statutory interest. Factors to consider in balancing interest: a. case of one of first impression b. abrupt departure from a well-established practice c. reliance on the former rule d. degree of burden e. statutory interest to apply rule despite reliance of party C. Formal and Informal Rulemaking 1. APA Rulemaking Procedures Many agencies routinely choose rulemaking as their preferred method for adopting rules of general applicability. Such rulemaking procedures generally must comply with the APA requirements. However, the APA recognizes several different categories or rules and imposes different procedural requirements for each one: a. procedure rules, interpretive rules and policy statements very few procedural requirements i. ii. APA 522 tells agencies to publish at least some of such rules in the Federal Registry APA 553(d) requires agencies to publish procedural rules at least 30 days before they become effective must publish notice of the proposed rulemaking in the Federal Register must offer all interested persons the opportunity to comment on the proposed rule must publish the final rule in the Federal Register accompanied by a concise statement of the rules basis and purpose 13

b. legislative rule more onerous procedural requirements (See APA 553(b) and (c).) i. ii. iii.

c. formal rulemaking distinguished from informal rulemaking in that an oral evidentiary hearing is required for formal rulemaking as described in APA 556 and 557. 2. The Decline of Formal Rulemaking Most contemporary rulemaking is informal. In fact, agencies that may only issue legislative rules through formal rulemaking have pretty much abandon all efforts to make legislative rules. When Congress initially adopted the APA, adjudication rather than rulemaking was the norm for agency policymaking. However, with the pressure of increased caseload and the need for a more definite standard, agencies began to embrace rulemaking. Most agencies believed they were required to use formal rulemaking where statutes authorized them to act only after a hearing. So after hearing is a trigger for the formal process BUT now. See United State v. Florida East Coast Ry. Co (holding that the treatment of the term hearing in the organic statute does not by its own force require the Commission either to hear oral testimony, to permit cross-examination of Commission witnesses, or to hear oral arguments.) a. after hearing does not necessitate a formal rulemaking process b. NOW on the record after opportunity for an agency hearing magic words to indicate the need for a formal rulemaking process As a result of the Courts holding in Florida East Coast Railroad, agencies have largely ceased to engage in formal rulemaking. In fact, when Congress adds on the record language to a statute, it is effectively eliminating/reducing the agencys ability to utilize rulemaking to effectuate legal policy, and thus erodes the agencys regulatory power. 3. The Evolution of Informal Rulemaking With the virtual disappearance of formal rulemaking after Florida East Coast Railroad, agencies seeking to promulgate legislative rules typically employ the informal noticeand-comment procedures of APA 553 (b) and (c). Prior to 1967, the courts rarely reviewed agency rules issued via an informal process. A rule typically was not considered ripe for review until an agency applied the rule in an enforcement proceeding However, from 1967-1983 judges began interpreting APA 553 (b) and (c) to require more expansive procedural burdens. See Abbott Laboratories v. Gardner (announcing a new test to determine whether a rule is ripe for review by asking (1) whether the issues raised by the petition are susceptible to judicial resolution prior to the application of the rule in an enforcement proceeding and (2) whether the petitioner would be subject to hardship as a result of deferral of review). a. The Abbott Labs test rendered a high proportion of agency rules ripe for preenforcement review 14

b. Further, there was no down-side risk to initiate a pre-enforcement review proceeding since the party would not be subject to civil, criminal or even collateral damages as a result of the hearing In the Pre-Abbott Labs environment, the courts considered whether the rule was valid using the record of the enforcement proceeding. After Abbott Labs, judges only had the record of the rulemaking proceeding which consisted of the NOPR, the comments on the NOPR from the public and the final rule incorporating a statement of its basic purpose. Reviewing courts often concluded that rulemaking records where inadequate and vacated rules on the ground that the agency had not created a record sufficient to allow the court to engage in a meaningful review. As a result, agencies where demanded to (1) conduct oral evidentiary hearings in many rulemakings, (2) issue elaborate and lengthy NOPRs at the beginning of a major rulemaking and (3) make long and detailed statements of the basis and purpose of final rules. See Vermont Yankee Nuclear Power Corp. v. NRDC (remanding D.C. Circuit decision on the basis that the Court should not stray beyond the judicial province to explore the procedural format or to impose upon the agency its own notion of which procedures are best or most likely to further some vague, undefined public good.). D. Procedural Requirements for Informal Rulemaking 1. Notice APA 553(b) general notice of proposed rulemaking shall be published in the Federal Register UNLESS persons subject are named and either personally server OR otherwise have actual notice. Notice shall include: a. time, place and nature of the public rulemaking proceedings; b. reference to the legal authority under which the rule is proposed; and c. either the terms or substance of the proposed rule or a description of the subjects and issues involved Shell Oil Co. v. EPA (held that the EPA rule was not foreseeable merely because comments received in response to the rulemaking appeared to anticipate the rule. The ambiguous comments and weak signals from the agency gave petitioners no such opportunity to anticipate and criticize the rules or offer alternative and thus the EPA rules must be set aside) a. Noted that an unexpected intention cannot convert a final rule into a logical outgrowth that the public should have anticipated. See Small Refiner Lead PhaseDown Task Force v. EPA. b. Under the standard of the APA, notice necessarily must come - if at all from the Agency. See Small Refiner c. logical outgrowth and sufficiently foreshadowed phraseology is interchangeable d. BUT, agencies cannot be expected to amend their NOPRs for every unanticipated comment or suggestion to which they respond by altering their proposal. See Intl. Harvesters Co. v. Ruckelshaus.

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 Portland Cement Assn v. Ruckelshaus (invalidating EPA standard of performance due to the critical defect in the decisonmaking process whereby the EPA promulgated rules on the basis of inadequate data or data that was, to a critical degree, only know to the agency). a. BUT, a court may not require an agency to disclose information received after the comment period is closed IF (1) the data was publicly available and the challenging party actually responded to it or (2) the technical background of the rule has been the subject of extensive debate for a substantial period of time. b. Note that a court MAY allow an agency to rely on undisclosed studies or other data that is not critical, perhaps b/c such information merely supplements that which was disclosed in the NOPR OR b/c the studies or other data only support secondary justification for the agency action. American Radio Relay League, Inc. v. FCC (remanded rule to the FCC b/c it failed to satisfy the notice and comment requirements of the APA by redacting studies on which it relied in promulgating the rule and failed to provide a reasoned explanation for its choice of the extrapolation factor for measuring Access BPL emissions). a. among the information that must be revealed for public evaluation are the technical studies and datathat was employed in reaching the decisions to propose particular rules. b. Public notice and comment regarding relied-upon technical analysis are the safety valves in the use ofsophisticated methodology. c. rule of prejudicial error the court will not set aside a rule absent a showing by the petitioner that they suffered prejudice from the agencys failure to provide an opportunity for public comment in sufficient time so that the agencys decisions may be framed with comment in full view. [See practice problems on p. 408-409] 2. Statement of Basic Purpose An agency does not need to respond to every comment, but it must respond in a reasoned manner to significant comments received. U.S. v. Nova Scotia (holding that the FDAs concise general statement required by the APA was inadequate by leaving vital question raised during the notice and comment period unanswered) a. The court cannot discharge its role unless the agency is held to a high standard of articulation to give a reason why one course of action was selected instead of another b. Need to be able to see what major issues of policy were ventilated by the informal proceedings and why the agency reacted the way it did. c. These concise general statements are a safeguard against arbitrary decision making by the agency d. One may recognize that even commercial infeasibility cannot stand in the way of an overwhelming public interest. Yet the administrative process should disclose, at least, whether the proposed regulation is considered to be commercially feasible, or whether other considerations prevail even if commercial infeasibility is acknowledged. 16

3. Ex Parte Communications APA 557(d)(1) prohibits ex parte communications in formal adjudication and formal rulemaking Although the APA does not deal directly w/ informal rulemaking. This trilogy of cases established that: (1) must disclose to public when they form a basis for action, (2) the latter are prohibited between form notice of rulemaking and decision-making, (3) motivations irrelevant, just need a reason, (4) the decision maker disqualified if has unalterably closed mind. a. Home Box Office v. FCC (stating that once notice of a proposed rulemaking has been issued, agency official/employees should refuse to discuss matters relating to the disposition of a rulemaking proceeding with any interested private party prior to the agencys decision.) i. ii. highlights importance of the record as a reference point for the reviewing court and disclosure is important when a basis for action all communications must be placed in the public domain immediately after the communication is received so that interest parties may comment

b. Action for Childrens TV v. FCC (modified Home Box Office ruling by drawing the line at the point where rulemaking proceedings involve competing claims to a valuable privilege b/c it reasoned this is the point where unfair advantage outweighs the practical burdens of requiring additional comments from the public). i. Note that ACT was distinguished from HBO in that the informal rulemaking undertaken did not involve such conflicting private claims to a valuable privilege BUT instead the possible formulation of programming policy revisions of general applicability

c. Sierra v. Costle (holding that it was not unlawful not to docket a face-to-face policy session involving the President during the post-comment period, since the agency make no effort to base the rule on any information or data arising from that meeting. i. Our form of government simply could not function effectively or rationally if key executive policymakers were isolated from each other and from the Chief Executive. Single mission agencies do not always have the answers to complex regulatory problems. Note D.C. Federation of Civil Associations v. Volpe (requiring two conditions to be met before an administrative rulemaking is overturned simply on the grounds of Congressional pressure: (1) the content of the pressure upon the Secretary is designed to force him to decide upon factors not made relevant by Congress in the applicable statute and (2) the Secretarys determination is affected by those extraneous considerations.

ii.

4. Bias Decisionmaker

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 Association of National Advertisers v. FTC (holding that the mere discussion of policy or advocacy on a legal question, however, is not sufficient to disqualify an administrator). a. Analogized the role of the Administrator to that of the legislature b. When a proceeding is classified as rulemaking, due process ordinarily does not demand procedures more rigorous than those provided by Congress (SeeVermont Yankee). c. Stating it never intended the Cinderella rule to apply to a rulemaking procedure such as the one under review. The latter disqualifies a decision maker if a disinterested observer may conclude that he has in some measure adjudged the facts as well as the law of a particular case in advance of hearing it. d. In the rulemaking context, the factual component of the policy decision is not easily assessed in terms of an empirically verifiable condition. e. Rulemaking involves the kind of issues where a month of experience will be worth a year of hearingsthus application of the Cinderellas strict law-fact dichotomy would necessarily limit the ability of administrators to discuss policy questions. 5. Exemptions from Rulemaking Procedural Requirements: Subject Matter, Good Cause, and Procedural Rules Exemptions Interpretive Rule Exemption a. APA 553(b)(3)(A) exempts interpretive rules from informal rulemaking procedure requirements b. But, how do you distinguish legislative rules that require formal rulemaking procedures from mere interpretive rules? Legislative Rules Agencies must have statutory authority to issue. See National Petroleum (p. 345) Have force and Effect of Law (like statutes). See Heckler v. Campbell. Entitled to strong deference from the Court Affecting individual rights and obligations. See Chrysler Corp. v. Brown. c. Although SCOTUS often referred to particular regulations as either legislative or interpretive, the Court has never articulated a clear standard for distinguishing between the two categories. d. American Mining Congress v. MSHA (announcing four-pronged test for determining whether a rule is legislative or interpretive (1) whether in the absence of the rule there would not be an adequate legislative basis for enforcement action or 18 Interpretive Rules Dont need expressed statutory authority. The authority derives from the Agencys basic executive authority to interpret the law. Do NOT have the force of law Just the Agencys view; the Court can either accept it or not

other agency action to confer benefits or ensure the performance of duties, (2) whether the agency has published the rule in the Code of Federal Regulations, (3) whether the agency has explicitly invoked its general legislative authority and (4) whether the rule effectively amends a prior legislative rule). i. ii. If the answer to any of these questions is YES legislative rule A rule does not become an amendment merely because it supplies crisper and more detailed lines than the authority being interpreted. [Q: At what point does it become crisper? At what point does it become a line?] Policy Statement Exception a. APA 553(b)(3)(A) also exempts general statements of policy from formal rulemaking procedures b. Like interpretive rules, policy statements are not legally binding on members of the public or on the courts. They also are not subject to judicial review until they are applied in a particular case (i.e. ripeness issue) c. Courts trying to distinguish between policy statements and legislative rules often ask whether the agency action is question has binding effect. d. Pacific Gas & Electric v. FPC (analogized a general policy statement to a press release that presages an upcoming rulemaking or announces the course which the agency intends to follow in future adjudications.) i. beneficial function of the general statement of policy : (1) provides a formal method by which agencies can express its views, (2) encourages public dissemination of the agencys policies prior to their actual application and (3) facilitates long-range planning within the regulated industry and uniformity in areas of national concern. binding effects test asks whether the agency action is finally determinative of the rights and duties of a particular person

ii.

e. Community Nutrition Institute v. Young (holding that FDA action levels for aflatoxin contamination are legislative rules subject to the notice-and-comment requirements of 553 on the basis that (1) the language employed by FDA suggests that the action levels have present, binding effect and (2) the FDA policy statement purports to bind itself i. restricting an agency more specifically (by a number, action level) 1. Systematic methods for controlling rulemaking via: Office of Management and Budget (OMB) to assemble, correlate, revise, reduce, or increase the budget estimates of the several departments or establishments a. serves as an information clearinghouse to help the President discern what various govt agencies are doing and to influence their actions b. analyze the costs of proposed rules as well as possible alternatives to regulation (Now required to be done w/in Agencies themselves????) E. Presidential Control of Agency Rulemaking

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 Office of Information and Regulatory Affairs (OIRA) subsidiary to OMB that is responsible for monitoring and reducing the burden of paperwork across the federal govt and also w/ respect to the private sector 2. Executive Orders presidential directives that govern the actions of govt officials and agencies that often carry the force of law F. Court Review of Agency Rulemaking: Arbitrary and Capricious (Hard Look) Review 1. Most rules are reviewable by the courts, as provided in the organic statute as per: pre-enforcement review, time limit, who may seek review and legislative facts types of review (i.e. based on the record of the agency, substantial evidence based on the record as a whole, arbitrary and capricious), arbitrary and capricious evolved to Hard Look review a. APA 706(2)(A) instructs reviewing courts to set aside agency action found to be arbitrary and capricious b. Courts began to vacate agency rules if they concluded that the statement of basis and purpose that the agency incorporated in the final rule did not demonstrate that the agency had taken a hard look at the issue and that the agency had not explained to the courts satisfaction why it resolved each contested issue as it did. c. Have employed the doctrine to delve much more deeply into the quality and thoroughness of agency reasoning d. Normally, an agency rule would be arbitrary and capricious if the agency has (1) relied on factors which Congress has not intended it to consider, (2) entirely failed to consider an important aspect of the problem, (3) offered an explanation for its decision that runs counter to the evidence before the agency, (4) it is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. (See SEC v. Chenery Corp) e. BUT, We will uphold a decision of less than ideal clarity if the agencys pather may be reasonably discerned. (See Bowman Transp.) 2. National Tire Dealers v. Brinegar ( holding that while an agency may act after informal rulemaking procedures upon the basis of information available in its own files, and upon the knowledge and expertise of the agency, the Secretarys allusion to information and knowledge outside the record was unpersuasive, i.e. arbitrary and capricious, in the light of the powerful doubts raised by the on-the- record comments of petitioners and other about the practicability of the requirements.) standard of review the paramount objective is to see whether the agency, given an essentially legislative task to perform, has carried it out in a manner calculated to negate the dangers of arbitrariness and irrationality in the formulation of rules for general application in the future 3. Motor Vehicle Mfrs. v. State Farm( holding that the agency failed to present an adequate basis and explanation for rescinding a requirement and that it was therefore arbitrary and capricious.)

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 Must offer a rational connection between the facts found and the choice made; reasoned decisionmaking. An agencys view of what is in the public interest may change, either with our without a change in circumstances. But an agency changing its course must supply a reasoned analysis. 4. NFC v. Fox Television (finding that the FCC did not act arbitrarily and capriciously in deviating from its prior policy and refusing to apply a more stringent standard of review to the action because it changed its policy or because it had implications on constitutional liberties). Majority noted that such claims may be set aside by the court on the basis of its unlawfulness 5 U.S.C. 706(2)(A) Three Part Test Applied by Lower Courts: (1) that the agencys new policy be permissible under the statute, (2) that the agency have good reasons for the new policy, and (3) that the agency believe that the new policy is better, which the conscious change of course adequately indicates. G. Evaluation of Rulemaking 1. Ossification and Responses Decisions in cases like Portland Cement, Shell Oil, Nova Scotia Food Products and State Farm have greatly increased the time and the agency resources required to issue a major rule Arbitrary and capricious or hard look review under APA 706(2)(A) has had a similar effect. Added requirements that judges have imposed on the informal rulemaking process have, in turn, produced a phenomenon that may scholars call ossification that is a tendency for agencies to refrain from using the informal rulemaking process at all. BUT other scholars point to the fact that Agencies issue thousands of pages of new rules each year. Process is just slowed Regulatory Flexibility Act adds procedures when an agency issues rules that affect small entities which essentially require agencies to further explain the reasons and consequences behind their rules. 2. Negotiated Rulemaking agency assembles representatives of various parties who are interested in the outcome of a rulemaking for the purpose of negotiating the proposed rule process begins w/ a public notice negotiating committee established neutral mediator/facilitators chairs the sessions consensus reached NOPR issued notice and comment, etc. PRO: (1) reduces the amount of time that an agency needs to promulgate regulations, (2) decreases litigation challenging the regulation once finalized CON: (1) heightens conflict by excluding some interested parties, (2) any consensus built likely to unravel as agencies consider other voices through the notice and comment process Posner an abdication of regulatory authority to the regulated, the full burgeoning of the interest-group state, and the final confirmation of the capture theory of the administrative state. 21

 Note decline in the use of this method of rulemaking 3. Direct Final Rulemaking Involves issuing regulations in the Federal Register with a notice that they will become final on a given future date unless, within the designated comment period, some interested party files comments requesting changes or criticizing the regulations. If the agency receives negative comments, then follows NOPR process or if it receives material or substantial negative comments Under either approach, the agency will publish the rule if it receives only favorable comments or no comments at all. 4. Remand without Vacatur controversial remedy issued by a reviewing court that merely remands the regulation to the agency for further action while allowing the rule to remain in effect whether this remedy is appropriate depends upon the seriousness of the orders deficiencies as well as the disruptive consequences of invalidating the rule. supporters of this remedy note that judicial vacation of an agency rule may seriously disrupt agency efforts to implement statutory requirements and accomplish statutory goals dissenters, however, point out that 706(2)(A) requires a reviewing courts (shall) to vacate the rulei.e. no other remedy is allowed under the APA. IV. Adjudication 1. When Does the Process Apply Due process requirements attach to agency adjudication, but not to agency rulemaking a. adjudication agency process for formation of an order w/ order including licensing and disposition, of an agency in a matter other than rulemaking. APA (Appendix B) b. rulemaking agency process for formulating.a rule. w/ rule defined as an agency statement of general or particular applicability and future effectdesigned to implement, interpret, or prescribe law or policy. Londoner v. Denver (holding that a discretionary tax assessed on landowners violated due process principles in that they were entitled to a hearing and must have notice, either personal or by publication, or by a law fixing the time and place of the hearing). Bi-Metallic v. State Board (distinguished from Londoner in that the rule was generally applicable to all property holders of the city and that the property owners were not exceptionally affected, in each case upon individual grounds.) 2. Defining Life, Liberty and Property If the action is adjudicative (i.e. falls on the Londoner side of the Londoner/Bi-Metallic distinction), then the Court must decide whether the action deprives any person of life, liberty, or property. And if so, what process is due the person Three Considerations: (1) Does the person have life, liberty or property; and (2) Does the person have an interest? (3) If so, what procedures are required by the Constitution? A. Due Process Protection

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a. property courts tend to defined property narrowly w/ reference to common law (e.g. real or personal property) b. liberty Question arise as to whether the opportunity to apply ones labor and skill fall under this definition. Over time, SCOTUS has increased the scope of due process. Goldberg v. Kelly (holding that a States termination of public assistance payments without affording a pre-determination evidentiary hearing denies the recipient procedural due process) a. Notes that a critical fact is that anyone whose govt entitlements end may be deprived of benefits for which he is eligible since he lacks the independent resources needed to seek redress from the welfare bureaucracy. b. One compelling state interest argument the Court points out that the interest of the eligible recipient in uninterrupted receipt Board of Regents v. Roth (holding that although there might be a case in which a State refused to re-employ a person under such circumstances that interests in liberty would be implicated, but that this was not one of them.) a. The Constitution does not require opportunity for a hearing before the nonrenewal of a non-tenured teachers contract UNLESS there is a show that the decision not to rehire somehow deprived the person of an interest in liberty or that there was a property interest in continued employment, despite the lack of tenure or a formal contract b. liberty interest (def.) not merely freedom from bodily restraint, but also the right to contract, engage in any common occupation of life, acquire useful knowledge, to marry, establish a home and bring up children, to worship God and generally enjoy those privileges long recognized c. So, had the State made any charges against Roth that might seriously damage his standing and association with the community, then he might have a liberty interest of which he was deprived by the State. d. Here, however Roth makes no such suggestion and was merely denied an abstract need or unilateral expectation. Further, no interest created under common law contract rights Perry v. Siderman (holding that the respondents lack of a contractual or tenure right to reemployment, taken alone, DOES NOT defeat his claim that the non-renewal of his contract violated the First and Fourteenths amendments) a. Claimed that the decision not to rehire him was based on his public criticisms of the college administration and thus infringed on his right to freedom of speech b. Also claimed that their failure to provide him an opportunity for a hearing violated the Fourteenth Amendment guarantee of procedural due process c. The lack of a contract was immaterial to his free speech claim. Found that there is a genuine issue of fact as to whether the college refused to renew the teaching contract on an impermissible basis. Thus, summary jdgt was improper.

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d. Looked at de facto program and the fact that he was under that program was significant. the promisors words and conduct in light of the surrounding circumstancesand the meaning of these words in the past significant. 3. Procedures Required by Due Process Matthews v. Eldridge (holding that a disabled worker is not entitled to an evidentiary hearing prior to a withdrawal of benefits because (1) the nature of the interest of disabled workers need is not analogous to that of public assistance beneficiary in Goldberg and (2) the nature of the govt interest in providing benefits to the disabled worker is outweighed by the cost to the state that would be imposed by staying on benefits while the adjudicatory procedure is pending and (3) in Goldberg written submissions were inadequate because of the nature of the issue whereas in this case written submissions by doctors were adequate). a. Eldridge three part balancing test individual v. public interest v. nature of the issue b. Goldberg is the only case in which the Court has held that due process requires an oral evidentiary hearing BEFORE the government may deprive a person of a protected interest c. In many cases, the Court has held as it did in Eldridge that a pre-deprivation paper hearing is adequate if the individual has the right to a post-deprivation oral evidentiary hearing. d. J. Rehnquist the bitter with the sweet idea that if an individual relies on a statute as the basis for a right that is protected by due process, he must take the bitter with the sweet (i.e. he must accept the procedural contours of the right along with the substantive contours of that right) See Arnett v. Kennedy (holding that the employees property interest in his govt employment was limited to the procedural protections granted by Congress when it strengthened statutory jobs protections for civil service workers.) Cleveland Board of Education v. Loudermill (holding that the bitter with the sweet approach misconceives the constitutional guarantee of due process and that the due process clause provides that certain substantive rights, i.e. here a predetermination.) a. Claim was against a OH state law for classified civil servants where he could be terminated only for cause and could obtain administrative review if discharged. The statute did not provide that the employee an opportunity to respond to the charges against him prior to removal. b. BUT, the pretermination hearing need not be elaborate. It need only be an initial check against mistaken decision essentially, a determination of whether there are reasonable grounds to believe that the charges against the employee are true. Hamdi v. Fumsfeld (holding that although Congress authorized the detention of combatants in the narrow circumstances alleged here, due process demands that a citizen held that a citizen held in the U.S. as an enemy combatant be given meaningful opportunity t contest the factual basis for that detention before a neutral decisionmaker) a. Ct. applies Eldridge balancing test (1) individual interest in being free, (2) risk of erroneous deprivation of citizens liberty, and (3) govt interest b. J. Scalia (dissent) these are not normal criminal proceedings subject to restrictions of habeas corpus. Having found a congressional authorization for detention of citizens where none clearly exists; and having discarded the categorical procedural protection of

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the Suspension Clause; the plurality then proceeds under the guise of due process to prescribe what procedural protection IT thinks is appropriate. basicallythere is no place for this test where the Constitution (via war powers) and common law already supply an answer. c. J. Thomas (dissent) the court lacks the expertise and capacity to second guess the federal govt decision in exercising its war powers. In using the Eldridge test the plurality utterly fails to account for the govts compelling interest and for our own institutional inability to weigh competing interest correctly.

B. Statutory Procedures in Adjudication 1. Formal Adjudication Actions are governed by APA 554-558 An Administrative Law Judge (ALJ) presides over an oral evidentiary hearing and writes an opinion that includes findings of fact and conclusions of law APA 554(a) talks about when an agency must use the elaborate formal procedures described in 554, 556, and 557 (i.e. in every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing, except as otherwise provided) The Florida East Coast Railway decision (dealing w/ when formal procedures are required for Agency rulemaking) complicated the question of when statutory hearings are required in the context of adjudication. Chevron clarified this question, employing a two part test for judicial review of agency interpretations of statutes that they administer: (1) determine whether the meaning is clear and (2) if ambiguous whether the Agencys interpretation is reasonable.

In sum, Chevron held that courts must defer to an agencys reasonable interpretation of ambiguities in the statutes that they administer Since 1984, every circuit court that has addressed the issue has either held outright that the holding of Florida East Coast Railway applies to adjudication (i.e. must have phrase on the record to trigger formal procedures) or has deferred to the agencys interpretation of the statute as not requiring APAs formal procedures. 2. Informal Adjudication If an agencys organic statute lacks the words on the record or some other verbal formation that explicitly requires an oral evidentiary hearing, the agency is free to engage in informal adjudication. The vast majority of agency organic statutes DO NOT include this language and therefore do not trigger the procedural requirements proscribed by APA 554, 556, and 557. However, due process may impose other procedural requirements

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 See Citizens to Preserve Overton Park Inc. v. Volpe (stating that formal findings where not required in this case where there is an absence of a statutory directive and the nature of the agencys action is unambiguous). a. The final inquiry is whether the Secretarys actions followed the necessary procedural requirements. Here the only procedural error alleged is the failure of the Secretary to make formal findings and state his reason for allowing the highway to be built. b. Here the statutes did not require formal findings and the Secretarys determination was clearly supportable. However, the Court found that the post hoc rationalization was not sufficient. Thus, the case was remanded to be reviewed by the District Court based on the full administrative record that was before the Secretary at the time the decision was made and not merely the litigation affidavits. c. since there was no official findings, the only way to review is to examine the decision makers themselves C. Separation of Functions in Adjudication Due process requires a neutral decision-maker (i.e. a decision maker who is free of impermissible bias. The courts have long struggled to apply this requirement to the context of administrative adjudications. One means of achieving neutrality is to separate the administrative function of investigating and prosecuting cases and adjudicating the outcome. See APA 554(d) and 556(b) restricting which agency employees may preside over the taking of evidence and render decisions in agency adjudication APA 554(d) explicitly prohibits employees serving as adjudicators from performing investigative or prosecutorial functions and vice versa APA 556(b) restricts those presiding over the taking of evidence to (1) the agency, (2) one or more members of the body which comprises the agency, or (3) one or more administrative law judgesall of whom must proceed in an impartial manner including possible disqualification for bias. HOWEVER, these APA Requirements subject to Two Important Limits: a. requirements apply only to formal adjudication b. even when the formal adjudication provisions of the APA apply, the agency is free to substitute its opinion for that of an administrative law judge and the agency itself is not subject to the structural restrictions imposed by the APA i.e. the Secretary, Administrator or Commissioner of an agency has the power to order and investigation, order initiation of proceedings to enforce the law and make a final decision that the conduct at issue violates the law. Withrow v. Larkin (holding that the state medical examining board could properly rule with regard to the merits of the same charge it investigated and that this combination of investigative and adjudicatory powers did not create an unconstitutional risk of bias.)

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a. To makes its case, the petitioner would have to overcome a presumption of honesty and integrity afforded adjudicators and that a realistic appraisal of psychological tendencies and human weaknesswould pose a risk of actual bias. b. Analogizes to the judicial court system and points out that it finds no reason to impose a higher standard on administrative agencies than Art. III judges. c. BUT notes that its ruling should not be construed to say that there is nothing to the argument that those who have investigated should not then adjudicate. d. Cases where risk of bias is too high (1) adjudicator has a pecuniary interest, (2) in which he has been the target of personal abuse, OR (3) criticism. e. Other Claims (1) prior exposure to an issue, (2) prior expression of views on an issue The Split Enforcement Model a. Alternative to the APA model that divides responsibility for investigation and enforcement from adjudication. (e.g. OSHA (rule maker), OSHRC (adjudicates cases initiated by OSHA) D. Judicial Review of Agency Adjudication In addition to the procedural constraints imposed by the APA, agency action is also limited by judicial review of the outcomes reached in the course of agency adjudication. APA 706 articulate standards governing judicial review of agency actions generally substantial evidence test fact (formal) arbitrary and capricious test policy/ hard look review 1. Issues of Fact Universal Camera v. NLRB (affirming the use of substantial evidence test to gauge the adequacy of the evidence to support the agencys finding of fact and providing that the whole record should be considered when making this determination). a. substantial evidence test different when applied to legislative facts ( i.e. general facts looking for a rational connection to the conclusion that the agency reached) v. formal adjudication (i.e. determination of what happened) b. Notice that this test is highly deferential to the agency findings c. Also note that APA 706 (2)(E) only calls for judges to apply the substantial evidence standard in cases that are (1) subject to sections 556, 557 and 557 (i.e. those requiring formal adjudication) OR (2) otherwise reviewed on the record of an agency hearing provided by statute.

d. Since most agency adjudications are informal, the question then is when does the substantial evidence test actually apply? e. f. Alternatively, where the substantial evidence test does not apply, the APA 706(2) (A) requires the arbitrary and capricious standard. However, the Court has never articulated the differences between these two tests in their application to findings of fact.

Assn of Data Processing v. Board of Governors (holding that the substantial evidence requirement applicable to our review here demands a quantum of factual support 27

no different than from that demanded by the substantial evidence provisions of the APA which in turn is no different from that demanded by the arbitrary and capricious standard). a. Note that Scalia justifies equating these standards in part by stating that otherwise an adjudicatory order that that applies to only one regulated party would be subject to more rigorous judicial review (under the substantial evidence standard) than a rulemaking of general applicability b. Case also noted that the APA 604, 606 requires substantial evidence to be found within the record of closed-record proceedings to which it exclusively applies c. Thus, whether the agency acted arbitrarily must be determined on the basis of what it had before it when it acted and not on the basis of some new record made initially in the reviewing court. 2. Issues of Law APA 706 (2)(A) instructs the court to apply the arbitrary and capricious standard of review to all agency actions SCOTUS has held that an agency must explain its reasoning in support of its actions to avoid the conclusion that its action is NOT arbitrary and capricious BUT, how does this standard effect informal decision making? a. A court cannot reverse and agency action taken through the use of informal adjudication on the ground that the agency failed to explain the basis for its action because the agency has no duty to explain its action.

b. Court deals with this problem by instructing reviewing courts to remand such decisions to the agency to allow the agency to explain its actions c. A court can vacate and remand an agency action if the courts concludes that the agency did not adequately explain why it attached greater significance to some evidence than to other evidence

In the cases where an agency is making a decision that is inconsistent w/ prior policy, then the agency must acknowledge and explain why it is changing court An irrational departure from policy (as opposed to an avowed alteration of it) could constitute action that must be overturned as arbitrary and capricious, or an abuse of discretion. FCC v. Fox Television (The agency must who that there are good reasons for the new policy, BUT it need not demonstrate that the reasons for the new policy are better. A reasoned explanation is needed for disregarding facts and circumstances that underlay or were engendered by the prior policy). Skimore v. Swift & Co stands for the proposition that an agency is not entitled to deference but respect. (i.e. you look at it and you decide what you want to do) a. We consider that rules, interpretations and opinions of the Administrator under this while not controlling do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.

b. The weight that the agency decision will have depends on (1) thoroughness evident in its consideration, (2) the validity of its reasoning, (3) its consistency with earlier and later pronouncements and (4) all those factors which give it power to persuade.

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V. The Chevron Revolution A. Chevron v. NRDC, J. Stevens (Issue was whether the EPAs interpretation of the statute was based on a reasonable construction of the statutory term. Announced new test when reviewing an Agencys construction of a statute to which it administers). 1. Outcome marked a major change in how the Courts would review agency actions If Congress has explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation. Such legislative regulations are given controlling weight UNLESS they are arbitrary, capricious, or manifestly contrary to the statute. A court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrative agency. When a challenge to an agency construction of a statutory provision, fairly conceptualized, really centers on wisdom of the agencys policy, rather than whether it is a reasonable choice w/in a gap left open by Congress, the challenge must fail. Chevron two-step (p. 536) tilted toward deference to the Agency a. whether Congress has directly spoken to the precise question at issue (i.e. intent clear) b. whether the agency s answer is based on a permissible construction of the statute (agency deference) Chevron Raised Several New Issues a. How does the court decide whether the statute is clear as to what the interpretation should be? when is the statute clear? (See p. 536) i. ii. Employing traditional tools of statutory instruction (i.e. words of the statute, the legislative history, the context, etc.) Only if it is not clear, does the Court move on to the next test. Who decides? The Court does. So, if the Court wants to hear the case, it can say that the Congressional intent is clear and we dont get to the agency deference part of this test. 1. Raponos v. U.S. (Scalia rejects the interpretation of regulated waters by the Corps by stating that the statute was NOT ambiguous. He added that even if the statute was ambiguous, the interpretation by the Corps was not permissible as per Chevron. So, in either case, the regulation was rejected.) i.e. the Court decides who decides J. Stevens characterizes Scalias opinion as an overreaction where he is replacing the policies of the politically accountable branch of govt with a policy that is consistent w/ his views (i.e. a politically unaccountable judge). p. 601. the specific waters, not general waters J. Roberts Notes that the Corps and the EPA would have enjoyed plenty of room to operate in developing SOME notion of an outer bound to the reach of their authority, (i.e. if 29

B. Applying Chevron

they had gone through the rulemaking process.) Thus, the EPA could have avoided this litigation and interpretation. J. Kennedy Agrees w/ Roberts, but notes that rulemaking here may not have helped b/c the court didnt get to the second step in the Chevron test. C. The Mead Counter-Revolution 1. U.S. v. Mead ( holding that administrative implementation of a particular statutory provision qualifies for Chevron deference when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference here was promulgated in the exercises of that authority). delegation of such authority may be shown in a variety of ways: (1) power to adjudicate, (2) notice and comment or (3) some other indication of Congressional intent. stands for the proposition that a rule that an agency comes up w/ in an adjudication is also entitled to strong deference. Basically bringing back some of Skidmore Chevron did nothing to eliminate Skidmores holding than an agencys interpretation may merit some deference whatever its form, given the specialized experience and broader investigation and information available to the agency. J. Scalia (dissent) avulsive change in judicial review The court has largely replaced Chevron, in other words, with the test most beloved by a court unwilling to be held to rulestotality of the circumstances test So Mead is incorporating the comments of Roberts and Kennedythe Agency gets more deference if it does some rulemaking. 2. Gonzales v. Oregon (invalidated interpretation of AG by applying the Skidmore standard b/c it perceived the relevant regulation as merely reiterating the statutory language and not really making an interpretation) whether registration of physician is NOT inconsistent w/ the public interest point beingyou cant get Skidmore deference merely by parroting Competition Conception of Skidmore Deference p. 622 Skidmores emphasis on deferring to agency legal interpretations based on their power to persuade represents no deference at all, as the weight assigned to any advocates position is presumably dependent upon the thoroughness evident in its consideration and the validity of its reasoning. p. 622 Competing characterization of Skidmore is prescribing deference along a continuum or sliding scale, with the degree of deference varying according to the reviewing courts evaluation of various contextual factors VI. Availability of Judicial Review Answers question of whether or not there is review Looks to (1) the organic statue and (2) the APA 702, 704, 706 30

 absent an organic statute, look to the APA Main questions: (1) is there a review at all or is it excluded?, (2) when may review take place and (3) who may seek review? presumption of review traces back to 1967 holding in Abbott Laboratories and reiterated in Overton Park. the exception is set forth in that APA 701 (a) 1 &2 (1) the cases where the statute precludes judicial review and (2) the agency action is committed to agency discretion by law i. ii. a(1) is concerned with whether Congress expressed an intent to prohibit judicial review a(2) applies in those rare instances where statutes are drawn in such broad terms that in a given case there is no law to apply.

See Bowen v. Michigan Academy of Family Physicians p. 675 - Subject to constitutional constrains, Congress can, of course, make exceptions to the historic practice whereby courts review agency action. The presumption of judicial review is , after all, a presumption, and like all presumptions used in interpreting statutes, may be overcome by , inter alia, specific language or specific legislative history that is a reliable indicator of congressional intent or a specific congressional intent to preclude judicial review that is fairly discernible in the detail of the legislative scheme. Agency discretion doesnt only come from the organic statute, but also from congressional principles whereby the agency is given discretion on what to do in a particular action b/c there is nothing to measure the agency action byi.e. no standing, nothing to review. See Overton Park. p. 682 this is a very narrow exception The legislative history of the APA indicates that it is applicable in those rare instances where statutes are drawn in such broad terms that in a given case there is no law to apply. A. Committed to Agency Discretion Main Point presumption of reviewability Overton Park v. Volpe (NOT reviewable when (1) prohibition or (2) agency action committed to the agency by law.) B. Agency Inaction 1. Reviewability Heckler v. Chaney (holding that the presumption that agency decisions not to institute proceedings are unreviewable is NOT overcome by the enforcement provisions of the FDCA). a. the presumption of review only follows when the agency acts and not when it chooses NOT to act. b. Note that FDA arguments focused on its discretionary priorities, i.e. worst first thus the FDAs argument is that even if it had the authority it wouldnt take up the case b/c it has a general policy not to investigate unless there is a serious danger to public health c. This argument was a better approach b/c if the FDA had merely argued that it didnt have jdx, the court could have held that the FDA did have jdx. A decision on whether or not an agency has jdx is reviewable. However, the priorities approach circumvented 31

reviewability b/c the agency is far better equipped than courts to deal with the many variables involved in the proper ordering of its priorities. d. Difficulty w/ a non-action is there is no record to review American Horse v. Lying (Petitioner seeking a new rulemaking by the agency. The agency had indicated that it would do so on the basis of a study of the effectiveness of the current rules, but the agency did not do so here. Ultimately held that the D. Ct. was correct in finding that the case required a determination fo whether the Secretarys failure to act was arbitrary and capricious.) C. Ripeness for Review generally these are legal issues as to specific procedural issues and are fit to be decided preenforcement Abbot Laboratories v. Gardner

D. Standing Lujan v. National Wildlife Federation

Is action final (as required by APA 704)? o 1) agency completed process AND 2) process had legal effect release of information not final action because no coercive effect (Flue-Cured Tobacco) o inaction can be final need to show 1) immediate harm and 2) end of process (D.C. Circuit DDT Cases) o doesnt require change in legal position (AMP v. Gardner review on whether drug or device) o Is the action ripe? o issues are fit for judicial review AND party seeking review would suffer hardship if review delayed until enforcement (Abbott Labs) Compare Toilet Goods enforcement would clarify scope of regulation and will not cause plaintiffs to risk serious penalties Ohio Forestry v. Sierra Club regulations that made logging more likely but did not authorize meant issue not ripe
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Has P exhausted administrative remedies? ( 704; Myers v. Bethlehem Shipbuilding) o sometimes not enforced for fairness concerns (See McKart v. United States) o not required to exhaust when question is constitutionality of process (Mathews v. Eldridge) o only need to exhaust as far as statute says (Darby v. Cisneros) o Is action moot? o not moot unless behavior is not reasonably likely to occur (Laidlaw) voluntary cessation is not enough o exception if claim is capable of repetition yet evading review (Doe v. Sullivan)
o

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