ADMIN OUTLINE: COLBURN

6th from 3-5, 7th from 2-5 What he is looking for on the exam: y Citing authority y Giving advice to the client a clear and definite answer y It is okay to tell a professor that you do not have enough information (do not say this TOO often, however) APA Judicial Review Chart 551. Definitions 552. Public Information; Agency Rules, Opinions, Orders, Records, and Proceedings 552(A) Records Maintained on Individuals 552(B) Open Meetings 553. Rule Making 554. Adjudications 555. Ancillary Matters 556. Hearings; Presiding Employees; Powers and Duties; Burden of Proof; Evidence; Record as basis of decision 557. Initial Decisions; Conclusiveness; Review by Agency; Submissions by Parties; Contents of Decisions; Record 701. Application; Definitions 702. Right of Review 703. Form and Venue of Proceeding 704. Actions Reviewable 705. Relief Pending review 706. Scope of Review

I. Introduction [1-23] The US Constitution creates and vests three types of Power or legitimate authority in its first three articles: the legislative, the executive, and the judicial. Nowhere does the Constitution mention any other type of Power, but neither does it say that this omission is intentionally exclusive. So our first session sketches the ways in which the Congress, President, and courts relate to the administrative departments, agencies, commissions, bureaus, offices, etc., within a sprawling mass of modern institutions and legal doctrine. a. APA [5 U.S.C. 551 et seq.] definition of an agency: [e]ach authority of the Government of the United States, whether or not it is within or subject to review by another agency, but does not include

b. c.

d.

e.

f.

g. h.

i.

Congress; Fed. Courts Governments or territories in possession of the United States Government of the District of Columbia Agencies composed of representatives of parties/representatives if organizations of the parties to the disputes determined by them v. Courts martial and military commissions vi. Military authority exercised in the field in time of war or in occupied territory vii. Functions conferred by various provisions of the U.S. code. Franklin v. Massachussetts (1992) SCOTUS says POTUS an agency Class Definition of Agency: i. Comprised of politically accountable and appointed supervisors who are meant to inject politics into the agency. ii. Office, board, bureau, department, service, commission, consul, administration, authority {agency} iii. APA definition of an agency is VERY broad 1. FOIA reads definition of agency even more broadly than the APA government transparency. Citizens for Responsibility and Ethics in Washington (CREW) v. Office of Administration (D.C. Cir. 2009). i. CREW says OA lost millions of White House e-mails FOIA request for emails ii. Is the OA a sufficiently independent agency to be subject to FOIA? iii. OA s operates by advising the Executive Office of the President (EOP). iv. Courts held: OA is PART of EOP; OA is NOT independent of EOP 1. People in OA serve at the pleasure of POTUS and are NOT independent 2. If Congress must expressly subject POTUS to this type of request; Congressional intent absent here. v. Important to characterize entities implicated for political and leverage purposes No Vehicles in the Park: i. Transitive legislation directly changes rights and duties in the world 1. Little transitive legislation today ii. Intransitive legislation delegates duties 1. Majority of legislation today. iii. No Vehicles in the Park: what does this mean? Vehicle? Park? Purpose? 1. Purpose a. Empowers interpreter to construe the regulation (in their favor). b. Close to re-writing enactment. 2. Must look at how things are defined in other places Relationship between legislative bodies i. President relationship w/Congress House relationship w/Senate 1. Senate Represents State 2. House Represents proportional populations Courts do not adjudicate the political issues associated with a claim before it. Signing statements played great importance in GW Bush s and Clinton s administrations i. This is how I interpret this statute ii. Signing Statement line-item veto Agency Hierarchy i. Members of Cabinet are known as secretaries ii. Secretaries are in the line of Presidential succession

i. ii. iii. iv.

iii. Somewhere, a statute created every single one of the Cabinet Level Agencies iv. There is no Agency that is constituted by the US Constitution v. The statutes provide for the delegation of authority from the President to each agency. No agency created without an ORGANIC STATUTE. j. Why so many Agencies? i. Neither Congress nor the Judiciary are large enough to handle all decisions ii. Not sophisticated enough in certain areas of expertise. iii. Need to remove some decisions from the political process. This gives Congress someone else to make hard decisions that have political repercussions. k. Tensions in Admin Law i. Expertise v. Political Popularity 1. The best public policy decision may sometimes require expertise that does not lead to a popular decisions 2. The need to balance the public interest in effective implementation of regulatory and benefit programs against the individual interest in protection from erroneous, arbitrary, or abusive exercises of power. 3. There is a necessity to delegate certain actions to agencies, but this seems to be a violation of the Separation of Powers (SOP) that is a cornerstone of our government. a. SOP constrains the structure and operation of agencies. The proper relationship among agencies, Congress, POTUS, and the judiciary is, explicitly or implicitly, an aspect of virtually ANY administrative issue. b. SOP re: Agencies i. President is elected and has a check ii. Congress is Politically liable iii. Courts say what the law is iv. Agencies are in the middle of the power struggle ii. Characteristics of Agencies Can be positive or negative. Little accountability and long office terms place importance on political agendas instead of society s evolving needs. 1. Slow moving 2. Constant 3. Plodding 4. Consistent iii. Laws can do Three Things: 1. Permit 2. Forbid 3. Require II. Congressional Influence Over Agencies Read Articles I and III of the Constitution very carefully. Article I, 8 says, for example, that Congress shall have Power to legislate and provide . . . for the general Welfare while Article I, 1 says [a]ll legislative Powers herein granted shall be vested in a Congress. . . . Article III vests the judicial Power in one supreme Court, and in such inferior courts as the Congress may . . . ordain and establish. Do these provisions mean that (1) Congress may not vest the power to make law in an agency; or (2) that Congress may not create other tribunals to hear cases or controversies?

a. Delegating the Power to Enact the Law (pg. 26-34; 44-55); Sep. of Powers i. The Non-Delegation Doctrine 1. Intelligible Principle Standard a. Congressional delegation of legislative authority is an implied power of Congress that is Constitutional so long as Congress provides and intelligible principle to guide the executive branch. J.W. Hampton, Jr., & Co. v. United States (1928) 2. Panama Refining Co. v. Ryan (1935) SCOTUS Hot Oil Case a. 1 of 2 cases where court steps in and says too much delegation (non-delegation doctrine) b. Statute delegated to the President the discretion to regulate transportation of petroleum interstate. c. Court says that 9(c) is too vague i. This case came at the height of the Court s skepticism of FDR s philosophy and approach to government. d. Constitution means what the court says it does here the Court says that this delegation of power is unconstitutional. 3. A.L.A. Schechter Poultry Corp v. United States (1935) SCOTUS Sick Chicken Case a. Other non-delegation doctrine case but distinguishable from Panama Refining because getting at unfair competition. b. In this case, legislative power has been given to the heads of industry (aka the direct beneficiaries!) ii. Decline of Non-Delegation iii. Apparent rejection of the Attempt to Reinvigorate the Non-Delegation Doctrine 1. Mistretta v. United States (1989) SCOTUS Sentencing Guidelines Commission a. Non-delegation doctrine not used since Panama and Schechter b. Mistretta is the latest word on non-delegation c. Commission was an independent body of the Judicial Branch d. Reasons that delegation was not unconstitutional: there are goals, purpose, tools, and factors placed on the commission to serve as guidelines distinguishes from Panama and Schechter. i. Satisfies intelligible principle doctrine. 1. Constraining at the same time empowering 2. Courts focus on that statute 3. Extreme Deference to Congress e. Scalia Dissent: b. Delegating the Power to Adjudicate Cases [74-99] i. Art. III vests power in one Supreme Court and such inferior courts Congress may from time to time ordain and establish. 1. Cannot read this literally (impracticable) 2. This is the threshold Congress cannot give inferior courts ALL of the power that the Supreme Court Holds. ii. Some argue that Agencies are less expensive than courts and get superior results. iii. Some Argue that Agencies are more expensive because relaxed evidentiary rules increase cost and duration of administrative adjudication. iv. At the very least, it relieves burdens placed on Federal Courts. v. Public vs. Private Rights 1. Public

a. Cannot be vindicated by an individual b. Suffers some kind of indefinite wrong common with other people generally c. Between the government and persons subject to its authority in connection with the performance of the constitutional functions of the executive or legislative departments 2. Private a. Must have private right to be heard in court b. Specific wrong vi. Crowell v. Benson (1932) SCOTUS yet to be overruled by S.C. 1. Statute designed to provide compensatory avenue for individuals injured upon the navigable waters of the U.S. 2. Brought before Deputy Commissioner of U.S. Employees Compensation Commission 3. Article III courts can still review the Deputy Commissioner s decision, but the Commissioner s findings of fact are final. 4. Issue comes with deference regarding findings of fact a. If Article III courts defer on findings of fact they are empowering an inferior court to define its own jurisdiction Constitutional Issue 5. Held the United States Employees' Compensation Commission satisfied Fifth Amendment Due Process and the requirements of Article III with its court-like procedures and because it invests the final power of decision in Article III courts. 6. This case was the death knell to the difference between public and private rights. 7. Takeaway: a. Administrative adjudication is permissible if the agency is acting as an adjunct to the courts, provided that the courts retain the essential attributes of judicial power, including the authority to review the agency decision. vii. Northern Pipeline SCOTUS (1982) 1. Case dealing with debts of bankrupt party 2. Adjudicated by an adjunct Bankruptcy court after Congressional rewrite of the Bankruptcy Act in 1978. 3. Note: Bankruptcy Judges are pretty damn close to Federal Judges (can hold jury trials, issue declaratory judgments, issue writs of habeas corpus, issue writs required by their jurisdiction) a. HOWEVER, Bank. Judges: i. Appointed by POTUS w/advice&consent of Senate ii. 14-year terms iii. May be removed iv. Pay may be altered. 4. Held: a. Bankruptcy judges cannot exercise full Article III adjudicatory powers because not protected from political influence (they may be removed, their pay may be affected). 5. Colburn: a. The plurality invalidates the Act's different provisions that vest most of the Article III judiciary's traditional powers (powers of

contempt, traditional writs, etc.) and extremely broad subject matter jurisdiction in adjudicators who lack Article III's tenure and salary protections (as Article I courts, bankruptcy courts are similar to but not exactly like Article III judgeships). Some of what makes this troubling is the potential for the judges to be less than independent, although in my experience B judges are fiercely independent. b. The real trouble is that the Brennan opinion doesn't get five votes and the Rehnquist opinion is much narrower in scope--which for practical purposes means that one needs to synthesize what was held in NP w/ what came after. That would be Schor for us.. i. Schor notes that JR by an Article III court was guaranteed by the Act--that CFTC orders couldn't be enforced except by petition to the district court. viii. Distinguishing Benson and Northern Pipeline 1. Benson was a narrow jurisdiction over limited cases. 2. Northern Pipeline was broad jurisdiction over a large class of disputes. ix. Commodity Futures Trading Commission v. Schor SCOTUS (1986) - Functionalist 1. CFTC = SEC for commodity futures (SEC regulates stock trading) 2. Question of potential encroachment upon judicial powers by Congress in enacting the Commodities Exchange Act 3. This case is 4 years after Northern Pipeline 4. Held: Schor cannot go to Article III court to complain because willingly withdrew case from Federal District Court waiver theory a. Schor notes that judicial review by an Article III court was guaranteed by the Act--that CFTC orders couldn't be enforced except by petition to the district court. 5. Schor Test: the current controlling test for non-Article III adjudication a. Must consider 3 factors i. Whether the court or the agency exercises the essential attributes of judicial power; ii. The nature of the right at issue; and iii. The reasons Congress has for delegating authority to the agency. x. Overview of Non-Delegation 1. Mistretta = Functionalism 2. Benson = Functionalist 3. Shor = Functionalism 4. Northern Pipeline = Formalist (remember not a clear majority): Justice Brennan, because he says this is adjudicative power given to Article II judges that was given to a non-article III body. 5. FEC v. NRA-PVF = Formalist because ex officio members are formally sitting and may effect the outcome. c. Other Mechanisms of Congressional Influence [106-130] i. Agency Organic Acts Statutes that simultaneously delegate power to agencies and limit the scope of their powers. ii. Other Statutes 1. Administrative Procedure Act (1946)

iii.

iv.

v.

vi.

a. Enacted to created greater uniformity with respect to the procedures agencies use to make decisions and the standards courts apply in reviewing those decisions. 2. Freedom of Information Act (1966) a. Intended to make the functions of government agencies more transparent to the public so it could apply pressure to resolve problems i. Public Access ii. Disclosure Upon Request iii. Unintended effects 1. Organized Crime has used FOIA to find and kill informants 2. Have to respond within 30 days deadline rarely met (congress miscalculated burden on agency) b. Open America v. Watergate Special Prosecution Force i. Court found that FBI was using due diligence ii. Requests categorized as either difficult and simple ; case at bar was difficult . iii. Since no issue of urgency, issue became whether or not Open America could go right to court. iv. Court said no unless there was an exceptional need. 3. National Environmental Policy Act (1969) a. Requires every agency to prepare an environmental impact statement before it takes any major action that has a significant effect on the environment. b. SCOTUS has repeatedly held that there is no substantive standard for NEPA. c. Could file a report saying there would be a devastating effect without violating NEPA. 4. Civil Service Act (1883) a. Required meritocratic system of hiring and firing, evaluating, and promoting employees. 5. Information Quality Act (2000) a. Attached as a rider to 2001 appropriations bills b. Requires agencies to act only on the basis of high quality information Allocation of Litigating Authority 1. Agencies that don t have statutory authority to go to court to enforce statutes must rely on DOJ to enforce. 2. SCOTUS has held that an agency must have explicit statutory authority to represent the government in court FEC v. NRA Political Victory Fund The Confirmation Process 1. Article II 2 POTUS has power to nominate and with advice and consent of Senate appoint Officers of the United States. 2. Article II 2 also gives Congress power to appoint inferior officers. The Appropriations Process 1. Congress must appropriate all funds spent by gov t. 2. Congress often uses funding to force agencies to act in its favor. The Oversight Process 1. Evaluate agency performance

2. Members of Congress often use oversight hearings to influence agency actions by embarrassing an agency unless it acts in ways preferred by the member. vii. Casework 1. Casework = communications with agencies to assist constituents in obtaining results they desire from agencies in a timely manner. viii. Limits on Congressional Power 1. Due Process a. Always ask How much process is due? i. Simple notice of claim against and next proceeding? 1. Paper hearing can be sufficient under Mathews. ii. Evidentiary hearing? iii. Full trial-type hearing? b. 5th Amendment Due Process i. Imposes procedural requirements on federal gov t and agencies when they try to deprive people of life, liberty, or property ii. *** Life means death don t worry about it. iii. Liberty 1. Rights iv. Property 1. Financial interest c. Pillsbury Co. v. Federal Trade Commission (5th Circ. 1966) i. FTC filed complaint against appellant challenging its acquisition of another company. ii. FTC ordered Appellant divest (reduce its interest in something for ethical objective) itself. iii. Congress was unhappy with Chairman of FTC because did not adopt a per se rule. iv. This is a matter of Howrey (Chairman of FTC) being hauled up to Congress and badgered with questions. Court says this is a denial of due process. v. Rule: It is a violation of due process to bring a person before Congress and badger them into a position on a pending matter. 2. Procedures Required to Legislate a. The Legislative Veto i. From 1930s until Chadha, Congress enacted provisions allowing it to approve or disapprove agency actions through measures far shy of full legislation (the decision of even a single committee in some cases). ii. In Chadha, Congress wanted to enact an amendment to the APA that would have conferred on either House acting alone the power to veto ANY agency Action. iii. Immigration & Nat. Services v. Chadha (1983) SCOTUS 1. Article I 7 cl. 2 requires bicameralism and presentment 2. This is a formalist decision that invalidates ALL Legislative Vetoes strict separation of powers

legislative veto = a legislative action that nullifies an action by the Executive Branch. 3. Compare with Schor (formalist) decision a. Reverses course from that decision III. Presidential Influence Over Agencies Read Article II of the Constitution very carefully. It vests The executive Power in the President, it lists several specific powers of the President, it loosely structures the President s relationship with Congress, and subjects the President and all Civil Officers of the United States to removal from office by impeachment. In this unit, we consider what Article II does and does not say about the President s relationship to the agencies of the United States. a. Appointment Power: Formalism vs. Functionalism [141-158] i. Article II Powers 1. 2, Cl. 1 Commander in chief of the Army and Navy a. He may require the opinion, in writing, of the principal officer in each of the executive departments upon any subject relating to the duties of their respective officers. i. Presupposes existence of executive departments (agencies) ii. Does not mention removal. 2. 2, Cl. 2 Appointments a. Shall nominate with the advice and consent of the Senate ambassadors, other public ministers and consuls, judges of the SCOTUS, and all other officers of the United States. i. Mode of appointment for Principal officers b. but the Congress may by law vest the appointment of such inferior officers, as they think proper, in the President alone, in the courts of law, or in the heads of departments. i. Mode of appointment for Inferior officers. c. Textualism i. Principal Officers 1. Presidential appointment w/Senate Consent ii. Inferior Officers 1. Congress may by law vest the appointment in the President alone, the courts of law, or in the heads of Departments. iii. Other Employees 1. No Article II requirements iv. Courts are increasingly formalist on Appointments Clause 3. 3 Take care that the laws be faithfully executed 4. 4 Removal Power a. Full text: The President, Vice President and all Civil Officers of the United States, shall be removed from Office on Impeachment for and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors. b. Writers of constituted could not agree on removal power, which is why there is no mention of removal of secretary of state c. Deafening Silence

a.

ii. Formalism vs. Functionalism 1. Formalist: a. Three vesting clauses (of articles I,II,III enumerating the powers of each branch) complete division of the branches. b. Every exercise of government power must fit within one of the 3 branches or find explicit constitutional authorization for such deviation. 2. Functionalists: a. Asks whether the exercise of the contested function by one branch impermissibly intrudes into the core function or domain of another branch. b. Question of blending of power is degree in functionalism, rather of kind in formalism. iii. The Power to Appoint 1. Ex officio = Part of one group by virtue of being a member of another a. E.g., being a member of the FEC because a member of the House or Senate. 2. Buckley v. Valeo (1976) SCOTUS Who is an Officer of the U.S.? a. As a result of water gate Congress attempted to ferret out corruption in political campaigns by restricting financial contributions to candidates. The Federal Election Commission was created to enforce the statute b. The Term Officers of the United States has substantive meaning any appointee exercising significant authority pursuant to the laws of the United States i. Officers of the United States under Art. II, 2, Cl. 2 includes all persons who can be said to hold an office under the government in United States v. Germaine. c. Court held that the members of the FEC are Officers and must be appointed pursuant to Article II 2 Rule: Congress CANNOT vest in itself the power to appoint. d. Functionalist 3. Federal Election Commission v. NRA Political Victory Fund (D.C. Circ 1993) a. FEC tries to bring an enforcement action against NRA-PVF for transfer of funds as a political contribution. b. Held: i. Issue of appointment non-Justiciable because it cannot be proven who POTUS would appoint. ii. However, Congress s use of the appointment power to place congressional members as ex officio officers of the FEC is a violation of the separation of powers. 1. Congress would not Appoint Sec. of the Senate and Clerk of the House to the FEC if it didn t expect them to influence agency decision-making 2. Congress has ample avenues to influence agency without non-voting ex officio members. 4. Landry v. FDIC (D.C. Circ. 2000) a. At issue is the FDIC s appointment of ALJs for the process of removing a bank officer from his position and to barring him from

further participation in the operation of a federally insured depository institution (this power is delegated by Congress). b. Landry argued that the ALJs were inferior officers because they were appointed by a body that is not a department as required by the Appointments Clause. c. Held: i. ALJs are NOT inferior officers. When the FDIC appointed ALJ s it circumvented the appointment power. ii. ALJs are lesser functionaries appointed by the Executive. d. Cites and Distinguished Freytag v. Commissioner (1991) SCOTUS i. Granting Chief Judge of the United States Tax Court the power to appoint special trial judges violated the Appointments Clause. ii. Distinguishes Court notes that the special trial judges (STJs) in Freytag were able to issue a FINAL decision; In this case the ALJs could not issue the final decision of the FDIC. b. Removal Power and the Supervisory Authority It Brings [19-202; handout] i. Myers v. United States (1926) SCOTUS 1. Court declared provision of the Tenure in Office Act unconstitutional because it required POTUS to seek advice and consent of the Senate in seeking to remove first, second, and third class postmasters. ii. Humphrey s Executor (1935) SCOTUS 1. Court upheld a provision of the Federal Trade Commission Act that granted commissioners of FTC a term of years and limited POSUS removal power to situations of inefficiency, neglect of duty, or malfeasance in office. Good cause restriction. iii. Wiener v. United States (1958) SCOTUS Functionalist 1. Court considered the limited tenure of the Commission itself, when ruling that POTUS (Eisenhower) could remove Truman s appointees. 2. Congressional silence on the issue. iv. Morrison v. Olson (1988) SCOTUS Functionalist 1. A.G., upon sufficient grounds that anyone violated the statute, must investigate himself for 90 days. Then, if he still has grounds, he must request a special court to appoint independent counsel, who does not report to ANYONE (only gives periodic reports to the special court) a. Argument that the Independent Counsel violates the Take Care clause because the Independent Counsel is accountable to the Special Court and not POTUS. 2. Placing a restriction on POTUS via the A.G. (a principal officer) in removing inferior officers is constitutional. 3. Good cause restriction did not unconstitutionally restrict Executive Power. 4. Do not need purely executive Functions Functionalist justification v. Free Enterprise Fund v. PCAOB (2010) SCOTUS 1. Congress creates the Board as a non-profit board promulgates ethical standards, audits, investigates, etc. a. The Act puts the Board under SEC control, but Board officers (inferior) officers are insulated by a good cause restriction from the SEC The double layer.

2. Held: Such multilevel protection from removal is contrary to Article II vesting of the executive power in the President. a. Not only restricts Board members to good cause termination, but completely withdraws POTUS from deciding whether or not good cause existed. 3. Takeaway Double layer restrictions (i.e., preventing POTUS from removing an officer who in turn is restricted from removing another officer) are unconstitutional. c. Other Mechanisms of Presidential Influence [202-224] i. The Nature and Scope of Presidential Authority 1. Youngstown Sheet & Tube v. Sawyer (1952) SCOTUS a. Pres. Truman told parties in wage negotiation to resolve issue with Wage Stabilization Board. b. Board wanted to increase wages, but Steel Industry wouldn t do it without increased price ceiling. c. Strike announced. d. Truman issued executive order directing Sec. of Commerce to take possession and operate steel facilities. e. Court held that this order was unconstitutional because no statute gave POTUS the power to act as he did. f. Takeaway: If an executive order mimics a statute, it is legislative in nature and not a function of POTUS but of congress. g. 3 Models of Presidential Power: i. POTUS acts pursuant to express or implied authorization of Congress maximum power ii. POTUS acts in absence of either congressional grant or denial of authority (relying on his independent powers). Zone of twilight in which he and Congress may have concurrent authority. iii. POTUS takes measures incompatible with express or implied will of Congress least power 1. POTUS POWER = Article II power Congress s Article I power ii. Tools Presidents Use to Control Agencies 1. Presidential Signing Statements a. Article I 7 bicameralism and presentment (POTUS may sign a bill after it is presented to him after it passes both houses of Congress) b. POTUS would offer statement upon signing indicating interpretation of the statute not legally binding (which is why this is not a line-item veto) 2. Executive Orders a. Presidential directives that govern actions of gov t officials and agencies. b. Carry the force of law (so different than signing statements) c. Constitution does not explicitly authorize Executive Orders. 3. OMB (Office of Management and Budget) & OIRA (Office of Information and Regulatory Affairs) a. OMB i. Evolved from Bureau of the budget

Assemble, correlate, revise, reduce, or increase the budget estimates of the several departments or establishments iii. Ensures that the right hand knows what the left hand is doing. b. OIRA i. Subsidiary of the OMB ii. Responsible for monitoring and reducing the burden of paperwork across the federal government and also with respect to private parties. 4. Executive Order 12291 1981 (Reagan) a. Limited to rulemakings and not adjudications b. Calls for agencies to perform cost-benefit analysis for all regulations, and to issue regulations only when benefits outweigh the cost. 5. Other Recent Presidential Efforts to Influence Rulemaking a. Clinton directing agencies to begin rulemaking to address particular problem that POTUS considered particularly important. 6. Ad Hoc Jawboning a. Persuading agency officials to carry out executive wishes. b. Political arm-twisting. IV. The Procedural Categories The Administrative Procedure Act (APA) was enacted in 1946 to require every agency covered by its terms to comply with various procedural norms when issuing orders or making rules (among other things). In some respects it codified existing case law while in others it blazed new paths in court/agency relations. Today, the APA is a series of interlocking provisions dividing all agency action into three categories: (1) adjudications, (2) rulemakings, and (3) other. Finding the practical distinctions between these three can be more challenging than you might think, though. Class Review of Adjudication and N/C Rulemaking APA Adjudication Notice [554(b)] Hearing [554(c),(d)] Initial Decision [556] Appeal and Revision(s) Hearing Nash v. Bowen; Withrow v. Larkin Appeal Universal Camera Final Richardson v. Perales Notice and Comment Rulemaking NPRM [553(b)] Comment [553(c)] SBP/Final [553(c)] NPRM Shell Oil (logical outgrowth); Portland Cement Comment HBO; Action Children s Television v. the FED; Sierra Club SBP/Final Nova Scotia

ii.

a. What Is Adjudication (and Not Something Else? [225-246] i. The Role of the Due Process Clause 1. 5th Amendment a. Most procedural disputes are resolved by reference to the agency s own procedural rules or the statutes that govern the agency s choice of procedures. ii. When Due Process Applies 1. Adjudication vs. Rulemaking a. Adjudication = final disposition (on things that have already happened); agency process for formulation of an ORDER i. Contrary to popular definitions, there is NOT always a judge in adjudication (often headed by boards/political appointees). ii. APA definition in 551(6 & 7) 1. Agency process formulation final disposition other than rulemaking. b. Rulemaking = future effect ; agency process for formulating a RULE. i. 551(4 & 5) 1. Agency process formulating agency statement of future effect process to implement/interpret/prescribe law. c. Due process requirements attach to agency adjudications, but NOT to agency rulemaking; hence, the distinction is IMPORTANT. 2. Scope of the APA: 706. Scope of Review a. The reviewing court shall...hold unlawful and set aside agency action, findings, and conclusion found to be without observance of procedure required by law. 3. United States Constitutional Amendments V and XIV a. V: Federal b. XIV: State 4. Sequence Notice/proposal preliminary decisions final decision post decision review 5. Londoner v. Denver (1908) SCOTUS a. State imposed taxes for roads being re-paved in front of peoples property b. State gave notice in a newspaper that they could submit objections to the city clerk then to the city council c. NOT an adjudicatory process. d. Similar to legislative hearing e. The law provided that after the hearing, there was no review. f. Held: No opportunity to legitimately challenge the act = violation of due process i. a hearing, in its very essence, demands that he who is entitle to it shall the right to support his allegations by argument, however brief, and if need be, by proof, however informal.

g. Takeaway: Have to be able to address decision-maker in a fashion that permits you to respond to their questions and rejections of your arguments. 6. Bi-Metallic Investment Co. v. State Board of Equalizations (1915) SCOTUS a. State Board proposed to raise taxes by increasing valuation on ALL taxable property by 40%. b. Instead of specifically tailored taxes, this is a blanket increase. c. Much larger group of people affected than in Londoner. d. When the action of the agency affects a relatively small number of people upon individual grounds, those affected persons are entitled to due process protection. i. This is what activates the due process protection ii. The Londonder|Bi-Metallic test. 7. Londoner|Bi-Metallic Distinction a. Think of this as a switch Due process either APPLIES or does NOT apply. b. Courts rely on this distinction as a basis for holdings that due process does not require the gov t to provide a hearing before it takes an action that adversely affects a class of individuals. (pg. 231 for examples) c. Distinction explained in three ways: (1) Pragmatic basis: the kind of procedural safeguards due process requires for individualized gov t determinations would be prohibitively expensive and time-consuming if they were required for determinations that affect a large number of people. (2) Nature of disputed facts on which gov t action is based: All gov t actions based on a large number of assumptions concerning facts. These assumptions often disputed. Individuals are entitled to determinations of adjudicative facts (the who, what, where, when, why, how). (3) Theory of Gov t That Underlies the Constitution: Courts must protect (1) Procedural Due Process; and (2) insular minorities (substantive due-process) LONDONER & Bi-METALLIC Adjudication (Londoner) Rulemaking (Bi-Metallic) Few People Many People Especially Affected Similarly Affected Individual Grounds Same Grounds i. Implications for Rulemaking: 1. Political Process Checks 2. Judicial Procedures Impractical 3. Nature of facts do not require a hearing JUDICIAL FACTS vs. LEGISLATIVE FACTS Judicial Facts Legislative Facts Who did what to whom? When? Where? Why? What public policy will best accomplish objectives

Affect Concentrated Interest Within Special Knowledge of Affect Parties Require oral testimony and cross-examination

Concern broad-based interests Based on empirical data and expert knowledge Can be evaluated based on documentary evidence

iii. Life, Liberty, or Property 1. If Court decides that the government action falls on the Londoner side (adjudication), then they must decide if it deprived the person of life, liberty, or property, and if so, what process is due the person. a. Must identify the interest at stake. 2. Sequence a. Londoner|Bi-metallic test if Londoner identify interest at stake person deprived of that interest? what process is due? iv. Goldberg v. Kelly (1970) SCOTUS 1. Financial aid recipients benefits terminated w/o pre-termination hearing alleged this was denial of due process. 2. Court held this WAS a violation of due process 3. Welfare was the only means for food, clothing, housing, medical care the very means by which to live 4. Extent to which procedural due process must be afforded is influenced by extent to which he may be condemned to suffer grievous loss. 5. Footnote 8: Welfare benefits are like property. a. People had already been adjudicated as eligible. 6. Justice Black (liberal) Dissent: a. Thinks Court is invading the province of the legislature (SOP) b. Allocative point: If this is allowed to happen, legislature will put less people on welfare. b. Entitlements, Some Kind of Hearing, and Mathews [246-257; 262-276] i. Wisconsin v. Constantineau (1971) SCOTUS 1. Woman brought suit in WI fed. Dist. Ct. to have Wisconsin statute declared unconstitutional a. Statute forbids sale of liquor to people who by excess of drinking have caused certain negative conditions 2. Court held that this placing a stigma on someone and labeling them with a badge of disgrace violates procedural due process. 3. Person s good name, reputation, honor, or integrity deserves procedural due process. ii. Board of Regents of State Colleges v. Roth (1972) SCOTUS 1. Roth hired as teacher @ UW-Oshkosh. Hired for fixed term of one academic year. Completed his term. Informed he would not be rehired. At the time, he had NO TENURE RIGHTS. 2. Under Wisconsin law, you can only get tenure after four years of year-toyear employment. 3. Statute and regulations silent on eligibility for re-employment, so up to discretion of school administrators. 4. District Court held that Roth s re-employment interest outweighed University s interest. 5. SCOTUS held that he was not entitled to re-employment and that due process was not violated. a. He had no property interest in the job because statute and regulation silent on the issue.

b. No policy supported Roth s claim. iii. Perry v. Sindermann (1972) SCOTUS 1. Sindermann was a teacher in a state college system. Taught for two years. Then he was employed at the college for a series of one-year contracts. Became president of Texas Junior College Teachers Association, causing rift w/school administration. 2. After Sindermann s contract was up, it was not renewed. 3. Held: Summary judgment against Sindermann was improper. a. Teacher s criticism of his superiors on matters of public concern may be constitutionally protected any may, therefore, be an impermissible basis for termination. b. Property Interest: A person has a property interest in a benefit if there are enough rules or mutually explicit understandings that support this claim. iv. Procedures Required by Due Process 1. Between 1970 and 1975, the liberal wing of SCOTUS expanded due process. 2. Mathews v. Eldrige (1976) SCOTUS a. Eldridge s disability benefits terminated w/o hearing or any other notice. b. Held: termination of benefits without evidentiary hearing did NOT violate 5th amendment Due Process. c. Distinguished Goldberg v. Kelly i. Eldridge s benefits were NOT based on need but on factors designated by statute. ii. Degree of potential deprivation is significantly less than Goldberg s. d. Nature of a hearing: Must be commensurate with interest affected, taking into account the state s administrative needs. e. Mathews Two-Factor Balancing Test: i. Importance of individual liberty or property interest at stake (the private interest); and ii. The extent to which the requested procedure may reduce the possibility of erroneous decision-making (government s interest). c. Triggering the APA s Requirements for Formal Adjudication [293-307; APA 551, 554, 555] i. APA 551 1. (7) Adjudication defined: an individualized decision in which an agency makes determination of historical facts, and applies the law to those facts in such a manner as to fix legal consequences. 2. (6) Order defined: The whole or part of a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than a rule making but including licensing. ii. APA 554 1. To Trigger 554(a) (1) must be an adjudication; (2) organic statute must require a hearing; and (3) organic statute must provide that the hearing is on the record or supply similar language. iii. APA 555 iv. Formal Adjudication

v.

vi.

vii.

viii.

1. ALJs are almost as independent of the agencies at with they preside as federal district judges are of the Executive and Legislative Branch. 2. Once you trigger a. 5 U.S.C. 554(a), then i. 5 U.S.C. 556(a), then 1. 5 U.S.C. 557(a) Dominion Energy Brayton Point v. Johnson (1st Circ. 2006) 1. EPA denied Dominion s request for an evidentiary hearing after it issued a proposed final National Pollution Discharge Elimination System. 2. EPA took public comment and held public hearings. 3. Dominion said that EPA violated a nondiscretionary duty by not holding an evidentiary hearing. 4. Clear Water Act does not say on the record. Only requires opportunity for public hearing 5. Chevron analysis deference to EPA EPA not required to hold hearing. 6. Takeaway: a. EPA determined that there was no evidence that Congress intended to require formal evidentiary hearings or that the CWA precludes informal adjudication of permit review petitions b. Court did NOT come out and say that it must be on the record, but that in this case the EPA was not required to hold a hearing. Chemical Waste Management (D.C. Circ. 1989) 1. Agencies are entitled to chevron deference for these decisions about adjudication where the enabling statue is ambiguous. This was the case that kicked off this type of Chevron type analysis in adjudication application. 2. Trend is AWAY from APA adjudication, but agencies (e.g., NLRB) still do a lot of it. United States v. Allegheny Ludlum Steel (1971) SCOTUS 1. Action to enjoin enforcement of two car service rules' that were promulgated by Interstate Commerce Commission and that would have general effect of requiring that unloaded freight cars be returned in direction of the owning railroads. 2. Held: The car service rules that tended to restore incentive to railroads to augment their supply of freight cars, even at temporary expense of optimum utilization of existing fleet, were reasonable within Esch Car Service Act empowering Commission to establish reasonable rules, regulations and practices with respect to car service. a. Administrative agency's authority to proceed in complex area by means of rules of general application entails concomitant authority to provide exemption procedures in order to allow for special circumstances b. Sections of Administrative Procedure Act providing for formal agency hearing and making of record in rule-making procedure need be applied only where the agency statute, in addition to providing a hearing, prescribes explicitly that it be on the record Informal Adjudication 1. Does not fall under 554 and derive from the organic statute, agency rules, and due process.

ix. APA Hearing Requirements 1. 3 APA requirements under 554(b) a. Personal notice of the hearing, which must include time, place, and nature of the hearing; b. The legal authority and jurisdiction under which it is held; c. Matters of fact and law asserted 2. 554(c) If the parties cannot settle the matter, a hearing and decision in accordance with 556 & 557 x. Overton Park v. Volpe (1971) SCOTUS 1. Statutes enacted by Congress to curb destruction of natural resources prohibited the Sec. of Transportation from authorizing the use of Federal Funds to finance the construction of highways through public parks if there was a feasible and prudent alternative route. a. The Secretary approved a highway to be built through Overton Park 2. Held: a. Formal findings not required under 706. However, a finding based solely on affidavits prepared for trial is insufficient. 3. Takeaway: if the courts are to perform their function, they need some kind of administrative record adequate for judicial review You (the agency) had better have some sort of record to support your decision. xi. Pension Benefit Guaranty Corp v. LTV Corp (1990) SCOTUS 1. In this case, the enabling legislation said nothing about a public hearing or a hearing on the record. 2. If the legislation says nothing about a hearing, you are NOT entitled to a hearing. 3. In this case, d. Adapting the Judicial Model Into Administrative Adjudication [307-323; APA 556, 557] i. APA 556 ii. APA 557 iii. Judicial Models: Separation of Functions and split-Enforcement 1. Split-Enforcement a. Alternative to the APA model b. Divides responsibility for investigation and enforcement from adjudication c. Congress has adopted this model with regard to OSHA and MSHA (Mine Safety and Health Administration) 2. Judicial Model a. Both APA and split model are versions of the judicial model of adjudication that U.S. courts use to resolve criminal and civil cases. b. The Judicial model is based on one conception of due process: the values reflected in the Due Process Clauses are further by insulating decision makers from all external sources of pressure i. Life tenure ii. Protection from salary decreases iv. Withrow v. Larkin (1975) SCOTUS 1. Wisconsin authorized its Examining Board (Board) to investigate individuals suspecting of practicing medicine without a license or performing other acts of professional misconduct, and to temporarily

suspend a physician s license if there was probable cause to suspect wrongdoing. a. The Board sent a notice to a physician (Appellee) that a contested hearing would be held to determine whether he had engaged in the prohibited act of performing abortions at his practice in Milwaukee 2. Doctor had issue with an adjudicatory process a. The same body conducted the investigation and the adjudication likely formed an opinion at investigation stage. 3. Held: The combination of investigative and adjudicative functions does not, without more, constitute a due process violation. However, the risk of unfairness, if determined by a court to be intolerably high, would legitimize a ruling that the action violated due process. v. Judicial Model vs. Bureaucratic Model 1. Bureaucratic Model: decisions are not made by independent individuals but by teams of people who are organized hierarchically and who are instructed to apply objective, verifiable criteria; and both the criteria and the methods of application are constantly reevaluated and are revised to enhance accuracy, consistency and efficiency. vi. Nash v. Bowen (2d. Circ. 1989) 1. Director of Social Security Administration had 100,000 cases back logged so he instituted a series of reforms. 2. Appellant filed suit contending that these reforms impaired ALJs decisional independence under the APA. 3. Held: Policies designed to ensure with a reasonable degree of uniformity on decisions of ALJs are within the boundaries of legitimate agency supervision, which have to be encouraged. a. Secretary is the ultimate authority to make final decisions in benefits cases. e. Judicial Review and the Substantial Evidence standard [323-344, APA 706] i. Judicial Review of Agency Fact Finding 1. Universal Camera v. NLRB (1951) SCOTUS Main opinion on 706(2)(e) a. Hearing examiner (ALJ) got to see the witnesses and ruled one way. The NLRB believes other witnesses and reverses ALJ s decision. b. When the APA says that determinations should be made based on the whole record you cannot cherry-pick 556 (initial decision becomes part of the record) c. Standards of Review i. De Novo = issue of law ii. Clearly Erroneous = for trial court s findings of fact d. Doctrines: i. The substantiality of evidence must take into account whatever in the record fairly detracts from its weight. This is clearly the significance of the requirement in both statutes. ii. The requirement for canvassing the whole record in order to ascertain substantiality does not furnish a calculus of value by which a reviewing court can assess the evidence. iii. Substantial evidence is more than a mere scintilla and such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.

e. Reviewing action by NLRB after an adjudication ON THE RECORD. 2. Substantial Evidence Rule (pg. 328) a. Applies to formal adjudication or rulemaking under 556 and 557 if specified by the organic statute. 3. Richardson v. Perales (1971) SCOTUS a. Claimant filed for SS benefits as a result of a back injury where he claimed he could not work and his doctor backed up that claim. The SSA concluded that the claimant had not shown that he qualified for SS because the injury was not so severe. ALJ dismissed case finding that Perales was NOT disabled. b. Argued that he was denied due process. c. Held: Blackmun has ruled on efficiency grounds. The usual standards of due process should not apply in agency proceedings. THIS IS A MAIN THEME. It would cost a lot of money to adjudicate all the cases to higher standards, which would cut into benefits for people. d. Takeaway: i. Written report by licensed physician who has examined the claimant can be admitted as evidence, despite hearsay nature of the report and the presence of opposing direct medical testimony. ii. May constitute substantial evidence supportive of a finding by hearing examiner adverse to the claimant. ii. Fact-Finding in Informal Adjudication 1. Ass n of Data Processing Service Organizations v. Board of Governors of the Federal Reserve System (ADAPSO) (D.C. Circ. 1984) [Scalia before SCOTUS] a. ADAPSO Doctrine: When the Arbitrary and Capricious standard is performing the function of assuring factual support, there is no substantive difference between what it requires and what would be required by the Substantial Evidence test, since it is impossible to conceive of a nonarbitrary factual judgment supported only by evidence that is not substantial in the APA sense i.c., not enough to justify, if the trial were to a jury, a refusal to direct a verdict b. Takeaway: 706(2) Provisions are cumulative An agency action which is supported by the required substantial evidence may in another regard be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law. iii. Judicial review of issues of law and of the Agency Reasoning Process 1. Judicial review of the agency reasoning process takes place through application of the arbitrary and capricious standard under 706(2)(A). 2. An agency can issue a decision that is inconsistent with its precedents only if it acknowledges that it is changing course and explains adequately why it is changing course. a. See INS v. Yang Though the agency s discretion is unfettered at the outset, if it announces and follows by rule or by settled course of adjudication a general policy by which its exercise of discretion will be governed, an irrational departure from that policy could constitute an action that must be overturned as arbitrary and capricious (or an abuse of discretion).

b. See also FCC v. Fox An agency may not depart from a prior policy sub silentio or simply disregard the rules that are still on the books. Must show good reasons for the new policy. V. The Procedural Categories of Agency Action: Rulemakings As you ll discover, the required process for rulemakings depends on the precise context. Often, agencies can make rules without observing much procedure at all. The most common kind of rulemaking proceeding is known as notice and comment and has several well known (and several lesser known) facets. We will establish when agencies may and must engage in notice and comment rulemaking as well as some other basics about rulemaking more generally. a. How and When Can Agencies Make Rules? [345-359; 364-370; APA 552(a)(1)-(2), 553] i. 552(a)(1) ii. 552(a)(2) iii. 553 1. 553(b,c) Three-step process for adopting a rule, known as notice and comment. a. Issuing a notice of proposed rulemaking (NPRM) b. Soliciting Comments on the proposal from interested members of the public; AND c. Publishing the final rule with an accompanying statement of its basis and purpose. iv. Agency Power to Issue Rules 1. Two types of Rules: a. Legislative Rules i. A rule adopted by an administrative agency according to the procedures laid down by the APA. ii. This rule has the force of law and imposes new duties on affected parties. iii. A legislative rule is created in concurrence with the legislature s intention. iv. An administrative agency creates a legislative rule for the proper implementation of a general statutory provision b. Non-Legislative Rules i. Interpretative Rules 1. Interpretative rules are rules issued by an administrative agency to clarify or explain existing laws or regulations. 2. An interpretative rule does not attempt to create a new law or modify existing ones. Paralyzed Veterans of Am. v. West. 3. An interpretative statement simply indicates an agency s reading of a statute ii. Procedural Rules 1. Procedural rules create or alter the procedure in which parties present themselves or their ideas before an agency. Chamber of Commerce of the United States v. United States DOL

2. An example for procedural rule is rule that prescribes a timetable for affirming substantive rights of parties. Procedural rules have no binding effect on parties 3. Generally, procedural rules can claim exception from notice and comment rule because they only influence the agency s mode of operation. However, to grant the exception procedural rules should not have substantial impact on affected parties. 4. When an agency policy statement has substantial impact on the public it can be considered as a legislative rule. iii. Policy Statements 1. Agency policy statements operate as a guide to an administrative agency s exercise of discretion. 2. An agency s general statement of policy differs from a legislative rule because a policy statement is neither a rule nor a precedent. 3. A policy statement merely announces to the public the policy which the agency hopes to implement in the future. v. National Petroleum Refiners Ass n v. FTC (D.C. Circ. 1974) 1. Upheld the authority of the FTC to promulgate a legislative rule requiring that octane ratings for gasoline be posted at the pump. 2. This case emphasized the advantages of rulemaking. FTC s use of rulemaking (as opposed to case by case adjudication) would proceed more expeditiously, give greater certainty to business subject to the Act, and deploy its internal resources more efficiently than would be possible through adjudication alone. a. Under current law, there is little doubt that a general grant of authority to implement statutory provisions by regulation includes authority to make substantive rules, unless the peculiar circumstances of a given provision suggests otherwise b. No retroactive adoption of rules unless specifically authorized to do so. vi. Advantages of Rulemaking (pg. 352) 1. Rulemakings (arguably) yield higher quality rules than adjudication. 2. Enhanced political accountability through rulemaking 3. Efficiency 1 rulemaking eliminates need to engage in expensive and time-consuming adjudicatory hearings 4. Efficiency 2 Rulemaking eliminates the need to relitigate recurring issues 5. Efficiency 3 Rules created through rulemaking are easier and less expensive to enforce 6. Fairness 1 Rules provide affected parties with clearer advance notice of permissible/impermissible conduct 7. Fairness 2 Rules avoid widely disparate temporal impact of rules announced and applied through adjudicatory process. 8. Fairness 3 Rules reduce the incidence and magnitude of interdecisional inconsistencies in implementing regulatory and benefit programs

9. Fairness 4 Rules allow all potentially affected members of the public an opportunity to participate in the process of determining rules that affect the. vii. Functional relationship Between Rules and Adjudications 1. Rules provide a means through which agencies can limit the discretion of ALJs and other adjudicatory personnel by resolving an issue once and for all may yield greater accuracy, consistency, and/or efficiency. a. However rules take away your right to remove yourself from a legal category see Heckler v. Campbell. 2. Heckler v. Campbell (1983) SCOTUS a. HHS Secretary relying on medical-vocational guidelines to determine a claimant s right to SS benefits. b. Held: the Petitioner s use of the medical-vocational guidelines to determine a claimant s right to disability benefits did not conflict with the Social Security Act, nor were the guidelines arbitrary or capricious i. The Secretary of Health and Human Services to adopt reasonable and proper rules and regulations to regulate and provide for the nature and extent of the proofs and evidence and the method of taking and furnishing the same in disability cases c. Two pronged determination of disability i. Medical determination ii. Vocational determination 3. Yetman v. Garvey (7th Circ. 2001) Age Sixty Rule a. Petitioners are pilots aged 60+ i. Rule provided that until it was satisfied that medical standards could demonstrate an absence of risk factors in an individual sufficient to warrant more liberal exemption policy, pilots over 60 were to be prohibited from serving. b. FAA had discretionary power to establish a rigid policy c. Over/Under inclusiveness b. The Chenery Doctrine: Rules Versus Interpretations [370 387] i. Making Rules Through Adjudication 1. SEC v. Chenery Corp. (Chenery II) (1947) SCOTUS a. SEC, under Public Utility Holding Company Act, has to decide if reorganization of a holding company is good for the public. b. Chenery group the minority shareholders, higher ups in the holding company. c. Held: SEC had not previously been confronted with this specific issue, thus the agency must be able to use ad hoc adjudication. d. Chenery I (Before APA enacted): strongly suggested that the SEC could only create a new principle of law through rulemaking i. Compare Chenery II (After APA enacted): the choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency. e. Chenery II Doctrine: recognizing that agencies have the discretion to announce rules through the process of adjudication

ii. Bowen v. Georgetown University Hospital (1988) SCOTUS 1. Under Medicare Act, HHS secretary issued new schedule altering the method for calculating hospital costs. D.C. hospitals challenged the schedule. 2. 1983 District Court invalidated the schedule because it did not comply with notice and comment. 3. 1984 began notice and comment. 4. Congress amended the Act to provide different reimbursement process for years beginning in 1983 but the calculation for 1981 and 1982 remained in dispute. 5. District Court held that retroactive application was not justified. 6. Held: The appellate Court was correct in upholding the District Court s decision because retroactive application was inappropriate in this case. 7. Takeaway: a. Congressional enactments and administrative rules will not be construed to have retroactive effect unless their language requires this result. b. Structure and language of Medicare Act provided that the retroactive provision applied only on a case-by-case basis (Adjudication) and NOT to rulemaking. 8. Presumption against retroactivity: General presumption is against retroactivity unless there is clear intent included. The presumption is even greater where when an agency tried to make retroactive rules, which requires an explicit authorization in the agency s organic statute c. Varieties of Rulemaking: Formal, Informal, etc. [387-409; APA 556, 557] i. 556 ii. 557 iii. The Decline of Formal Rulemaking 1. United States v. Florida East Coast Ry. Co. (1973) SCOTUS a. The Commission issued a proposed rule with a notice to railroads to file statements of position within 60 days. i. This rule was proposed AFTER an investigation, a notice of proposed rulemaking, and an informal conference at which Appellees voiced concerns. The Commission concluded that the statute authorized it to impose incentive charges on freight car owners. b. SCOTUS concluded that the correct reading of 503(c) required an organic statute to expressly include the phrase on the record, or some similar verbal formulation, before the formal procedures of APA 556 and 557 would apply. iv. The Evolution of Informal Rulemaking 1. Florida East Coast = virtual disappearance of formal rulemaking. 2. Now, agencies seeking to promulgate legislative rules typically employ notice and comment through APA 553(b,c) a. Remember the 3 requirements: i. Published notice in the Federal Register ii. Offering interested parties the opportunity to comment iii. Publishing the final rule in the federal register with a statement of rule s basis and purpose v. Oral Hearings in Informal Rulemaking

1. Vermont Yankee v. NRDC (1978) SCOTUS Court cannot impose additional procedural requirements a. Hazardous and Solid Waste Amendments of 1984 authorized the EPA administrator to issue an order requiring corrective action whenever he determined that there had been a release of hazardous material. i. Those subject to corrective action orders would have right to public hearing. ii. EPA promulgated procedural regulations to govern these hearings the regulations provided that the formal adjudicatory procedures only applied to challenges of corrective action that included suspension or revocation or an assessment of civil penalties for noncompliance. b. Held: The regulations represented a reasonable interpretation of an ambiguous statutory provision and were not, on their face, inconsistent with the requirement of due process. i. Chevron deference! c. Takeaway: Courts have no authority to order rulemaking procedures beyond those required by the APA and the organic statute, except perhaps in the unusual case where an agency rule is really an adjudication under Londoner and Bi-Metallic such that due process requires a formal adjudicatory hearing. vi. The Notice Requirement 1. Shell Oil v. EPA (D.C. Circ. 1991) Logical Outgrowth Test a. EPA proposed a mixture rule regarding Solid and Hazardous Waste. Notice was a response the EPA made to the American Mining Congress. EPA says this should have alerted the interested parties. b. Final rule must be a logical outgrowth from the proposed rule. c. Held: EPA failed to demonstrate a logical outgrowth i. The comments were too sparse and ambiguous. d. Notice and Comment: [409-430; APA 553] i. 553 ii. Portland Cement v. Ruckelshaus (D.C. Circ. 1973) 1. Standards of performance under the clean air act. Statute required them to look at standards in real life application. The EPA skimped on total disclosure of the results. 2. The Court held that the Spirit of 553, to establish an informed rational dialogue, was violated because the EPA violated the opportunity to participate in the rulemaking language of 553(c). a. Focused on inadequacy of the data. iii. American Radio Relay League v. FCC (D.C. Circ. 2008) 1. Requires the FCC to publish staff reports on which it relies in their entirety, rather than merely including in the record the parts with which it agrees 2. Requires the FCC to address proposals by commenters with something more substantive than well, we ve always done it this way, so we see no need to change. iv. The Concise Statement of Basis and Purpose

1. United States v. Nova Scotia Food Products Corp. (2nd Circ. 1977) a. FDA sets minimum time-temperature-salinity requirement for all fish species. b. Nova Scotia argues that a species-by-species standard would be better. c. FDA rule finalized. d. The rule is enforced against the fish company. Company wants to challenge rulemaking e. Held: Concise general statement agency does NOT have to discuss every fact, but it is expected that the major issues of policy are articulated and why the agency reacted as it did is explained. f. Whitefish Doctrine: It is not in keeping with the rational process to leave vital questions, raised by comments which are of cogent materiality, completely unanswered. The agencies certainly have a good deal of discretion in expressing the basis of a rule, but the agencies cannot be as vague and ambiguous as the legislature. i. The Doctrine in Practice 1. Response Type 1: a. We received X comment. The commenter is assuming the agency will apply the rule in X manner. The agency has no intention of applying the rule as suggested. 2. Response Type 2: a. Commenter X argues that data it submitted tend to undermine the agency s conclusions. The agency has examined the data submitted and fond them inconclusive. 3. Response Type 3: a. Commenter X submitted data that led to a change in the rule from its form at proposal. The change is insubstantial, however, and the agency has elected not to share X s submitted data which were submitted as Confidential Business Information. v. Ex Parte Communications In Rulemakings 1. HBO v. FCC (D.C. Circ. 1977) a. Commissioners had input from companies off the record. Rules stated basis is in comments. Court invalidated the regulations and sent it back to the commission. b. HBO claims they did not have adequate notice and comment c. Held: Information gathered ex parte from the public which becomes relevant to a rulemaking will have to be disclosed at some time. On the other hand, we recognize that informal contacts between agencies and the public are the bread and butter of the process of administration and are completely appropriate so long as they do not frustrate judicial review or raise serious questions of fairness. d. Takeaway: i. Agency should either 1. Put everything on the record, OR

2. Deny that the ex parte communication was a reason for the final rule. e. Controlling External Influences In Rulemakings Through Process [432-455] i. Action for Children s Television (ACT) v. FCC (D.C. Circ. 1977) 1. ACT proposed rules to FCC under 553(e) (anyone has the right to petition an agency for the issuance, amendment, or repeal of a rule). a. Agencies typically summarily reject the application (but NOT officially because that would be a final disposition; this keeps them out of court) 2. Before FCC rejected the rulemaking, they posted a proposed rule. 3. As a result of the rulemaking, advertisers self-regulated and the FCC dropped its proposed rule 4. ACT argued that closed-door conversations (jawboning) were fundamental to the rulemaking. 5. Held: FCC did NOT violate 553 because no official and final rejection ii. Sierra Club v. Costle (D.C. Circ. 1981) 1. EPA issued new source performance standards to govern atmospheric emissions of sulfur dioxide. 2. Environmental Defense Fund challenged the rule on procedural errors undocketed ex parte communications. 3. White House contacts with EPA expressing its views. Court held not wrong, but actually important for agency to have the views of other executive agencies and President. iii. Impermissible Bias in Rulemakings 1. Association of National Advertisers v. FTC (D.C. Circ. 1979) a. Pertschuk had expressed opinions during rule making procedures. Move to disqualify him. b. Court held that it is not basis for disqualification in informal rulemaking procedures. c. Contrasted to bias of Federal Judge or to a Commissioner who must adjudicate. d. Less problem with bias in informal rulemaking. May be more of a problem in hybrid, formal rulemaking. Definitely a problem in adjudication. f. Exemptions from Notice and Comment [455-480; APA 552(a)(1)-(2), 553] i. 552(a)(1) ii. 552(a)(2) iii. 553: Rulemaking. 1. Three broad categories of rules and applicable procedures (1) Rules promulgated pursuant to the requirements of 553 (notice and comment) (2) Rules that are exempt from the requirements of 552, and (3) Formal Rules that must be promulgated using the trial like hearing procedures of 556 & 557. 2. Notice and Comment a. Procedural requirements of 553 include: notice, opportunity for comment, and a concise statement of basis and purpose. b. 553(b) notice must be published in the federal Register and must include the content of the rule, instructions for submitting comments, and other pertinent information.

c. 553(c) the agency shall give interested persons an opportunity to participate in the rulemaking through submission of written data, views, or arguments with or without opportunity for oral presentation. i. Note comments from the agency are in written form and the agency has discretion about whether to provide any type of oral hearing ii. 553(c) also requires the agency to incorporate in the rules adopted a concise general statement of their basis and purpose. This means the agency must explain why it adopted the rule. d. Paper Hearing The result of notice and comment i. This entails: 1. Notification of the public of the terms of the proposed rule and key data and info supporting it to provide full opportunity for comment; 2. Compilation by the agency of a record of all the comment and related data and information received 3. Provisions by the agency of an explanation of the final rule in which the agency responds to significant comments. iv. Subject Matter Exemptions 553(a) 1. Military or Foreign affairs functions of the United States interpreted broadly 2. A matter relating to agency management or personnel or to public property, loans, grants, benefits or contracts. a. Controversial b. Scholars consider this overbroad v. The Good Cause Exemption 553(b)(B) 1. Exempt when the agency finds (and incorporates the finding and a brief statement of reasons therefore in the rule issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to public interest. a. Procedural Note: The more detail in the reason for being exempt, the more likely the court will find in favor of the agency. b. Substantive Note: Disjunctive or suggests 3 categories (impracticable, unnecessary, or contrary to policy) vi. The Procedural Rule Exemption 1. Exempts rules of agency organization, procedure, or practice. 2. Disputes arise when a party that does not like the rule alleges that it is a substantive rule put in place without going through notice and comment. 3. Chamber of Commerce v. Labor Dept. a. Court Characterized an OSHA directive as substantive that gave employers a choice between participation in a program or submitting to an inspection. 4. James Hurson Associates v. Glickman a. Agency rule that eliminated an expedited face-to-face meeting as a method for obtaining approval of proposed food labels was considered procedural. 5. National Whistleblower Center v. NRC

a. Agency s decision to replace its good case standard for waiving a filing deadline with an unavoidable and extreme circumstances test was procedural. vii. The Interpretative Rule Exemption 553(b)(3)(A) American Mining Congress v. Mine Safety & Health Administration (D.C. Circ. 1993) 1. Regulation covered notification, investigation, reports and records of accidents, injuries, illnesses, employment and coal production in mines. a. Issued program policy letters which were intended to coordinate and convey agency policies, guidelines and interpretation to agency employees and the interested public. b. 3 of these Program Policy Letters were issued without notice or comment. 2. Held: The Program Policy Letters were interpretative rules 3. Takeaway: a. When something is purporting to restrict the agency s discretion, it is less likely to be a general policy. b. In deciding whether or not the rule has legal effect, examine the following questions (if ANY are true legislative rule): i. Whether in the absence of the rule there would NOT be a legislative basis for enforcing the action or other agency actions for ensuring the performance of duties; ii. Whether the rule had been published in the Code of Federal Regulations; iii. Whether the agency had invoked its general legislative authority; iv. Whether the rule had amended a prior legislative rule brought by it. 4. Leading case for distinction between legislative and interpretative rules 5. Exempts interpretative rules from informal rulemaking procedural requirements. 6. Non-exempt rules, often called legislative rules, have the same force and effect as a statute. viii. The Policy Statement Exemption 1. Pacific Gas & Electric Co. v. Federal Power Commission (D.C. Circ. 1974) a. During a national gas shortage, FPC issued a statement of general policy requiring curtailment plans ; one statement said that the first priority should be end use rather than previous contracts. b. Held: This is not procedurally defective because it was a general statement of policy and was exempt from the rulemaking requirements of the APA because it did not have the force of law. i. Formulates the Binding Effect standard Does the policy have binding legal effect? 2. Community Nutrition Institute v. Young (D.C. Circ. 1987) a. FDA established action levels for unavoidable food contaminants (aflatoxins). b. Held: Action levels were legislative rules i. 2 criteria distinguish interpretative/legislative rules 1. Statement of policy may not have present effect

2. Policy statement leaves agency a great deal of discretion c. The regulation was not legally binding on CNI, but rather on the FDA because it had to enforce it! Think Chenery Doctrines i. Chenery I: 1. Agency action only sustained on grounds invoked by the agency at the time it took action ii. Chenery II: 1. Agencies empowered to act either by rule or by order are free to choose the sequence of their proceedings and judicial interference therewith is improper. 3. The Practically Binding Standard a. Legislative if practically binding as determined by the court then procedurally invalid. g. Arbitrary and Capricious review [480 499; APA 706] i. 706 ii. Arbitrary and Capricious ( Hard Look ) Review 1. 706(2)(A) APA Arbitrary and Capricious Standard 2. National Tire Dealers v. Brinegar (D.C. Circ. 1974) a. Statute delegates mission that agency must set manufacturing standards for motor vehicle safety. At issue is Standard No. 117, requiring all pneumatic passenger information permanently molded into or on one sidewall of tire. Tire retreaders are claiming this is way too expensive to implement b. Court invalidates regulation- secretary used too strong, off-therecord assertions to support his argument in favor of the regulation. Court applies 706(2)(A) and determines that agency action is arbitrary. Agency gets unnecessarily skeptical in worrying about secondary purchasers of retread tires and need for permanent fixtures (secretary offers mere assertions ). Case about factual support in an informal agency action. 3. Motor Vehicle Manufacturers v. State Farm (1983) SCOTUS a. Passive Restraint system regulation b. Agency gave no consideration to modifying the standard to require airbag technology. i. No reasoning given that if only one of the restraints were feasible that NONE should be used. c. Hard Look Standard called this because it involves the agency s judgment i. Normally an agency rule would be arbitrary and capricious if (1) the agency has 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, or (4) is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. ii. The agency must explain the evidence which is available, and must offer a rational connection between the facts found and the choice made. h. Agency Interpretations Run Amok? [499-525]

i.

i. FCC v. FOX (2009) SCOTUS 1. Concerns obscene language broadcast on the Fox television network from two Billboard Music Awards shows from 2002 and 2003. 2. In 2004, the FCC prohibited "single uses of vulgar words" under any circumstances, including previous instances where it gave leeway for "fleeting" expletives that networks unknowingly allowed to enter the airwaves. 3. Held (Scalia): FCC did NOT act arbitrarily when it changed a long-standing policy and implemented a new ban on fleeting expletives 4. Courts interpreted this holding as requiring a 3-part test: a. Agency policy is permissible under the statute b. Agency has good reasons for the new policy c. Agency believes the new policy is better. ii. Ossification and Responses 1. Some have called for Congress to reduce APA s procedural requirements to the 3-step informal rulemaking process, others seek to add. 2. Congress has remained silent. iii. Negotiated Rulemaking 1. 1990 Congress enacted the Negotiated Rulemaking Act a. Create alternative profess for issuing a rule. b. Procedure: i. Agency assembles representatives of various interested parties to negotiate. ii. Agency issues notice of intent to use Negotiated Rulemaking iii. Once representatives are established, a neutral mediator chairs the negotiation sessions. iv. Goal is to reach consensus. v. Then the proposed rule is published in a Notice of Proposed Rulemaking for Comment (consistent with APA requirements) iv. Direct Final Rulemaking 1. 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 comment requesting changes or criticizes the regulations. v. Remand w/o Vacatur 1. Agency Rule that fails review that is allowed to stay in effect during continuing agency action. vi. The pre-Chevron Approach 1. NLRB v. Hearst Publications (1944) SCOTUS Chevron and Its Alternative [526-531, 543-549, 551-557] i. Chevron v. NRDC (1984) SCOTUS 1. Clean air act amendments made requirements applicable to states that had not achieved national standards established by EPA. 2. Amendments required States to establish a permit program for certain pollution sources of air pollution. 3. Held: EPA s definition of the word source is a permissible construction of the statute. a. EPA consistently viewed the definition of the word flexibly. 4. Takeaway Chevron 2-Step

(1) First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. b. (2) If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute. 5. Justifications for Chevron a. Implicit delegation b. Statutes today are VERY complex and require a great deal of policy judgments; Court decisions without deference could disrupt administrative balance. c. Agencies and administrators are more politically accountable for their decisions than Courts. ii. Skidmore v. Swift & Co. (1944) SCOTUS 1. Skidmore et. al. worked for Swift. They worked a normal 40-hour work week during the day, but sometimes stayed overnight to respond to fire alarms. 2. Given sleeping quarters and lounge, no other duties but responding to alarms (infrequent). 3. Paid a set amount per alarm responded to, in addition to weekly salary. 4. Fair Labor Standards Act a. Skidmore argues that they were entitled to time-and-a-half for extra hours worked. 5. Held: No principle of law found either in the Statute or in Court decisions precludes waiting time from also being working time. 6. Skidmore Doctrine: We consider that the rulings, interpretations and opinions of the Administrator under this Act, while not controlling upon the courts by reason of their authority, do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance. The weight of such a judgment in a particular case will depend upon 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, if lacking power to control. a. Stands for the idea that a certain amount of weight should be given, by the courts, to the administrators views b. Is this deference? i. Colburn argues that this allows the Court to come in with an open mind and decide if it is persuaded. 7. Overruled by Chevron No Chevron Deference Skidmore No Force of Law Skidmore less formal agency actions Force of Law Chevron

a.

j.

iii. Debating the Theory of Chevron 1. Scalia article (pg. 544) a. Doesn t like the binding nature of deference. b. Posits that it means little more than considering those views with attentiveness before possibly rejecting or accepting them. 2. Pierce article (pg. 547) a. When Court adopts Chevron, it is still ruling on a policy issue; it is ruling that deference to the agency s judgment is appropriate. iv. How Clear is Clear? 1. Yellow Transportation v. Michigan (2002) SCOTUS a. Interstate Commerce Commission allowed states to charge annual fees to interstate motor carriers. b. Some states discounted or waived registration in exchange for reciprocal treatment. c. ICC changed how it computed fees, and levied a fee on Yellow Transportation (who had a fee waived) d. Held: Because ICC s interpretation of the fee-cap provisions that States may not modify reciprocity, the Michigan Supreme Court erred in declining to enforce it i. Allowing states to disavow reciprocity agreements so as to alter any fee charged would potentially permit States to increase their revenues substantially under the new system, which the ICC reasonably believed that Congress did NOT intend. Statutory interpretations in the Chevron Era [567-574, 613-621] i. The Tools of Step-One Analysis 1. Plain Meaning a. Use of dictionary terms to determine their statutory meaning. b. Facilitates clear communication because all parties have access to same means of deciding what language means. 2. Legislative History a. Lobbyists and congressional staff can insert statements without action or participation by Congress arguably illegitimate for this reason. 3. Legislative Purpose a. Few statutes have a single purpose 4. Cannons of Construction a. Customary rules that courts have long utilized 5. Stare Decisis a. Adhering generally to prior decisions irrespective of whether current justices agree or not. 6. Dep t of Housing and Urban Development (HUD) v. Rucker (2002) SCOTUS a. Respondents are residents of housing projects. b. Each was evicted after their respective relatives were found to be using drugs in the houses, despite having signed lease agreements that made them subject to eviction if they or those living with them used drugs, with or without their knowledge. c. Held: SCOTUS focused on plain language as well as legislative history finding that Congress had intended this result.

ii. Chevron s Scope and the Mead Counter-Revolution 1. Between 1984 and 2000, lower courts had no guidance from the court as to the scope of Chevron deference. 2. Christensen v. Harris County (2000) SCOTUS a. Petitioners were deputy sheriffs employed by Harris County i. Agreed to accept compensatory time instead of cash. ii. Respondents concerned that they did not have adequate funds. iii. Respondents established a policy placing a maximum time limit for compensation time. b. Fair Labor Standards Act case c. Held: Appellate court correctly reversed the district court, and correctly held that the FLSA did not speak to the issue at bar. i. The act itself had clearly stated that the use of compensatory time could be compelled by the employer and its language was NOT ambiguous. ii. Plain Meaning. d. Takeaway: i. An employer has to honor the request of the employee for using the compensatory time within reasonable period following the request as long as the compensatory time should not disrupt the employer s operations. e. If agency action has the force of law Chevron deference k. The Modern Skidmore [621-645] i. United States v. Mead (2001) SCOTUS 1. Tariff class Rulings can be issued out of any of 46 customs offices OR headquarters (about 10-15 THOUSAND issued per year). a. Interpret the tariff schedule 2. Only binding to things that are exactly the same as at issue in the letter (EXACT PARTICULARITY). 3. Mead cascade Customs enabling statute Ruling letter Diaries, notebooks, address books 4. Mead Factors to Determine whether or not there is the force of law (none of these factors are controlling) a. Implied or express statutory delegation of lawmaking authority b. Relative Procedural formality of agency action under review c. Agency practice/treatment of interpretative format under review 5. Scalia dissent: a. Annoyed because believes that the court is introducing more ambiguity into the deference standard. ii. National Cable & telecomm. Ass n v. Brand X (2005) SCOTUS 1. Goes in the opposite direction of mead. 2. Companies could either provide access to Internet by acting as ISPs or could lease the ISPs 3. Commission initiated rulemaking and applied the classifications to cable companies.

l.

4. Commission said that internet service was information service and NOT telecommunication under the Act and was NOT subject to carrier regulations. a. Had to do with taxes 5. Brand X Doctrine: a. Allowing a judicial precedent to foreclose an agency from interpreting an ambiguous statute, as the Court of Appeals assumed it could, would allow a court s interpretation to override an agency s/Chevron s premise is that it is for agencies, not courts, to fill statutory gaps. The better rule is to hold judicial interpretations contained in precedents to the same demanding Chevron step one standard that applies if the court is reviewing the agency s construction on a blank slate: Only a judicial precedent holding that the statute unambiguously forecloses the agency s interpretation, and therefore contains no gap for the agency to fill, displaces a conflicting agency construction. 6. Dissent: a. This could allow agencies to overrule judicial decisions unconstitutional? Agency Interpretations of Agency Rules [645-662] i. Gonzalez v. Oregon (2006) SCOTUS 1. Death with Dignity Act, the first state law authorizing physicians to prescribe lethal doses of controlled substances to terminally ill patients. Attorney General John Ashcroft declared in 2001 that physician-assisted suicide violated the Controlled Substances Act of 1970 (CSA). Ashcroft threatened to revoke the medical licenses of physicians who took part in the practice. Oregon sued Ashcroft in federal district court. That court and, later the Ninth Circuit, held Ashcroft's directive illegal. The courts held that the CSA did not authorize the attorney general to regulate physicianassisted suicide, which was the sort of medical matter historically entrusted to the states 2. Held: Congress intended the CSA to prevent doctors only from engaging in illicit drug dealing, not to define general standards of state medical practice. Moreover, the CSA did not authorize Attorney General John Ashcroft to declare a medical practice authorized under state law to be illegitimate.

VI. Availability of Review Doctrines of reviewability preclusion, standing, exhaustion, and finality exert powerful influences over the court/agency relationship (and individuals affected by administrative agency action). In this final unit we review some of the common issues that arise under these doctrines. Notes from Colburn: y The requirements for reviewability are all nominally independent of one another. But in APA cases, if you have "final agency action" under the controlling statutes, regulations, and the meaning of 703 and 704 (Darby & Bennett), then practically speaking you have exhausted all necessary aspects of the administrative process, too. Exhaustion doctrine at that point is moot. Ripeness is still an independent question from finality, though, and

actually works to erect a common law barrier to review of some agency actions that are final in every sense. The Court has been a little uneven in its application of the Abbott Labs trilogy's test, but most administrative law experts think the Court is trying to cut back on pre-enforcement review, albeit carefully. Of course the DC Circuit still tends to resolve ripeness questions in favor of pre-enforcement review. Class Chart: 

Preclusion of Review APA 701(a) y Black v. Bowen y Lincoln v. Vigil y Heckler v. Chaney y Abbott labs different way to preclude other than the APA Finality/Ripeness/Exhaustion (WHEN questions) y No definition of finality in APA y Abbott Labs (2 factor test for ripeness) o Fitness of issue for judicial review o Hardship to the parties if the court refuses jurisdiction that is sought Applied in Toilet Association v. Gardner (no hardship to the parties in that case because their responsibilities to the world would not have been changed) y Franklin y Dalton y Bennett (2-factor test for finality) o To be final and action must:  Be the consummation of decision making process; and  Be the kind of action from which legal consequences follow.

Questions of Fact, Law, or Judgment Fact o First question is it under 556 and 557 these are on the record proceedings Substantial evidence is the appropriate standard of review.  What is the Substantial Evidence standard Universal Camera Standard Such relevant information o If it is not an on the record review, the Appropriate standard is Arbitrary and Capricious Challenges to Fact y ADAPSA v. FED o 706(2)(a)  Actions that are not on the record (Informal adjudication, usually) o 706(2)(a)  Proceeding that was on the record  Substantial Evidence review o Scalia said these two provisions are effectively the same.

y y

Universal Camera Reviewing action by NLRB after an adjudication ON THE RECORD o This is THE 706(2)(e) opinion Richardson v. Perales Formal adjudication (proceeding on the record) o Develops Universal Camera National Tire Dealers Informal adjudication o 706(2)(a)

Law o First Question: Is the Law ambiguous? Does Chevron Apply?  Mead states that chevron does not always apply y If agency has the force of law, it is given chevron deference y Factors in Mead to decide chevron deference o Implied or express statutory delegation of lawmaking authority o Relative procedural formality of agency action under review o Agency practice and treatment of interpretive format under review Judgment o State Farm Hard Look review  Normally an agency rule would be arbitrary and capricious if the agency has relied on factors which congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. o Class Notes: y State Farm Hard look standard o All about conclusions of what policy to adopt y FCC v. Fox Special case because it elaborates on Hard look (where an agency can t make up mind about what policy to adopt; reasoning appears to be at odds with its previous reasoning) o NO heightened standard o However, it is a minefield when an agency has said something different about the same issue. a. Preclusion of Review [663-679; 702-706; 713-720; APA 701-704] i. 701 ii. 702 iii. 703 1. The form of proceeding for judicial review is the special statutory review proceeding relevant to the subject matter in a court specified by statute or, in the absence of inadequacy thereof, any applicable form of legal action, including actions for declaratory judgments or writs of prohibitory or mandatory injunction or habeas corpus, in a court of competent jurisdiction. If no special statutory review proceeding is applicable, the action for judicial review may be brought etc. APA makes clear that you re only entitled to review after final agency action iv. 704

v. Reviewability 1. Preclusion a. Express Preclusion (Johnson v. Robison) i. If a statute clearly and unequivocally precludes all judicial review of an agency action, then courts will generally give the statute effect. ii. Even when expressly precluded, courts interpret Congress s words narrowly to conform with the APA s presumption of reviewability. iii. Courts are particularly protective of petitioner s ability to obtain review of agency action if the claim said action violates their constitutional rights. b. Johnson v. Robison (1974) SCOTUS i. Conscientious objector denied educational veterans benefits ii. Held: No explicit provision denied Courts to hear claims of constitutionality as pertained to agency action. 1. decisions of the administrator shall be final and conclusive and no court of the United States shall have power or jurisdiction to review such decision. a. Court emphasized the word decision 2. Constitutional questions are not in the hands of the administrator but in the hands of Congress. c. Implied Preclusion (Block v. CNI) i. Just because courts read explicit limitations on reviewability narrowly does NO mean they will not find implies preclusion. d. Block v. Community Nutrition Instituted (1984) SCOTUS i. Diary farmer case intense marketing competition. ii. Act authorized Secretary to issue milk marketing orders setting minimum prices that processors had to pay producers. iii. Purpose of the act was to raise producer prices to ensure that benefits and burdens were properly distributed. iv. Held: Judicial review unavailable 1. Clear from the Act that Congress did not intend to strip judiciary of its authority, but it was equally clear that Congress did not intend to limit the classes entitled to participate in the development of marker orders. v. Takeaway: Whether and to what extent a particular statute precludes judicial review is determined not only from its express language, but from the structure of its statutory scheme, its legislative history, and the nature of the administrative action involved implied. 2. Bowen v. Michigan Academy of Family Physicians (1986) SCOTUS a. Secretary contended that the Act, which authorized appeal by individuals, impliedly foreclosed administrative or judicial review by failing to authorize such review while simultaneously authorizing review of any determination order.

b. Held: Careful analysis of the statutory provisions and legislative history revealed that Congress intended to bar judicial review only of determinations of the amount of benefits. vi. Lincoln v. Vigil (1993) SCOTUS 1. Indian Children s program terminated direct clinical services 2. Held: Service s decision to discontinue the Program was not committed to agency discretion by law and therefore not subject to judicial review under APA 701(a)(2) 3. Lump Sum Doctrine a. No judicial review if your challenge is against how an agency is spending lump sum appropriations. vii. American Horse Protection Ass n Inc v. Lyng (D.C. Circ 1987) 1. A petition to an agency to make a rule under 553(e) is NOT the same thing as Heckler v. Cheney enforcement discretion, and is therefore reviewable. 2. Agencies tend to get a deferential standard of review, but cant complain that action isn t subject to review because petitioning is a different kind of agency action than enforcement action. viii. Heckler v. Chaney (1985) SCOTUS 1. Several prison inmates convicted of capital offenses and sentenced to death by lethal injection petitioned the Food and Drug Administration (FDA) alleging that the drugs to be used for their executions were not approved for use in human executions and therefore violated the Federal Food, Drug and Cosmetic Act (FDCA). 2. FDA denied enforcement of the Act. 3. Held: Presumptively unreviewable a. Refusals of administrative agencies to exercise enforcement authority involve a complicated balancing of factors, including agency allocation of scarce resources, which are not suitable for judicial review. i. Thus presumptively unreviewable under 701(a)(2). ii. This presumption CAN be rebutted where the substantive statute has provided guidelines for the agency to follow in exercising its enforcement powers. ix. Webster v. Doe (1988) SCOTUS Not in our book; extra case 1. The Director of the Central Intelligence Agency (CIA) determined that Respondent John Doe s homosexuality presented a security threat, and terminated his employment pursuant to authority under Section:102(c) of the National Security Act (Act). Respondent filed an action in District Court, and the CIA (Petitioner) moved to dismiss on the ground that Section:102(c) precluded judicial review of the Director s determination. 2. Under APA Section:701(a)(2), even when Congress has not affirmatively precluded judicial oversight, review is not to be had if the statute is drawn so that a court would have no meaningful standard against which to judge the agency s exercise of discretion. However, there is a heightened standard for congressional intent with respect to precluding constitutional claims: clear congressional intent must be demonstrated. b. Finality/Ripeness [727-750] i. Final Agency Action 1. 704

2. Franklin v. Massachusetts (1992) SCOTUS a. Census bureau case; home of record method used for overseas employees of Dept. of Defense. b. Held: POTUS is not an agency, thus there was no final action in this case. i. It was the president s report to Congress, not the secretary s report to POTUS that decides reapportionment. ii. The final act being a duty of the president is key in bolstering its weight and in demonstrating that his action is more than ministerial or ceremonial. 3. Dalton v. Specter (1994) SCOTUS a. Respondents sought to enjoin the secretary of defense from enforcing his decision to close the Philadelphia Naval Shipyard. b. Held: Judicial review unavailable i. Reports submitted to the commission were like the reports submitted to POTUS in Franklin; they were NOT final agency actions. ii. Again the importance of POTUS s role was emphasized. iii. NO FINAL AGENCY ACTION OCCURRED. 4. Bennett v. Spear (1997) SCOTUS a. The Fish and Wildlife Service was notified that an irrigation project might affect two endangered species of fish. FW Service concluded that the proposed long-term operation of the project was likely to jeopardize the species and decided to maintain minimum levels of water in certain reservoirs. The petitioners filed suit claiming the determination and imposition of minimum water levels violated the Endangered Species Act's requirement that the designated area's economic impact be considered. b. Held: Economic interest was sufficient to establish petitioner s standing in this case. c. Two-step test i. Action marked by the consummation of decision-making process ii. The type of action from which legal consequences flow. ii. Ripeness for Judicial Review 1. Abbott Labs v. Gardner (1967) SCOTUS a. Congress amended the Federal Food, Drug and Cosmetic Act in 1962 to require manufacturers of prescription drugs to print the established name (generic name) of the drug prominently and in type at least half as large as the type used for the proprietary name (brand name) on labels and other printed material. i. Purpose was to inform doctors and patients of drugs established names so they could be purchased at lower prices. b. Held: Nothing in the Act precludes pre-enforcement review i. A review of the legislative history of the Act reveal that the specific review provisions were designed to provide an additional remedy, and NOT to cut down more traditional channels of review. c. Ripeness test

i. Is the question fit for judicial resolution; and ii. Hardship of the parties as the result of withholding review must be shown. 2. Toilet Goods v. Gardner (1967) SCOTUS a. Held that judicial review of a regulation's validity was inappropriate because the controversy was not ripe for adjudication, in that it was not clear whether or when an inspection would be ordered and what reasons the Commissioner would give to justify his order, no primary conduct was affected, and no irremediable adverse consequences flowed from requiring a later challenge to the regulation by a Manufacturer who refused to allow inspection. c. The Duty to Exhaust Administrative Remedies [750-758; 768-779; APA 704] i. 704 ii. Duty to Exhaust Administrative Remedies 1. McKart v. United States (1969) SCOTUS a. Local draft board rules against guy seeking conscientious objector status. b. Guy doesn t to appeal reclassification to I-A. c. Interest in applying the exhaustion rule must outweigh burden placed on criminal defendant. d. Court says this is a purely an issue of statutory interpretation (not policy): e. Held: i. Court holds no exhaustion requirement in this case NONE of the policy reasons advanced by the government apply to THIS case. Pure issue of statutory interpretation, not about developing facts specific to McKart. Not many people out there in draft dodger land who look just like McKart. Say that this case can go forward 2. McGee v. United States (1971) SCOTUS a. Another draft dodger case. b. Guy finally gets medical exam but refuses to join. i. Essentially, not going through the process, but is not cooperating (straight up draft dodging) this is not inadvertent. c. Difference between McKart and McGee i. Question in McKart (was he a sole surviving son?) is an easily identified fact (did not need administrative procedure), but in McGee they DID need administrative process because they needed their expertise to identify whether or not the guy was an actual conscientious objector. iii. Statutory Exhaustion 1. Darby v. Cisneros (1993) SCOTUS a. Real estate developer wanted to get single-family mortgager insurance from Dept. Housing and Urban Development. b. ALJ made an initial debarment proceeding. c. Developer did not appeal to higher agency process.

i. Figured would have better chance in Federal Court than through Agency appeal. d. Is there something in the statute that would require someone bringing the suit to exhaust any other form of relief? e. Changes direction from McGee! i. Moves away from common law f. Rule: Unless statute specifically requires further administrative process, then it is final agency action. i. Look to 704 Except as otherwise expressly required by statute, agency action otherwise final is final for the purpose of this section. g. Held: The HUD statute and agency rules did not expressly require administrative exhaustion, so it was not required prior to seeking judicial review and the courts could not properly require it iv. Issue Exhaustion 1. Requirements are not absolute v. Agency Delay 1. Agencies often take a long time to reach decisions 2. Sometimes the result of Congress requiring the agency to take on more cases than it can reasonably handle results in an unintended delay in dispute resolution. d. Standing [781-794; 799-807] i. ADAPSO v. Camp (1970) SCOTUS Modern Standing Doctrine but look to Lujan for articulation 1. Traditional plaintiffs in this case people who will lose money. 2. Injury in fact Justice Douglass looks to the class of people and whether or not their interest is to be protected under the statute. 3. Essential tension between what the court does and Congress says in 702. 4. Held: a. Petitioners satisfied the injury test, not only through their allegations that competition by national banks would entail a future loss of profits, but also with proof that the American National Bank and Trust Company was servicing two of Petitioners prior customers i. The relevant section of the Act brought petitioners within the zone of interests the statute was designed to protect. ii. Statutes were clearly relevant within the meaning of 702 of the APA. iii. No evidence Congress sought to preclude judicial review. 5. Takeaway: The zone of interests test for standing requires that the interest sought to be protected be the sort of interest the statute was designed to protect 6. ADAPSO standing requires: a. Injury in fact b. APA c. Zone of Interest ii. Constitutional Standing 1. Allen v. Wright (1984) SCOTUS a. The IRS requires, as a condition for tax-exempt status, that schools not discriminate on the basis of race

b. Respondents brought a class action suit against the Petitioner, contending that Petitioner had not enforced its statutory mandate. Respondents argued that Petitioner s failure (1) amounted to federal support for segregated schools and (2) fostered the organization and expansion of such schools, thereby hindering efforts to bring about desegregation. c. Held that Respondents lacked standing i. For an injury to be sufficient ground for a lawsuit it must be distinct and palpable and not abstract, conjectural, or hypothetical. ii. Injury must be fairly traceable to the challenged action and relief from the injury must be likely to follow from a favorable decision. iii. The line of causation between that conduct and desegregation of Respondent s schools is highly indirect and results from the independent action of some third party not before the court. d. Brennan Dissent: i. Respondents alleged a direct causal relationship between government action in that the tax-exempt status granted by the IRS to discriminatory schools affects their ability to get an education at an integrated school. e. Takeaway: An asserted right to have the Government act in accordance with the law is not, alone, sufficient to establish standing. 2. FEC v. Akins (1998) SCOTUS Illustrates common source of disagreement regarding the injury in fact element of standing. a. FECA imposes recordkeeping and disclosure requirements upon political committees. i. Certain assistance does not count toward expenditure cap; e.g., if it takes the form of communication. b. FEC refused to bring an enforcement action petitioners appealed this decision. c. Held (Breyer): Voters seeking information, to which they believe the Act entitles them, have standing to challenge the FEC s decision NOT to bring an enforcement action. i. Voters had prejudicial standing ii. Inability to obtain information = Injury in fact. 3. Lujan v. Defenders of Wildlife (1992) SCOTUS Modern Standing a. Act promulgated to protect endangered species. i. Under the Act s authority, the Secretary declared that the Act applied to actions outside the Untied States. ii. The Secretary then reinterpreted the Act to apply to actions within the United States or the high seas. b. Plaintiffs (organizations dedicated to wildlife conservation) filed action against the Secretary seeking an injunction to have the initial interpretation reinstated. c. Held: No standing. i. Limited effect of the Act made the claim that not enforcing an injunction would result in injury was too speculative.

4.

ii. Also too speculative that action by the Court would have a substantial impact on the threatened species to be protected. d. Takeaway: i. Congress cannot create standing when an injury in fact, a causal connection, and redressability are not present. ii. Plaintiff must suffer: (1) injury in fact; (2) there must be causal connection between injury and the conduct; and (3) it must be likely that this injury will be redressed by a favorable decision. Any Person cause of action a. In 1970 s, legislation began to give a cause of action to any person. i. Not just a handler, producer, a manufacturer.