Administrative Law Section W1 - Spring 2007 Goldberg 1. Administrative Law Practice AKA Introduction to Administrative Law a.

. What is Administrative Law and Why Should We Study It? i. Administrative law, broadly conceived, includes two different facets: the law that governs agencies and the law that agencies make. 1. the law that governs: substantive law 2. the law that agencies make: administrative law b. Why you should study may be less clearseveral answers: i. You might work as a lawyer for a government agency, in which case administrative law will govern many of your agencys activities in the same way that substantive law governs private actors ii. As a lawyer in private practice, you may be faced with an agency taking some action that may be beneficial or detrimental to your client. iii. Studying the law that governs agencies is like an extension of Constitutional law; you learn about how the legal system as a whole operates, the interrelationship at the federal level between Congress, the President, agencies, and the courts. This in turn will make you a better lawyer. c. An agency lawyer serves three general functions in the rulemaking process: i. Lawyer ensures that the agency complies with the applicable rulemaking procedures, and he or she helps other agency staff to write legal documents that those procedures require. ii. The lawyer may be asked to give a legal opinion whether certain regulatory options are within an agencys statutory authority iii. Agency lawyers help defend the agency in court if a rule is appealed. iv. NOTE: Regulatory lawyers in places like trade associations, interest groups, corporations, or lawyers with on-going clients have the responsibility of looking at the Federal Register each day to determine whether an agency has proposed a rule, or issued some other notice, about which their client or organization should be aware. d. What is an agency? i. The APA defines agency as, each authority of the Government of the United States, whether or not it is within or subject to review by another agency (exceptions apply). 1. Exceptions include Congress (APA explicitly excepts), the Courts (APA explicitly excepts) and the President (Franklin v. Massachusetts). 2. Agencies include departments, their subsidiaries and government corporations. 3. Departments are agencies and they have the highest status. 4. Generally Congress passes statutes to create agenciescalled enabling acts. 5. Congress also has the power of the purse to help them control the agencies. 6. Independent agencies are freestanding agencies, which are not part of any department. a. Examples include: i. National Labor Relations Board (NLRB) ii. Securities and Exchange Commission (SEC) iii. Federal Reserve Board (FRB) iv. Federal Trade Commission (FTC)

b. More independent from the Presidents influence than executive agencies b/c: i. Headed not by a single person but by a multi-member group (e.g. a commission, council, board or conference) that reaches decisions by majority vote ii. Members of the group heading the independent agency normally can only be removed for cause (thus mere political disagreement with the President would not be grounds for removal) iii. Members of the group heading the agency serve for a term of years (generally 5 years) on a staggered basis, so that a President in a single term cannot replace the entire group iv. The statutes creating independent agencies normally require that no more than a simple majority of the agency can come from a single party. In other words, in a commission of five members, no more than three could be from one party. 7. Executive agencies are all departments and almost all the agencies within the departments. a. Examples include: i. Social Security Administration (SSA) ii. Environmental Protection Agency (EPA). b. More dependent on the Presidents influence i. Headed by a single person ii. Head generally serves at the pleasure of the President iii. Head serves until they resign or are fired iv. Head is typically members of the Presidents political party 8. Federal v. State: The aforementioned refer to federal, differences for state include: a. Many agencies are headed by elected officials, rather than officials appointed by the governor. b. Thus, many agencies are directly accountable politically and may not be subject to the supervision of the governor. c. In fact, these agency heads may be political rivals of the governor and therefore there is a less deferential, more competitive dynamic ii. Agency hierarchy: 1. Administrator a. the final decision maker on agency rules, the ultimate judge in agency adjudications, and the court of last resort in intra-agency turf battles. b. With the final say over the allocation of resources, the administrator determines agency priorities and decides which offices play what roles in the decision making process. c. Principal spokesperson for the agency and the primary focal point in interactions between the agency, the White House, Congress and the public. 2. Deputy Administrator has only such institutional power as the administrator cares to delegate. 3. Nine politically appointed assistant administrators responsible for several offices with several regulatory programs 4. Office Director the highest level nonpolitical appointee

a. actual managers of agency regulatory programs, and they are the officials primarily responsible for the substance of agency rules. b. most easily accessible to regulates and the important citizen groups. c. assumes responsibility for all of the agencys substantive rules under a particular statute. d. A senior civil service employee and is aided by a deputy director of almost equal status. 5. Staff Sergeants/Branch chief supervises a staff of agency professionals who do the actual work of writing and compiling the technical support for agency rules. 6. Agency professionals: scientists, engineers, and other professionals with training or experiences in environmental management. iii. What do Agencies do? 1. Regulate Private Conduct a. Agencies primarily engaged in regulating private conduct are called regulatory agencies b. Regulate consumer protection, preservation of the environment, individual health and safety, economic welfare, and other economic and social goals. c. Examples include: i. Occupational Safety and Health Administration (OSHA) (to regulate workplace health and safety practices) ii. Federal Trade Commission (FTC) (regulates trade practices by commercial entities d. Justifications for Regulation i. The government can remedy or at least mitigate imperfections created by our private market system. ii. Regulation is used to conform market outcomes to social values, such as fairness or equity, or to other social aspirations. The operation of unregulated markets may also produce results or consequences the majority of the public find unacceptable. 2. Administer Entitlement Programs a. Generally, AEP dispense state and federal funds to the proper recipients. b. Examples include Medicare, Medicaid, social security and foodstamps. 3. Everything else- some examples that dont fall under either above category. a. IRS b. Citizens and immigration c. Department of Homeland security d. Department of the Treasury 2. Overview of the Procedural Act a. Definition of Adjudication and Rulemaking i. Adjudication is the agency process for the formulation of an order. 551(7). 1. Adjudication is when an agency applies an existing rule or statute to a set of facts to determine what is required by the rule or statute. 2. An order is the whole or part of a final disposition other than rule making but including licensing. 551 (6) ii. Rulemaking is the agency process for formulating, amending, or repealing a rule. 551(5)

1. A rule is an agency statement of future effect designed to implement, interpret, or prescribe law or policy. 551(4) 2. Rules are published in the Federal Register. 3. Rulemaking is subject to judicial review. b. Rulemaking: Two types (ok maybe three) i. Informal rulemaking: used most often. 1. Section 553 establishes a three-step process for informal rulemaking. a. An agency is required to publish a notice of the proposed rule in the Federal Register with two exceptions. (Give Notice) i. Interpretive rules, general statements of policy, or rules of agency organization. ii. When the agency has good cause for bypassing the notice stage of rulemaking. Notice and procedure are impractical, unnecessary or contrary to the public interest. b. Agency must give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation. (Inviting written comments) c. Agency must incorporate in the rules adopted a concise general statement of their basis and purpose. (justify the rule in a statement of basis and purpose) 2. Judicial interpretation of 553, which has imposed additional procedural obligations on agencies. (Yankee changes thisso that the court cannot add additional requirements.) 3. An agency may have to utilize procedures imposed by sources other than the APA. 4. The agency may wish to take advantage of certain mechanisms for developing rules, which entail special procedures. a. An agency may desire to develop a rule through consensus-building among interested parties called regulatory negotiation b. An agency may want to obtain the advice of outside persons before proposing a rule. 5. Executive agencies must comply with executive orders issued by the President a. Such as E.O. 12,866, which requires agencies to prepare a regulatory impact analysis for any significant regulatory action, which must then be submitted for approval to the Office of Information and Regulatory Affairs (OIRA), an office in the White House, which has the function of monitoring the agencys compliance with the executive order. 6. Rulemaking is impacted by the nature of the internal procedures, incentives, and management methods used by an agency. The regulations the agency chooses to enforce upon itself. ii. Formal rulemaking: used only when required. An agency follows the procedures outlined in 556-57. 1. The test for when an agency must use formal rulemaking appears in 553(c). a. When rules are required by statute to be on the record after an opportunity for agency hearing. iii. Hybrid rulemaking: (not really a separate type) 1. Created by Congress by imposing particular rulemaking procedures on programs and agencies created by Congress since the APA.

2. Also created when agencies impose procedures on themselves. 3. Referred to as hybrid b/c they invariably add some additional procedures to section 553s requirements, while not going so far as to mandate the procedures of sections 556-57. 3. Initiating Rulemaking a. Df: of Rulemaking when an agency promulgates a regulation that has the same force and effect as if it had been passed by Congress or a state legislature. Rulemaking beings with a notice of the proposed rulemaking and ends with publication of the final rule. i. Not all agencies have the rulemaking power b. Why propose a rule? i. Statutory command ii. In response to staff recommendations iii. As a result of a rulemaking petition from an interested person iv. Due to political pressure from the legislative or executive branches c. Sources of Proposed Legislation i. Most common source is legislation requiring specific regulations, often by a particular time or upon the occurrence of certain events. 1. Often a statute mandates the agency adopt rules generally to protect safety or in the public interest, convenience or necessity and it up to the discretion of the agencies to determine what, if anything, needs to be regulated and when regulation is appropriate. ii. Bottom up approach: Staff recommendations may arise in a variety of 1. Staff members may suggest that a rule is necessary when they identify problems that the agency should address based on such things as new scientific research, regulatory developments in other countries, or recommendations by private standard-setting organizations. 2. The agencys enforcement efforts will produce information that can be used to determine how well existing regulations are being met and what aspects of the regulations are not working or are unrealistic. 3. The agency might have a formal system of priority-setting that identifies potential rulemaking subjects and ranks them according to their importance. iii. Top down approach: White House and Congress 1. White House contacts a particular agency to suggest an issue worth of agency priority. Done through he Office of Management and Budget. 2. Congress can threaten to reduce an agencys budget or to attach an appropriations amendment that limits future agency action. Ability to bring the agency before television cameras and start investigations. 3. The public. a. Acting indirectly through legislators or executive officials, lobbyists representing a segment of the public can generate political heat that triggers the top-down approach. b. Lobbying can also be done at the staff level to create an interest in a possible rule. c. The APA provides that each agency shall give an interested person the right to petition for issuance, amendment, or repeal of a rule. 553(e) iv. PROBLEM 2-1: Lobbying the Agency.

1. Go as low as you possibly can on the agency hierarchy. 2. Amending is the same as rulemaking. 551(b) 3. 553(e) mandates that an agency review your petition. 4. Where do you find existing regulations? CFR. Code of Federal Regulations. 5. Page 53 has the chart of the EPA hierarchy. d. Petitions for Rulemaking i. Administrative Conference of the United States (ACUS) recommended that agencies adopt basic procedures for the receipt, consideration and prompt disposition of petitions for rulemaking, including procedures for publicizing the address for filing petitions and what should be included in their contents, the maintenance of a public petition file, and a commitment to prompt notice of a petitions disposition. ii. APA mandates a 555(b) reasonable time to response and 555(e) prompt notice of denial 1. Agency inaction: 551(13) Df of agency actionwhich includes a failure to act. Agencies typically use the excuse of limited resources when pressed as to why they didnt act. 2. Courts can order the agency to make a decision iii. PROBLEM 2-2: How do you get to court? 702: The right to review. 706(1): Courts can compel agency action if they have been unreasonable. 706(2)(a) what is unreasonable. capricious or otherwise not in accordance with the law. Goldberg said that was very deferential. iv. Telecommunications Research & Action Center v. Federal Communications Center. 1. The time agencies take to make decisions must be governed by a rule of reason 2. where Congress has provided a timetable or other indication of the speed with which it expects the agency to proceed in the enabling statute, that statutory scheme may supply content for this rule of reason 3. delays that might be reasonable in the sphere of economic regulation are less tolerable when human health and welfare are at stake 4. the court should consider the effect of expediting delayed action on agency activities of a higher or competing priority 5. the court should also take into account the nature and extent of the interests prejudiced by delay 6. the court need not find any impropriety lurking behind agency lassitude in order to hold that agency action is unreasonably delayed. 7. Holding: B/c they did not meet self proclaimed timelines, the court will retain jurisdiction over case in order to protect the constitutional rights of the individual. 8. Very hard to get a court to command agency to act on proposed section. 9. Inaction can also arise when the rulemaking has begun but the agency has not concluded. v. Denial of petition 1. Is the denial lawfuldoes the agency have authority? 2. Is the denial factual or is it just not important enough? vi. PROMBLEM 2-3: Very hard to get the court to overturn an agencys finding unless agency has been egregious or completely ignored the findings. Refer to the spotted owl case for the expectation rule. 4. Rulemaking Procedures

i. Exceptions 1. General Exceptions a. None of section 553(a) applies to certain types of rules i. Agency management or personnel ii. Public property, loans, grants, benefits or contracts b. Although some may be exempt from 553 they are not exempt from 552 generally known as the Freedom of Information Act 2. Exceptions from Notice and Comment a. Rules of agency procedure or practice b. Interpretive rule 553(b)(a) c. General statements of policy d. Other rules for which notice and public procedure are impracticable, unnecessary and contrary to the general public. i. Requires the agency to find a good cause for invoking the exception. 553(b)(b) 3. New Deal: 1930 govt grew and regulated many businesses that created backlash that was put on hold after WWII. The APA was a way to . Business is ultimately interested in getting govt off its back. 4. Benefit v. Burden argument: The question to ponder is the benefit the law provides to the public weighed against the burden to be bourn by those who are regulated. 5. PROBLEM 2-4: It can be argued that the EPA was not implementing a new rule but modifying a current practice. At issue is whether this is change is procedural or substantive. a. Using the label procedural isnt that easy. The line in between procedural and substantive is fuzzy. If the impact is limited to how info is presented to the agency then it is procedural. If it alters the rights or interests of regulated parties, then it is substantive. b. Courts say that in order to invoke formal procedures the enabling statute has to use the magic words of 553 on the record after agency hearing. These language bumps it up to formal rulemaking. US. v. Allegheny-Ludlum Stell Corp and United States v. Florida East Coast Railroad Co. ii. Formal, Informal or Hybrid Rulemaking 1. Hybrid rulemaking comes from Congress imposes additional rules and regulations voluntarily adopted by the agency. FINAL QUESTION: Two ways to have hybrid rulemaking: Congress and Agencies. 2. Vermont: Courts cant impose hybrid rulemaking. Only Congress and the agencies can impose hybrid rulemaking. 3. 553(c) is what makes it go informal to formal rulemaking. 4. PROBLEM 2-5: Logical outgrowth in character with the original scheme. The court found the chocolate milk case was a bait and switch. Test devised by the court was that if the changes in the original plan are in character with the original scheme and the change is a logical outgrowth, then its ok. Its precedent but remember that it may be limited to narrow applicationi.e. bait switch cases, by Distinguishment. iii. Informal Rulemaking Requirement 1. Notice

a. The APA requires that a general notice of proposed rulemaking shall be published in the Federal Register. 553(b) i. Variously abbreviated as NPRMs or NOPRs. ii. NPRM must include the time, place and nature of the public proceedings. iii. Must also indicate the legal authority under which the rule is proposed, and either the terms or substance of the proposed rule or a description of the subjects and issues involved. iv. Provided to enable the participation of interested persons so they know the type of rule involved, the time during which the agency will receive written comments, and instructions concerning where to file the comments. v. Agencies may choose to publish a preamble a background to the rulemaking and describes what the rule is intended to do. vi. When an agency fails to make the necessary disclosures, a court will remand a final rule to an agency for a new notice and comment period. vii. Actual notice: person has been named, served or otherwise aware. viii. Constructive notice: Publication in the Federal Register. Not required if the persons subject to the rule are either named or have been served or otherwise have actual notice. b. Courts have consistently held that notice of purposed rulemaking must fairly apprise interested parties of the interests in the rulemaking and then c. Interested persons are fairly apprised if the final rule is a logical outgrowth of the rulemaking proceeding. 2. Opportunity for Comment a. 553( c ) requires agencies to provide interested persons an opportunity to comment through submission of written data, views or arguments. i. There is no requirement for oral presentation or hearing and no APA mandate for a time for this specific opportunity. b. The APA regarding informal rulemaking is silent on ex parte communications but it is prohibited in formal rulemaking. Common judicial interpretation is that if one type strictly forbids and the other is silent, then the silence is another way of saying, its not forbidden. So the inference is that ex parte communications is ok for informal rulemaking. 3. Statement of Basis and Purpose 4. Published in the Federal Register 553(b) 5. 553(b)(1) Time, nature and place of the proceedings 6. 553(b)(2) reference to the legal authority under which it is purposed 7. 553(b)(1),(2),(3) terms of the proposed rule or a description of the rule involved iv. Hybrid Rulemaking Procedures 1. Fifth source of procedural requirements are legislative, administrative or executive orders. a. Ask yourself three questions: i. What is the trigger? ii. What analysis must the agency undertake?

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iii. Is the agencys compliance with the analytical requirements subject to judicial review, and if so, what relief can the court grant to plaintiffs? National Environmental Policy Act (NEPA) i. Requires agencies to make Environmental Impact Statements (EIS) before engaging in activities (including rulemaking) that may have a significant effect on the human environment. EIS statement isnt binding, however, so this is a procedural, rather than substantive, requirement. Regulatory Flexibility Act (RFA) i. Requires agencies to create a Regulatory Flexibilty Analysis (RFA) whenever they propose a rule that may have a significant economic impact on a substantial number of small businesses, organizations or governments. ii. Only applies to executive agencies. Paperwork Reduction Act i. Overruled the Supreme Courts decision in Dole v. United Steelworkers of America, in which the Court had held that the acts requirements did not apply to govt demands on private persons to supply information to the public, as in product labeling requirements or workplace safety notices. Executive Order 12866 (replaced E.O. 12,291) i. Agencies are required to assess the benefits and costs of proposed and final significant action rules, and the OIRA (Office of Information and Regulatory Affairs) has the responsibility to oversee agency compliance. ii. Regulating the regulators iii. Significant is interpreted as 100 million dollars iv. Applies only to executive agencies Unfunded Mandates Reform Act of 1995 i. Requires federal agencies, before promulgating either a proposed or final regulation that would include a mandate resulting in cost over $100 million annually on state, local or tribal govts or the private sector, to prepare a statement assessing the effect of the regulation. ii. The agency must consider a reasonable number of regulatory alternatives. iii. The agency must then select the least costly, most cost-effective or least burdensome alternative that achieves the objectives of the rule. Congressional Review of Agency Rulemaking i. Requires agencies to delay the effective date of the rule for 60 days, except in certain circumstances, during which time Congress can pass resolution rejecting a regulation which becomes law if signed by the President. Data Quality Act (DQA) i. Requires agencies to issue guidelines that ensure and maximize the quality, objectivity, utility, and integrity of information that they disseminate, to establish an administrative process that allows affected

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persons to seek and obtain correction of information that does not meet those benchmarks, and to report yearly to the Office of Management and Budge (OMB) concerning receipt and resolution of complaints. ii. Replaced by the IQA i. Information Quality Act (IQA) - Same as DQA except: i. Government-wide guidelines were issued to agencies concerning implementation of the act that required that independent scientists peer review most of the scientific information disseminated by the govt. v. Negotiated Rulemaking 1. an agency and other parties with a significant stake in a rule participate in facilitated face-to-face interactions designed to produce consensus. 2. Together the parties explore their shared interests, as well as differences of opinion, collaborate in gathering and analyzing technical information, generate options, and bargain and trade across these options according to their differing priorities. 3. If a consensus is reached, it is published in the Federal Register as the agencys notice of proposed rulemaking and then the conventional review and comment period takes over. Judicial Review of Rulemaking a. Statutory Interpretation i. APA directs reviewing court to hold unlawful agency action not in accordance with the law 706(2)(A) and agency action in excess of statutory jurisdiction, authority, limitations, or short of statutory right 706(2)(C) ii. Chevron v. Natural Resources Defense Council, Inc. p. 146 1. Chevron Two Step a. Whether Congress has directly spoken to the precise question at issue. i. Non-deferential review (de novo) ii. If the intent of Congress is clear that is the end of the matter as the agency (and the court) must give effect to unambiguously expressed intent of Congress. STOPdo not pass Go.do not collect $200.00 iii. If the court determines that Congress has not directly addressed the precise question at issue, then the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. There are two ways to determine if Congress has answered the precise question. 1. Text do not read into the words at all, just a face value approach of the words. (Scalia) 2. Interpret the text using traditional statutory interpretative tools such as legislative history and records. b. If the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agencys answer is based on a permissible construction of the statute. i. Highly deferential review. (Reasonable) Why defer? 1. agencies are most representative of the people 2. more politically agreeable to let the agency to fill in the gaps as opposed to the judiciary

a. gaps may have been left purposely by Congress so it would be passed b. Agencies have the expertise in the subject matter. So theyre the best person to fill it in. ii. 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. iii. Such legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute. iv. A court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the agency. v. Interpretation does not have to be the best, merely a reasonable one. 2. Applying Chevron a. Step Zero: Courts decide whether to apply Chevron to the agencys statutory interpretation. i. The use of rulemaking does not necessarily guarantee that Chevron will apply. There are some circumstances in which despite a seemingly broad grant of rulemaking authority under a statute, the agency has not actually been granted lawmaking authority, and hence lacks interpretive authority over an issue that can arise under the statute.so the Chevron two step would not apply. b. Step One: The court determines whether the statute clearly requires or forbids the agencys interpretation. i. Standard of Review: independent judgment of the court 1. In some cases, the Court determines ambiguity under a plain meaning test. 2. In other cases, the court will move to step two ONLY if it cannot resolve an ambiguity by applying tools of statutory construction like legislative history or inferring legislative intent from the statutes animating principles. c. Step Two: If the statute does not clearly answer the question of Step One (or in other words the statute is ambiguous) the court determines whether the agencys interpretation is reasonable or permissible. i. Standard of Review: highly deferential to the agency 1. Two approaches a. Courts examine statute to determine whether it can support the particular interpretation adopted by agency by measuring interpretation against congressionally established limitations. b. Courts evaluate whether the agency, in reaching its interpretation, reasoned from statutory premises in a well-considered fashion, i.e. is the interpretation supported by a reasonable explanation and is logically coherent (much like the arbitrary and capricious test). c. NOTE: As of 1991, the Supreme Court had never found that an agencys interpretation failed step two.

d. PROBLEM 2-9: Applying Chevron b. Substantive Decisions i. When an agency promulgates a rule, it reaches two types of substantive decisions 1. Determines on the basis of the evidence available to it, what are the relevant facts 2. Decides what type of rule, if any, is appropriate in light of those facts, choosing the regulatory option that will best further its statutory mandate ii. Section 706 authorizes courts to review both decisions when it mandates that the reviewing court shall hold unlawful and set aside agency action, findings, and conclusions found to be (A) arbitrary, capricious, an abuse of discretion or not otherwise in accordance with the law; [and] (E) unsupported by substantial evidence in a case subject to sections 556 and 557. Judicial review of the agencies substantive decision under 706 involves three issues: 1. Scope of Review a. Substantial evidence standard - court is to uphold a rule if it finds the agencys decision to be reasonable or the record contains such evidence as a reasonable mind might accept as adequate to support a conclusion. Consolidated Edison v. NLRB i. Requires the decision to be supported by evidence in a record developed in a trial-like proceeding b. Arbitrary and Capricious standard very deferential, essentially the equivalent of judicial review of economic regulation under substantive due process. i. Standard is narrow. See Motor Vehicle case. P. 175 ii. No record required iii. Challenger must prove that there were no facts or good reasons to support the agency action. CHANGED BY. iv. Citizens to Preserve Overton Park v. Volpe 1. Supreme Court defined the arbitrary and capricious standard as requiring the reviewing court to engage in a substantial inquiry, a thorough, probing in-depth reviewto find arbitrariness, the court must consider whether the decision was based on a consideration of relevant factors and whether there has been a clear error of judgmentAlthough this inquiry into the facts is to be searching and careful, the ultimate standard of review is to be a narrow one. A hard look a. Must have a record to review b. Requires agency to give a plausible explanation/otherwise remanded to the lower court c. Convergence of the two standards i. Overton Park initiated concept of a record for an informal agency proceeding. Overton Park also is the origin of the need for an agency to explain its decision in informal proceedings. ii. Therefore, the only real difference between the two standards is the means by which the record is created and what might be in it. iii. Another difference may be that the standard choice is a mood point which sets the critical attitude with which a court should approach an administrative decision.

2. Rulemaking Record a. Section 706 requires that a court review the whole record when determining whether to affirm a rule. b. Overton Park defined the whole record for informal proceedings to be the information that the agency actually considered in making the decision. i. Normally composed of the Federal Register notices for the proposed and final rule, the comments that were submitted, and any studies or data created or used by the agency that were not published in the notices. c. Difference between judicial review of a trial-like proceeding and a rulemaking is the nature of the factual determinations an agency is making i. Formal: nature of the facts usually relate to what happened in the past. ii. Rulemaking: the facts at issue relate to what will happen in the future (thereby justifying a regulation to prevent it.) 3. Adequate Explanation a. A rule will be remanded if an agency cannot provide adequate explanation b. An agency rule will be deemed arbitrary and capricious if the agency: i. Relied on factors which Congress has not intended it to consider ii. Entirely failed to consider an important aspect of the problem iii. Offered an explanation for its decision that runs counter to the evidence iv. Is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. v. Explanation must be provided by the agency. The court cannot find a permissible explanation for the agencys actions. So even if theres a good reason, if the agency isnt the one to submit it, the court cannot ok it on that basis. c. Courts tend to remand back to the agency to develop explanation instead of striking down the rule. d. Upon remand of a rule for inadequate explanation, an agency will quickly fix the holes. 4. PROBLEM 2-10: Judicial Review of Substantive Decisions c. Challenging the Agency Rule i. PROBLEM 2-11: Do You Always Appeal? 1. When a rule has an adverse impact on a companys business, several steps can be taken to limit or avoid the costs of a judicial challenge a. Effective advocacy during the legislative and rule-making processes i. To be effective, advocacy must be based on carefully marshaled facts clearly presented, at the right time and in cognizance of the full context of agency action, including constituency pressures ii. Includes knowing when to compromise if the results of the legislation or rule-making would be preferable to results that could be obtained through judicial review 2. If judicial challenge appears necessaryfour questions should still be considered: a. Are there alternatives to litigation?

i. Ask the agency to interpret the rule so that its impact on the company is lessened to a point at which it becomes acceptable. ii. Convince the agency or the White House to reconsider the rule iii. Persuade Congress to revise the rule legislatively. b. Is the rule vulnerable to challenge? i. Exceeds agencys statutory authority (must be substantial) ii. Unconstitutional iii. Unreasonable iv. Not supported in the agencys record v. Otherwise procedurally inadequate or improper c. What results would be obtained by a successful challenge? i. If challenged on procedural grounds the rule will be stripped from the books and the agency will have another shot to promulgate the rule. So worst-case scenario, you only won a delay until the rule is properly promulgated. In the best case scenario, there is a change of administration/personnel, and the rule wont be raised againor revised enough to no longer adversely affect your client. ii. If challenged on substantive grounds (on the merits) then the rule is permanently barred and the agency could never promulgate the rule (unless and until Congress amended the statute to allow for it). d. What will a challenge cost, both in financial terms and in terms of the companys overall relationship with the agency? 3. Generally, one must determine whether the rule has been adequately explained, fairly considers alternatives and has cost and benefits that are reasonably proportionate. 4. Courts have developed a set of relatively informal criteria by which to judge the sufficiency of the administrative record to support agency decisions. a. Scope of competence i. Within the area the court views the agency as having substantial competence OR ii. At the boundaries of the agencys statutory competence b. Whether the data upon which the decision relies is solid i. If within the area of competence, court is willing to forgo ii. If at boundaries, court may remand for lack of data c. Whether the agency followed its own regulations and the basic notice-andcomment procedures required by APA d. Whether the agencys process was adequate to meet the decision-making task presented by a particular rule 5. Ultimate cost of a judicial challenged is principally a function of two factors: a. The size of the regulatory record on a given issue; and b. Whether a further appeal will be necessary to resolve the issue. ii. PROBLEM 2-12: Appeal for Purposes of Delay? 1. You always begin with the practical consideration. Will you client derive a benefit from the delay? 2. Straight face test: If you could persuade yourself that there is a plausible argument, then you are justified in moving forward, even if its a very small chance of winning.

If there is no plausible argument, then you violate Rule 11 of Civil Rules of Procedure and delay would be unethical and impermissible. 3. Agency can decide to stay enforcement of a rule. So you could petition the agency to do that or if they wont ask the court for an injunction. 4. Irreparable harm means no money would make you whole. Then youd need to ask for an injunction. 6. Adjudication a. Introduction i. Df: an agency applies an existing rule or statute to a set of facts to determine what outcome is required by the rule or statute. 1. 551(7) the process for formulating an order 2. 551(6) final ii. Can be used to determine whether a regulated entity has violated an agency rule or a provision of a statute that the agency enforces OR to determine whether a person or entity qualifies for some govt permit, benefit or entitlement. iii. Not all agencies have the adjudication power iv. Any agency process that results in a final disposition, which is not rulemaking, is adjudication. Includes everything from giving grandma SS or building a new power plant b. Two types: formal v. informal i. Formal: If the agencys mandate requires it to reach adjudicatory decisions on the record after opportunity for agency hearing then the agency must use the procedures required in sections 554, 556 and 557. Resembles a trial. 1. 554 agency must give notice and offer opportunity to reach settlement. The person presiding at the hearing are forbidden from ex parte communication. Must hold hearing in accordance with 556 and 557. 2. 556 hearing procedure. Administrative law judges are technically administrative employees. Cannot be dismissed unless by hearing by another agency. They are independent. 3. 557 appeals process ii. Informal: The APA does not prescribe any procedures for informal adjudication but two circumstances may require an agency to follow certain hearing procedures. 1. The mandate statute might still require the agency use a specified hearing procedure that does not rise to formal adjudication 2. if the due process clause applies to the agencys action, it may be obligated to follow some type of hearing process. The obligation of due process applies if the agencys action will deprive a person of liberty or property. 3. Right to an explanation of the decision 4. Right to have counsel if you can pay for it 5. Right to a timely decision 6. Right to subpoena (if that agency has subpoena power) iii. How do you choose between Formal and Informal. 1. Factors in determining how informal or formal an agencys adjudication should be. A balancing of factors is required. a. Speed of the process. Informal is quicker. b. Efficiency

c. Cost. Formal is more costly d. Accurate result. Formal is more accurate. e. Want the agency to exercise its discretion. 2. Goldberg have the example of a nuclear power plan (a costly decision not made very often with huge consequences) versus granny getting SS (hundreds of SS applications made each day with insignificant consequences) 3. Magic words. on the record a. 1st Cir. (Seacoast) Adjudication is assumed formal unless otherwise specified as informal b. 7th Cir. (City of West Chicago) the magic words must appear or Congress otherwise makes known its intent. c. D.C. Cir. (Chemical Waste) Post Chevron. As long as the agencys interpretation (formal or informal) is reasonable, courts will defer based on the Chevron two step analysis. c. Adjudicatory Procedures i. Notice 1. 554(b) proceeding must begin with notice including the time, place and manner of the hearing, legal authority/jurisdiction and matters of fact and law at issue and who is bringing the suit. ii. Intervenors 1. 555(b) interested persons may appear before an agency (both informal/formal rulemaking/adjudications) 2. What does the right to appear mean? The nature of the appearance is vague. Could be as an actual party to the action or only by filing an amicus curie brief. iii. Settlement 1. 554(c) and 556(c)(6) there should always be an opportunity before a hearing for the parties to resolve the dispute. iv. Administrative Law Judges 1. like a judge at a bench trial in civil court but the end result may not be a decision. The ALJ often only provides an opinion and the enabling act specifies whether or not that opinion is a final decision 2. 556(b) Three different groups that can hear a case. a. Agency head (usually only executive agencies) i. b. Board members (non-executive agencies) c. ALJ i. 556(c) lists the powers of the ALJs ii. Generally they do one of three things (557(b)) 1. Decide the case 2. Make the case 3. Solely create the record 3. Appeal authority w/in the agency is under the de novo standard 4. 556(b) agencies are subject to disqualification due to personal bias v. The Split Enforcement Arrangement

1. When an agency splits the prosecutorial and adjudicative functions. Only OSHA and MSHA currently use the split enforcement method. 2. An independent board appointed by the agency for the purposes of determining whether agency regulations have been violated. 3. The board only determines whether regulations were violated. It is unable to interpret the statute/regulations. Complete deference by the board to interpretations handed down by OSHA. vi. Burden of Proof 1. 556(d) An agencys decision must be supported by and in accordance with reliable probative substantial evidence. Substantial evidence refers to the quality of the evidence. 2. Hearsay evidence can be admitted as long as its not irrelevant, immaterial or unduly repetitious. It could even be the sole evidence (arguably) if it is reliable, probative, and substantial. a. Wallas v. Bown: Would not allow hearsay evidence after trial b/c the other side had no ability to subpoena. b. Richardson: Hearsay evidence would be admitted b/c it was during trial and there existed an opportunity for the other side to subpoena. vii. Testimony and Documents 1. 556(d) agencies only have to permit such cross examination as is required for a full and true disclosure of the facts 2. Agencies can offer either oral or written viii. The Records and Ex Parte Communications 1. Records a. 556(e) the transcript of testimony and exhibits together with any papers filed in the proceeding constitutes the exclusive record for decisions b. A major difference between formal/informal records is that informal records are not necessarily compiled in a proceeding. 2. Ex Parte Communications a. 557(d) extra agency communications. Interest person outside of agency. i. Df. Interested person. See p. 240. Any person with a greater than general interest than the public as a whole may have. b. 554(d) intra agency communications. Inside the agency you cant talk to people off the record. c. Nothing in the APA bars exparte communication in informal rulemaking/adjudication. However, there may be other sources of law that do. d. Df: An oral or written communication not on public record w/respect to which reasonable notice to all parties is not given but it shall not include requests for status reports on any matter or proceeding covered by APA 551(14). e. Remedies for ex parte communications i. Disclosure of the communication and its content ii. Violating party needs to show cause why his claim or interest in the proceeding should not be dismissed, denied or adversely affected on account of the ex parte communications 557(d)(1)(d)

iii. Most people dont care about ex parte communication if it has no effect iv. Factors to see if the ex parte communication caused the decision making process to be irrevocably tainted. 1. gravity of the ex parte communications 2. influence on ultimate decision 3. whether or not the person making the contact benefited 4. were the discussions public knowledge 5. contents were unknown to opposing parties so there was no opportunity to respond 6. if vacation of the agencys decision and remand for new proceeds would serve a useful purpose ix. Appeals 1. Under the APA, agencies have all the power it would in an initial proceeding. De novo review. x. State Adjudication xi. Applying Adjudicatory Procedures d. Ex Parte Communications i. APA prohibits ex parte during formal rulemaking (and adjudication) but no such ban exists in informal proceedins (rulemaking & adjudication). ii. Df: 551. Oral or written communication not on the public record to which reasonable prior notice was not given. iii. Problem 3-3: iv. Problem 3-4: v. 554(d) - internal vi. 557(e) external vii. Factors: gravity of the communication, influence exerted by the communication, if the party benefited, if it was unknown to opposing parties that did not have a responsibility to response, would vacation serve a useful purpose. viii. Stone v. Federal Deposit Insurance Corp. case: Three factors for 1. cumulative info or info that the court did not know about? 2. was there notice and an opportunity to respond? 3. whether that ex parte communication is the type likely to induce pressure or affect outcome? e. Due Process Hearings (only applicable if the APA doesnt kick in) i. Does Due Process Apply? 1. State Action? a. state/local: 14th Am. b. federal: 5th Am. 2. Life, Liberty, or Property Interest? a. Liberty Interest? i. e.g., freedom from restraint; right to contract, pursue common occupations, marry and raise children, practice religion; stigma? b. Property Interest? i. Legitimate claim of entitlement; more than a unilateral need or desire; source of entitlement outside the due process clause

Individualized Decision-making? a. Nature of factual inquiry i. e.g., across the board tax rates (Bi-Metallic) vs. assessment of taxable value of particular piece of property (Londoner) ii. and/or ?? (see CB p. 254). Usually the two factors work hand in hand but the whole idea is murky. The Supreme Court hasnt clarified the issue. b. Number of people involved. ii. If so, what process (type of procedure) is due? 1. Notice a. You need notice that the govt is coming after your property and under what grounds allow them to do it. 2. Some type of hearing not uniform. Different situations require different types of hearing. a. When? (pre- and/or post-deprivation). Does due process require the hearing before hand or is it sufficient to have it post-apprehension of your property. i. Matthews v. Eldridge: a factor to be considered is the costeffectiveness of allowing for an additional hearing. B/c the student was already entitled to a post hearing, due process was satisfied. b. How formal? (e.g., live or written? witnesses? cross-examination? right to be represented by counsel?) (Many of these questions are to be answered by 556 & 557 in greater depth than due process). c. Neutral decision maker: A neutral decision maker is required but just how neutral is debatable. i. Withrow v. Larkin: There is a presumption of honesty and integrity of the decisionmaker. This presumption is overcome by bias of those performing those performing investigating and adjudication. The performance of these two functions alone do not imply bias. 3. The Mathews v. Eldridge balancing test provides the framework for analysis: a. The private interest affected, and the seriousness of the deprivation b. The risk of erroneous deprivations, using existing procedures i. The value of additional or different procedures in reducing likelihood of erroneous deprivations. 1. Plaintiffs must show that the additional requested safe guards are required by due process. 2. P. 273. Walters case. An example of the courts weighing the numbers. ii. This is really where the balancing occurs. Whatever procedures are used, the purpose is an accurate and fair result. c. Government interests include administration of law cheaply and efficiently. The more elaborate, then the more cumbersome it will become. 4. Stigma Plus seems to be the kind of stigma that might infringe a property interest. Codd v. Velger came under the stigma. There was state action and there was a stigma. Is this the kind of dispute that required individualized decision making? Yes. One person.

3.

f. Judicial Review of Adjudications: i. Generally, rulemaking and adjudication are subject to juridical review with following limitations: 1. Section 701 establishes that a person is not entitled to review if statutes preclude review (in other words, when Congress has prohibited judicial review in an agencys mandate) or if agency action is committed to agency discretion by law (in other words, circumstances in which the agencys authority is not constrained by legislative standards or restrictions, i.e. when Congress has left the decision to the agencys discretion). a. Federal common law and the APA limit as to when a person may seek judicial review of agency action. b. The agency action must be final. c. The person seeking review has exhausted any administrative remedies that the agency provided. d. The agency must be ripe for review, meaning that it is appropriate for judicial consideration at the time the lawsuit is filed. e. Constitution imposes requirement that the person challenging agency action has standing, meaning that the person has suffered (or is about to suffer) injury as a result of the govt action and that a favorable court decision can redress (or prevent) the injury. 2. Standard of Review: a. De novo standard instructs a court to substitute its judgment for that of the agency. Under this test, the court must agree with the agency decision in order to uphold it. b. The substantial evidence standard instructs a court to uphold a decision if it is reasonable. Under this test, the court need not agree with the agencys conclusion to affirm it; it only needs to find that the agencys conclusions are reasonable ones. 706(2)(e) Modern view: the evidence necessary to overcome a motion for dismissal. c. The arbitrary and capricious or abuse of discretion standards instruct a court to affirm a decision unless the judges can say that the decision is arbitrary. (Most deferential.) 3. Deference to ALJ: a. There is a distinction between when a court reviews an agencys decision and when an agency reviews an ALJs decision. b. The court will generally defer to the agency (using Chevron) in that the agency is presumed to have the expertise and in a better position to c. When there is a question of mixed fact and law. Differentiate into: i. Demeanor: Testimonial: Deference given to ALJ ii. Facts: Derivative: Agency can make the decision de novo. d. Under the Universal camera case, the court says the ALJs decisions is part of the whole record and therefore a reviewing court must take it into account whether an agency has substantial evidence for its findings and conclusions. e. 706 gives us the scope of review: Reviewing courts use the following standards for scope of review.

7.

i. Arbitrary and Capricious standard. 706(2)(A) when does the standard apply? Almost to anything. Pretty deferential. Pretty hard to prevail under so if any other standard is available, the alternative will be pursued. Typically applied in informal adjudication and informal rulemaking. ii. 706(2)(B) only available if there is a constitutional question (including due process). De novo review by the courts. iii. (c) where the agency has arguably violated a statute. Use Chevron test if the statute the agency violated was the enabling statute. If something that agency doesnt have an expertise on, like the APA, then you dont use Chevron. No deference. iv. (D) Three options depending upon the source of the statutory procedural requirement you are alleging the agency violated. If APA no deference, no Chevron. If enabling statute deference, Chevron. If additional (non-enabling) act no deference, no Chevron. Agencys own promulgated rules court will enforce them with no deference to the agency, however, the court will defer to the agency as far as how those rules are interpreted. So what they mean and how they are followed will be deferred to the agencys interpretation. v. (E) Substantial evidence standard. Fairly deferential but not so much as arbitrary or capricious. Only applies to certain things. Formal rulemaking and formal adjudication. (But remember that the majority of an agencys action fall under informal adjudication) vi. (F) if you got some kind of adjudication that falls short of formal adjudication but the enabling statute has this written into it. Basically not used anymore. Very rare. Choosing Between Rulemaking and Adjudication to Make Policy a. Three major issues to consider: i. Why might an agency prefer a particular process option in a given situation? ii. What are the advantages and disadvantages of such options form the perspective of the public or regulated entity? iii. Are there legal limitations that constrain the choice of particular options, such as the agencys statutory mandate, the APA, or the due process clause? b. Option One: Adjudication i. Advantages & Disadvantages 1. Pro: a. Allows for flexibility b. Insulated from political pressures c. Less likely to attract media attention, so the agency can proceed without largescale opposition, like national interest lobbying, etc. d. Proceeding against one entity is likely to be significantly less expensive and time-consuming than a rulemaking applicable to entire nation. (Investigation and data collection also a lot less intensive) e. Agency gets to pick its defendant. f. Burdens of cost-benefit analyses and OMB/Congressional reviews not applicable.

2. Con: a. Decision isnt changed by public criticism, advise or input. b. Focuses only on one entity (the one being adjudicated) i. The decision is only legally binding on the entity against which it is issued. ii. The singled out entity pays for the initial imposition of a new and inevitably costly legal obligation in addition to the cost of litigation fees. iii. The practice may industry-wide but only one entity is being called onto the carpet for it. 3. Problem 4-1: a. NLRB v. Bell Aerospace p. 327 i. The court basically says that agencies can use rulemaking or adjudicatory proceedings to announce new policies. There may be times when the Boards reliance on an adjudication would be an abuse of discretion, but this is not one of those cases. In this case adjudication is appropriate because there are tens and thousand of manufacturing, wholesale and retrial units,which do this stuff. The duties of buyers vary depending on the company and therefore generalized standards would not work. b. Retail, Wholesale and Dept Store Union v. NLRB i. Courts will decline to enforce administrative orders when in their view the inequity of retroactive application has not been counterbalanced by sufficiently significant statutory interests. Considerations include: 1. Whether the particular is one of first impression 2. 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. Look at how bad is the surprise, was there any notice (same for #3). 3. The extent to which the party against whom the new rule is applied relied on the former rule 4. The degree of the burden which a retroactive order imposes on a party 5. The statutory interest in applying a new rule despite the reliance of a party on the old standard c. Option Two: Rulemaking i. Issues: If an agency can engage in rulemaking and adjudication, it can adopt a new policy and make it legally binding through rulemaking and then, if necessary, enforce it through adjudication or judicial action. Four legal issues that arise when an agency pursue this option include: 1. Does the agency have the authority to promulgate substantive rules? 2. Can an agency restrict the scope of adjudicatory hearing rights by promulgating a rule that eliminates the materiality of facts that otherwise would be subject to resolution in a hearing? 3. Can an agency give retroactive effect to a rule?

4. To what extent does due process limit an agencys authority to use adjudication to clarify ambiguity in a rule? ii. Advantages & Disadvantages 1. Pro: a. All entities that fall under the rule are bound to follow the new policy i. The cost of implementation is therefore spread across the industry. b. Final rule can be changed by public comment c. Allows the agency to establish a bright-line policy, which is clearer and more precise than a policy developed on a case-by-case basis in adjudication. This clarity should increase the level of compliance with the policy and decrease opportunistic behavior by regulated entities that seek to avoid the new policy. 2. Con: a. Not flexible, doesnt allow for exceptions. iii. Rulemaking Authority 1. An agency has the authority to promulgate legislative rules if Congress (or a state legislature) has given it this power. iv. Impact on Adjudication Rights 1. An agency is not required to provide a safety valve for rules by permitting regulated entities to apply for a waiver or exception, but agencies often find it advisable to do so. v. Retroactive Rulemaking 1. The Court declared that an agencys power to issue rules is limited to the authority delegated by Congress, and that agencies do not have the power to give rules retroactive effect without an express grant of such authority by Congress (or a state legislature whoever was the source of the initial enabling statute?) 2. No such thing as retroactive rulemaking unless the statute explicitly expresses the agency may do so. vi. Ambiguous Rules 1. If a rule is ambiguous or unclear, a regulated entity may be subject to an enforcement action under circumstances it did not anticipate. a. If the enforcement action occurs in a judicial forum, the court will interpret the meaning of the regulation with possible issues of deference to the agency if the agency has expressed an interpretation of the regulation. b. If the enforcement action occurs in an agency adjudication, the agency interprets the regulation. c. GE v. EPA i. GE attacked the rule b/c it didnt know what it mean but the court gave the agency what it meant and once the agency explained, under Chevron deference, the court said it was reasonable. B/c it was ambiguous, it would not be applied retroactively. Due process requires a party to receive notice of a regulation so thats why it cant be applied retroactively. d. Option Three: Nonlegislative Rules i. Introduction

1. Df: A Nonlegislative rule is an agency pronouncement that advises the public of the agencys view on an issue. Section 553 recognizes two types of Nonlegislative rules: a. Interpretative rules are statements issued by an agency to advise the public of the agencys construction of the statutes and rules which it administers. b. Policy statements are statements issued by an agency to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power. 2. Fit the APAs definition of a rule, the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy 551(4) 3. Contrast legislative v. Nonlegislative a. Legislative rules are legally binding and must be adopted by the notice and comment process. b. Nonlegislative (all other rules that do not fall under legislative) are NOT legally binding and therefore do not need the notice/comment process. 4. Issues: Three legal issues arise from the agencys use of Nonlegislative rules: a. Although an agency can promulgate Nonlegislative rules without use of notice and comment rulemaking, the APA does impose some requirements concerning publication of such rules and failure to follow these requirements may limit an agencys use of Nonlegislative rules. b. A party might challenger a Nonlegislative rule on the ground that the rule is invalid because the agency failed to use notice and comment procedures as required by the APA.which leads to a court determining whether the rule is in fact a nonlegislative or legislative rule. c. When an agency issues a nonlegislative rule, the issues arises concerning what are the consequences when a member of the public relies on this statement and then the govt later refuses to follow it.which leads to a court determining whether a member of the public has any remedy b/c of the persons reliance on the agencys prior policy. ii. Advantage and Disadvantages of Option Three 1. Pro: a. Efficient and beneficial (FASTER AND CHEAPER) because i. A nonlegislative rule is a means of informing the public as to the agencys views and intentions which is good for two reasons 1. Most members of the regulated community will change their behavior in accordance with the expressed views of the agency 2. If the agency does not need to take enforcement action to implement the expressed policy, the regulated community will not be able to claim surprise. ii. A nonlegislative rule can be used as a mgmt tool to issue guidance to agency ees, thereby ensuring centralized policy control and administrative uniformity. iii. Agency not ready to make a definitive rulingthis shuts people up in the meantime. iv. Gives the agency greater flexibility to respond to new scientific or social developments.

2. Con: a. Nonlegislative rules may be adopted w/out public input. In cases where review is not sought or is unavailable, members of the public will have no opportunity to contest the rule, unless they were in a position to oppose it by lobbying the agency before the rule was adopted, and the agency is denied the educative value of their facts and arguments. (Not fair to public) b. An agency may treat a nonlegislative rule as binding on members of the public. Persons who challenge this behavior are protected as long as a court detect that the agency has imposed a binding obligation. But those who acquiesce are denied the opportunity to comment on legislative rules that is afforded them under the APA. (Not technically binding, but close to it). c. B/c members of the public rely on nonlegislative rules as authoritative guidance of an agencys intentions, these person may be adversely affected by their reliance. An agency can ordinarily disown a nonlegislative rule w/out prior notice b/c it has not been adopted by notice and comment rulemaking. 3. Notes: a. New York Times article: Executive order makes executive agencies must do something like notice and comment (even after the fact) if the nonlegislative rule is significant (greater than $100M) KNOW THIS FOR FINAL!!! White House E.O. for interpretive rules or statements of policy generated by executive agencies (not independent agencies) that requires substantive review by the OMB (already exists for legislative rules for the executive agencies). In addition this executive order imposes a variation of notice and comment on the process of promulgating these. If its a significant rule; defined by meaning it has a significant economic impact; impact of 100 million dollars or more; then the agency has to do something like notice and comment rulemaking. They agency has to welcome the public comment and perhaps review and comment and respond to it. The executive order goes further and says you should really do this beforehand, but we are not going to require it. So the executive order makes the promulgation of interpretive rules or policy statements and makes them much closer to the level of formality required by formal rulemaking. iii. APA Procedures 1. 552 of the APA aka the Freedom of Information Act (FOIA) requires each agency to publish in the Federal Register statements of general policy or interpretations of general applicability formulated and adopted by the agency. 2. When a person proves that an agency failed in this legal duty to make information available, a court can provided appropriate relief. iv. Distinguishing Nonlegalitive from Legislative Rules 1. Policy statements a. Policy statements are issued by an agency to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power in subsequent adjudication or a rulemaking. b. A policy statement does not purport to interpret an existing duty in a regulation or statute but instead announces that the agency intends to adopt a new duty in some future adjudication or rulemaking.

c. Courts therefore use a binding effect test to distinguish policy statements from legislative rules by asking whether the statement of the agency imposes a new duty or merely announces the intention to impose a new duty at some future time. i. American Hospital Assoc. v. Bower 1. Two criteria test set forth b Judge McGowan in American Bus Association v. United States a. Unless a pronouncement acts prospectively, it is a binding norm. Thus a statement of policy may not have a present effect: a general statement of policy is one that does not impose any rights or obligations b. Whether a purported policy statement genuinely leaves the agency and its decision makers free to exercise discretion. 2. In applying these two criteria, an agencys characterization of its own action, while not decisive, is a factor to consider. d. Notes: i. Community Nutrition Institute (CNI) v. Young: a rule is legislative if it is binding on an agency, regardless of whether it is also binding on regulated entities. 2. Interpretive Rules a. An interpretive rule interprets or clarifies the nature of the duties previously established by an agencys statutory mandate or by regulation promulgated by the agency. b. In an interpretive rule, an agency announces how an existing law or statute in binding on those who are subject to it. The interpretive rule, however, is not ITSELF binding. Until the interpretation is adopted in a legislative rule or an adjudication, persons are free to ignore the interpretation. c. When Congress has not granted an agency the authority to make legally binding rules, any rule that the agency issues is necessarily interpretive. If an agency has the authority to promulgate legislative rules, the courts look generally at two factors to determine whether to accept the rule as interpretive. i. Factors are 1. The agencys characterization of its actions 2. The source of the duty a party is obligated to obey ii. If a regulation contains a phrase that is clearly susceptible of two interpretations, the court is likely to accept as an interpretive rule an announcement that resolves this ambiguity. d. American Mining Congress v. Mine Safety & Health Administration i. Whether a rule has the force of law depends upon whether the agencys rule shows an intent to exercise the power delegated to it by Congress. Occurs in three situations 1. In the absence of a legislative rule by the agency, the legislative basis for agency enforcement would be inadequate.

2. An agency seems likely to have intended a rule to be legislative if it has the rule published in the Code of Federal Regulation. Section 1510 limits publication in that code to rules having general applicability and legal effect. 3. If a second rule repudiates or is irreconcilable with a prior legislative rule, the second rule must be an amendment of the first; and of course, an amendment to a legislative rule must itself be legislative ii. Whether a rule has legal effect depends upon the following factors. If the answer to any of them is YES, then rule is legislative, NOT an interpretative rule, 1. Whether in the absence of the rule there would not be an adequate legislative basis for enforcement action or 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 4. Whether the rule amends a prior legislative rule iii. Metropolitan School District v. Davila 1. Representation of a paradigmatic case of an interpretive rule. The rule is based on statutory provisions, and its validity stands or falls on the correctness of the agencys interpretation of the statute. In this case, it was clearly an interpretive rule. Use the two step test: (1) what did the agency think it was doing (2) the more new responsibilities are created, the more likely a legislative rule. e. Notes: i. Substantial Impact test 1. Asks whether or not an agency pronouncement has a substantial impact: on the rights or duties of the public. 2. Rejected by majority of jurisdictions as an independent means to distinguish nonlegislative and legislative rules b/c inconsistent with 553, which exempts nonlegislative rules regardless of their impact. 3. Further in disfavor post Vermont Yankee Nuclear Power Corp v. Natural Resources Defense Council, Inc. where the court held that the courts cannot require agencies to use procedures more demanding than those required by statute or the Constitution. v. Legal Protection of Reliance on Nonlegislative Rules 1. Problem 4-8: Usually if you rely upon the govt and then the govt changes its mind, you get screwed. Alaska aka the Bush hunters case is an exception. a. Alaska Professional Hunters Association, Inc. v. Federal Aviation Administration.

b.

c.

d.

e.

i. Long period of reliance (30 years) ii. An entire regional office of the agency offered the incorrect interpretation (as opposed to one erroneous employee) iii. No procedure in place for petitioners to determine correct interpretation (so petitioners were not on notice that the procedure may change and were not unreasonable in relying upon regional office) iv. Court held once an agency gave its interpretation of a regulation, it can only change that interpretation through notice and comment. You cant change an interpretative rule simply by issuing an interpretation of the interpretation. Association of American Railroads v. Department of Transportation i. Court distinguished from Alaska finding no reliance on the interpretation. Unlike Alaska, there was nothing in the record to suggest the RR was told otherwise. Heckler v. Community Health Services i. Court will never say never to evoke estoppel against the govt but estoppel wasnt applicable here b/c the plaintiff didnt prove both elements of estoppel (1) reasonable reliance and (2) to their detriment. 1. Reliance upon advice from third party not reasonable. Office of Personnel Mgmt v. Richmond i. Plaintiff sough govt benefits but earned too much money. ii. Oral advice is less reliable than a written response. iii. There was no law that authorized benefits to someone who was not entitled, so the Court used this as why they couldnt make the agency pay. Appeal of ENO (New Hampshire Department of Employment Security) i. Whether the department may deny benefits to the plaintiff on the ground that she made insufficient efforts to find work, over a period of time in which the dept led her to believe that her efforts were sufficient. ii. Court said a violation of her due process. iii. No state prohibition against giving out the money. In federal law, only Congress can give out the money.

2. Notes: a. Some lower federal courts have recognized the doctrine of estoppel in nonappropriations cases most decisions refuse to apply the doctrine b/c the plaintiff failed to prove that there was reasonable reliance on the govt pronouncement. b. The states seem more willing than federal courts to apply estoppel in certain situations: i. When the govt acts in a proprietary, rather than a governmental capacity, several states have found equitable estoppel applicable. ii. Equitable estoppel may be applied when state or local agencies have engaged in affirmative misconduct. iii. Some states are willing to find equitable estoppel simply when there is some stronger basis than would justify equitable estoppel against a

private partytypically phrased as to the extent justice requires or to prevent manifest injustice. c. It is relatively well established that one cannot be held criminally responsible for acting in reasonable reliance upon the advice of a government agent. i. Reasonable reliance that caused civil infraction youre screwed. ii. Reasonable reliance that caused criminal infraction youre ok. d. If the govt cannot be estopped and if due process does not apply, the courts may apply the prohibition against inconsistent application. e. Judicial Deference i. Will the level of deference that a court will give to a decision vary according to the type of action that the agency used to adopt that decision? 1. Chevron Deference: According to Chevron, a court will defer to an agencys statutory interpretation if it concludes that a statutory term is ambiguous and that the agencys interpretation of the term is reasonable and permissible. A stronger deference. 2. Skidmore Deference: A very weak form of deference. The weight of an administrative agencys nonbonding rulings, interpretations and opinions will depend on a case by case basis on the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements and all those factors which give it power to persuade. 3. Supreme Court cases that help us determine whether to use Chevron or Skidmore deference. a. Christensen v. Harris County: Only formal agency rules and adjudications require Chevron deference. Nonlegislative rules (non binding informal nonrules like policy statements, agency manuals, enforcement guides and opinion letters, etc.) are only entitled to Skidmore deference, meaning they can be found to be persuasiveor not. b. United States v. Mead Corporation: Court held 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 was promulgated in the exercise of that authority. HOWEVER, the customs ruling failed to qualify for Chevron but was remanded in case it was entitled to persuasive deference under Skidmore. So in other words, it is not only formal rules that require Chevron deference, informal ones can be entitled to Chevron deference but the Court failed to elaborate in which situations informal rules/adjudication would require Chevron. c. Barnhart v. Walton: Court found this to be an instance where an informal rule deserved deference from Chevrona bit tricky b/c it started out as an informal policy and later became a formal rule promulgated through a notice and comment period. The interstitial (are we filling gaps in the statute) nature of the legal question, the related expertise of the Agency, the importance of the question to administration of the statute, the complexity of that administration, and the careful consideration the Agency has given the question over a long period of time all indicate that Chevron provides the

appropriate legal lens through view the legality of the Agency interpretation here at issue. ii. Notes: 1. While the waters are muddy concerning when a court will use Chevron deference, a few things are clear: a. Look to Congress intent: If Congress intended that a particular type of interpretation or decision should receive deference, then the courts apply Chevron deference. The courts apply Chevron deference b/c Congress intended that the agency, not the courts, should have the primary responsibility to resolve the type of legal issue that has arisen. i. Legislative intent is usually not the actual intent of Congress ii. Instead, the Court is using hypothetical intent, focusing on whether it is reasonable to assume that Congress meant for the courts to defer to the agencys interpretation or application of a statutory provision. b. The Court focuses on certain aspects or attributes of the administrative process used by the agency in interpreting the statute as an indication of likely legislative intent concerning whether Chevron deference is appropriate. i. In Christensen, the Court focused on whether an administrative decision had the force of law. ii. In Mead, the Court continued to rely on the force of law test BUT added that an interpretation or application of a statute might qualify for Chevron deference even if it was not adopted using formal adjudication or notice-and-comment rulemaking b/c other circumstances might indicate that Chevron deference might be appropriate. iii. Barnhart 1. Before Barnhart: an agency received Chevron deference for rulemaking and formal adjudication and an agency might receive Chevron deference when the interpretation is made more informally, if the circumstances suggest it was exercising law-making authority. 2. After Barnhart: Three impacts of the Barnhart decision on the reading of earlier cases: a. Force of Law no longer definitive test: the test was whether it was likely Congress meant the courts to defer to an interpretative rule or policy statement in light of the interpretive method used and the nature of the question at issue. b. The courts will need to determine this issue on a caseby-case basis. c. Not clear whether force of law test is limited only to the issue of level of deference for non-legislative rules, or whether the Court dropped the test concerning other situations, such as what level of deference to give to informal agency adjudication.

2. Rulemaking only creates the presumption that Chevron deference is appropriate. A court may therefore deny an agency Chevron deference if there are persuasive reasons why Chevron deference is inappropriate. 3. Seminole Rock Doctrine: The Supreme Court in Bowles v. Seminole Rock & Sand Co. held that the courts should defer to an agencys interpretation of its own regulations. a. However, when an agency merely parrots the words in the statute in the agencys regulation, the subsequent informal interpretation of the regulation does NOT qualify for Seminole Rock/Auer deference. 8. Reviewability a. Introduction i. What is necessary for one to obtain judicial review or what arguments can be raised to have a plaintiffs case dismissed without reaching the merits. ii. Ask yourself how delaying or conditioning review will affect the conduct of the private party and the govt, as well as how it affects litigation. 1. First question in federal courts is whether the court has jurisdiction. a. Standing whether the person bringing the lawsuit is an appropriate person to bring the suit b. Once standing is satisfied, the court must then satisfy a statutory grant of jurisdiction. This is usually not a problem in administrative law for two reasons: i. First, many statutory regimes contain specific jurisdictional provisions ii. Second, if a plaintiff does not have jurisdiction under a particular statutory regime, the general federal question jurisdictional statute is normally available. (The APA itself does not grant jurisdiction.) 2. Second question is if a plaintiff states a cause of action, which means there is a statute granting plaintiff some judicially enforceable right. a. Where there are specific judicial review provisions, they can provide both jurisdiction and a cause of action. b. For matters not covered by the specific review provisions, the APAs section 702 is the fallback provision. i. This action is sometimes referred to as non-statutory review to distinguish it from review under a specific statutory provision. ii. To successfully assert a cause of action under the APA, the plaintiff must meet 6 requirements (5 established by the APA and 1 by common law): 1. Agency action the agency must have taken some action, which is defined broadly as the whole or part of an agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act.551(13) 2. Appeal NOT excluded from review 701(a) states that the APAs judicial review provisions do not apply to the extent that (1) statutes precludes judicial review; or (2) agency action is committed to agency discretion by law. a. Statutes can preclude review by implication.

b. Case law concerning when a statute impliedly precludes judicial review is not clear. c. The mere fact that an agency can exercise discretion is not enough to escape judicial review under the APA. 3. Legal Wrong/Zone of interest section 702s cause of action is limited to persons suffering legal wrong or those adversely affected or aggrievedwithin the meaning of a relevant statute. a. Legal wrong in the context of the APA means an action by the govt that interferes with a persons constitutional, statutory, or common law rights. i. Ex. Govt takes your property, interferes with your liberty, or denies you a statutory right. b. Adversely affected cause of action authorizes lawsuits by persons who assert interests that are arguably within the zone of interests to be protected or regulated by the statute in question. Zone of interest requirement is an aspect of standing, but prudential, not constitutional standing. i. Ex. Govt agrees to develop land near a wilderness area, which would adversely affect the hikers enjoyment of the wilderness. The hikers would be w/in the zone of interest. 4. Finality Doctrine final agency action for which there is no adequate remedy in a court. Requires persons to wait until an agency has reached its final decision in the matter. 704. 5. Exhaustion of Remedies provision 704 says an agency action is final for judicial review purposes even if a person has not appealed within the agency, unless the agency by rule requires such an appeal and stays its action pending that appeal, in which case the action would be final only after the conclusion of that appeal. 6. Ripeness common law doctrine that makes sure the case is in a posture appropriate for judicial determination and that the courts will not unnecessarily interfere in the administrative process. 3. Venue the power of an individual court to function. a. A typical venue provision for the circuit courts permits a plaintiff to bring suit in the circuit (1) in which the that person resides, (2) in which the persons principle place of business is located, or (3) in which the particular activity under review took place. b. A lawsuit filed under general federal question jurisdiction may be brought in any judicial district in which (1) a defendant in the action resides, (2) a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) the plaintiff resides if no real property is involved in the action.

c. B/c federal agencies all reside in D.C., plaintiffs may always bring APA suits in D.C. 4. Primary jurisdiction a common law doctrine where if a court and an agency both have jurisdiction over an issue, the court will wait until the agency has made a determination before moving forward with the case. The agency is seen to have primary jurisdiction before the court. *Different b/c the doctrine arises in litigation between private parties rather than in litigation to review agency action. b. Standing Consti. Art. III, sect. 2 limits federal judicial power to cases and controversies and thereby requires a sufficient connection between the plaintiff and the lawsuitreferring to the doctrine of standing. If the connection is not sufficient, the court has no jurisdiction, b/c the lawsuit is not considered a case or controversy. i. Standing Test: Has the plaintiff suffered an injury (or is the plaintiff about to suffer an injury) caused (or about to be caused) by the alleged illegal action, and would a favorable court decision remedy (or avoid) that injury? 1. Standing easily met when govt takes action against a person 2. Standing harder to find when govt takes action against third party. Must consider: a. What type of injury must the plaintiff prove? b. What chain of causation (and redressibility) between the injury suffered and the govt action must the plaintiff prove? i. Injury in Fact - If the govt action or inaction injuries a third person in some real fashion, then the person has suffered a sufficient injury for standing purposes. 1. Injury in Fact test replaced the earlier, more restrictive legal injury test, where a person did not have standing to challenge a govt action unless the person had a right not to be injured conferred by common or statutory law. 2. The Court has resisted including purely ideological or theoretical injury w/in the concept of injury of fact. These are considered mere generalized grievances rather than actual, particularized injuries. Thus, a citizen is not deemed injured simply b/c the govt acts unlawfully and the person is upset with that. Ex. Sierra Club sued the govt for degradation of the environment. No standing. 3. Doctrine of associational or representational standing an association can sue in its own name on behalf of its members if: (1) one of its members would have standing to bring the action, (2) the lawsuit relates to the purposes of the organization, and (3) neither the claim asserted nor the relief requested requires the participation of individual members (which in practical terms means the action is not for damages, but is for declaratory or injunctive relief). ii. Causation and Redressability the court must determine whether the injury is the result of govt action and that as a favorable court decision would remedy the injury. 1. A plaintiff is entitled to prove that the govts actions caused an injury if its pleadings were more than sham allegations.

c. d.

e. f.

2. Simon case complaint lacked irrepressibility. ii. Prudential Requirements additional standing requirements established by the Supreme Court that cannot be found in the Constitution and therefore not based on the case and controversy constitutional requirement. 1. Subject to amendment by statute. 2. Intended to assure that courts do not exercise judicial power unnecessarily 3. The requirement that a person cannot assert the rights of others reflects the Courts judgment that it is generally unsuitable to have someone litigate the rights of another person even if the potential plaintiff can claim an actual injury. a. For administrative law purposes, 702 delimits this prudential requirement. b. Doctrine of associational standing is another exception. iii. Standing in the States as the constitutional limitation of federal judicial power to cases and controversies does not apply to states, most states have developed their own rules of standing through either their own constitutions or common law. iv. Litigation of Standing 1. Lujan v. Defenders of Wildlife p. 415 a. Whether the Defenders have standing the Court said no b/c not concrete enough of an injury. Court says you need to purchase a ticket. b. Constitutional minimum of standing contains three elements: i. Plaintiff must have suffered an injury in fact, i.e. an invasion of a legally protected interest which is (1) concrete and particularized and (2) actual or imminent, not conjectural or hypothetical. ii. Causal connection between the injury and the conduct complained of must be fairly traceable to the challenged action of the defendant and not the result of the independent action of some third party not before the court. iii. It must be likely (as opposed to merely speculative) that the injury will be redressed by a favorable decision. c. Associational Standing: INSERT THREE ELEMENTS 2. Federal Election Commission v. Akins a. Court took the language to mean that Congress wanted the voters to be avoided from the exact type of harm that the voters in this case endured, i.e. information withheld. Agency Action i. Lujan v. National Wildlife Federation START HERE!!! Exclusions From Judicial Review Under the APA i. Statutory Preclusion 1. Problem 5-4: 2. Notes: ii. Committed to Agency Discretion 1. Problem 5-5: 2. Notes: Cause of Action i. Problem 5-6: ii. Notes: Timing

i. Finality 1. Problem 5-7: 2. Notes: ii. Exhaustion 1. Problem 5-8: 2. Notes: iii. Ripeness 1. Problem 5-9: 2. Problem 5-10: 3. Problem 5-11: 4. Notes: 9. Agency Structure a. Introduction b. Delegation of Legislative Power i. First Phase ii. Second Phase iii. Third Phase iv. State Practice v. Statutory Interpretation 1. Problem 6-1: c. Delegation of Judicial Power i. Article III, Section 1 1. Problem 6-2: ii. Seventh Amendment 1. Problem 6-3: d. The Legislative Veto i. Presentation and Bicameralism ii. Post-Veto Developments 1. Corrections Day 2. Congressional Review of Agency Rulemaking a. Problem 6-4: e. Appointment Power i. Appointment of Officers of the United States 1. Problem 6-5: ii. Appointment of Inferior Officers 1. Problem 6-6: iii. Removal 1. Limitations on Presidential Removal 2. Legislative Removal a. Problem 6-7: Inspections, Recording and Reporting a. Introduction b. Inspections i. Legal Authority to Inspect

10.

1. Problem 7-1: 2. Problem 7-2: 3. Notes: ii. Remedies for Illegal Inspections 1. Problem 7-3: c. Special Needs Searches i. Problem 7-4: d. Record keeping and Reporting Requirements i. Statutory Authority and Limitations 1. Statutory Authority 2. Administrative Procedure Act 3. The Paperwork Reduction Act a. Problem 7-5: ii. Fourth Amendment 1. Problem 7-6: iii. Fifth Amendment 1. Problem 7-7: 2. Notes: e. Parallel Proceedings i. Problem 7-8: ii. Notes: 11. Public Access to Agency Processes a. The Freedom of Information Act (FOIA) i. FOIA Time Limits ii. FOIA Fees iii. Judicial Review under the FOIA iv. The FOIA Request 1. Problem 8-1: 2. Notes: v. FOIA Exemptions 1. Classified Information 2. Internal Personnel Rules 3. Specifically Exempted by Statute 4. Confidential Business Information a. Problem 8-2: 5. Inter- or Intra- Agency Memoranda 6. Personal Privacy 7. Law Enforcement Records 8. Financial Institution Records and Oil Well Data vi. Reverse FOIA Suits 1. Problem 8-3: 2. Notes: 3. Problem 8-4: 4. Notes: b. The Federal Advisory Committee Act

i. Problem 8-5: ii. Notes: c. The Government in the Sunshine Act i. Problem 8-6: ii. Notes: 12. Attorneys Fees a. Introduction b. Equal Access to Justice Act i. Prevailing Party 1. Problem 9-1: 2. Notes: ii. Substantially Justified? 1. Problem 9-2: 2. Notes: iii. Amount of Award 1. Problem 9-3: What are Special Factors? 2. Notes: