Origin and mandate of administrative agencies;

legislative control of administrative agencies

12/02/2011 09:51:00
The nature and functions of administrative agencies
• A. The origin and mandate of administrative agencies
o 1. Theories of the origin of administrative agencies
 1) First, focuses on an underlying social problem or
need to which the administrative apparatus is viewed as
the response.
 According to this view, administrative agencies
are created to serve some kind of “public interest”
or promote some “public value”. (pg. 6-8)
 2) Second, views the creation of administrative agency
as the outcome of a struggle among self-serving
legislators and the factions, interest groups, and
powerful individuals who compete for legislative prizes.
• B. Legislative control of administrative agencies
o Congress exercises control over federal administrative
agencies through a variety of mechanisms.
 1) Authorization
 2) Revision
 3) Appropriation
 4) Oversight
o How congress controls an agency…
 1) Congress creates and empowers admistrative
agencies through legislative authorization.
 A statute that provides for the creation of a
particular agency or confers upon it a particular
set of powers and responsibilities is usually called
an “authorizing act” or “enabling act.”
 2) A second form of legislative control is through
revision of the powers conferred by enabling acts or
actions taken pursuant to those powers.
 Revising or legislative veto
 3) Third power of the purse
 4) Oversight – catch all category
 What is administrative law?
• Will be looking at big agencies and independent agencies (these
work differently)
• We will be focusing on the federal level in this class
• States have their procedure acts and agencies
Headless fourth branch of government
• There is constitutional law in relation to the 3 branches of
government (in this class).
o Con law is here just as a framework
• There are 3 branches of government
o Legislative
o Executive
o Judicial
• Where does the “fourth branch” lie, where does it get its power?
Congress

Enabling Act(look this up) Agencies

• Scope
• Statutory
•
1. Authorization: the problem of delegation
• legislatures often create an administration agency to implement
public policy in a particular arena when they cannot predict or
agree-precisely what that policy should be.
• Hampton v. U.S
• Facts:
o A tariff statute imposed tariffs on various listed goods, and
authorized the president to alter tariffs if an investigation
proved that differences in costs of production warranted it.
But note that the president could act only after receiving
input from the Tariff Commission.
 Hampton, a NY company that imports barium dioxide
(input for an industrial process), objects to the
president raising the tariff by two cents ($0.04 to
$0.06) from the original statute.
o Issue: Does the tariff statute represent an unconstitutional
delegation of authority?
o Held (by Taft, unanimous): No.
 Note: The delegation is constitutional, but the opinion
has some mixed language about what constitutes an
appropriate delegation.
 Nondelegation Language
 “…it is a breach of the national fundamental law if
Congress gives up its legislative power and
transfers it to the President…” (supp.)
 Delegation Language
 “Congress has found it frequently necessary to
use officers of the executive branch within defined
limits, to secure the exact effect intended by its
acts of legislation, by vesting discretion in such
officers to make public regulations interpreting a
statute and directing the details of its execution…”
(supp.)
 “common sense requires that…Congress may
provide a Commission…to fix those rates….in
accord with a general rule that Congress first lays
down.” (67).
 Rule of Law from the Case [Intelligible Principle]
 What is constitutionally required, Taft held, is “an
intelligible principle to which the person or body
authorized to fix such rates is directed to
conform, such legislation action is not a forbidden
delegation of legislative power.” (supp).
  Result: Congress must make a general decision
about what the purpose of the statute, and the
delegation must be sufficiently cabined to enforce
conformance with that goal (“principle”). Here the
intelligible principle is clear: “equalize production
costs.”
 Rationale: Allows Congress to give some degree
of discretion, within clear limits, to the executive
branch to carry out its will, while still mitigating
democratic accountability and rule of law concerns
that attach to the delegation of quasi-legislative
power to agencies.
Problems with setting up agencies
• Delegation
o Art 1 §1 – vesting clause? Gives the government power
o Issues with “All legislative powers” what does this mean?
 This issue still comes up
• Enabling act
Field v. Clark
• The case that started the non-delegation doctrine
• The result of the case: congress can delegate to the president
certain power via any agency that is specific
• There are opportunities for there to be unconstitutional delegation
• Here this was not the case because there was enough fact finding…
•
Unintelligible principle – 1928 case (Hampton v. U.S)
• For the first time acknowledged that congress could delegate
policymaking authority, so long as the statute furnished “an
intelligible principle.”
CATCH PHRASE INTELLIGBLE PRINCPLE
• Panama Refining Company v. Ryan (1935) [pg. 17]
• Facts:
o In between Hampton and Panama we had the Great
Depression and the New Deal. While administrative agencies
predated the New Deal, they expanded greatly, in number,
scope, and power, after it.
  NIRA (National Industrial Recovery Act) is at issue in
this case. The specific provisoin at issue empowered the
president to prohibit the interstate transport of “Hot Oil”
(oil produced in excess of state limits).
 These shipments were already prohibited by
states, but the statute gave the president
authority to make it illegal under federal law as
well.
• Roosevelt exercised this authority (under §9
of NIRA) in 1933, and NIRA then issued
implementing regulations.
o Issue: Unconstitutional delegation of power to the president?
o Held: Yes. The court “found no standard for the President to
follow in deciding whether to close interstate commerce to
‘hot oil.’”(69, quoting casebook).
o Note on outcome: This was the first time a federal statute had
been struck down on nondelegation grounds, so this case was
significant at the time.
o Analysis:
 Unconstitutional because there is no intelligible
principle:
 Unlike in Hampton, there are no identified set of
circumstances or restrictions that would enable
one to predict, ex ante, why or when the
president might ban shipments of Hot Oil.
 “The Congress left the matter to the President
without standard or rule, to be dealt with as he
pleased.” (69).
 Critique (Solicitor General’s Argument)
 Argument: The president’s discretion is actually
narrower than that authorized by the statute in
Hampton.
 • Whereas in Hampton the president had
broad discretion to set tariffs at any price he
saw fit, here the president only has a binary
(illegal/legal) decision to make on the sale
of Hot Oil.
• Also, implicit in this is the “intelligible
principle” that the president should
proscribe Hot Oil shipments only if that
furthers the goals of the NIRA, which can be
gleaned from the Act itself.
 Counter: Hampton had a specific principle –
equalize costs of production – that bounded the
president’s discretion in a meaningful way. Here,
although the president can do only one thing, he
can do that thing entirely of his own accord,
without real restriction.
 Dissent (Cardozo):
 Similar to the SG’s argument, Cardozo says that
the purpose of the statute, which everyone is
aware of, is to promote fair competition.
 The court should look to the broader statute – the
NIRA – to ascertain the purpose (“intelligible
principle”) of the delegation. That linkage is
sufficient to render the discretion “canalized in
banks that keep it from overflowing.” (?).
New Deal legislation
• Problems here regarding the National industrial Recovery Act
(NIRA)
• Panama refinery (Oil case) pg. 17
o Delegation:
 To whom:
 Congress is giving the delegation to the president
 Scope of authority:
 To exclude from interstate commerce petroleum
products “produced or withdrawn from storage in
excess of the amount permitted…by any state law
or valid regulation…”
o Here the court found that there was no intelligible principle
• A.L.A Schechter Poultry Corp v. U.S.
• Facts:
• Another challenge to the NIRA, only five months after Panama. §3
of the NIRA allowed different industry groups to organize into guilds
and promulgate “codes of fair competition.”
o If the codes were approved by the President a subsequent
violation “shall be deemed an unfair method of competition in
commerce within the meaning of the Federal Trade
Commission Act” – which carried criminal fines of up to $500
a day.
 Before the President could approve the codes he had to
find that the guilds were representative of the industry,
and that the codes were not designed to promote
monopolies or to suppress competition.
 One of these codes was certified for the poultry
industry, and was challenged.
• Issue: Unconstitutional delegation of legislative power?
• Hold (Hughes; unanimous, including Cardozo who dissented in
Panama): Yes.
o Hughes, majority:
 Because “fair competition” can mean almost anything
under the statute, Congress has delegated the
regulation of virtually the entire economy to the
president and to industry groups. If anything violates
the nondelegation statute, this is it.
o Cardozo, concurs:
 The delegated power here, in contrast to Panama where
it was “canalized,” is “unconfined and vagrant.”
 Key Distinction: Scope of approval power (See note
on scope vs. breadth, above).
  Although, at first blush, the president seems to have a
binary approve/not approve power, similar to Panama,
in actuality the President can approve anything
presented to him as a code, which renders his scope
almost unlimited.
 “Unfair competition,” although not precisely defined, is
a term of art. “Fair competition,” on the other hand, has
no such well-established restrictions or limitations. (See
below for more).
• Analysis:
o Democratic Accountability:
 This is about as far as you can get from a
democratically elected group of legislators. The actual
substance of the codes, which effectively become
Federal law, are devised by private industry groups.
 Counter: The President still must approve the codes, so
it is technically the President engaging in the legislation,
not industry groups.
 (me) Is this different from an industry group today
drafting proposed rules or regulations which an agency
then implements?
 (me) Difference: That would be, for better or worse, a
below-the-table maneuver, not one that is specifically
sanctioned by statute.
o Procedural Safeguards: Other statutes that proscribe unfair
competition, such as the act that gives the FTC jurisdiction,
contain numerous procedural safeguards which are not found
in §3 of the NIRA (no formal hearing or review rights).
o No Intelligible Principle: Adequately Representative
 The limitations imposed on the President’s approval of
codes (e.g., that the trade group be adequately
representative of the industry) are simply too ague to
provide any meaningful restriction.
  Counter: Intelligible principle doesn’t need to be
extremely precise. Is “adequately representative” really
any vaguer than “equalize costs of production”
(Hampton)?
 Substantive Problem: A representative industry group
might include the four largest companies, comprising
90% of the market (and hence “representative”), but
ignore input from every small player. So this might not
provide any other intelligible principle beyond “in the
interest of the largest corporations.”
o No Intelligible Principle: Fair Competition
 Similarly, there is no intelligible principle governing the
actual content of the codes, which are designed to
promote “fair competition.”
 Fair Competition vs. Unfair Competition:
 Unfair competition, as used in the FTC statute, is a term
of art with a narrowed and specific meaning.
 “Fair competition,” as in § 3 of the NIRA, can cover just
about everything the industry does (e.g., working hour
regulations would not fall within the ambit of unfair
competition, but could be included by fair competition).
 Counter: The purpose of the NIRA is to allow industrial
self-regulation, including the ability to define what
constitutes “fair competition.”
 Critique: This still does nothing to cabin the President’s
ability to approve of any such proposed code. There is
no way to know, ex ante, whether a submitted code is
likely to be found to promote “fair competition” or not;
it is simply too vague.
o Schecther (sick chicken case)
 NIRA pg. 17
 Delegation
 To whom:
• To the president
 Scope of authority:
 • Authorized the president to approve “codes
of fair competition” for trades and
industries. Such codes could be approved,
upon application
 Long statement of the delegation of authority to
the president
• Is this an intelligible principle?
o On top the delegation there were
additional factors for the president to
consider
o Problem because it such a sweeping
delegation
o Trade associations played a role here
because
Two issues
 1) no intelligible principle
• Was too broad
• No set standard
• Was really expansive
 2) Involvement of 3rd parties
• Because they have an interest in the
outcome
o Can congress delegate to trade agencies?
 Pg. 20
 Carter v. Carter
 No, congress can’t….
 “The court found this delegation of legisltive
authority to private coal companies
unconstitutional: “this is legisltive delgation in its
most obnoxious form; for it is not even delgation
to an offical or an offical body;presumptively
distinterested, but to private persons whose
interest may be and often are adverse to the
interests of other in the same business.
Scope of authority cases
• Panama case
 • Scehter case
• Carter v. Carter
o Congress cannot delegate authority to 3rd parties (priviate)

Revitalization of Delegation
Yakus v. U.S. (1944) [pg. 21]
Facts:
• The Emergency Price Control Act (EPCA) of 1942, a wartime measure
designed to help ease turmoil in the domestic economy, allowed the price
administrator to set prices that were “fair and equitable and will
effectuate the purposes of this Act.”
o Yakus was charged and convicted of selling beef at more than the
regulated price, as set pursuant to the EPCA, and he brought a
nondelegaton challenge.
Hold (C.J. Stone, for eight member majority): No unconstitutional delegation.
Analysis:
• Functionalism:
o Stone upholds the EPCA using functionalist rhetoric. The
Constitution does not demand the impossible or the impracticable.
 All Congress must do is establish the basic conditions that
trigger the regulations; if the “filling in the details” work is
substantial, that is OK.
 “…Congress is not confined to that method of executing its
policy which involves the least possible delegation of
discretion to administrative officers.” (71).
o Rationale: As long as a Court can discern what Congress meant to
accomplish, that is sufficient to satisfy the “intelligible principle”
standard. Here the clear purpose is to avoid price gouging in the
midst of a world war.
o Key Consideration: Scope not Breadth (See note, above)
 The key consideration for the Court is whether the statute
sufficiently defines the limitations on the decision process of
the administrator, not whether the scope of the
administrator’s delegation is too large.
  The standards are “sufficiently definite and precise to enable
Congress, the courts and the public to ascertain whether the
Administrator, in fixing the designated prices, has conformed
to those standards.” (71).
• Dissent (Roberts):
o There is no intelligible principle here.
 The purpose that the majority discloses – that prices are not
supposed to be “excessive” – is completely open-ended and
provides little to no ex ante predictive value.
 The purpose or “standard” adduced seems to permit the
administrator to adopt any policy.
o Procedural Flaws:
 The administrator is not required to make factual findings in
support of his decision.
 There may be a hearing, at the discretion of the
administrator, but there is judicial review only in a special
court, and the burden is entirely on the objecting party to
show that the administrator’s chosen price is unreasonable.
• Historical Note: Yakus might have been exceptional in its leniency on the
delegation question, because it was decided at the beginning of a war
period, but history has not born that out
Revitalization of Delegation
Yakus v. U.S
Delegation
o To whom:
 Office of price Administration
o Here there was a process in place insofar as how the power
will be used
o Scope of authority:
 To fix generally fair and equitable rent and price ceilings
o This was up held

Industrial Union Dept, AFL CIO v. American Petroleum institute

• §3(8) and §6(b)(5)
• §3(8)
o Delegation
  To whom:
 Secretary labor
 Scope of authority
 Create standards responsibly necessary and
appropriate” to protect worker health and safety
o What can the secretary of labor regulate?
 Benzene
 The standard set a maximum exposure limit of
one part benzene per million parts of air (1 ppm).
o Dealing with an agency with scientic expertise
• §6(b)(5)
o Delegation
 dealing specifically with harmful toxic substances in
the workplace, directs the secretary to select that
standard which “most adequately assures,
 to the extent feasible, that no employee will
suffer material impairment of health or functional
capacity.
• Was this considered an intelligible principle:
o The SC did not strike it down and said there was an
intelligible principle
o The SC said that there was not enough
o SC reads Harmful toxic substances
 The secretary of labor did not find “significant risk of
harm”
• Based on the outcome of this case if I am the secretary of labor
what I am going to do?
o Find a significant risk of harm first….so I am setting this
standard….

American textile manufactures institute v. Donovan

• Builds on the significant risk of harm case
• The court squarely addressed the issue sidestepped in Benzene, by
ruling that, so long as the Secretary has found a “singifica risk of
harm
 o This ties up that cost/benefit question that arised Industrial
case above
o Issue with cost/benefit analysis
 Courts…unless it is written into the statute….the agency
is not mandated to include that into its analyzes, not
necessary unless it is written in…

Clean air act of 1970
• Congress gave power to Department of health, education, and
welfare to set national standards for automobile and power plant
emissions.
• EPA - §109
o Primary standard (a concentration level “requisite” to
protect the public health” with an adequate margin of safety”)
o Secondary standard – (a concentration level “requisite to
protect the public welfare_
• Public health – physical symptoms
• Public welfare – losing jobs
• PPM (Parts per million)
• Several parties had issues with the standard
o Industrial
o Trucking

American Trucking Litigation:

• American Trucking Associations, Inc. v. E.P.A. (D.C. Cir. 1989) [pg.
33]
o Facts:
 CAA instructs EPA to set NAAQSs at whatever standards
are requisite to protect public health with an adequate
margin of safety.
 Both Ozone and Particulate Matter 9PM) are non-
threshold pollutants (i.e., no known safe level of
exposure), but when EPA revised their NAAQSs to
make them tougher there were a number of
challenges, including an unconstitutional
delegation challenge.
 Hold: The CAA, as currently interpreted by the
EPA, posed a nondelegation problem. But the D.C.
Circuit remanded the case to the EPA in order to
provide an intelligible principle for setting the
NAAQSs in question.
 Majority Opinion (Stephen Williams for maj. of the
panel):
• Result:
o Rather than having the Court interpret
the statute in a way that avoids the
nondelegation problem (e.g.,
Benzene), Judge Williams remands to
give the EPA the first crack at this
task.
o If the agency does it successfully, and
articulates an intelligible principle that
can find support in the statute, then it
can revisit its NAAQS decisions in light
of that principle.
• No Intelligible Principle: Williams does not
find an intelligible principle governing the
application of various factors (which are
themselves intelligible).
o “EPA appears to have articulated no
‘intelligible principle’ to channel its
application of these factors; nor is one
apparent from the statute.” (40).
o For example, if the EPA is charged
with regulating “big guys,” and told to
consider “height and weight,” that is
insufficient. Although the factors to be
considered are intelligible, the process
of weighing them is not: how tall, or
how heavy, is a “big guy”?
• But the case is remanded
o Query: If the statute lacks an
intelligible principle, why does the
D.C. Circuit remand to the EPA?
Doesn’t Hampton require Congress,
not the administrative agency, to
provide the intelligible principle?
o Argument: If the EPA can construe
the CAA in such a way that it would
impose limiting criteria on its
discretion in setting the NAAQSs, then
there might no longer be a problem.
o Critique: The intelligible principle is
supposed to be “apparent from the
statute,” not supplied by the agency
itself.
o Counter (Defense of Williams’s
approach):
o For functionalist or pragmatic reasons,
it is important to avoid striking down
the CAA, an important statute that
has been on the books for a long
time.
o Concerns: Although EPA providing its
own intelligible principle would not
address democratic accountability
concerns, it would address rule of law
and administrative discretion
concerns.
o Critique (again): There may be good
policy reasons for Williams’s
approach, but what is the legal theory
that permits this?
o Response:
 o This is merely the agency construing
the statute, rather than a court
serving that function, as the Supreme
Court did in Dulles and in Benzene.
o If a Court can alter the statutory
language, as in Benzene (Stevens
approach), to avoid the nondelegation
problem, then presumably the agency
can do the same thing as well.
o Goal: Interpret the statute in a way
that imposes a proper limiting
principle, and then revisit its relevant
NAAQS analysis in light of that new
interpretation.
• Suggestions for an Intelligible Principle
o Judge Williams suggests several ways
in which the EPA might interpret the
CAA to provide an intelligible
principle.
o Examples: a zero-emissions standard
(hints this wouldn’t be approved),
cost-benefit analysis (“rough
equivalent of a generic unit of
harm…”), ask Congress for legislation,
or health-health tradeoffs (weigh
direct health effects of the more
stringent NAAQS against health
tradeoffs that result from harm to the
economy, including loss of jobs, etc.).
 Critique:
• Congress should make fundamental policy
decisions:
 o Similar to Rehnquist’s opinion in
Benzene, and the more general
critique of the constitutional
avoidance canon, the decision here
(how to make tradeoffs in setting
NAAQSs) is a decision that Congress
should not be able to punt on.
o There is a nondelegation problem here
and that can’t be removed simply by
allowing the agency to pick its own
intelligible principle.
• There is an intelligible principle (Judge
Tatel, in dissent)
o The intelligible principle is to protect
the public health with an adequate
margin of safety.
o While imprecise, it is no less imprecise
than other principles that have been
sustained as adequate to avoid the
nondelegation problem.
o See Marshall’s dissent in Benzene.
 Denial of Petition for Rehearing En Banc (Silberman,
dissent)
 Argues that the intelligible principle standard is
too weak, and that the Supreme Court should
revise the doctrine.
 But given the existing precedent on this point, it
is impossible for him to find a nondelegation
violation here, when it hasn’t been found in other
cases. Remand, as Williams suggests, is not
appropriate (See Tatel dissent, and Marshall in
Benzen).
American trucking associations, Inc. v. U.S. Environmental
protection agency
• What does the court find in this case?
o Was there an intelligible principle?
 No intelligible principle

 In the past where there is no intelligible
principle….deemed unconstitutional
 Here, in this case the agency was given the
opportunity to fix it…thus the case was remanded
so that the agency could fix it and make it an
intelligible principle
 The EPA was given the chance to turn it around
 D.C circuit says EPA fix it
Whitman v. American Trucking Assocation, Inc. (2001) [pg. 48]
• Hold (unanimous, Scalia writing): Reverses the D.C. Circuit
(Williams and Ginsberg, panel majority) on the nondelegation issue.
o The Court more or less endorses Judge Silberman’s rationale,
above. There is a long history of upholding seeming vague
intelligible principles.
o Note: The Court, however, declined Silberman’s invitation to
alter or strengthen the intelligible principle doctrine.
• Other Analysis:
o Stevens vs. Scalia dispute: Has Congress delegated legislative
power to the EPA?
 Recall from Mistretta that Scalia believes there is a
certain amount of discretionary lawmaking power
inherent in executive power.
 Scalia, as a strong formalist, wants to adhere tightly to
the notion of a clear separation between the three
branches.
 So he crafts a definition account of executive power
that allows for some discretionary lawmaking (that
looks a lot like legislative power).
 Stevens thinks this is nonsense. Just call it what it is –
legislative power – and don’t play games with words.
What is important is to decide how much legislative
power may be constitutionally delegated to the
executive branch.
 Note: Although they come from opposite sides of the
functionalist / formalist spectrum, the two justices wind
up at the same result in this case.
o Thomas (Concurrence): Strengthen Intelligible Principle
Standard
 Justice Thomas is willing to revisit and strengthen that
standard, as Silberman suggested, because he believes
the current doctrine is out of line with the intent of the
Framers.
 But, the doctrine being what it is, the result reached in
this case is correct, although he would be open to a
challenge to the existing doctrine in a future case.
 Note (Stephenson): this is a very typical strategy for
Thomas.
• Conclusions from American Trucking Litigation:
o The Supreme Court decisively rejects that the intelligible
principle will be rejected or revised in any serious way.
o Kent v. Dulles and Benzene are still good law, and indicate
that when the Court gets nervous about a delegation it might
attempt to limit it itself by ascribing a narrower intelligible
principle to the statute, but it clearly rejects Judge Williams’s
suggestion of giving the underlying agency the first attempt
at such a revision of the intelligible principle.
o Rule: The intelligible principle, vague though it may be,
must come from Congress, or be capable of discovery in
the statute by the Court, in order to satisfy the
nondelegation concerns. The agency itself cannot
discern it.

Whitman v. American trucking associations, inc
• What is the thrust of the outcome of this case?
• What was the major problem here?
o The SC said that it conditractory to allow an agency the
chance to fix something that was deemed unconstitutional in
the first place .
 o Thus, the agency should not be allowed to fix it…..it must go
back to congress to fix it…
• What did the SC court think about the intelligible principle?
o It found that there was an intelligible principle
• Other standards
o FTC  “unfair” methods of competition
 Example of a word that if left up to the agency to
determine
• “requite”  defined in this case
o pg. 31
 requiste, in turn, “means sufficient, but not more than
necessary”
• This case has a dissent
• Pg. 32 (bottom)
o Concurrences
Selective application of non-delegation doctrine Pg. 36
Touby v. U.S
• Involved a statute delegating to the attorney general the power to
designate certain drugs as “controlled substances,” with the result
that their manufacture or sale would be subject to criminal
penalties.
• In upholding the delegation, the court assumed…that greater
congressional specificity might be required in delegating power to
agencies to issue rules that are subject to criminal enforcement, but
nonetheless found the delegations sufficiently specific.
This are cases the supplement the cannon cases
• Touby v. U.S
o Delagation
 To whom:
 Attorney general
o Court found that there was an intelligible principle
o The reason this case came up was the criminal penalties
• Loving v. U.S
o Delegation
 To whom:
 The president
 o Issue here with criminal ramifications
• Mistretta v. U.S
Pg. 37
•Narrow interpretation of broad stautes
o “Even though the court has refused since 1935 to strike down
any statutes on delegation grounds, it has invoked the
doctrine from time to time as a basis for narrowly interpreting
broad stautes.
Zemel v. Rusk

Pg. 896
§551 – this is important – need to read
• (1) – its in the negative, tells us what an agency is not,
o Listed underneath tells us what is not an agency
 The branch that is excluded is the executive, however,
case law that has determined the president is not an
agency
• (4) “rule” is important
• (5) “rule making”
• (13) “agency action”
o this important to determine what triggers judicial review
Sections 551-559 address agency procedures such as rule making
and adjudications, and sections 701-706 address judicial review.

Enabling stautes
• Enabling statues have two basic purposes
o 1) to establish the agency and its powers
o 2) to set out the substantive rules of law the agency is to
carry out

E&E Notes – Delegation Doctrine

• The court’s cases on the delegation doctrine divide into two lines of
cases
o 1) Concerns federal statutes that delegate “quasi-legislative”
power, meaning the power to make rules that have a legal
effect on people’s everyday lives.
  The central issue in these cases is:
 Whether congress has given an agency so much
rulmaking discretion that congress has abdicated
its responsibility to excersie “all legislative
powers” granted in the consitution.
o 2) federal statutes that delegate “quasijudicial” power,
meaning the power (typically subject to judicial review) to
apply the law to particular cases and issue order that affect
the legal right of identified parties.
 The central issue in these cases:
 Whether congress has given so much adjudicatory
power to an agency that congress ahs
undermined federal courts authority to exercise
the judicial power of the U.S. constitution.
• NOTE: Congress delegation of executive powers to an executive
agency does not implicate the delegation doctrine.
o Constitutional issues d arise when congress delegates
executive power to agency or official is indepedent of
presidential control.

Rule: for congress’s delegation quasi-legislative power to agency or

offical:
• Congress can delegate quasi-legisaltive power as long as it gives
the agency (or offical) an “intelligible princple” to follow in
exercising that power.
o Note: Whehter the agency power is exteremly limited –
meaning very specific there is no requirement of intelligible
principle….on the hand where an agency’s regulation may
effect the entire national economy, substantial legislative
guidiance may be necessary.

The delegation doctrine today will apply only rarely, and even then will
usually result, not in the invalidation of a staute, but in a narrow
interpretation.
Rule: for congress’s delegation quasi-judicial power to agency or
offical:
• The ultimate question appears to be whether the delegation impairs
either an individudal’s interest in having a claim adjudicated by
impartial Article III judge or the structural interest in having an
independent judical branch decide matters that have traditionally
fallen within the core of Article III business.
The legislative veto 12/02/2011 09:51:00
The legislative veto 38-55
Congressional Control of Agency Decision-Making
• Tension: Delegation vs. Control
o Congress cannot do everything itself, so it has a strong
incentive to delegate some decision-making authority to
administrative agencies.
 However, Congress is also wary of too many (politically
and socially) important decisions falling to political
appointees outside of Congressional control, so
Congress has an incentive to attempt to retain control
of the agency.
 Note that this same tension is what motivates the
legislative veto provision in INS v. Chadha.
Overview of this Section:
• Congress cannot exercise control of administrative agencies
through…
o Self-Delegation (Bowsher)
o A legislative veto (Chadha)
• However, Congress can control administrative agency actions
through…
o The power of the purse [notes pg. 46]
 Carrot-stick mechanism
 Congress controls agency budgets, and can slash
them to little or nothing, or increase them greatly,
as it sees fit.
 Uses this power to exert pressure over agencies,
and their employees, which may be highly
responsive to budgetary threats.
 Influence priority setting through budgetary limitations
 Congress can implicitly alter how an agency
behaves (e.g., how aggressively it pursues
enforcement).
  Critique: Appropriations, though annual, still
require going through Article I, § 7 process, so
this is still more or less like passing legislation
(see below).
 Criticism:
 Blunt Tool: While the power of the purse is an
effective method of controlling agencies, it is also
a very blunt tool.
• Fiddling with budgetary constraints might
simply make an agency less effective
overall, when all Congress really wants is to
alter its behavior in one particular.
• While earmarking is a political reality, it is
constitutionally questionable and, hence,
often done under the table; which means
that it might not be perfectly effective in
controlling agency behavior.
 Political Accountability:
• Budget restrictions allow Congress to, for
instance, take political credit for passing
aggressive legislation, and then (partially)
shift the political accountability problem to
the executive branch by failing to fund the
legislation.
• Critique: The public is relatively dumb, but
it is not this dumb.
• Query: Should a Court be able to find that
Congress has implicitly repealed a statutory
mandate when it is drastically underfunded?
o An informal legislative veto [notes pg. 46-47]
  Generally: There is bargaining between Congress and
administrative agencies that go on all the time.
 Though this is not legally enforceable, and cannot
be codified into law, it is a political reality.
 Result: There are statutes with provisions that
look an awful lot like legislative vetoes, and that
probably aren’t constitutional if challenged, but
they aren’t challenged because of the need for the
agency to keep a good working relationship with
Congress.
 Formalism:
 Critique: This violates the formalist spirit of
Burger’s decisions in Bowsher and Chadha.
 Counter: Actually, it doesn’t. There are no formal
legislative vetoes, and the political process is
taking care of the functionalist concerns without
bastardizing the constitutional framework in the
process. This should make Burger (relatively)
happy.
o Passing new legislation pursuant to constitutional process
(Article I, § 7)
 (Stephenson) It might make more sense to call this
persistent political bargaining in the shadow of Article I,
§ 7, rather than an informal legislative veto.
 Congress and the executive agencies cooperate
because, in theory, agencies are worried that Congress
might otherwise retaliate through Article I, § 7
lawmaking.
o Congressional Review Act: Congress has overturned only one
regulation (out of more than 400) that has come before it,
but not clear if the very existence of the CRA is causing
agencies to consult more careful with Congress prior to
rulemaking.
o Hearings:
 This is another means, totally outside of the Article I, §
7 process, for Congress to exert control over
administrative agencies.
 Congress can require agency administrators to file
reports, attend and present at hearings, etc. Congress
can, if it wants, significantly add to the workload of an
agency (e.g., by turning the GAO on it) and, in addition,
drag its top officials into the public spotlight and
browbeat them.
o Procedural Organization and Structure:
 Congress can, in the initial Article I, § 7 delegation of
authority, structure the agency in such a way that
predisposes it toward certain behaviors, constituent
interests, etc.
 While this is part of the Article I, § 7 process, it is still
another means by which Congress may exert control
over agency actions.
Class 1/21/11
• Tarp hand out
o How does the tarp legislation fall into the other new deal
cannon cases…
• The broader in scope the delegation it will raise questions as to
whether there is enough guidance
Legislative control of agencies
• 1) creation/delegation
o enabling act
o sunset provisions
 agency set up for a certain amount of time or task
2) Revision of statue
o can eliminate
o or restructure
 Legislative veto – here because the court analogies as
to how congress is supposed to operate
• 3) Money/appropriations
o Money directed to the agencies
  The appropriations can be a lum sum or they can be
linked to certain tasks
 Thus, can be general or specific
 This distinction makes a different
 Appropriations often contain limiting language
• 4) Oversight
What we are looking at in this course will fall into one of the above
INS v. Chada (1983)
• Background:
o Immigration and Nationality Act of 1952 gives the power to
the AG to suspend the pending deportation of any alien.
Unlike the old system, it is now the AG (not Congress) acting
through the INS that makes individualized decisions not to
deport.
 However, the Act contains a legislative veto provision
which allows for the AG’s decision to be overridden by a
simple majority of either house of Congress.
 Note that the legislative veto was not particularly
innovative or rare. By 1983, when Chadha is decided,
there were over 200 such provisions in various statutes.
 Facts:
 Chadha overstays his student visa and is
scheduled for deportation. Applies to INS for a
suspension, and INS grants the request. A
resolution is then introduced in the House which
overturns the INS decision.
 Chadha, trying to prevent deportation, challenges
the constitutionality of the legislative veto
provision of the Act.
 Hold (Burger, majority): The legislative veto provision is
unconstitutional, but it is also severable from the Act.
 As in Bowsher, which comes after it, this is a
highly formalistic opinion by Burger.
 Congress cannot legislate without going through
the formal Article I, § 7 process, so the legislative
veto is unconstitutional.
 Analysis:
 Self-Delegation: (Unconstitutional, Formalist
Argument)
• The legislative avenues open to Congress
are full Article I, § 7 legislation, or the
delegation to an executive official to make
deportation decisions.
• What Congress cannot do is delegate
authority to make these decisions to itself,
skirting the Article I, § 7 process.
• Note: Even though this case precedes
Bowsher, this is similar to the argument
that Stevens makes (in his concurrence) in
that case.
 No Aggrandizement (Constitutional, Functionalist
Argument)
• General Argument:
o Congress is using the legislative veto
provision as a shield, not as a sword,
to ensure that its delegated authority
is properly used. Congress delegated
to the executive the authority to stay
deportations, and it wants to retain
some control over that authority.
o Note that this is a form of the
“greater includes the lesser”
argument: Congress could have
withheld power from the AG to
suspend deportations at all. That
Congress need not have granted this
power at all implies that Congress can
convey it to the AG with certain
restrictions on its use.
 • Nondelegation Concern Assuaged: This also
actually makes the delegation more
legitimate, by allowing Congress to maintain
ongoing involvement in the agency’s quasi-
legislative activities.
• Counter: Once Congress delegates authority
it is gone, and Congress cannot continue to
meddle in agency affairs.
 No New Legislation (Constitutional, Formalist
Argument)
• In response to the self-delegation argument
(above), it is contended that Congress is
not actually making any new legislation, it is
simply upholding the status quo.
• Status quo: And, under the Constitution,
changing the status quo requires the
approval of both houses of Congress and
the President. Upholding the status quo,
however, only requires one house of
Congress (to veto).
• Negative power: Like vetoing proposed
legislation (which would change the status
quo), the Congressional power here is
purely a negative power, and thus the
procedure is perfectly legitimate.
 Concurrence (Powell): Adjudication vs. Legislation
 Hold: Congress can use a legislative veto in some
circumstances, but not when the action in
question is so individualized and specific that it
looks like an adjudication decision.
 Generally:
• Powell believes the case was decided far too
broadly.
 • Here, Congress has involved itself in
adjudication. Rather than addressing
whether Congress can exercise a legislative
veto over something that looks like
legislative rule-making, Powell thinks the
Act is clearly unconstitutional because it
allows Congress to use a legislative veto
over an adjudication determination.
 Hypo: A legislative veto related to rulemaking by
the EPA in the context of setting NAAQSs would
be much less problematic for Justice Powell.
 Rationale: (me)
• To the extent that the legislative veto runs
the risk of encroaching on the adjudicative
or executive branches, a legislative veto in
the CAA context appears to be much more
concerned with legislative power. It thus
poses much less of an aggrandizement or
encroachment risk.
• Specific vs. General: Additionally, in the
CAA context the public accountability value
of the legislative veto is much higher, as the
public at large is going to be more
concerned with general environmental
regulations than with individual deportation
decisions, as in Chadha.
o Critique: Individual cases set
precedent that can be just as
important as a general rulemaking, so
people will care about individual
decisions.
o Counter (me): This is Powell’s exact
point: things that apply to individuals,
especially when they are
adjudications, should not be subjected
to legislative vetoes.
 Dissent (White): Functionalist Dissent
 Hold: The legislative veto is fine because it is
attached to the original Congressional grant of
power, and because it promotes democratic
principles.
 Democratic Accountability:
• Insofar as Congress is more democratically
accountable than administrative agencies,
the legislative veto is a good thing because
it enables ongoing control (and thus
increased accountability) of administrative
agencies.
• Critique: This Congressional influence is (a)
applied to only a few individuals, at least in
this case and (b) largely opaque in a way
that doesn’t really increase political
accountability in any meaningful way.
 Legislative Difficulty:
• Thinks the majority places Congress on the
horns of a dilemma:
o EITHER Congress must not delegate
at all
o OR Congress must delegate away all
its power, with no restrictions (as in
Chadha).
• Given the size and complexity of
governmental affairs, the legislative veto is
a necessary tool to enable Congress to
engage in necessary delegations of
legislative power, while still retaining the
appropriate balance of power between the
executive and the legislative.
 Critiques:
• Congressional Control Undesirable:
 o Maintaining ongoing political control
over administrative agencies may not
be necessary or desirable.
o This control undermines agency
independence, and breaks down the
desired insulation from the political
process.
o (me) In addition, Congress does
maintain some control over agency
implementation of Congressional laws,
insofar as it can exercise its
appointment veto.
• Limited Delegation:
o If, as White argues, removing the
legislative veto would make
delegation less attractive for
Congress, then perhaps this is a good
outcome.
o Without the legislative veto, perhaps
Congress will enact more specific
legislation on its own, and make more
democratically accountable policy
decisions.
o Recall Hampton: legislation is
supposed to be difficult. If Congress
doesn’t have the time to legislate with
appropriate specificity, then perhaps it
shouldn’t legislate at all.
o Critique: This might not lead to less
legislation, only to bad legislation.
 Note that this dissent by White has shades of
using a formalist rationale (the separations of
powers are important) for reaching a functionalist
result (the legislative veto is necessary to conduct
efficient government).
 Severability:
  Argument: A separate part of the opinion, the
Court argues that the history of the Act indicates
that Congress wanted to retain control of the
individual deportation decisions (through a
legislative veto) if possible, but that the essential
purpose of the Act was to delegate these
decisions to the AG so that Congress didn’t have
to continually make them.
 Counter: Congress would not have delegated but
for the legislative veto provision. Without that,
Congress would have kept all the power for itself.
 Conclusion: The legislative veto provision is
severable.
 Generally: The Court has to face this same
question in a number of statutes. Most of the time
the Court concludes that the legislative veto
provision is severable, but there are a few where
it comes out the other way.

Immigration and naturalization service v. Chadha

Suspension process – in regards to immigration
• §244(a)(1),
o delegation to whom: AG
o “attorney general may, in his discretion, suspend deportation
and adjust status to that of an alien lawfully admitted for
permanent residence, in the case of an alien applies to the AG
for suspension of deportation
 AG – looks at three things in making his determination
• (c)(1),
o the immigration judge suspended deportaion and a report of
the suspension was transimitted to congress
• (c)(2)
o congress had the power under (c)(2)…to veto the AG’s
determination…
o in the case of an alien specified in paragraph (1) of subsection
(a) of this subsection
• Deportation statuts (default) suspensiondeport
• What are the critical constitutional issues in this case?
o Presentment and bicameralism these from Art I. Sec. I
• The issues in this case stem from section 7
o bicameralism house/senate
o Presentment, president
• Pg. 46 – “examination of the action taken here by one house
pursuant to 244(c)(2) revals that is was essentially legislative in
purpose and effect…..”
• What is the difference between Burger and the dissent?
o The scope of delegation is the crux here
o The majority is saying that if you are going to delegate your
authority you must delegate all of it
 Congress must delegate completely
o The dissent is saying …about the resolution that was passed
 No departure from the default can take place without
certain triggers
 Dissent is there was no legislative action here because
there was a default
• There is a delegation issue here even though the case focuses on
presentment and bicameralism
• This is the revision section of the text book here because
• Pg. 47…we see that when the framer intended to authorize either
House of congress to act alone and outside of its prescribed
bicameral legislative role, they narrowly and precisely defined the
procuded for such action. There are four provisions in the
consitution, explict and unambigouos, by which one house may act
alone with the unreviewable force of law, not subject to the
president’s veto:
o (a)….
• There is another issue at the end of the case
o How did the court deal with affect of this provision going
forward?
 The SC determined that the statue was severable
 Just took out the legislative veto
  Raises the question what was congress intent with
this staute…
 What will congress do in the future
 Sunset provision
 Congressional review act
• Look at pg. 911 – “congressional review
agency rulemaking”
o §801. Congressional review
 The congressional review act
has only been used once
 “Before a rule can take
effect, the federal agency
probmulgating such rule
shall submit to each house
of the congress and to the
comptroller general a
report containing—“
How congress is going to operation
• Bicameralism
• Presentiment
• Must adhere to the legislative process

Examples and Explanation

• When congress retains power for itself over over administrative
matters, we worry that congress may be “aggrandizing” itself at the
expense of the other branches.
o The U.S supreme court has invalidated four ways that
congress has tried to retain control of administrative
agencies:
 1) by appointing administrative officials
 congress can appoint officials to help it exercise
its legislative powers
 2) by having members of congress themselves serve on
administrative bodies
 3) by controlling the removal of administrative officials
  the consitution prescribes only one way for
congress to remove “officers of the U.S.” by
IMPEACHMENT
• Impeachment limited to: treason, bribery,
or other high crimes and misdemeanors
 4) by exercising a legislative veto over administrative
action
 5) the oversight power
 via congressional committees..
Appropriations: line items and the line item veto;
Executive control of administrative agencies
12/02/2011 09:51:00
Appropriations: line items and the line-item veto
• Congress can, in principle, exercise a good deal of control over
administrative action through the annual appropriation.
• There are three dimensions to the influence wielded via the
appropriations process.
o 1) First, of course is the sheer size of the appropriation.
o 2) Second…is the specificity or generality of the budgetary
categories used in the appropriations act.
 General vs. narrow use of monies
 By contrast, congress can exercise a great deal more
control over the agency’s priorities and activities by
earmarking appropriated fund more narrowly for a
specific statutory program or even for a specifically
identified project.
o 3) Appropriations acts often contain “riders” or specific
statutory language placing additional constraints or conditions
on agency powers beyond those contained in its enabling
acts.
 Riders have the life of one year
• In formal sense, appropriations legislation is just like any other
legislation: it must be passed by both houses of congress and
submitted to the president for approval or veto.
o Appropriations legislation is unique, for two reasons
 1) the sheer enormity of the scope of appropriations
acts.
 2) Time pressure
 Because the government would shut down
without money
Line item veto
• Gave the president authority to “cancel” certain spending and tax
benefit provisions of a duly enacted appropriations bill within five
days after signing the bill into law.
 o Can be overridden by a disapproval bull (adopted in the usual
manner for enacting legislation).
• Clinton v. City of New York
o - strikes down the Line Item Veto - cannot give president the
unilateral power to change the text of a duly enacted statute
Class notes
• How an agency is created and controlled
o Authorization
o Enabling act
o Revision
 Legislative act (chada)
 Chada dealt with issues of presentment of
bicameralism
o Appropriation- $
 Size
 Specific/general
 “riders”
 Clinton v. NY
 Tax/spending and budget
o “Oversight” (generally)

• Legislative veto
o Ins v. Chada
 Whether one house could override the attorney
general’s decision?

Appropriations: line items and the line-item veti

• 3 divisions
o Clinton v. City of new york
 “line item veto – tax + spending”  makes distinction
between “cancel” v. “return”
 3 required findings
 5 day window
 Clinton used the line item veto over 82 times
 There was money that was supposed to go NY
  This line item veto canceled certain things in the
spending bil…
 What does it mean to cancel ?
 What we are dealing with here is with a bill that is
pushed through both houses it is enacted by the
president but then 5 days he cancels certain parts of it
 Field v. Clark (delegation case) pg. 59 directed
the president to suspsend that exemption…
 Pg. 60
 List three cricital differences between the power
to suspend the exemption from import duties and
the power to cancel portions of duly enacted
statute.

Tariff Act
Clintion
• Contingent
1) discretionary
o Duty
2) discretionary
 Executive policy embedded in the staute
3) discretionary

Pg. 61
• Notes and questions
o Formalist vs. functional approach
 Chada – formalist
• We know how congress creates and agency….and how congress has
power over agency
• There is no legislative veto anymore (Chada)
• Oversight
o How congress reins in agencies…

Executive control of administrative agencies

• Article II, § 1, of the consitution provides that. “the executive
power shall be vested in a president of the Unitied states of
ameriac.”
o Executive is given broad authority in foreign affairs, but his
domestic powers grow out Article II, § 3, which requires the
President to “take care that the laws be faithfully executed.”
• 1. Appointment and removal powers
o a. appointment power

o Appointment of Officers and Inferior Officers

(see handout)
 “Appointments Clause” – Article 2, Section 2
 The President shall nominate and appoint all
officers of the United States whose appointments
are not otherwise provided for in the Constitution
of by law, but Congress may enact laws allowing
the President, Heads of Departments, or Courts of
Law to appoint inferior officers
 Buckley v. Valeo (1976)
 Congress proposed a scheme to appointment
members to the Federal Elections Committee that
would have had two members appointed by the
Senate, two by the House, and two by the President.
The Supreme Court held that this was clearly
unconstitutional.
 Principle officers
• Must be appointed by the President with the
advice and consent of the Senate
• Congress cannot appoint executive officers
o Cannot take power away from the
executive by appointing officers with
executive duties
 Inferior officers
• Congress may allow inferior officers to be
appointed by the President, Heads of
Departments, or Courts of Law
 • Edmond
o Generally speaking, “inferior officer”
connotes a relationship with some
higher ranking officer or officers below
the President
 Employees
• People who do not exercise “significant
authority pursuant to the laws of the United
States” do not need to be hired pursuant to
the Appointments Clause
Class notes 2/3/11

• Default rule is that appointment must go through president with the

advice and consent of the senate
• Problem with the appointment clause in Buckley was that it violated
the appointments clause…
o Buckley deals with what officer is and the appointment
process
o Senate has narrow for superior officers

Executive power over agencies

• Pg. 65
o Article II…executive power
o Independent vs. executive agencies
 Why?
 Not subject to politics
 Accountability independence with
• Example
o Enabling act
 DHHS department (15)
 There is a secretary of the DHHS
• FDA (agency)
o Will have a commissioner
 Example of agency insulated from the president
 FTC
 • Multiple commissioner/agency
• Pg. 66
o How the agency were created
o A lot of the agencies came out during the New Deal
What is difference between executive and independent agencies?
• Appointment power –pg. 67
o Article 2 section 2 clause 2
 “president shall appoint officers of the united
states
 Checked by the “advice and consent of
senate”
• Checked by “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”
Series of case…
• Myers
• Humprey’s executive
• Bowsher
• =
• Morrison
• Edmonds

Appoint clause case

Appoint power can be given to any of these three groups
President alone
Courts of law
Heads of department (P(HOB))
Buckley v. Valeo
• Congress made an amendment to the qualifications for how persons
get appointed to the FEC
• Appoints to the FEC
o Why is this a violation of the appointment clause?
  The narrow holding of this case…that congress holding 2
senate and 2 house appoints is not ok…
 Look to the text of the constitution and nowhere is
there any mention of this kind of appointment power
• Important language
o Government employees are not inferior officers
o Pg. 69
 “Insofar as the powers confinded in the commission….”
 This is important because if we have a delegation of
certain authorties the courts are going to severe this
different authorites in the context of different
authorties..
• Important
o Note 2 – incompatibility clause – cannot have a congressional
member sitting on a congressional committee
o Note 3 – president appointing article III judges to this
commission
 Court is looking at a separation of power issue here

Removal Power

Constitution is silent as to the removal of officers, but there is

significant case law
• Presidential Removal Power
o Myers (1926)
 Purely executive officials may be removed at will by the
President
 The Rules after Myers
 Removal power is plenary for superior officers.
• For inferior officers Congress may attach
certain restrictions (as in the Civil Service
cases, see Perkins) but it may not directly
involve itself.
 o Note that Myers was highly
controversial when decided, and less
than a decade afterward the Supreme
Court cut back on its holding
significantly in Humphrey’s Executor.
Class notes 2/3/11

Deals with a statute the deals with removal…

What did congress do with regards to remove
• Congress reserved power for itself
• Within the statue included a rule for removal for themselves

• Humphrey’s Executor (1935) – old standard

o Congress can condition the President’s removal power…
o President could not remove an FTC commissioner without
good cause
 This was not a purely executive role but included quasi-
legislative and quasi-judicial powers
 Distinguishing Myers from Humphrey’s:
 The Supreme Court distinguished between
executive branch agencies and independent
commissions.
• The argument being that there is a
fundamental difference between the Postal
Service and the FTC, so the removal rules
ought to be different as well.
Class notes 2/3/11
• Federal trade commission act
• Clear limitations are spelled out
• Humphrey
o Court found that the limitations were ok
o The language was ok
o The president did not follow the limitations
o Seems to go against some of the dicta from the Meyers cause
o There was not violation
• Morrison (1988) – modern standard
 o See above
Legislative Removal Power
• All executive powers must rest with executive officials
o Congress may not remove executive officials
Bowsher v. Synar
• Congress assigned the Comptroller General authority to execute an
Act so he clearly had executive duties and is, therefore, not subject
to legislative removal
Background:
• Congress very concerned about fiscal self-discipline, so in 1985 it
passes the Gramm-Rudman-Hollings Act.
o Sets annual deficit targets, with across the board cuts to get
down to the limit.
 Problem: To figure out what the deficit will be, and how
much the budget needs to be cut, turns out to be a
substantively difficult task, and since it is such a
politically charged issue there are incentives to fudge
things in one direction or another.
 Proposed Solution: The Act addresses this
problem by delegating the calculations to the
Comptroller General (CG), the head of the
General Accounting Office (GAO).
• Facts:
o The GAO was created by a 1921 statute which states that the
CG can be removed “for cause” by a joint resolution of
Congress. A joint resolution needs to be passed by both
houses and must be signed by the President.
o Synar, a Congressman who opposed the GRH Act, challenges
its constitutionality.
• Issue: Is the CG’s potential removal by Congress constitutional?
• Hold (Burger, majority): No. Legislative self-delegations are
unconstitutional.
o Ultimately the problem is that the CG is under the control of
Congress but exercising executive power (executing and
interpreting an act of Congress).
 o This confluence of powers – a legislative agency exercising
executive power – is an unconstitutional violation of the
separation of powers.
• Analysis:
o “Who owns the GAO”?
 The majority first notes that GAO is an arm of
Congress, something that is made clear primarily
because it is Congress, and not the President, that can
initiate removal proceedings.
 Thus, the CG is exercising legislative power, not
executive power.
 Counter: This doesn’t consider the fact that Congress
can only remove “for cause,” and that they are required
to obtain the President’s signature.
o Reconciling Bowsher with Humphrey’s:
 In Humphrey’s the investigation was whether the FTC
was independent of the President. The Court concluded
it was because removal could only be “for cause,” which
imposed limitations on the President.
 In Bowsher, on the other hand, the question is whether
the CG is independent of Congress. Because the “cause”
for which the CG can be removed is broad, the Court
concludes there is no independence.
 Result: “for cause” can be construed more or less
broadly. The more narrowly it is construed the more of
a constraint that puts on the removal power .
 By Bowsher, however, the Supreme Court appears to
construe “for cause” quite broadly, which leads to the
conclusion that the removal power of Congress is
relatively unconstrained.
 This is a concern because it means that the CG might
be beholden to Congress (e.g., for his job) in a more
significant way than if “for cause” imposed a truly
meaningful limitation on the Congressional removal
power.
  Critique: Doesn’t Congress always retain some
significant control over an official (e.g., the ability to
legislate to reduce the agency’s budget or jurisdiction,
etc.)? Does it really make sense to worry overmuch
about Congressional involvement in removal?
 Counter: The fact that Congress can do something
through formal Article I, § 7 legislation does not mean
that they should be allowed to them bypass all of the
procedural requirements that legislation entails.
 Although Congress could abolish the office of
Comptroller General tomorrow, by legislation, this
would require walking a more difficult procedural road
(and also result in more political fallout) than utilizing
the current removal provision, even though both would
accomplish the same goal.
o Functionalism vs. Formalism:
 Note: Remember that Burger is a super-formalist on
these matters, although his opinion picks up votes from
O’Connor and Rehnquist, both of whom are much more
functionalist.
 Functionalist Appeal:
 The concern here, although Burger doesn’t focus on this
in his opinion, is Congressional aggrandizement:
Congress usurping the executive branch’s power by
investing a legislative agency with executive power.
 This concern is likely what draws in the likes of
O’Connor and Rehnquist.
 Note that Stevens concurrence, which focuses on the
legislative character of the GAO and the impropriety of
self-delegation outside the formal legislative process is
a nice mix of functionalist and formalist themes.
Class notes 2/3/11
• Bowsher v. Synar
o Several different duties given to the comptroller
o Problem was that the reductions could be binding on the
agencies
 o The problem is here was that there was a rule making
function
o Has to be specific…
• Non-officer can come in 2 different flavors
o 1) an aid
o 2) general employees

Different date
Where do we get the power of removal?
There is constitutional silence on this matter
Pg. 72 – general propostion
Myers v. United states
• Myers was post master 1st class and there was law passed that 1st,
2nd 3rd post master should be removed with the advice and consent
of the senate
• The issue was whether this constitutionally infringe on the
president’s power.
• Congress reserved for itself the right to intervene in the removal
process
• First case dealing with how congress can place itself in statute with
regards to removal powers
• Pg. 73 – quasi judial matters discussed
• Holding: narrow: congress preserving for itself the power to
remove….
Humprehey’s executor v. U.S.
• Member of federal trade commission was being removed
• Brought suit for back pay
• Can only remove commissioner for “inefficeny, neglect of duty, or
malfeasnace in officer”
• Dealing with restriction on the president’s removal power
Myers is purely executive function
Bowsher v. Synar
• what were the functions at issue here?
• Problem for the SC is what happens when the targets were not
being met..
• Drawing line between
 • What triggers the issuer here?

Appointment and removal reconsidered: the independent counsel

Morrison v. Olsen (1988)
• Special court appoints an independent counsel to investigate
executive officials
• SC holds that the independent counsel was an inferior officer and,
therefore, a Court of Law could appoint her
o Her appointment was temporary, she was limited in
jurisdiction, and was removable by the Attorney General for
cause
• Removal
o President could not remove her without good cause
o Must look to whether a restriction on the President’s removal
impede the President’s ability to faithfully execute the law
 “For good cause” restriction does not
• Hold (Rehnquist): The Act is constitutional.
o The Court concludes (7-1) that the IC is an inferior officer. No
one factor (see below) is dispositive, but taken together the
IC looks like an inferior officer.
 This would have been enough, under Perkins, to
authorize removal restrictions, but the Court goes
further and repudiates Humphrey’s and Myers by
replacing the quasi-/pure formalist test with an
aggrandizement/encroachment functionalist balancing
test.
• Constitutionality of Removal Authority:
o The argument that it is unconstitutional is that the IC is not
making any policy and so, in fact, the authority exercised is
purely executive. Indeed, the IC is a prosecutor, and it
doesn’t get much more purely executive than a prosecutor.
 Indeed, the Morrison majority stressed the executive
(prosecutorial) functions of the IC.
  Under Humphrey’s Executor this would clearly
seem to fall on the “core executive” side of the
line, and thus limit the ability of the Congress to
restrict removal.
• On the other side, the Court finds the
statute constitutional (and reconciles it with
Humphrey’s and Meyers) by focusing on
aggrandizement:
• Rehnquist concludes that there is no
aggrandizement concern in this statute:
“this case simply does not pose a ‘dange[r]
of congressional usurpation of Executive
Branch functions.’” (164).
• Result: Humphrey’s is expressly
repudiated and the Court makes the
central touchstone for removal challenges
whether or not the executive’s power is
excessively infringed upon.
• If there is aggrandizement this will almost
certainly be found.
• Things are murkier, however, if it is only
encroachment alleged.
 Encroachment:
 Morrison does not stand for the proposition that
only aggrandizement is problematic when it
comes to evaluating the Constitutionality of
removal provisions.
 Aggrandizement is a bigger concern, but if
encroachment “impede[s] the President’s ability
to perform his constitutional duty…” (164) then it
may be grounds for a finding of
unconstitutionality as well.
o Functionalism vs. Formalism:
  In repudiating the Humphrey’s core/quasi distinction,
the Court moves away from a formalist test (determine
where the power in question is appropriately classified:
with the legislative, executive, or judicial branches)…
 …to a functionalist test in Morrision (consider the
importance of the power involved and the degree of
impediment to the executive branch).
Class notes 2/3/11
• Morrison v. Olson
o What was the process in place that led to the issue in the
case
o There needs to be a trigger that causes the finding
 Complaint to A.G
 AG the goes to Speclal division (Courts of law) Appoint
 Special counsel then turns to IC (independent counsel)
– invest power in department of DOJ
 Issue where the A.G. can remove the party
selected by IC
o Is this person a superior officer or inferior officer?
o There are four things with regards to determing if someone is
an inferior officer:
 1) appellant is subject to removal by a higher executive
branch official
 2) appellant is empowered by the Act to perform only
certain limited duties
 3) appellant’s office is limited in jurisdiction
 4) appellant’s office if limited in tenure
o The above 4 items lead to the conclusion that the
independent counsel is an inferior officer
o This case stands for the fact that congress can delegate the
removal powers to someone else in the executive that is not
the president
 Departure from the quasi cases above
o Dissent
 Scalia
 Argues that this person is not an inferior officer
  In order to be inferior officer there needs to be a
subordinate
 He thinks it needs to be directly in the line of the
president to appoint and remove for there to be an
inferior officer
 Conflict of interest
 Scalia response
 He argues about the view of the vesting clause…
 President needs to have exclusive authority over
the exectutive branch
 He believes in the unitary executive branch theory
Inferior vs. Principal officers
• Edmond v. United States
o Majority was written by Scalia
o The issue was the constitutional authority of the Secretary of
Transportation to appoint members of the coast guard court
of criminal appeals (CCA), an intermediate court with the
system of military justice.
o This decision clearly lays out that inferior = subordinate
 This case is important because inferior = subordinate is
really the rule
 Generally speaking, “inferior officer” connotes a
relationship with some higher ranking officer or officers
below the President
• Freytag v. Commission of internal revenue
o Some narrow instances that it is the final say
• Landry v. FDIC
o Dealt administrative law judges
o ALJ have no final authority
Handout
• FREE ENTERPRISE FUND v. PUBLIC COMPANY ACCOUNTING
OVERSIGHT BOARD
• Pg. 5
o S-O(act)
o SEC
 PCAOB (5 member board)
  Look at “interior” “Edmond”
• We want to focus on removal
o Removal limitations: pg. 7 (to remove board members) (this
is an at will removal)
 Willful violation of act
 Willful abuse of authority
 Without reasonable justification or accuse
 The above limations are very narrow according to
the professor
• Those procedures require a Commission
finding, "on the record" and "after notice
and opportunity for a hearing," that the
Board member
• (A) has willfully violated any provision of
th[e] Act, the rules of the Board, or the
securities laws; (B) has willfully abused the
authority of that member; or (C) without
reasonable justification or excuse, has failed
to enforce compliance with any such
provision or rule, or any professional
standard by any registered public
accounting firm or any associated person
thereof.
• The SEC is an independent agency
o As an independent agency has a lot more insulation from
other agency
o There is still some authority by the president over the SEC
• President removal powers
o Is the Humprehy standard…..negligent, malfeasance in
office….etc
• Dissent finds the removal power odd because there is no limitation
in the statute
o Strange that this standard of removal is being used because
the SEC was around prior to the Humphrey case….
• Is it ok that there are two different remove processes?
o The court says NO!
 o President has no control over the board
o One of the levels is severed
• Three additional arguments at the end of the excerpt…
o SEC is a department and has its own head
o Narrow question…what does it mean to be an agency
What do we take from these cases
• Meyers
o Holding limited to what the court said…
o Congress cannot retain for itself a rule for removal must
follow the appointments clause
• Dividing line between inferior and superior case
o Morrision and Edmond
 Inferior = subordinate
 No more IC because of sunset provision
• Non-officers
o Those that merely aid in the legislative process
o Employees (people doing the day) do not rise to execution of
the law
• Severe
o Court will severe shitty parts of a staute
• We saw a retreat from the traditional: executive, judicial, and
legislative functions
• SEC
o Will be treated as a department for appointment purposes
o Can have multiple comissioners
Supervisory Powers
• Sources and limits of presidential authority
Class 2/3/11
• The executive is vest in a president; and as far as his powers are
derived from the constitution, he is beyond the reach of any other
department, except in the mode prescribed by the coustion the
impeaching power. But it by no means follows, that every
officer in every branch of that department is under the
exlsive direction of the president. Such a principle, we
apprehend, is not, and certainly cannot be claimed by the
president.
 • Youngstown sheet & Tube
o There was no statute giving the president this power….
o This was an executive decision
o President was functioning in a law making capacity
o What is important is Jackson’s concurrence
Three types of presidential actions
 1) those undertaken with authorization of
congress, express or implied
 2) those undertakn with neither support no
disapporoval from congress, and
 3) those undertaken in oppostion to express
r implied will of congress
• Dames & Moore v. Regan
o Here, found that the president had implied authority
Executive order 12, 1991
• Creates a layer of review before rules become law
• “By the authority vested in me as president by the consitution and
laws of the united states of America, and
o in order to redudce the burdens of existing and future
regulations, increase agency accountability for regulatory
actions, provide for presidential oversight of the regulatory
process, minimize duplication and confluct of regulations, and
insure well-reasoned regulations….
Ronald Reagan executive order

Examples and explainations pg. 52

• Two of the chief means of presidential control are the powers to
appoint and remove administrative officials
• Presidential coordination and oversight of administrative action.
Appointment
• Principal officers – the heads of all executive departments and the
members of the independent agencies in the Executive branch.
o May also include many other high-level officials such as
deputy….
 • Inferior officers – officials who are subordinate to principal officers,
but who have enough authority that they are not considered mere
“employees,” who fall outside of the appointments clause
altogether.
o An “officer” as distinguished from an “employee,” is someone
who “excercises significant authority pursuant to the laws of
the united states.
o Inferior offices can be found both inside and outside the
executive branch…
• In determing whether someone is any inferior officer
o Apply the Morrison factors: IC case
o Apply Edmond
 “holding exclusively on the fact that the judges of the
coast guard court of criminal appeals are inferior offices
because their work is directed and supervised by
principal officers.”
Removal
• Rule:
o “Myers” and “Humphrey’s” indicated that the president had to
have unrestricted discretion to remove “purely executive”
officers who he had appointed with the senate’s advice and
consent;
 in contrast
 congress could restrict the president’s power to
remove presidential appointees who arried out
qasi-legislative or quasi-judical powers.
o Morrison
 The court held that the determination of whether the
constitution allows congress to impose a good cause
type resitction on the president’s power to remove an
offical cannot be made to turn on whether or not that
offical is classifed as “purely excutive”
 The court indentified “the real question” as
whether the restrictions on removal “impeded the
president’s ability to perform his constitutional
duty.
Standards of judicial review under the APA
12/02/2011 09:51:00
Scope of appropriations for agencies
• Legislation
• Limitations on agency powers
o Constitution
o Enabling act
 Appropriations
 Scope of authority
 Oversight
 Revision process
o APA
When we want to know the scope of an administrative agency we will always
turn to the enabling act…
General propositions are set out in the APA
The administrative procedure Act – 5 U.S.C. §701-706
Judicial review of administrative decisions
• The dominant concern of administrative law is the legal control of
amdinstration
A. Standards of judicial review under the administrative procedure
act
• Section 706 provides that a court reviewing the legality of an
administrative agency’s action may hold that action unlawful if
the court finds the action to be:
o (A) arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law;
o (B) contrary to constitutional right, power, privilege, or
immunity;
o (C) in excess of statutory jurisdiction, authority, or
limitations, or short of statutory right;
o (D) without observance of procedure required by law;
o (E) unsupported by substantial evidence in a case
subject to sections 556 and 557 of this title or
otherwise reviewed on the record of an agency hearing
provided by statute; or
 o (F) unwarranted by the facts to the extent that the
facts are subject to trial de novo by the reviewing
court.
Citizens to preserve overton park v. Volpe
• Brief Fact Summary. Two statutes enacted by Congress to curb
destruction of the country’s natural resources prohibited the Secretary of
Transportation (Secretary) 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. The Secretary approved route I-
40 being built through Overton Park, and a group of citizens and
conservation groups (Petitioners) contended that the Secretary violated
the statutes.
• Generally: Congress passed bill stopping highways from going through
parks without DOT Sec’s permission. SC says the bill is very clear, here
the substantial evidence standard doesn’t apply b/c not rulemaking under
556/557, so it is “arbitrary/capricious” review.
o Analysis:
 Cannot fact gather an interrogation usually, this is rare,
better to just remand. If contemporaneous discussion, can
only consider it if substantial showing of fraud (San Luis
Obispo v. NRC p. 998), otherwise just overturn it
 Important that says need to look at entire record even
in informal proceedings
o CCNV v. Lujan (D.C. Cir. 1990) [supp.]: Can’t depose administrator
of NPS to figure out why the
• How to decide which provision §706 applies
o The substantial evidence test applies only to formal
adjudication and formal rulemaking:
Citizens to preserve overton park v. Volpe
• What were some of the procedural issues?...
• Sectary of transportation
• States approving the highway designs
• Who was consulted?
o The city council
• Was there any public imput?
o There were some public meetings
 • These was part of the process of getting information
• It was unclear what the process was…
• Court eliminates
o The substantial evidence test
• Where do we go to find out if there is a formal process in place…
• Must be laid out in the statute that it is a formal proceeding
• Was there a formal adjudicative hearing?
• “Arbitrary + capacious”
o is the easiest standard of review
 Secretary of transportation will want to argue this
• De Novio
o The citizens will ant to argue this…substantial evid..
• De Novouo review does not apply…why?
o De nvo is authorized when the action is adjudicatory in nature
and the agency fact finding procedures are inadequate.
o And, there may be independent judicial factfinding when
issues that were not before the agency are raised in a
proceeding to enforce nonadjuictoary agency action. Pg. 117
• What does the court do we this case?
• The record was taken as a slice in time
• Remanded in order to attain the full adjudicative record
Overton par involved a dispute over the meaning of a statutory term
– the word “prudent.”
The Personal Responsibility of the Decisionmakers to Decide

Morgan I (1936)
• “He who decides must hear”
• An administrator who takes responsibility for a decision must
personally have heard the case
o Strongly calls for the judicial model
 The examiner may sift and analyze the evidence, but it
must be presented to the Secretary before he makes
his decision

• Agencies get around Morgan I

 o Delegation of power to make final decisions to an ALJ or other
lower judicial officer who stands in the shoes of the Secretary
o Intermediate review board
 Agency head then has discretion to consider appeals
from this board
• In reality it is very hard to enforce the principle behind Morgan I
(see Morgan IV)

Morgan II
• Formal adjudication due process requires an intermediate report be
prepared by the hearer of the evidence to focus the issues for the
benefit of both the parties and the ultimate decisionmaker
o This report must be made available to both parties and they
must be given an opportunity to object to it before a final
decision

Morgan IV (1941)
• Inquiry into the mental process of the decisionmaker as to how he
made his decision must be avoided absent a strong showing of bad
faith or improper behavior
• BUT, when an agency fails to explain its decision,
o Overton Park (1971)
 If an agency fails to explain its action, the court should
remand the case to the agency for them to provide an
explanation
 This applies only when there if there is no
explanation
• United States v. Morgan
o Dealt with formal findings
o Cannot post hoc and ask the offical what they were thinking
when they made their decision
 This case Overton was not a formal finding thus giving
us some wiggle room
• The type analysis the sectary was doing was centered around a
cost/benefit analysis
o What does the court say about the cost/benefit analysis?
  Goes very much to substance of the decision that was
not discussed
• What the citizens arguing? What does prudent mean to them?
• What is outcome of the case once it is remanded?
o The court throws it back to the secretary…
 This case is being litigated again in a different way…
park question continues….go to the website
Review of the case
• Things left open
o How courts look at issues that agency actions and how they
are decided…
o Fact/law policy…
o Will always go to enabling act to find out what the authority
is…and what is in scope

Examples and explaintions pg. 254

• Standards of review are enumerated in section 706
o 1) questions of law
 can occur under several of the subsections of section
706
 these question involve claims as to the meaning of a
constitutional
o 2) substantial evidence
 occurs under the APA only when reviewing factual
decisions made un formal adjudication or formal
rulemaking.
 Substantial evidence review is the review of questions
of fact in formal adjudication or formal rulemaking.
o 3) arbitrary and capricious review
 includes not only review of question of fact informal
adjucations and rulmaking, but also what are often
called formal judgment
 asd
Judicial review of questions of law – the early years
and the chevron doctrine 12/02/2011 09:51:00
Judicial review of questions of law
• There are competing traditions regarding review of agency
conclusions of law.
o 1) De novo review of law: questions of law were traditionally
review de novo by courts on the theory that it is the judicial
role to declare the law.
o 2) Deferential review of law: there is also a competing
tradition that courts defer to reasonable agency
interpretations of law because agency expertise assist in
understanding congress’s statutory commands and other legal
issues within the agency’s jurisdiction.
National labor relations board v. Hearst publications
• Brief Fact Summary. Hearst Publications, Inc. (Respondents), the
publishers of four daily Los Angeles, California newspapers, refused
to collectively bargain with a city union representing newsboys,
claiming the it was not required to because the newsboys were not
their “employees” within the meaning of the National Labor
Relations Act (Act). The United States Supreme Court granted
certiorari to resolve the issue.
o The court reviewed the NLRB’s determination that people
selling newspapers on the street were employees of the
newspaper company entitled to the protections of federal
labor laws.
o Rule:
 Definition of employee is for the courts
 Application of definition is for the agency

Class Notes
• Federal buear of management approves a plan to harvest timber on
10,000 acres of federal land. Decision was made informally +
decision was announced in a press release issued by Director of the
bureau. Decision is challenged by citizen group who urge court to
use substantial evidence test under 706. Is this proper standard.
 o Substantial evidence 706(2)(e) can only be used for
formal rule making
o If no standard built in the statue you use 706
o 706 – at the end of the statue….says that we need the whole
record
Chevron
• When the court is reviewing an administrative decision of an
administrative agency and to what extent a court should defere to
an agency
§ 706 – scope of review
• seems like a rigid application of the Madison court decision
• “To extent necessary to decision and when presented, the reviewing
court shall decided all relevant questions of law, interpret
constitutional and statuorty provisions, and determine the meaning
or applicability fo the terms of an agency action…”
National labor relations board v. Hearst publications inc.
• NLRB is unique in how it operates because it operates in case by
case determination
• Employee v. independent contractors
• Where did hearst look to find his interpretation?
o Common law standard
 The court said that congress did not intend the act to
bring the common law standard because the common
law standards were so varied from state to state
o “The SC agreed with the board. It first held that congress did
not intend the Act to import common-law standards.”
• Example of deference given to the agency – “The court then turned
to the question of what was the apporiate definition of “employee”
and whether Hearst’s newsboys fit within that definition.
o “the reviewing court’s function is limited”
 This is important
• Dissent
o feels that this is a question of law
Skidmore v. Swift & Co. (informal agency decision)
When decisions of law are made informally, a lower level of deference,
known as Skidmore deference may apply.
Watch for situations in which Chevron does not apply because of the
informality of the agency process leading to the interpretation. With informal
interpretations, apply Skidmore deferncce
• Agency interpretations are “entitled to respect…but only to the
exten that those interpretations have the “power to persuade.”
• Under Skidmore courts decide how much to defer to agency
interpretative decision based the:
• 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 cntorl
o 7 persons employed as private firefighters in Swift’s meat
packing plant seud their employer to recover payment for
overtime worked. They claimed that time spent in the
company’s “fire house” at night, while on call to respond to
alarms, was “working time” under the Fair Labor Standards
Act, and thus entitled them to overtime pay.
o Issue
 FLSA – “working time”
 Trying to determine what is considered working
time.
o Adminstrative  brief + internal bulletin
 Court said that this is entitled to some deference
o This case is saying while it does not have the force of law it
does deserve some deference
Pure questions of statutory interpretation: the Chevron test
• In Chevron the court stated that unless congress has directly spoke
to the precise issue in question, courts should defer to agencies on
pure questions of statuory interpretation as long as the agency
arrived at a reasonable or permissible construction of the statute.
• Identifying a pure question of statutory interpretation
o Pure question of statutory interpretation are those issues that
involve only the meaning of the words of the statute.
They do no involve applying those words to a particular
situation.
 • The chevron two-step analysis:
o 1) whether congress has directly spoken to the precise
question at issue .
 If so, congress’s intent prevails
 Congress intent will prevail over agency
o 2) If the reviewing court concludes, in step one, that
congress has not directly spoken to the precise issue in
question, then the reviewing court asks whether the agency’s
interpretation is “permissible.”
 An interpretation is permissible if it is “sufficiently
rational one to preclude a court from substituting
its judgment for that of the agency.
The chevron doctrine
• There is a two step process that comes out of this case
• Here, we have a company rather than the EPA
• What are the two steps?
o 1) Has congress directly spoken on the issue?
 A.K.A Is there clear congressional intent?
o 2) If silent or ambiguous, then is agency’s interpretation
reasonable/permissible?
 What is the court looking at when it making this
determination?
• In order for the court to apply the chevron two step it must be a
statute which it administers (meaning the agency)
• Deals with the “Clean Air Act”
o Two iterations of the clean airt act
 1) CAA 1970
 here, deals with setting emissions limits
 § 111(a)(3)  “stationary sources”
• 1975 EPA regulation
o introduced us to the bubble context
o Bubble concept put a bubble on the
whole facility
o Bubble  plant wide
 2) CAA, 1977 (AM)
o What were the reasons that the EPA made this change
The current view of Chevron step one:
• Currently the dominant view at the supreme court appears to be
that the plain meaning of the statute is the dominant factor to
consider in step one.
• If the plain meaning does not answer the question, then analysis
shifts to to step two without attempting to discover congress’s
intent using other traditional tools of statutory interpretation.
o In 2000,the ruled against FDA jurisdiction to regulate
tobacco based on the structure of the statute and the
overall purpose of congress, without regard to the
statutory language.
•
MCI Telecommunications corp. v. American telephone & Telegraph
• What does it mean to modify?
o They look at dictionary meanings…
• This case fails at step 1
• Court also looks at the legislative history
• Modify does not equal the ability to eliminate see pg. 57
• The case with the tariffs for phone rates
Review of classes
• Chevron
o questions of law
 prudent

Examples & Explaintions pg. 255

• Typically, when an agency adopts a rule, it must interpret at least
the statute that atuorizes or requires it to make that rule.
• Sometimes the interpretive issue is much narrower, going only to a
particular word in a staute…
• In rulemaking or formal adjuication, when an agency
interprets a statute it is responsible for administering, courts
are supposed to review that interpration under the Chevron
doctrine…
• Rule:
o The doctrine sets out a two-step approach,
  1) Determine whether the statutory language being
interpred is ambigouos, or whether using traditional
tools of stautory construction the meaning of the
provision is clear.
 If the meaning of the provision is clear, that is the
end of it, and the court announces the clear
meaning of the statute.
• If, however, after using traditional tools of
statutory construction, the meaning of the
provision cannot be deemed clear, but
rather remains ambigosu, then the court
goes the second step.
o 2) detemine whether the agency’s interpretation is reasonable
or permissible, or if the itnerpreation is outside the range of
ambiguity in the provision.
 If the iterpretation is reasonable, the courts upholds the
agency interperation.
 Note: courts usually uphold an agency
interpreation if the court gets byond the first step
of Chevron
•
o as
Judicial review of questions of law – Mead and
the Revival of skidmore deference
12/02/2011 09:51:00
Mead and the revival of skidmore deference
• An interpretation contained in an opinion letter, not one arrived at
after, for exmple, a formal adjudication or notice-and comment rule
making.
• Interpretations such as those in opnion letters—like interpretations
contained in policy statements, agency manuals, and enforcement
guidelines, all of which lack the force law—(do not warrant
Chevron-style deference)…Instead, interpretations in formats such
as opinion such as opinion letters are “entitled to respect” under our
decision in Skidmore v. Sieft…but only to the extent that those
interpretations have “the power to persuade,”…
National cable & telecommunications assn v. Brand X interent
services
• is a case in which the United States Supreme Court declared 6-3
that a cable Internet provider is an "information service," and not a
"telecommunications service" and as such competing internet
service providers, like Brand X, were denied access to the cable and
phone wires to provide home users with competing internet service.
• A court’s prior judicial construction of a statute trumps an agency
construction otherwise entitled to Chevron deference only if the
prior court decision holds that tis construction follows from the
unambiguous terms of the statute and thus leaves no room for
agency discretion.
United states v. Mead corporation
• The court refused to accord Chevron deference to a statutory
interpretation contained in a customs service “ruling letter” which,
although represented the agency’s official position, was not based
on “a process of rulemaking or adjudication.
 • Rule: the force of law when it addresses ambiguity in the statute or
fills a space in the enacted law, even one about which “congress did
not actually have an intent” as to a particular result…When
circumstances implying such an expectation, a reviewing court…is
obliged to accept the agency’s position if congress has not
previously spoken to the point at issue and the agency’s
interpretation is reasonable.

Examples & Explanations

• Interpretations such as those in opinion letters – like interpretations
contained in policy statements, agency manuals, and enforcement
guidelines are entitled to Skidmore deference  but only to the
extent that those interpretions have the power to persuade.
o Skidmore
 Interpretations and opinions of the agency, 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 the power to
persuade, if lacking power to control.
 Skidmore deference still leaves to courts the
determination of what is the proper
interpretation of an ambiguous statutory
provision.
• How to determine if congress intended in a particular statute
for an agency’s interpretation to receive Chevron deference.
o 1) a very good indicator –
 whether congress has authorized the agency to engage
in rulemaking or adjudication, and the agency has made
its interpretation pursuant to that authority.
o 2) if congress provided for a “relatively formal administrative
procedure tending to foster the fairness and deliberation that
should underlie a pronouncement of such force.
Judicial review of questions of fact or policy – De
Novo Trial & Substantial Evidence 12/02/2011
09:51:00
Judicial review of questions of fact or policy
• Role of agency is very much fact finding
• ALJ will make the initial determination and will create the initial
record
• What scope of evidence is being looked at by the ALJ’s superior.
• What do courts look at when they are doing their review.
Standards of review
Chevron question of law TE/ALJ
• Factual inquiry
• hearing/testimony
o 706(2)(A) A+C (OP)
 board is reviewing in Camera
o 706(2)(E) – substantial evidence
 formal proceedings
 statutory (OSHA)/ even in informal context
 standard of review is written into the enabling act
• informal making
• Less deference to the agency
o 706(2)(F)  De Novo review
 OP – 2 situtations or by staute
 Just the process in which the court utilizing the
record
 The court takes fresh look…the reviewing court is
not bound by the decision of the agency
 Looks at the fact…can make the decision based on
the facts first hand
• usually courts will defer to the agency but
not in this context
 De Novo is very rare
• It usually happens when it is written into
the statute
• Will usually be set out in statute by
congress
•
De Novo Trial
• Agency determinations of fact or policy are rarely subject to review
by de novo judicial trial.
• Two circumstances when courts may engage in de novo trial
o 1) when the action is adjudictionary in nature and the
agency fact-finding procedures are inadequate
o 2) when issues that were not before the agency are
raised in a proceeding to enforce nonadjudicatory
agency action.
 anytime De Novo review is going to be used will
cit the above rule
 this is when there is no statute
Substantial evidence
• Formal adjudication
o §706(E) provides for “substantial evidence” review of factual
findings made by agencies in formal proceedings that is
proceedings governed by the formal hearing requirement of
APA §§556 and 557.
o Formal rule making is very common for an agency
• Substantial evidence
o more than scintilla. It means such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion.
 NLRB v. Columbian
 the court added that, in order to be considered
“substantial” evidence “must do more than create
a susicion of the existence of a fact to be
established…it must be enough to justify, if the
trial were to a jury, a refusal to direct a verdict
when the conclusion sought to be drawn from it is
one of act for the jury.
• Wagner act
o NLRB –
 orders from the NLRB are not self enforcing
APA § 706:
 • § 706(2)(A) allows court to overturn an agency decision that is
“Arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law”
o § 706 (2)E allows court to overturn agency decisions
“unsupported by substantial evidence” in a 556/557
rulemaking/hearing
o § 706 (2)F courts can overturn agency decisions
“unwarranted by the facts” (limited to if fact-finding
procedures were inadequate or issue brought up in case that
agency didn’t consider the first time)
National labor relations board v. universal camera corp.
• Issue: The essential issue raised by this case…is the effect of the
Adminstrative Procedure Act and the legislation colloquially known
as the Taft-Hartly Act on the duty of Court of Appeals when called
upon to review order of the National Labord relations Board.
• Hold: In determining whether NLRB’s decision is justified by
substantial evidence, the court can consider the whole record even
the examiner’s report, even if board did not consider it.
• Analysis:
o Substantial evidence is more than a scintilla. It is what a
reasonable mind might accept as adequate to support a
conclusion.
o Problem is if board can compile the record then can always
support its conclusion.
 The APA addressed this mix of prosecutorial and
judicial roles – added words “on record as a whole”
which means can’t ignore facts on the other side.
 Court will not substitute its opinion for the board’s on
close calls, but board must assign some weight to other
side
o Under APA, courts must assume more responsibility for the
reasonableness and fairness of board decisions. Here the
court determined that the board should have included report
of ALJ
Actors in the case
• Chairman: employee- support to maintenance workers/union
 o allegetions that testimony is false
• Kende: chairman’s supervisor/asked Weintraugh to investigate
• Weintraub: investigate chairman/ “communist”?
o initial determtion yields nothing
o disagreement chairman “drunk”
o different accounts of when chairman resigned
• Politar:
o weintraub says chairman should be fired
First there was an investigation by a trial examiner (kinda like ALJ)
Board
• has in front of them the record by the trial examin
• Trial record and decision
• disagreed with trial examiner  firing motivated by bad blood
Goes on appeal to 2nd circuit (part 1)
• pg. 164
o 1) Court is looking at the meaning of substantial
 trying to determine what the word substantial means
o 2) is looking at the record
• Issue of deference to the agency
o The 2nd circuit looked at the full record but id not take into
account how the board looked at the ALJ decision
o Court says it will not use overrule what the board has done
• The 2nd circuit ignored the trial examiners finding…
o appeared that the 2nd circuit was afraid to overturn to board
SC says you need to take the ALJ determination into account….the RECORD
MEANS YOU NEED TO CONISDER EVERYTHING MY NIGGIA ERRRRRR
THINGING
What is the whole record…
• Any resources at the time the agency made the decision
o everything pro and everything con used by the agency in
making its decision
• Need to include all the things that hand prior to the decision getting
to the board…(EVEYTHING)!!!!!
• The record is sort of an involving document that moves capturing
things at various stages with it
• ON THE RECORD MEANS EVERYTHING
 • Post hoc rationalization are not part of the record
PG. 171 – 2ND Circuit (Part II)
•
Informal rulemaking
• Although APA §706(E) restricts the applicability of the substantial
evidence test to formal proceedings, in a few recent regulatory
statutes congress has provided for substantial evidence review of
informal rulemaking (rulemaking conducted under the procedures
outlined in APA § 553).
•
Industrial Union Department, AFL-CIO v. American Petroleum Institute
(1980) [ [The Benzene Case]
• Facts:
o The Occupational Safety and Health Act (OSHA) instructs
OSHA (Occupational Safety and Health Agency) to set
exposure limits for chemicals at a level “which most
adequately assures, to the extent feasible, on the basis of the
best available evidence, that no employee will suffer material
impairment of health…” (59).
 Benzene is a non-threshold carcinogen (i.e., there is no
safe level of exposure) that OSHA is charged with
regulating.
 The agency explored lowering or altering the
initial benzene standard, in effect at the passage
of the OSHA, of 10ppm.
• The National Institute for Occupational
Safety and Health (NIOSH) – a science-
focused sub-agency of NIH – advised OSHA
to lower the standard to 1ppm. OSHA
agreed and (after a failed emergency
rulemaking), the full rulemaking lowering
the standard was challenged it court.
  Rationale: OSHA argued that it was required to
set a technologically feasible limit on benzene
without consideration of cost, provided that the
costs would not be so high as to shut down the
entire industry.
• Hold: No clear holding because the Court fractures badly, and there
are five separate opinions.
Pg. 175 – Guidance for establishing the standard
Not dealing with formal proceedings here
Just because there hearings does not mean they are formal
OSHA had a challenge with finding a proper level for Benezene
• Lowering Benezen threshold based on new information
The act delegates broad authority
• 3(8) – “reasonably necessary or appropriate”
o This is the standard definition
 “significant risk of harm”
 “Standard defined generally”
• 6(b)(5): narrower issue that deals with toxic material
o “Most adequately assuers”
o “to the extent feasible”
o “Basis of best available evidence”
 # of studies conducted by OSHA
o “That NO employee will suffer”
 How do you make something abosultey safe that no
employee will suffer?
 Determined that this is not achieveable
• 10ppm  1ppm
• §556. Hearing; presiding employees; power and duties; burden of
proof; evidence; record as basis of decision
• What is the role of the expertise of the agency and what is the
court’s review at the time of agency’s decision…

• Powell Opinion (only for himself):

o OSHA was incorrect to assert that it cannot conduct a Cost-
Benefit analysis. Believes that the statute can be interpreted
to allow this.
 o Note: This view was subsequently rejected in a later case.
• Stevens Plurality (joined by three others):
o Implicit nondelegation concern: The idea that Congress would
give OSHA the power to create such a massive disruption to
the economy is problematic.
o Threshold Finding
 note that he doesn’t strike down the Act due to a
nondelegation problem, or say that the Act is otherwise
unconstitutional.
 Instead, Stevens requires OSHA to make a threshold
finding that the workplace is unsafe (that there is an
unreasonable risk).
 Threshold Requirement: Unreasonable risk does
not mean any non-zero risk. OSHA must make a
threshold finding that the workplace is unsafe.
 Result: OSHA’s failure to make such a finding,
combined with Steven’s functionalist
interpretation of the statute, leads him to hold
that the regulation is invalid.
o Implicit use of “clear statement”
 Critique: It is very difficult to see where this threshold
requirement comes from. Stephenson thinks it is fair to
say that the threshold requirement is not the most
natural reading of §6 and §3 of OSHA.
 Stevens’s Defense:
 Relies on an implicit usage of the “clear
statement” rule from Kent v. Dulles.
 As in that case, Stevens avoids the nondelegation
by (essentially) rewriting the statute to include a
threshold requirement that limits the extent of the
delegation to OSHA.
  “If the Government was correct in arguing that
neither § 3(8) nor § 6(b)(5) requires that the risk
form a toxic substance be quantified sufficiently to
enable the Secretary to characterize it as
significant in an understandable way, the statute
would make such a ‘sweeping delegation of
legislative power’ that it might be unconstitutional
under (Schechter and Panama). A construction of
the statute that avoids this kind of open-ended
grant should certainly be favored.”(60).
 Note that Stevens doesn’t explicitly invoke the
“clear statement” rule, although this is obviously
what he is employing.
• Rehnquist:
o Objects to OSHA on nondelegation grounds, because he fails
to find an intelligible principle in the statute. Congress is
attempting to regulate risk in a very controversial area, and
didn’t provide a clear principle to guide OSHA’s behavior.
o How to determine what degree of regulation is appropriate
(whether it is using a cost-benefit analysis, a threshold
finding of risk, or some other standard) is a fundamental
question that Congress failed to address.
o Result:
 The Statute should be sent back to Congress to make
this fundamental decision.
 Note: Rehnquist rejects Stevens’s “saving” approach.
• Marshall (dissent, with three others):
o “Feasible” means whatever is technologically and
economically achievable, and that is a sufficiently “intelligible
principle” to uphold the statute.
o Critique:
 Query: (me) Should the scope of the delegation
require a more stringent application of the intelligible
principle test in this case as compared to other cases?
  Congressional Policy and the Court’s Role (Response):
Perhaps Congress has made a delegation disaster, but
the Court’s role is not to evaluate Congressional policy.
It is to evaluate whether or not the statute has provided
adequate standards and guidance for the receiving
agency, and that should not depend on the
“importance” of the underlying subject matter.
 Counter: Maybe it shouldn’t as a matter of law, but as
an atmospheric concern (See above) it is still important.
And it probably helps explain the outcome in this case
to some degree.

Examples and Explanations

• Rule:
o 706(2)(E) provides that a court shall hold unlawful and set
aside agency action “unsupported by substantial evidence in
case subject to sections 556 and 557 of this title or otherwise
reviewed on the record of an agency hearing provided by
statute.
• When does a court review for substantial evidence?
o a court reviews for substantial evidence when the agency
action was
 formal rulemaking or
 formal adjudication, or
 more accurately rulemaking or adjudication under
sections 556 and 557 of the APA.
o There are some statutes that specify “substantial evidence”
review although the agency action is not formal rulemaking or
formal adjudication.
• What does substantial evidence mean?
o Camera corp v. NLRB
 It is more than “a mere scintilla,” it is “such relevant
evidence as a reasonable mind might accept as
adequate to support a conclusion”; it is evidence
sufficient to withstand a motion for a directed verdict.
  It is a less rigorous standard that “clearly
erroneous,” …it is more rigorous than “no basis in
fact.”
• The agency’s findings are entitled to
respect, but they must nonetheless be set
aside when the record before a court clearly
precludes the agency’s decision from being
justified by a fair estimate of the worth of
the testimony of witnesses or its informed
judgment on maters within its special
competence or both…
 Court reviews the agency’s decision to determine
whether reasonable people could come to that decision.
 The court asks whether a reasonable person
viewing all the relevant evidence in the record
could find that a preponderance of the evidence
supports the agency decision. If so, the agency’s
decision is supported by substantial evidence.
Judicial review of questions of fact or policy -
arbitary & capricious; judicial remedies for unlawful
agency action 12/02/2011 09:51:00
Pg. 118 – Has the best law out for arbitrary and capricious
standard..the rule
• Rule:
o Section 706(2)(A) requires a finding that the actual choice
made was not “arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law.
 To make this finding the court must consider whether
the decision was based on a consideration of the
relevant factors and whether has been a clear of error
of judgment….Although this inquiry into the facts is to
be searching and careful, the ultimate standard of
review is a narrow one. The court is not empowered to
subsitute its judgment for that of the agency.
The arbitrary and capricious standard is the most common standard of
review
• Case book calls it a hard look review
• arbitray and capricious has been equated as a hard look…
Motor vehicle manurfacturers association v. State Fram Mutual
automobile co. (state farm case)
• The national traffic and motor vehicle safety act of 1977..
o Every vehicle made after 1981 had to have a seat belt and or
air-bag
• This was amended several times….
• The commission is being sued by the insurance company because
there was no reasonable ground for rescinding
o 208 - seatbelts
 Modified 208 – airbags + automatic seatbelts (industry
choice)
 Revoked 208 -
• Agency used its rule making authority
o So the agency regulated and then deregulated
• Statute at issue here
o Delegation is to the NHTSA
  “directs the secretary of transporation or his delegate to
issue motor vehicle safety standards that shall be
practicable, shall meet the need for motor vehicle
safety, and shall be stated in objective terms.
• Agency responding to a change in technology
• Part II
o Starts talking about why he started rescinding this matter…
o What is the reasoning for revoking the standard?
 The industry which given wide latidutde between
seatbelts and airbags
 Commission changes stance
• How does the court deal with this…?
 o The court is addressing two issues
 The court says that the commission did not consider a
modification of the standard…there was no
consideration to an alternative…
• Agency is entitled to change it view it is obligated to provide
reasoning for changing its view”
o Court will look to what the agency did in practice.
Dissent

Mass v. EPA
• We have the EPA taking input from soverign states, nonprofit
groups, environmental groups urging them to regulate green house
gases
• EPA points out the science was uncertain…
• EPA says they are not mandated by that statute
o Majority finds that the EPA should do something
 That the EPA has the authority
o Dissent
 Two related issues
 1) interpretation of the statute
• when the secretary of the EPA needs to
make judgment
o There was no judgment made by the
EPA
 However, the dissent feels that
the EPA did its job…
FFC v. Fox television Stations

Examples & Explanations

• Question of fact arising in informal adjudication must be reviewed
under the “arbitrary and capricious” review standard.
• 706(2)(A) is the provision governing “arbitrary and capricious”
review and states that courts shall hold unlawful and set aide
agency action that is “arbitrary, capricious or an abuse of
discretion.
 o The scope of review under the arbitrary and capricious
standard is “narrow” and the court is not to substitute its
judgment for that of the agency.
• Normally, an agency rule would be arbitrary and capricious if
the agency has relied on factors
o which congress has not intended it to consider,
o entirely failed to consider an important aspect of the problem
o offered an explanation for its decision that runs counter to the
evidence before the agency,
o or is so implausible that it could not be ascribed to a
difference in view or the product of agency expertise.
 Citizens to preserve overton park
 The reviewing court must be able to find that the
secretary could have reasonably believed that in
this case there are no feasible alternatives…
• The court is not empowered to substitute its
judgment for that of an agency.
• What if the issue has to do with new information that the
agency did not consider?
o If the court is convinced that the new information is material
to the agency’s decision and that it woul have been aviable to
the agency at the time of its decision, the court should
provide the agency and opportunity to supplement its record
and respond to the new information.
o If the agency had provided an opportunity for the public to
provide information before it made its decision, and it failed
to come forward, then the court should not reward the public
for hiding the ball by considering the new information or
allowing it to come into the record.
• The other circumstance where a court should allow
supplementation of the record is when a person raises a
serious claim as to the integrity of the decision making
process.
• Overton park
 o Was a case of informal adjunction, and arbitrary and
capricious review continues to be the standard for judging the
adequacy of the factual support for, as well as the reasoning
in, an informal adjudication, a standard that is
indistinguishable from substantial evidence review.
 Note: Today arbitrary and capricious review has
become a staple of challenges to rules adopted
after notice-and-comment or hybrid rulemaking.
• Hard look standard
o The court taking a hard look at the agency’s decision to
assure that was reasonable.
• Review of agency action unlawfully withheld or
unreasonably delayed
o Section 706(1) provides that a court is to compel agency
action unlawfully withheld or unreasonably delayed.
 While the APA defines “agency action” to include
the “failure to act,” so that review under section
706(2) to “hold unlawful and set aside agency
action” could reach agency inaction, normally
challenges to agency inaction are considered
under section 706(1).
 If the challenger asserts that the agency has
withheld action in violation of the terms of a
statute, the claim is a question of law, and a court
will review it like other questions of law.
 If the claim is that the agency is acting
unreasonably by withholding or delaying action,
the review will in effect be arbitrary and
capricious review.
• Remedies
o 706(1) states that in the case of agency action unlawfully
withheld or unreasonably delayed, the “court shall compel
agency action.”
 The difficulty in courts compelling agency action is
usually in the timetable.
•
•
Jurisdiction; reviewability – “agency action” &
statutory preclusion of review 12/02/2011 09:51:00
701(a)
• exclusions to judicial review
o statutory preclusion
o committed to agency discretion
702  who
• A person suffering legal wrong because of agency action, or
adversely affected or aggrieved by agency action within the
meaning of a revlant statute, is entitled to judicial review thereof.
704
706(1)
551(13) – ‘AGENCY ACTION”  1) rule, order, license, sanction relief 2) or/
the equivalent or denial therefore, 3) or failure to act
Availability of review
timing
Availability to specific parties
Scope of review/standard
• 706(2)
What is statutory preclusion?

Availability of judicial review

• A. Jurisdiction
o Jurisdiction vs. Reviewability
 Jurisdiction
 what court and is there a court can deal with the
case
 To find jurisdiction we look to:
• Enabling act
o Explicit jurisdiction
• 28 U.S.C. 1331
o The federal district courts have
jurisdiction  typically at the court of
appeals level

 Reviewability
 If there is a court whether it can be reviewed
• B. Reviewability
o Agency Action
 The APA’s judicial review provision apply to “agency
action.”
 There are two ways in which activity of the federal
government may not constitute “agency action”
• First, the entity taking action may not be an
agency
• Second, even if a petition for review
successfully identifies an agency, judicial
review will not be available if the petition
does not successfully identify something
constitutes an “agency action”.
• Norton v. Southern Utah Wilderness Alliance
o The dirt bike case in utah
 Although the Administrative Procedure Act says that a
person may challenge an agency's failure to act, this
provision essential just carries forward the writ of
mandamus. Thus an agency cannot be compelled to act
unless there is some non-discretionary, discrete act.
Therefore, in this case, an interest group could not
challenge an agency's failure to "act so as to preserve
the wilderness" in accordance with the statute.
 Question:
 Does section 706 (1) of the Administrative
Procedure Act authorize federal courts to review
the management of public lands under statutory
standards and the land use plans of the Bureau of
Land Management?
 Conclusion:

  Yes, but only to a limited extent. In a unanimous
opinion written by Justice Antonin Scalia, the
Court ruled that the APA only allows courts to
examine government agencies' failures to meet
specific statutory requirements. A general
complaint based on policy differences - like
SUWA's view that the off- road vehicles made the
Wilderness Study Areas unsuitable for
preservation as wilderness - could not be heard
under the APA. Justice Scalia wrote, "If courts
were empowered to enter general orders
compelling compliance with broad statutory
mandates ... it would ultimately become the task
of the supervising court, rather than the agency,
to work out compliance with the broad statutory
mandate, injecting the judge into day-to-day
agency management."
o
• Process: what is the statute is that involved? Who is given the
authority? What is the scope?
o What is the statute that sets it up?
 FLPMA ACT
 “retaining public land/balancing uses
 1787 – secretary to idenfity WSA
 Land use plans BSM
 WSAs
• Congress declares the wilderness areas…
• South utah Wilderness Alliance made three claims that are
relvenant
o 1) that BLM had violated its nonimpariment obligation under
1782
 (a) by allowing degradtion in certain WSAs
o 2) that BLM had failed to implement provisions in its land use
plans relating to ORV use
o 3) that BLM had failed to take a “hard look” at whether,
pursuant to the national enviomental policy act of 1969?
• What are we left with going into the analysis of the claims?
• Court
o When looking at the agency failure to act the court looked at
section 551(13)
 “Agency action is defined in 551(13) to include that
“whole or a part of an agency rule, order, license,
sanction, relief, or the equivalent or denial therefore, or
failure to act. Pg. 213
 We have to first determine whether the agency
was required to take an act…
• 1) look to the enabling act first….
 Failure to act – failure to take an agency action  that
is, a failure to take one of the agency actions ( including
their equalivents) earlier defeind in 551(13).
 Rule: failure to act – the same characteristic of
discreteness shared by all the preceding items. A
“failure to act” is not the same thing as “denial.”
See pg. 24-25 Mass v. EPA
• There must be a formal denial pg. 905 - §
555. Ancillary matters
• (e) promt notice shall be given of the denial
in whole or in part of a written application,
petition, or other request of an interested
person made in connection with any agency
proceeding. Except in affirming a prior
denial or when the denial is self-
exokanatory, the notice shall be
accompaniend by a brief statement of the
grounds for denial.
o Claims:
 The court says that the langugage in the statute “non-
impariment mandate” is very broad….
 Two issues starting on 214…to 215
• Norton take home message
o 1) 551(13)
  has to be a discrete agency action that the agency was
legally required to take and this can be set out in the
enabling act…
Statutory preclusion of review
Need to compare the statutes in both cases
• Johnson v. Robinson
o robinion, a conscientious objector during the war in Vietnam
 The adminstrator Robinion claim for benefit because he
had only served only two years of alternative service
and had not fulfilled the staturoty requirement of
“active duty”
 Robinon filed suit attaching the constitutionality of
the active duty requreiment
o Claims arise under the 1st and 5th amend
o Dealing with the language in the statute…
o The court does other things to beef up its reasoning…
 The court looks at the legislative history…
• McNary v. Haitian refugee center
o Holding: we hold that given the absence of clear
congressional language mandating preclusion of federal
jurisdiction and the nature of respondents requested relief,
the district court had jurisdiction to hear respondents
constitutional and statutory challenges to INS procedures.
 Foot note 6
 Notes and questions:
 Note 1 – Channeling of judicial review contrasted
with preclusion of judicial review
• Note that the statute in McNary does not
preclude judicial review completely.
 Johnson did not say that all non-review cases
include consitutional problems…
 Facts:
  The immigration reform and control act of 1986
constitued a major statutory response to the vast
tide of illegal immigration that had produced a
“shadow population” of literally millions of
undocumented aliens in the United States…
• Another consitutional claim
• Class action law suit
• This case all deals with a form of statutory
preclusion…
 Can only judicial review when you are actually be
deported…
 There was a due process claim here….
 There was no opporunity to challenge adverse evidence
 Issue:
 The narrow issue, therefore, is whether 210(e)
which bars judicial review of individual
determination except in deportation proceedings
also forecloses this general challenge to the INS’s
unconstitutional practices.
 Attacking the record
 Dissent: Scalia
 Focuses not on the constitutional challegnes
 Judicial review can only be made for final actions

Examples & Explanations

• Jurisdiction
o 28 U.S.C 1331 – the “federal question” statute – provides
jurisdiction for suits in federal district courts raising question
under federal law.
 Because suits against agencies alleging that they have
acted inconsistently with law invariably raises questions
under federal law, this provision is always available as
jurisdictional basis unless some other statute has
withdrawn it as a basis.
  Congress has in many situations substituted
another statutory basis for jurisdiction in
place of section 1331.
• Review by a trail court is often deemed
unnecessary because the agency action
subject to review is based on a pwper
record, and there are no issues of disputed
fact upon which testimony is necessary.
• Statutory preclusion
o Section 701(a)(1) provides that the chapter of the APA
dealing with judicial review 701-706, does not apply “to the
extent” that statutes preclude judicial review.
 Because the APA is a general statute, providing general
rules, it makes sense that particular statutes where
congress has either precluded review or specified
another form of review should govern rather than the
APA.
 The question that arises, however, is, when
a statute does not expressly preclude
review, what is the test for determining
whether the state should interpreted to
preclude it.
• First, if congressional intent to preclude
judicial review is fairly discernible in the
statutory scheme this suffices to establish
preclusion.
• Second, there is no presumption of “pre-
enforcement” judicial review.
Pre-enforcement review refers to a
challenge of agency action before the
agency enforces its action through
adjudication or court enforcement.
Reviewability – Committed to agency discretion by
law
12/02/2011 09:51:00
Committed to agency discretion by law
• The second of 701(a)’s exceptions to the general availability of
judicial review of agency action is where “agency action is
committed to agency discretion by law.:
General principles
• Webster v. Doe
o Brief Fact Summary. 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.

o Synopsis of Rule of Law. 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.
o Issue. Were decisions of the Director under Section:102(c)
reviewable, and if so, to what extent?
o Held. Affirmed in part, reversed in part, and remanded for
further proceedings. The language and structure of
Section:102(c) indicate that Congress meant to commit
individual employee discharges to the Director’s discretion,
and Section:701(a)(2) accordingly precludes judicial review of
those decisions under the APA. Reversed the Court of Appeals
to the extent that it found such terminations reviewable by
the courts.
 o However, Section:102(c) cannot be read to preclude
constitutional claims. Where Congress intends to preclude
judicial review of constitutional claims, its intent to do so
must be clear. Petitioner’s colorful constitutional claim was
not precluded.
o Dissent. Justice Scalia agreed with the Court that the
Director’s decision to terminate a CIA employee is “committed
to agency discretion by law,” but could not understand how
decision could be both unreviewable and yet reviewable for
constitutional defect, as the court held.
o Concurring in part, Dissenting in Part. Justice O’Connor
agreed that the APA does not authorize judicial review of the
employment decisions referred to in Section:102(c) because
the statute does not provide a meaningful standard for
judicial review, but disagreed with the Court’s conclusion that
a constitutional claim could nonetheless be brought in a
federal district court.

o Discussion. While the Court found Respondent’s claim
unreviewable under the APA, it was unwilling to leave
Respondent without a judicial remedy. The solution the Court
employed was to differentiate between the employment
decision, which was unreviewable, and the constitutional
claim, which it found to be reviewable.
Congress specifically set up when the head of the CIA deems something
• This is a deeming clause case
Constitutional challenges are treated differently
Here, the statute was written very broadly and in the interest of national
security
Court here focused on the deeming clause
• CIA national secruity
Prosecutorial discretion
• Courts are generally very deferential toward agency prosecutorial
decisions, holding them exempt from judicial review except in
certain narrow circumstances.
• The court has, however, recognized exceptions to the general rule
that agency prosecutorial decisions are unreviewable.
o One such exception, for when an agency acts in clear
violation of its governing statute or clearly in excess of its
statuory authority.
Look at the Bachowski case
arose the labor-managme reporting and dislcouse act of 1959.
• Heckler v. Chaney
• Facts of the Case:
o 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). When the FDA denied enforcement, the
inmates brought suit claiming violations of the FDCA and
requesting that the FDA be required to take enforcement
actions. The district court granted summary judgment to the
FDA holding that decisions declining to initiate enforcement
proceedings were not judicially reviewable. The Court of
Appeals for the District of Columbia Circuit reversed, finding
that the decision not to begin an enforcement action was
judicially reviewable under 5 U.S.C. Section 701(a)(2) and an
abuse of discretion.
o Question:
o
 o Are decisions made by the FDA not to exercise enforcement
authority over the use of drugs precluded from judicial review
by Section 701(a)(2) of the Administrative Procedure Act, 5
U.S.C. Section 501 et seq. (APA)?
o Conclusion:
o
o Yes, they are presumptively unreviewable. 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. Thus, they are presumptively "committed to
agency discretion by law" under Section 701(a)(2). This
presumption may be rebutted where the substantive statute
has provided guidelines for the agency to follow in exercising
its enforcement powers. In the instant case, the presumption
of unreviewability was not overcome by the enforcement
provisions of the FDCA. The FDCA's prohibition on
"misbranding" of drugs and introduction of "new drugs,"
absent agency approval, does not supply relevant guidelines.
Neither does the FDA's "policy statement" indicating that the
agency considered itself "obligated" to take certain
investigative actions nor the FDCA's provision that the
Secretary need not report for prosecution minor violations of
the Act supply relevant guidelines.

Examples and explanations

• Section 701 also excludes agency action from judicial review “to the
extent” that the agency action is “committed to agency discretion
by law 701(a)(2).
o A question arises, however, if the agency nonenforcement is
in the nature of a refusal to undertake a rulemaking.
 Obvisouly, if a staute specifically requires an agency to
undertake a rulemaking, the agency does not have the
discretion to refuse.
 More typically, however, a statute authorizes, rather
than requires, an agency to adopt rules for certain
purposes.
Reviewability – committed to agency discretion by
law; standing to secure judicial review 12/02/2011
09:51:00
Review
• Judical review or by enabling act
• reviewablity
o 551(13)
o 701(a)(1)+(2)
o 706(1)
 702-who
 704(what + when)
• Standing
• Timing
• Scope of review/standard
o 706(2)
o 706(1)
Failure to act of a required action
Cases
• Webster
o Deeming clasue, CIA national security
• Heckler – (traditional agency)
o enforcement discretion but a rebuttable presumption if
congress provdes law to apply
• Lincoln- (traditional agency)
o Lump sum appropriations (via staute)
 generall apporpration scope
 direct appropriation scope
 legislative history
Regulatory Delay
• Public citizen health research group v. CHAO
o The opinion address a petition by Public citizen to review the
inaction of the united states department of labor, OSHA and
to require OSHA to commence a rulemaking that would lower
the permissible exposure limit for hexavalent chromium…
 o OSHA agrees that there is clear evidence that exposure to
______can result in an excess risk of lung cancer and other
diseases….
o Crump report – concluded that significant numbers of excess
cancer deaths could be expected even at much lower levels of
exposure
o Petitioners
 Brought the present petition for review alleging that
“deference to an agency’s priorities and timetables only
goes so far,” and arguging that, “at some point, a court
must tell an agency that enough is enough.”
o Rule: 706(1), creates a right of action by an aggrieved party
to compel unreasonably delayed agency action…
o Holding:
 The court found the delay to be extreme.
Dealing with OSHA….
pg. 177
• Compare this case with the (The Benzene case)
• deal with two provisions in the national health act…
o 3(8) standards – all reasonable all health standards
o Court makes determination that congress states that there be
a significant risk of harm before 3(8) is triggered
o 6(b)(5) - toxic
rd
This is a 3 circuit
• Public citizen health research group v. Chao
o Case deals head on with the issue of unreasonable delay
o This case is dead on with how unreasonable delay plays out...
o Issue for the court
 1) was there unreasonable delay in first place
 2) was it unreasonable?
 3) are there any mitigating standards?
 4) compel agency action unreasonable delayed
• Agencies are given discretion for how they deal with issues it
appers that has to be reasonable
• History
o standard  100 meters – 1971
 o 1993 – petition
o Crump report
 Concluded that singificat numbes of excess cancer
deaths could be expected even at much lower levels of
exposure
o Intially deadlines were missed but the court did not find the
delay to too extreme
 Target date was being pushed back
 John Hopkins study
 Confirmed exposure at the 1971 delay can cause
death…
• What is unreasonable delay?
o OSHA
 Why didn’t the rulemaking happen?
 9/11 attack
 Anthrax attack
o the court makes the following statement:
 “The bottom line, OSHA states, is theat “the belief that
a chemical may be carcinogenic does not lead easily to
the appropriate PEL for that chemical” and focing it to
issue a rule prematurely will likely result in that reule
bing overturned in court.”
o Scientific uncertainty was thrown out of the window
o The court does find unreasonable delay
• Compelling agency action
o There was a meditation setting in the case
 Notes and questions
 The strategy employed by public citizen and other
groups to secure judicial review is to petition
OSHA to engage in rulemaking and then seek
judicial review when the petition is denied, or not
granted quickly enough.
Resource allocation and appropriations
• Lincoln v. Vigil
o Brief Fact Summary. The Indian Health Service (Service)
decided to stop funding the Indian Children’s Program
(Program) in favor of other services for Indians across the
United States. A group of handicapped Indian children
(Respondents) eligible to receive services through the
Program brought this action for injunctive and declaratory
relief against the Director of the Service and the Service,
claiming the decision violated the Snyder Act, the APA, and
other statutes.
 Synopsis of Rule of Law. While the APA embodies a
presumption of judicial review, Section:701(a)(2)
precludes judicial review of certain categories of
administrative decisions that courts have traditionally
regarded as “committed to agency discretion.
o Facts. The Snyder Act authorized the Service to allocate
funds it received from Congress “for the benefit, care and
assistance of Indians,” for the “relief of distress and
conservation of health.” The District Court granted summary
judgment for Respondents. The Court of Appeals affirmed,
rejecting the Service’s argument that the decision was
committed to agency discretion under the APA.

o Issue. Was it error for the Court of Appeals to hold the
substance of the Service’s decision to terminate the Program
unreviewable under the APA?
o Held. No. The Service’s decision to discontinue the Program
was “committed to agency discretion by law,” and therefore
not subject to judicial review under APA Section:701(a)(2).
The allocation of funds from a lump-sum appropriation is an
administrative decision traditionally regarded as committed to
agency discretion. The point of a lump-sum appropriation is to
give an agency the ability to adapt to changing circumstances
as it sees fit. Dissent. None. Concurrence. None.

 o Discussion. In giving the Service a lump-sum appropriation,
Congress provided the Service with flexibility to adapt to
changing needs and manage the funds as it saw fit. The Court
found this type of discretionary agency action unreviewable
under the APA.
Agency discretion case…
Who is suing who?
• Think about party and standing
o The Indian tribe that was being impacted by the decision.
 This more of someone aggrieved by agency action
Every year the Indian service got a lump sum amount that could be used at
its discretion…
Court picks up how the money is allocated
Congress never specified that the money had to go the program
pg. 266
• “congress may always circumscribe agency discretion to allocate
resources by putting restrictions in the operative statues (thugh
not, as we have seen, just in the legislative history.)
Standing to secure judicial review
 • Who may obtain review of agency action generally is referred to as
a question of “standing.”
o First, there is a constitutionally based limitation of the federal
courts “judicial power” to “cases or controversies” in Article iii.
o Second, standing to sue may be further restricted by judge-
made rules of judicial administration.
o Third, source-of-standing doctrine is legislative enactment.
Congress sometimes expressly defines the class of potential
plaintiffs by specifying who may petition a court to review a
particular administrative action.
702 – standing
• “who” an bring that particular case
• Chapter starts by laying out limitations to standing
o Standing limitations
 1) Constitutional. ART III
 cases and controversies
 2) Prudential – courts/judges
 no generalized grievances
 asserting own legal rights
 3) legislative enactment
 congress can specify who may be able to sue
• We are going to be looking at the following consitutional issues
o A) injury in fact
o B) Causation/”Fairly traceable”
o C) Redressiability
 the action needs to be able to be fixed
The legal right test
• Need to find out what this is….
• Before the APA there needed stated by congress that was being
litgated need to directly impact you
• Federal communciations commission v. Sanders Bros.
o The communications act conferred upon sanders no legal
itnerst in freedom from competition, but it did autorize “any…
person aggrieved or whose interests are adversely affected by
any decision of the commission” t pettion the court of appeals
for review of that decision.
Standing under the APA
• 702 of title 5 states “ a person suffering legal wrong (Legal rights
test – old test) because of agency action, or adversely affected or
aggrieved by agency action within the meaning of a relevant states
statute, is entitled to judicial review thereof.
• Association of data processing service organizations, inc. v.
camp
o Brief Fact Summary. Association of Data Processing Service
Organizations, Inc. (Petitioners) sold data processing to
businesses generally. Petitioners challenged a ruling by the
Comptroller of Currency (Respondent) allowing national banks
to make data processing available to other banks and bank
customers as an incident to their banking services. The
District Court dismissed the complaint for lack of standing to
bring suit.

o Synopsis of Rule of Law. 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.
o Facts. Section:4 of the Bank Service Corporation Act of 1962
(Act) provides: “No bank service corporation may engage in
any activity other than performance of bank services for
banks.” A prior case by the Court of Appeals for the First
Circuit interpreted Section:4 broadly as sufficient statutory
aid to provide standing for another data processing company
to contest the legality of a national bank performing data
processing services.

o Issue. Was judicial review of the Comptroller’s decision
precluded? Did the Petitioner allege that the challenged action
caused injury in fact? Was judicial review of the Comptroller’s
decision precluded?
o Held. Reversed and Remanded. 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.
Yes. Section:4 arguably brought bank competitors within the
zone of interests the statute was designed to protect. There
was no evidence that Congress sought to preclude judicial
review of administrative rulings by the Comptroller as to the
legitimate scope of activities available to national banks under
the Bank Service Corporation Act or the National Bank Act.
The statutes were both clearly relevant within the meaning of
APA Section:702. Petitioners had standing to sue. Dissent.
None. Concurrence. None.
o Discussion. The Court’s interpretation of APA Section:702
reference to a “relevant statute” to mean the substantive
terms of the agency’s statute, rather than the terms of any
special
 o review provisions specifically targeted at standing, conferred
standing upon Petitioners that they would not have had under
the traditional interpretation of the section.
Compt. Currency  1966 ruling
§4 bank act (1962)
Banking
Data services  business “aggrieved parties”
The Zone- of - interest test is applied here
• In this case the court looks to the statute to determine the zone of
interst
Barlow v. Collins
• Need to get notes
• suit by tenant farmers against the department of agriculture
• The court found standing based on the zone of interest
• Found the tenant farmers ere in the zone of interest
Zone of interest test
NEED TO DEFINE AND ATTAIN THE RULE
• Dealing with 702
• Dealing often with someone that is adversely affected
• APA
o standing
Notes 5 pg. 277
• How restrictive is the zone of interest test?
o Clarke v Securities industry assn
 The court hld that an assoiction of nonbank securites
brokers had standing to chllegne the comptroller of the
curreny’s decision that allowed a national bank to offer
brokerage services at number locaitons.
o Air courier confernece of america v. American postal workers
union
o
Standing to secure judicial review – constitutional
standing requirements
12/02/2011 09:51:00
Constitutional standing requirements: injury, causation,
redressability
• for standing under §10 of the APA {5 usc 702}…but the injury in
fact test requires more than ana injury to a cognizable interest. It
requires that the party seeking review be himself among the
injured.
• Sierra v. Morton
o contested the U.S. Forest Service’s approval of a Walt
Deisney enterprises plan to develop an extensive resort
complex in california’s mineral king valley.
o The SC affired the court of appeals holding that the club did
not have standing to sue because of its failure to assert that
any member actually used mineral king.
• United states v. Sudents challenging regulator agency procedures
o (SCARP)
 considered to be very lax
 involved a challenge to a decsion of the ICC to approve
accors-the board increases in railroad shipping rates
• Simon v. Eastern Kentucky Welfare Rights Orgzniations
o The court seemd to reverse ground, rebuffing a challegene to
an IRS Revenue Ruling brough by a group of indigent people
and organziations representing their interests.
o
Lujan v. defenders of wildlife
• Each federa; agency is required to consult with the secretaty to
ensure that “any action authorized, funded, or carried out by the
agency…is no liely to jeoparidzie the conitued existence of any
endangered specieis or threatened species or threatened …pg. 281
• Brief Fact Summary. The Secretary of Interior (Secretary)
promulgated a rule interpreting Section:7 of the Endangered
Species Act (Act) as applicable only to actions within the United
States or on the high seas. The Defenders of Wildlife (Respondents)
brought a challenge to the rule, and the District Court granted
summary judgment against them for lack of standing.
o
• Synopsis of Rule of Law. Article III, Section:1 of the United States
Constitution limits the jurisdiction of federal courts to “cases” and
“controversies,” known as the doctrine of standing. To have
standing, a plaintiff must have an injury-in-fact; there must be a
causal connection between the injury and the conduct complained
of; and it must be likely, rather than speculative, that the injury will
be redressable by a favorable court decision.
•
• Facts. Respondents filed this action against the Secretary seeking a
declaratory judgment that the new regulation was in error as to the
scope of Section:7(a)(2) of the Act, and an injunction requiring the
Secretary to promulgate a new regulation restoring its initial
interpretation that the obligations imposed by the section extended
to actions taken in foreign nations. The District Court granted the
Secretary’s motion to dismiss for lack of standing, and the Court of
Appeals reversed and remanded. On remand, the District Court
denied the Secretary’s motion for summary judgment and ordered
the Secretary to publish a revised regulation. The Court of Appeals
then affirmed.
o
• Issue. Did the Respondents have standing to seek judicial review of
the rule?
• Held. No. The Court of Appeals failed to apply the proper standing
principles. Respondents had not made the requisite demonstration
of at least injury and redressability. The affidavits of two female
members submitted by Respondents contained no facts showing
how damage to the species would produce “imminent” injury. The
women “had visited” Egypt in the past, and hoped to again “some
day.” That was insufficient to support an injury-in-fact. The
agencies funding the projects were not parties to the case, so the
Court could only afford relief against the Secretary. This would only
remedy Respondents’ alleged injury if the funding agencies were
bound by the Secretary’s regulations, which was questionable. A
further impediment to redressability was that the agencies
generally supplied only a fraction of the funding for a foreign
project, and Respondents
• produced nothing to indicate that the projects named would be
suspended or do less harm to the species without that fractional
contribution. Dissent. The Respondents raised genuine issues of fact
as to injury and redressability, sufficient to survive summary
judgment. The Court was overly broad in rejecting standing for
“procedural injuries.” Concurrence. Justices Kennedy and Souter
agreed with the result, but wrote to made several observations.
Since the Court concluded that Respondents had not demonstrated
a concrete injury, they would not have reached the issue of
redressability. Also, Congress has power to define injuries and
articulate chains of causation, but must at least identify the injury
and class of persons entitled to bring suit. The citizen-suit provision
of the Act did not meet these minimal requirements. Justice
Stevens, while concurring in the judgment, disagreed with the
Court’s conclusion that Respondents lack standing because the
threatened injury to their interest in protecting the environment
was not “imminent.” Stevens also disagreed that the injury was not
redressable.
Discussion. The party invoking federal jurisdiction bears the burden
of proof with respect to standing, and Respondents in this case
failed to provide sufficient proof of injury or redressability.
Congress passed the endangered specicis act of 1973
Consult – by statute
Interpretaion- by regulation
• U.S. or high ses
Citizen suit – by statute
• Goes directly to the prudential limiations and congress can limit
certain prudential limiations
•
•
The party invoking federal jurisdiction bears the burden of stablishing these
elements

Injury in fact
• The SC said that if he department does not consult with certain
funded activites it would increase the danger to certain species
The court found that there was no injury in fact?
• Redressiablity og. 285
o Who are the parties of the suit
 Secrtary vs. the defenders of wild life
• Court examines the citzen suit provision
• COngreess can include in a statute how standing is going to be
conferred
• Citzen suit provisions can only go far
Stevens concurrence
• he disagrees with the standing
o
o Where standing comes in the process
o feels that it should have gone in front of a jry
o There is threshold finding
Pg. 295 – Bennett v. Spear
• the court was confronted with another set of standing issues under
the ESA. The US fish and wldifie serivece issued a biolgoacial
opinion concluding that the current elvel of water use from cleark
lake, p threanted two wndangered species
Hypo
• Tax payer and I want to sue?
 o Generalized greivences
EPA v. Mass
• Outcome of the case
Take home message of standing cases
• very fact specifc general propostions
• Gneral rules that can be laid out
• There appears to incistency
• Exam
o look at the basic hiercahcy standing limitations
o consutaionl
o lugan
o injury in fact
o cuasiaon
o tracelable
What are the prudential limitations
Timing of judicial review; res judicata & collateral
estoppel 12/02/2011 09:51:00
Federal question jurisdiction leads to review under the APA
Jurisdiction
• enabling act that does not confer jurisditicion
o by default we must go to federal court jurisdiction
The timing of judicial review
• Courts, unlike adminstrators, will not act until an issue has
crystallized to the point of forming a cognizable “case or
controversy.” Nor will they intervene after a dispute has run its
course.
• Exhaustion
o Generally, the exhaustion requirement refers to steps that the
petitioner must take (usually, invoking an administrative
appeal mechanism) as a precondition to securing judicial
review.
Look at the enabling act to determine whether judicial review is allowed
• Reviewability
o available 702, 551(13), 704, 706(1)(a)(b)
 standing
 timing
 standard of review/scope
Finality
• comes from section 704
Ripeness
• Abbott laboratories
Exhaustion of remedies
• non APA
• APA
o 702
o 704
Pre-enforcement challenges: ripeness and finality requirements
• Abbott laboratories v. Garnder
o Brief Fact Summary
 o In 1962, Congress amended the Federal Food, Drug, and
Cosmetic Act to require manufactures of prescription
drugs to print the "established name" of the drug
prominently on labels. The underlying purpose of the
amendment was to bring to the attention of doctors and
patients the fact that many of the drugs sold under
familiar trade names are actually identical to drugs sold
under their "established" or less familiar trade names at
significantly lower prices.
o Rule of Law and Holding
o The Court held that this case presented a controversy
ripe for resolution and remanded it to the lower courts
for further adjudication.
•
o Rule:
 Ripe
 Without undertaking to survey the intricacies of
the ripeness doctrine it is fair to say that its basic
rationale is to prevent the courts, through
avoidance of premature adjudication, from
entangling themselves in abstract disagreements
over administrative policies, and also to protect
the agencies from judicial interference until an
administrative decision has been formalized and
its effects felt in a concrete way by the
challenging parties. Pg. 306
• The problem is best seen in a twofold
aspect, requiring us to evaluate both the
fitness of the issues for judicial decision and
the hardship to parties of withoholding court
consideration.
 o Brief Fact Summary. A group of drug manufacturers
challenged the authority of the Commissioner of Food and
Drugs to make regulations about labeling and advertising
prescription drugs under the amended Federal Food, Drug
and Cosmetic Act. The challenge was brought prior to
enforcement of the regulations.

Synopsis of Rule of Law. Pre-enforcement review is

appropriate where not prohibited by the text of the Act itself,
nor inconsistent with the legislative intent behind the Act.
There is an actual case or controversy where there has been
a “final agency decision” and withholding judicial
consideration will result in hardship to the parties.
o There was a notice a comment period that had passed
o What is the inquire involved for a ripeness isse?
 Look at rule aabove
 Pg. 307
• 1) fitness for review
o “purely legal” question (according to
the court)
o immediate violation of the statute and there are sanactions
involved…
 this a sensitive industry…
Toilet goods association v. Gardner
• Color additives amendement
• Brief Fact Summary. Toilet Goods Association
(Petitioners) sought pre-enforcement review of certain
regulations promulgated by the Commissioner of Food
and Drugs (Commissioner) on the ground that he
exceeded his authority under the Color Additive
Amendments to the Federal Food, Drug and Cosmetic Act
(Act).
Synopsis of Rule of Law. Nothing in the Food, Drug and
Cosmetic Act bars a pre- enforcement suit under the APA
and the Declaratory Judgment Act.
• Facts. The Petitioners, an organization of cosmetics
manufacturers and 39 individual cosmetics manufacturers and
distributors, brought this action in the United States District Court
for the Southern District of New York seeking declaratory relief and
an injunction against the Commissioner and the Secretary of
Health, Education and Welfare (Secretary). The challenged
regulation permitted the Commissioner to temporarily suspend
certification service if it appeared that anyone involved in the
manufacture of color additives refused to grant entry to an FDA
employee. The District Court held that the Act did not prohibit pre-
enforcement review, that a case and controversy existed, that the
issues were justiciable, and no reasons were presented by the
Government to warrant declining jurisdiction on discretionary
grounds. The Court of Appeals affirmed as to three of the
challenges to the regulations, but sustained the Government’s
contention that review was improper as to the fourth.

Issue. Was pre-enforcement review permissible?

• Held. Nothing in the Food, Drug and Cosmetic Act bars a pre-
enforcement suit under the APA and the Declaratory Judgment
Act. However, the Supreme Court agreed with the Court of
Appeals that judicial review of that particular regulation in that
particular context was not ripe for adjudication. Primary conduct
was not affected. The regulation merely stated that the
Commission could authorize inspectors to examine certain
processes of formulae. He had not yet done so, and the worst that
might have happened if a manufacturer refused to admit an
inspector would have been a temporary suspension of their
license, which could then be promptly challenged through
administrative proceedings. Dissent. None applicable to this case.
• Concurrence. None applicable to this case.

Discussion. The question of ripeness involves a two-fold inquiry:

1] determine whether the issues tendered are appropriate for
judicial resolution; and 2] assess the hardship if judicial review is
denied at that stage. Pre-enforcement review was not precluded
under the Act, but was precluded on ripeness grounds. Petitioners
were merely speculating as to the difficulty that would take place if
the Commissioner chose to act pursuant to the regulation, which
he had not yet done.
 •
Garder v. Toilet goods association
• Notes 4- pg. 314
o Reno v. Catholic Socila services
 The court reasoned that in most cases involving
creiteria for benefits, the hardship prong of Abbott Labs
is not met when no application has yet been made and
reject
• Note 5. Pg. 315
• Note 7 pg. 317
o Deals with letter rulings
 Letters ruling can be viewed as a final agency action
thus leading to the avail of judicial review
Rule
• Ripeness is finality plus two prongs that must be met

Exhaustion of administrative remedies prior to seeking judicial

review
• Exhaustion outside the APA
o Where congress specifically mandates, exhaustion is
required….but there congress has not clearly required
exhustion, sound judicial discretion governs….
o The exhustion doctrine also acknowledges that commonsense
notion of dispute resolution that an agency ought to have an
opportunity to correct its own mistakes with respect to the
programs it administers before it is haled into federal court.
o Pg. 321 bottom
 Reasons not to have agency exhaustion

• McCarthy v. Madigan
o this is the key case in this section
o Brief Fact Summary. John J. McCarthy (Petitioner) was a
prisoner who filed a complaint against four prison
employees, solely for money damages, in the District Court
for the District of Kansas. The District Court dismissed the
complaint on the ground that Petitioner had failed to exhaust
prison administrative remedies.

Synopsis of Rule of Law. The general rule is that parties

must exhaust administrative remedies before seeking relief
from federal courts. However, administrative remedies need
not be pursued if the litigant’s interests in immediate judicial
review outweigh the government’s interests in the efficiency
or administrative autonomy that the exhaustion doctrine is
designed to further.

Facts. The general “Administrative Remedy Procedures for

Inmates,” promulgated by the Federal Bureau of Prisons
allows prisoners to “seek formal review of a complaint which
relates to any aspect of imprisonment.” The review process
does not provide for any kind of hearing. Petitioner did not
go through the prison administrative remedy, but filed suit in
District Court, alleging respondents violated his Eighth
Amendment constitutional rights by their deliberate
indifference to his needs relating to a back injury and
psychiatric problems. The District Court dismissed, and
Petitioner filed a motion for reconsideration, arguing that he
was not required to exhaust administrative remedies
because he was seeking money damages, which the Bureau
could not provide. The Court denied the motion, and the
Court of Appeals affirmed. The Court of Appeals held that
since Bivens actions are a creation of the judiciary, the
courts can impose reasonable conditions on their filing to
determine whether there is a possible Bivens cause of
action. Requiring prisoners to exhaust the administrative
remedy first, even absent the ability to award money
damages, was permissible because it would create a record
 to aid the court in determining liability.

o Held. No. Reversed and remanded. Given the type of claim

raised and the particular characteristics of the Bureau’s
grievance procedures, Petitioner’s interests outweighed the
countervailing institution’s interests favoring exhaustion.
Petitioner did not have to exhaust his constitutional claim for
money damages. Turning to congressional intent, Congress
neither enacted nor mandated the general grievance
procedure promulgated by the Bureau. Further, the
grievance procedure did not include any monetary relief. Nor
did the interests
 o of the Bureau weigh heavily in favor of exhaustion in terms
of the remedial scheme. Dissent. None. Concurrence. The
concurrence agreed with the holding based solely on the fact
that the general grievance procedures did not provide for the
award of money damages.

Discussion. The Court employed a balancing test, and

found an absence of supporting material in the regulations,
the record, and the briefs that the general grievance
procedure was crafted with any thought toward the principles
of exhaustion of claims for money damages. Petitioner’s
interests outweighed those of the Respondents in this case,
and exhaustion was not required.
o
Exhaustion under the APA

• Darby v. Cisneros
•
• Brief Fact Summary. R. Gordon Darby (Petitioner) was a self-
employed South Carolina real estate developer whom the
Department of Housing and Urban Development (HUD) debarred
from participation in the program for a period of 18 months.
Petitioner filed suit against HUD (Respondents) in District Court,
and Respondents filed a motion to dismiss on the ground that
Petitioner had failed to exhaust administrative remedies.
Synopsis of Rule of Law. Where the APA applies, an appeal to
“superior agency authority” is a prerequisite to judicial review only
when expressly required by statute or when an agency rule
requires appeal before review and the administrative action is
made inoperative pending that review

Facts. Petitioner owned a large amount of real estate he had

purchased from HUD using straw purchasers to buy the property
and then transfer it back to him. This plan was to avoid HUD’s
“rule of seven,” which prevented rental properties from receiving
single- family mortgage insurance if the mortgagor already had
financial interest in seven or more similar projects in the same
project or subdivision. A combination of low rents, falling interest
rates and a depressed rental market resulted in HUD becoming
liable for over $6.6 million in insurance claims. HUD responded
with suspicion of Petitioner’s activities, and proposed debarment.
The Administrative Law Judge concluded that Petitioner had
disclosed most of the relevant facts of his plan to avoid the “rule of
seven” to HUD employees, and capped the disbarment at 18
months. Petitioner filed suit in the United States District Court for
the District of South Carolina seeking an injunction and a
declaration that the administrative actions were imposed for the
purpose of punishment, in violation of HUD’s own regulations, and
therefore “not in accordance with law” under APA Section:706(2)
(A). The District Court denied Respondent’s motion to dismiss,
holding that the administrative remedy was inadequate and a
resort to that remedy would have been futile. However, the Court
of Appeals reversed.
Issue. Do federal courts have the authority to require that a
plaintiff exhaust available administrative remedies before seeking
judicial review under APA Section:701, where neither the statute
nor the agency rules specifically mandate exhaustion as a
prerequisite to judicial review?
o
o Held. Reversed and remanded to the Court of Appeals to
review the District Court’s decision that the regulation was
beyond the power of the commissioner. No. Nothing in the
Act itself precludes pre-enforcement review. A review of the
legislative history of the Act reveals that the specific review
provisions were designed to provide an additional remedy,
and not to cut down more traditional channels of review. The
Act itself states, “The remedies provided
o for in this subsection shall be in addition to and not in
substitution for any other remedies provided by law.” Yes,
the issues presented were ripe for judicial consideration, and
withholding judicial consideration would result in hardship to
the parties. The parties agreed that the issue tendered was a
purely legal one. The regulations in issue were reviewable
as a “final agency action” under the Administrative
Procedure Act because “when, as here, they are
promulgated by order of the Commission and the expected
conformity to them causes injury cognizable by a court of
equity, they are appropriately the subject of attack.” The
regulations would have a direct day-to-day impact on the
operation of the companies, who either had to incur huge
costs to comply with the regulations’ requirements or risk
prosecution. Dissent. There were two unpublished dissents
by Mr. Justice Fortas and Mr. Justice Clark. Concurrence.
None.
o
o Discussion. Courts should look to the text of the statute
itself, along with the legislative history, to determine the
intended application and scope. In this case, pre-
enforcement review was not precluded by the Federal Food,
Drug and Cosmetic Act. Pursuant to the Constitution of the
United States, there must be an actual case or controversy
in order for the Supreme Court of the United States to grant
certiorari. Under the Administrative Procedure Act, “final
agency actions” are considered ripe for judicial review. Here,
the Petitioners would have suffered an operational and
financial hardship if judicial consideration was withheld.
 o
o
• Res Judicata and collateral estoppel

• Unites states v. Mendoza

•
o Brief Fact Summary. A Filipino national residing in the
United States petitioned for naturalization in 1978 under a
World War II statute that granted foreigners who served
honorably in the United States military during the war the
right to apply for and receive citizenship. The act was
repealed after the war and only applicants applying for
citizenship prior to December 31, 1946, were entitled to
naturalization.

Synopsis of Rule of Law. Non-mutual offensive collateral

estoppel cannot be applied against the government when
the party seeking to stop the government from relitigating is
a different party than was present in a prior action, or when
the subject matter is not the same as was present in the first
action.

Facts. Mendoza (Respondent) argued that the United States

immigration office in the Philippines was closed between
October 1945 and August 1946, which excused his delay in
filing. In his argument, Respondent relied on a 1975 district
court holding that sixty- eight Filipino war veterans were
entitled to naturalization despite delay due to the closure of
the immigration office in the Philippines. The court of
appeals held that the government was estopped to relitigate
the issue.

Issue. Does the doctrine of collateral estoppel apply when

used against the government?
 • Held. The court of appeals was wrong in applying non-mutual
collateral estoppel against the government in this matter. However,
in other situations, the government can be estopped from
relitigating a question when the government is litigating the same
issue with the same party.

Discussion. The Supreme Court of the United States uses this

case to differentiate between the role of private citizen as a litigant
and the role of government as a party to an action. The court notes
that if offensive collateral estoppel were allowed under the facts in
this matter, the development of important questions of law would
be halted due to effectively freezing the first final decision
rendered on a particular legal issue. The effect of allowing non-
mutual collateral estoppel would be quite wide-ranging and could,
as the court suggests, force the government to change its
procedural operation.
Due process resolved against the government
The party could not use that against the government because it had not
been a party in the prior suit

Note: 3. Pg. 329

• In companion case,…the court refeused to extend Mendoza to
defensive use of collateral estpopel where ther was mutuality of
parties.
Policymaking instruments – legal constraints &
agency authority to make policy by rule 12/02/2011
09:51:00
CFR v. Federal register (slides)
• Federal register
o publications that comes out everyday
• CFR
o published less frequrently
Administrative functions
• In this part we examine four generic administrative functions—
policy formation, adjucation, enforcement, and licensing—and the
kinds of legal controls that have become associated with each.
Two things that agencies can do
• 1) rulemaking
o formal
 very rare today
 if required the statute needs to be very detailed
o informal
 the way that majority of agencies operate today
Policy Formation
• Administration entails the making as well as the execution of policy.
• Congress has made a virtue of necessity by increasingly devoling
explict authority on adminstrators to make broad policy
determinations, and courts have frequently shown considerable
deference to those determinations.
• Policymaking instruments
o Legal constraints on choice of policymaking models
 Legal restrictions on the procedures that administrative
agencies may use in formulating policy derive from at
least three sources:
 The due process clauses of the 5th and 14th
amendments to the U.S. constitution
 The APA
 And various enabling acts applicable to specific
agencies or federal programs
 Due process constraints
 Londoner v. Denver
• ajudication – limited appliction – past relief
– due process issues arise here
o Londoner involved a challenge to a
decision of the Denver board of public
works.
 o The board, upon petition of a majority
of property owners on street, had
authorized the street to be paved.
o At the saem time, the board deceided
to assess the cost against each
property owner in an amount
commensurate with the benenfit
confreed on each proerptym as
determined by the board
 Individualize determination
 about the benefit of the street
 there was indivaluized decision made about what
people would be paying for the service
 Bi-Metallic
 Rulemaking – future relief – not many due
process isuess because there notice and comment
• Not individluzlized
• Dealt with an across the board tax inrease
 Statutory constraints
 Adjudication
• APA §554 establishes the basic conditions
under which “every case of adjudication
required by statute to be determined on the
record after opportunity for an agency
hearing must take place
 Rulemaking
• APA provides for two levels of formality
governed by section 553
o Formal
o Informal
• Agency authority to make policy by rule
o
 National petroleum refiners association v. Federal
trade commission
 The FTC issued a rule saying that gas stations had to
post octane ratings for their gasoline on their pumps.
 FTC believed that it had the authority to issue the rule
based on its Enabling Act (15 U.S.C. §46(g)), which
they claimed allowed them to issue substantive rules of
business conduct.
 There are two methods that an Administrative Agency
can use to make a new law:
 A rulemaking, where the Agency announces a new draft
law, takes comments from the public, and then
promulgates the final version as a rule.
 An adjudication, there the Agency makes an internal
decision, then finds someone who is breaking this new
law, and sues them for breaking it.
 A gasoline trade association (the Refiners) did not like
this rule and sued for an injunction, arguing that the
FTC did not have the authority to make such rules
under 15 U.S.C. §46(g).
 The Trial Court found for the Refiners. The FTC
appealed.
 The Trial Court found that FTC did not have the
statutory authority to make such a rule. It was outside
the scope of their Enabling Act.
 The Appellate Court reversed.
 The Appellate Court looked at the plain
language of §45 of the Enabling Act, and found that it
specifies that the FTC is to accomplish this goal by
means of issuance of a complaint, a hearing, findings as
to the facts, and issuance of a cease and desist order.
 That's an adjudication.
 However, the Court found that the plain language for
that section was not limiting, and so just because the

 Statute said that they could use adjudication, it didn't
imply that was the only thing FTC could do.
  In fact, §46(g) explicitly said that the FTC "may make
rules and regulations for the purpose of carrying out the
provisions of sections 41 to 46 and 47 to 58 of this
title."
 There are two types of rules that an Administrative
Agency can make, substantive rules, which actually
have the force of a new law, and interpretive rules,
which only are the Agency's opinion on how to interpret
the law. The Refiners unsuccessfully argued
that §46(g) only gave the FTC the ability to make
interpretive rules.
 But again, the Court found that the language was not
limited.
 The Court looked to how other courts had interpreted
the statutory construction of various Administrative
Agencies' Enabling Acts, and found that it is generally
construed broadly.
 In fact, case law shows that the courts seem to prefer
rulemaking to adjudication in the making of new
administrative law.
 The Court looked to the legislative history and found it
to be ambiguous.
 The Court found that the specific intent was to have a
"strong agency" to avoid inefficiencies. Therefore, the
Court felt they should look to the over-arching intent of
the authors and favor a broad interpretations.
 The Court found that there was a broad purpose to the
Statute, so the Court felt they should interpret that as
giving broad authority.
 "Our job is to make the policies behind the enactment
effective."
 In this case, the Court decided that although
the specific intent is unclear, the general
intent motivating the law's framers is clear.
This case is very much looking at the statute
Even if the power has never been used that does not matter
Take away message….look at the statute first and see if it gives the agency
that specific power…
Note 3. Pg. 350
• congress amending the statute
• amended 5 times
• reining the agency back in …
Even if
Pg. 902
• §533. Rule making
deals informal rulemaking
Policymaking instruments – Agency discretion to
make policy by order after adjudication & agency
discretion to make policy by manual 12/02/2011
09:51:00
Enabling act
• Will detail the scope of authority to agency
• Will give general powers to the agency
• Has to detail the rulemaking power
• Key rule making phrase
o “on the record after opportunity for a hearing”
o Formal rule making is a time consuming process and really
expensive for the agency
o Formal rule making is not that common
APA
• The APA will guide what the rulemaking looks like
• Rule making (formal) is rare
Rule vs. Orders
• Rule: pg. 896 section 551
o “Rule” means the whole or part of an agency statement of
general or particular applicability and future effect designed
to implement, interpret, or prescribe law or policy or
describing the organization, procedure, or practice
requirements of an agency and includes the approval or
prescription for the future of rates, wages, corporate or
financial structures or reorganization thereof, prices, facilities,
appliances, services or allowances therefore or of valuations,
costs, or accounting, or practices bearing on any of the
foregoing
o “Order”
 Means the whole or a part of a final disposition, whether
affirmative, negative, injuctive, or declaratory in form,
of an agency in a matter other than rule mking but
including licensing
NLRB
• functions differently from other agency
Cases from last week (Both are pre-APA cases)
 • Londer
o Individualized “adjudicatory”
o ADJ
• Bimettalic
o general  Tax increase across the board
o Legislative --> future looking
o RM (rule making)
Agency discretion to make policy by order after adjudication
• NLRB’s principal responsibilities is to supervise the selection of
employee representatives.
• NLRB can do rule making and hold adjucation
• Excelsior underwear, inc
o Excelsior Underwear Inc (1966): election campaign. union
asked for names/addresses of voters and Er refused.

o Issue: whether an empoyer’s refusal to provide union with
the names and address of employees eligible to vote in a
representation election should be grounds on which to set
that election aside.
o Held: (Rule) For all elections, w/in 7 days after the Regional
Director has approved of an election or directed an election,
the Er must file an election eligibility list of names/addresses
of all eligible voters [call the “Excelsior list”]
 Failure to comply with this requirement shall be gound
for setting aside the election whenever proper
objections are filed.
Employee list is at issue here
Employer put out a letter shitty on the union
The union wanted to be able to respond to the letter
There was no prior requirement in this case
Professor wants to know if a requirement is more like an order or more a
rule…
The requirement in case
• requirement  “list”
o 30 days after announcement
  Reason it is viewed as rule (there was no notice and
comment)
 future
 across the board
 not applied to the parties
• Pg. 353 basis for not applying it to parties in
the case at hand
o foot note 5
 “However, the rulle we have
here announced is to be applied
prospectively only. It will not
apply in the instant cases but
only in those elections that are
directed, or consented
to,subsequent to 30 days from
the date of this decision”
 Reason it is viewed as an order (there was no notice
and comment)
 adjudication process

• National labor relations board v. Wyman-Gordon co.

o This case confusing cases deals with precedent value of
adjudications.

o NLRB made the employer provide the unions with a list of
employees, saying that this was a rule established in a
previous adjudication.
o
o The employer argues that this is a rule of general
applicability, and thus must be done through notice and
comment rulemaking.
 “The rule created in Excelsior was not published in the
federal register…”
o
o The court agreed, finding that an agency cannot use an
adjudication to set rules of general applicability.
 o
o However, this case arose as part of an adjudication, in which
the agency made specific findings to support the order.
o
o Thus the court said that it was a valid order on its own, and
that the citation to the previous adjudication had no legal
significance because it was not necessary to justify the ruling.
o
o The end result is that you can use adjudications to show what
you are going to do in future adjudications, but the record of
the adjudication must support the ruling.
o
o Contrast this with using a rulemaking to limit the issues in
future adjudications, where the rule substitutes for the record
in the specific adjudications
The process that is involved here…
Plurality said the Exclesior is irrelevant
• *
Conncurrnece
• agrees with the result
• Focusing on excelsior
• Says it went the adjudicatory process
o Thus, it can decide how to make policy
o this was a valid process through adjudication
Dissent
• focus on the public hearings needed
• Going into the APA and looking at the language of the APA
o how the definitions are laid out..
• How a rule definded
o as having future effect
o If a rule has future effect the argument is that Excesior is a
rule
• An agency ajudication only when the final result is an order
NLRB
• can make a rule that has future in an adjudication as long it applies
to the parties
 o When given both powers
 There is much discretion given to the agency decide
which way to proceed
 Must consider due process issues
 Pg. 359 Sec v. Chenery Corp
• “the choice made between proceeding by
general rule or by individual, ad hoc
litigation is one that lies primarlily in the
informed discretion of the administrative
agency.”
Note and questions
• Foot note 2
o NLRB
 Could decide that it wants to pursue a rulemaking but it
would be slammed with adjudication
• Note 3
o There was a lot push making when the NLRB used
adjudication
 Rulemaking vs. Adjudication
 Rulemaking
• Public notice and comment
• More far reaching
• can include exceptions
• There is more clarity as to when a party is
in violation a rule
• There is public participation
 Adjudication
• Note 4
o Sec v. Chenery Corp

• NLRB v. Bell Aerospace Co

o NLRB did not have to use rulemaking to define managerial
workers but could do it in an adjudication
o
 o The court found that an agency is not precluded from
announcing new principles in an adjudicative proceedings,
and the choice between rulemaking and adjudication initially
lies within the agency's discretion.
o
o The NLRB can say that this is what it plans to do in the
adjudications and skip the rulemaking.
o
o Why??
 As with the previous case, the party gets to be heard
and put on rebuttal evidence, and thus the record must
support the decision.
The phrase at issue in this case is “Managerial employees”
NLRB act
• sets out the scope of what it covers
• Unions are covered under this act
Court first looks at a statutory interpretation issue
Initally NLRB says that managerial employees are outside the scope of the
act
• However, later the NLRB changes and says that managerial
employees are within the scope of the act
NLRB
• says that it is the status of the parties in this case is what is issue
• Buyers fit into the uion box
Bell arrow sued to block the unionization
Court told NLRB to focus on the buyer issue and what is the status of that …
• Court says that if Buyers can be moved into the union box then
NLRB can decide either to purse rule making or adjudication
•
• The decision of “buyers” is fact specific case-by-case
o seems to support adjudication
If the regulated parties have relied on prior rulemaking then court might
move towards applying rulemaking
General proposition
• agency can act through adjudication or rulemkaing
•
 o Notes and Questions - 365

 What is it about NLRB decisions that make the agency
want to dodge rulemaking?

 Using adjudications to set policy has limitations: the
agency cannot use adjudications to overturn properly
promulgated rules

 The court can overturn the adjudication for abuse of
discretion if the record does not support the ruling.

Agency authority to make policy by manual

• The policy that actually guides agency behavior may
• be less—or at least less directly—the product of formally announced
policy than of internal guidelines and staff manuals, informal
advice, and even the forms used within agencies and by those with
whom they deal.
• It should be not be a matter of surprise to find that forms and
instruction manuals fit quite imperfectly with broad policy
pronouncements of top-ranking decision makers.
Agency power to make rulemaking via a manual
Reason that disction between manuals, orders, rules….matters is because
chervon deference may or may not apply
• If the statute is silent or ambiguous the court will apply deference
o Morton v. Ruiz
 Ramon Ruiz and his wife Anita were Papago Indians and
U.S. citizens who in 1940 left the Papago reservation in
Arizona to seek employment 15 miles away at the
Phelps-Dodge copper mines at Ajo. They settled in a
community called the "Indian Village" and maintained
close ties with the nearby reservation.
  On December 11, 1967, Mr. Ruiz applied for
general assistance benefits from the Bureau of
Indian Affairs and was immediately notified by
letter that he was ineligible for general benefits
because of a provision in 66 Indian Affairs Manual
3.1.4 (1965) that eligibility was limited to Indians
living "on reservations" and certain jurisdictions in
Alaska and Oklahoma. The legislation authorizing
payment of benefits by the BIA had no express
residential criteria.
 This policy had not been published in the Federal
Register or in the Code of Federal Regulations and
its only manifestation was solely an internal-
operations brochure at the Bureau of Indian
Affairs intended to cover policies that "do not
relate to the public."
 Even though the Bureau of Indian Affairs was not
required to follow the Administrative Procedures
Act Section 553 for benefit disbursement, they
expressed internal policies that they would follow
it. The Supreme Court in an opinion written by
Justice Blackmun held that these internal Section
553 procedures were not followed, and thus
benefits could not be limited.
 The Supreme Court further said, "[In] order for an
agency interpretation to be granted deference, it must
be consistent with the congressional purpose. It is
evident to us that Congress did not itself intend to limit
its authorization to only those Indians directly on, in
contrast to those 'near,' the reservation, and that,
therefore, the BIA's interpretation must fail."
Couple was living on a resveration and then moved off the resveration
Found work at a copper mine and was laid off
General assictance through Synder Act – no general scope
BIA benefits
BIA manual  “on reservation”
Plaintiff
• 100% American indians, close ties, 15 miles away
Indian affairs
• Get their authority from the Synder Act
Pg. 369
• foot note 6
o Alaska and Oklahoma
 don’t need to live on the resveration
o “Purpose – The purpose of the general assitance program is
to provide necessary financial assitance to needy Indian
families and persons living on reservations under the
jurisdiction of the Bureay and in jurisdictions under the BIA
(Burea of Indian affiars) in alaka and Oklahoma….
There is no Chevron deference
Manual
• No input from the public
• This is internal to agency and circulated among its employees
• This was kept internal
The agency (what the court is looking at)
• Framing of program to congress  “On or near” reservation
• Exception (actual practice)
o court focused on the actual pratice
• BIA procedure  eligibility must be published
• APA - §552(a)(1)(D) – adverse effects must be published
o “Except to the extent that a person has actual and timely
notice of the terms therof, a person may not in any manner
be required to resort to, or be adversely affected by, a matter
required to be published in the federal register and not so
published.”
• §553
o Except when notice or hearing is required by statute, this
subsection does not apply—
 (A) to interpretative rules, general statements of policy,
or rules of agency organization, procedure, or pratice
 (B) Exempt through section (B) here
  “when the agency for good cause finds (and
incorporates the finding and a brief statement of
reasons therefore in the rules issed) that notice
and public procudere thereon are mipractiable,
unnecessary, or contrary to the public interest.
• Notes and questions
o The Ruiz court noted that the BIA’s
action violated the requirement in its
own manual that statements affecting
eligibility be published.
o While it seems to be generally
accepted that agencies must follow
their own formally established rules
(i.e., rules established after §553
notice-and-comment rulemaking), is
failure to follow informally adopted
internal procedural guidelines an
indepent ground for the…..court’s
decision…
Non substantive/non-legislative rules
• interperative rules
• policy statements
• ……
• Start thinking about …that argubably the agency can change them
Pg. 375 – Schweiker v. Hanson
• the court refused to order Social Secruity Adminstration to giver
retroactive benefits to an eligible applicant who had been given bad
advicen by an SSA field representitve….
Public participation in rulemaking procedures –
formal and informal models of rulemaking & notice;
explanation of the decision: concise general
statement
12/02/2011 09:51:00
Public participation in rulemaking procedures
• The APA established two procedural models for rulmaking__
o Informal (often called “notice and comment”)
o rulemaking and formal (on “on the record rulemaking.
o Although formal rulemaking provides greater opportunity for
interest parties to present their views orally before the
agency decisionmakers, the process is ex espenseive and
time-consuming,….
• Three possible justification for formal rulemaking hearings
o a) to develop information so that the agency may make a
reasonable decision
o b) to create a record for judicial review of the agency’s
determination,
o c) to give persons affected by the proposed rules an
opportunity to question the agency’s factual premises—but
concluded that formal ruleming at the FDA “does not
effectively serve any of these purpses.
• Relatively few statutes explicity require use of the APA’s formal
rulemaking prcedures.
o Formal and informal models of rulemaking
§533. Rule making
• Section (a) – exceptions
• Section (b) - general notice
o Notice
• Chocolate manufacturers association v. Block
o Chocolaate manufacturs sued because the food and nutrition
service remoeved chococalte milk
o They did because of public comment
o Dealing with the food and nutrition service of the USDA
o thinking about change a regulation look at 553(b) for what
the agency needs to do…
 o This case focuses on the process between the notice and
public…and the final rule…
o plaiintiffs are concerned because they make that COCO milk
 if no longer qualify …then no more DOUGH NIGGA
o Test
 Logical outgrowth test
 553 – section (c) and (d)
 (c)
• “after notice required by this section…
 case places it between (c) and (d)  court looks at the
substance
o FNS is making the argument that the notice in the case is
enough
o Plaintiff looks at the prior changes and the preamble which
says nothing about chocolate milk
o Adopted the logical outgrowth test…
 is applied in other circuits
 as the process for proposed rulemaking to the final rule
o The court determines that it will re-open the comment
period…
• Notes and questions
o Notes 4 pg. 385
 Anticipated changes
 Other courts have explained the “logicial
outgrowth” test as ensuring that agencies only
make changes from proposed rules that the public
could have anticapted.
o Note 5
 United states v. Nova Scotia Food Prods
 The court struck down a rule issued by the Food
and Drug adminstration that had been based on
undisclosed scientific data in the agency’s
possession when it issued the notice of proposed
rulemaking.
 Court dealing with an agency and how comments
were put forth…
  “The court distinguished scientific data received
from outside sources—which must be revealved
during the notice stage—from information
supplied during the comment stage and
inferences drawn from agencys own expertise.
• The agency may rely on the latter two
sources ithout specifically focusing
commetos attention to them
• But when the basis for a proposed rule is a
sciientifc decision, the secientific material
which is believed to support the rule should
be exposed to the view of interested parites
for their comment…
Explaintion of the decision: The concise general statement
• Section 553 requires agencies to incorporate into their rule “a
concise general statement o their basis and purpose”
• Section 553, however, provides no guidance on what the concise
general statement must contain.
• No need for agency to respond to every comment
Public participation in rulemaking procedures –
political influnces on administrative policy &
impartiality of the rulemaker 12/02/2011 09:51:00
553
• 553(a)
o military or foreign affairs
o agency management/person
• 553(b)
o publication – fed reg.
 time, place + nature
 legal authority
 terms or subtance or description of subjects
o Scienctific data basis
• 553(c)
o opposition to submit comments
o consideration of comments alter/revise rule based on
comments
o basis purpose, new reule (final
• 553(d)
o public in feder register
o 30 day
• 553(e)
o right to petition
Protecing the integrity of rulemaking “record”: ex parte contracts,
political influence, and prejudment
• Exclusivty of rulemaking record
o Home box office v. federal communications commission
(RED FLAG)
 had input from companies off the record.
 Rules stated basis is in comments. Court invalidated the
regulations and sent it back to the commission.
o Rule:
 From what has been said above, it should be clear that
information gathered ex parte from the public which
becomes relevant to a rulemaking will have to be
disclosed at some time.
 Of course, if the information contained in such a
cmmunication forms the basis for agency action, there,
under will established principles, that information must
be disclosed to public in some form.
o pg. 393 –
 “it is the obligation of this court to test the acitons of
the commission for arbitrariness or inconsistency with
delegated authority…yet here agency secrecy stands
between us and fulfillment of our obligation. As a
practical matter, Overton Park’s mandate means that
the public record must reflect what represetnations
were made to an agency so that relevant inofmration
supporting or refuting those represetnations may be
brought to the attention of the reviewing courts by
persons participating in agency proceedings. …”
o The FFC has to a two comment approach
 Initial comments
 Then following comments
 This is hybrid
o What to do with ex parte communciations?
 This case is a very strict interpretation…
o Pg. 392 – Sangamon valley tv corp v. U.S
 The court here was dealing with…was dealing with a
rulemaking but looked more like adjudication
 Pg. 396 - - “the FCC had used the form of
rulmaking, said the court, in reality was resolving
“conflicting private claims to a valuable
priveilege.” Herence, the Sangamon ruling tended
to be viewd as lmited to adjudication in the guise
of rulmaking.
o Pg. 394 is what the meat of the court is doing
 There is line being put in the sand between the record
and what is published
o Take home message from the case
 “If ex parte occur contracts nonetheless occurs, we
think that any written document or a summary of any
oral communcication must be placed in the pnlic file
established for each rulemaking docket immeditately
after the comunciation is received so that interested
parties may comment thereon…”
  Ex parte contact communcation on docket – HBO
v. FCC…lower court case….other courts do not
follow it…
 If they are interested party should be prohibited if they
were made then it should put into the docket….should
be in writing that serves the propose of notice to the
public…
 added another procedural requirement
 pg. 396 - "The alternative adopted by the HBO
court is a rule forbidding agencies to rely on
information not containted in a public rulemaking
docket…
• no courts follow it…it went to far
• Notes and questions
o Ex parte contacts are rountinely forbidden in rules of
procedure for civil and criminal trials.

Political influence on administrative policy

• Sierra club v. Costle
o Deals with regulation of coal emissions.
o Sierra club claims ex parte contact rule was violated by:
o Written comments taken after contact period.
o Meetings with industry.
o White house briefings
o Meetings with pro-industry members of Congress.
o Written comments taken after closing of comment period
o Added to record, no problem
o Oral communications with industry
o This is how agencies work, beneficial
o No problem, not explicitly prohibited by Act, does not concern
conflicting private claims to valuable privilege
o White house briefings
o Act is silent, thus no problem.
o Executive branch needs to monitor administrative agencies,
accountability, constitutional design.
o Congressional pressure
 o As long as there is no improper dealing, no new exchange of
information.
o Thus, court holds that there was no procedural error.
The issue in this case is what happened between here and here…blah…
• There is language of central relevance
First issue wrriten comments after the post comment period
•

http://adam.rosi-kessel.org/wikilaw/wikilaw.pl?
ClassNotesAdministrativeLawAdler

Impartiality of the rulemaker

• Assoication of national avdertisers inc. v. federal trade
commission
• Toy manufacturers request FTC chairman to recuse himself, claim
his public comments regarding advertisements towards young
children showed chairman had prejudged factual issues.
• District Court finds that chairman should recuse himself, based
on Cinderella Career & Finishing Schools, Inc. v.
FTP [425 F.2D 583], where Chairman Dixon gave speech
criticizing party before court.
• Court of Appeals holds that District Court erred in relying
on Cinderella. Cinderella was adjudication, while this case
involves a rulemaking.
• Sharp distinction between legislative and judicial models; legislator
should have some bias.
• Recusal should only occur where commisioner has unalterably
closed mind.
o it is a very high standard
o has to be close to a closed mind…
o the threshold for unalterably closed mind is quite high…
• Pg. 418 – “the mere discussion of policy or advocacy on a
legal questions, however, is not sufficient to disqualify an
administrator.”
• This is a very high threshold…courts are not going to easily remove
someone like the chair of an agency
o un alternative closed mind test to remove a rulmaker comes
from this test
Public participation in rulemaking procedures –
“hybird” procedures for informal rulmaking
12/02/2011 09:51:00
Adjudiction vs. rulemaking
• ex parte communications
o ex parte communciations with regards to adjudactions are not
allowd
o ex parte communciations with regards to rulemaking are
allowed because of lobbyist contacts with regards to
legislators.
 rulemaking is not that formal of a process…
• What are the basis for the difference in ex parte communcations in
a adjudication and rulemkaing?
o looking at the ability of the courts to review and the rights of
the parties…
o we know what a rulemaking looks like…
o the court knows what will be in the record…
• Another disctions
o adjudications  ex parte communications are not allowd
unless specifced in the enabling act or organic statute
o APA is explicitly says that ex parte communications are not
allowed
• Unalternable closed mind test…
“Hybird” procedures for informal rulemaking
• statutory hybirds
o Congress has, on many occasions, statutorily added to the
minimal procedures required by 553 of the APA for informal
rulemkaing, without going all the way to requiring formal
rulemaking.
 Such statutes typically add, inter alia, oral
hearings and cross-examinations to the
rulemaking process, procedures that are usually
associated with adjudication.
 In light of this reality, they have become
known as “hybrid” procedures…

Judicially fashioned
• AEC NRC
o Reg
 table of enviroment impact
o Licensing
 two things are required
 construction
 operating
o interested partes

• Natural resources defense council v. nuclear regulatory

commission
o NRDC petitioned the court of appeals to overturn the
comission’s decision to adopt the rule and to grant
Vermont Yankee’s license.
o NRDC’s main contention was that the commission’s
refusal to allow cross-examination of participants or
submission of interrogaties to the stff mamerber who
prepared the environmental survey violated NEPA’s
reuirement that the evnivormental impacts be
investigated fully…
o “whatever tehcniques the commission adopts, before it
promulgates a rule limiting further consideration of waste
disposal and reprocessing issues, it must in one way or
another generate a record in which the factual issues are
fully developed…”pg. 429
• Vermont yankee nuclear power v. natural resources defense
council
•
o 1. Generally speaking, 5 U.S.C. 553 (1976 ed.) establishes
the maximum procedural requirements that Congress was
willing to have the courts impose upon federal agencies in
conducting rulemaking proceedings
 qagencies are free to grant additional procedural rights
in the exercise of their discretion, reviewing courts are
generally not free to impose them if the agencies have
not chosen to grant them. And, even apart from the
APA, the formulation of procedures should basically be
left within the discretion of the agencies to which
Congress has confided the responsibility for
substantive judgments.
 Brief Fact Summary. This case arose from two
separate decisions by the Atomic Energy Commission
(Commission) 1) to grant a license to Vermont Yankee
Nuclear Power Corp. (Petitioner), and 2) to grant a
permit to Consumers Power Co. (Petitioner). The
Natural Resources Defense Council (Respondent)
challenged the Commission in the Court of Appeals for
the District of Columbia, claiming it employed
insufficient procedure.
 Synopsis of Rule of Law. Section:553(b) of the
Administrative Procedure Act (APA) requires that
agencies publish notice of proposed rulemaking in the
Federal Register, and that interested parties be given
an opportunity to participate, or comment, before the
agency adopts a final rule. This section of the APA
imposes the maximum procedural requirements which
Congress was willing to have courts impose upon
agencies in rulemaking procedure
 Facts. In the first case, the Court remanded a decision

of the Commission to grant a license to Vermont
Yankee Nuclear Power Corp. to operate a nuclear
power plant, finding the proceedings to be inadequate
and overturning the rule. In the second case, the Court
remanded the Commission’s to grant a permit to
Consumers Power Co. to construct two pressurized
water nuclear reactors to generate electricity and
steam.
 Issue. Were the agency’s rulemaking procedures
adequate?
 Held. Yes. Reversed and remanded. The Court of
Appeal improperly required the agency to employ
rulemaking procedures in excess of those required
under the text of the APA. Dissent. None.
Concurrence. None.
 Discussion. Agencies are free to grant additional
procedural rights in the exercise of their discretion, but
reviewing courts are generally not free to impose them
if the agencies have not chosen to grant them.
o “Whatever techinques the commission adopts, before it
promulagates a rule limiting further consideration of waste
disposal and reporecessing issues, it must in one way or
another gerneate a record in which the factual issues are
fully developed.”
 Court said that if the producres were adminstred more
fully they might have sufficed
APA IS THE MAXIMUM FOR RULEMAKING AND THE COURT CANNOT
ADD MORE…
Holding: a reviewing cannot interfere with the procedures of the agency…so long as it
operates within the exact procedures….
a lower court cannot second an agency procedures as long as the agency follows the
min procedures of the APA
pg. 430
• one party was arguing that the record was insufficient
• one party was arguing that the procedres were insufficient
 • The court went with procedureal asepcts
o The court said that if the lower court is looking procedure then it is
improperly inserting itself…
 Procedure is APA
• Record
o informal adjudcation
• Record
o what is required according to the APA
• Informal adjucdiation
o 555 – ancillary matters
 555(e)
 “promt notice shall be given of the denial in whole or in
part of a written application, petition, or other request of
an interested person made in connection with any
agency proceeding. Except in affirming a prior denial or
when the denial is self-explainatory, the notice shall be
accompanied by a brief statement of the grounds for
denial.
Hybird rulemkaing…
• pg. 422
o steps that the FTC must take before making a rule…
o adds a cost benefit analysis …
Congress can write additional procdures and safeguards to the APA
•
UPDATE
• American radio elay league v. FCC
o what is the agency doing wrong?
 some of the info in the statute have beenr redacted…
 blacking out the parts that won’t support the notice and
comment…
Public participation in rulemaking procedures –
exemptions from 553(b) 12/02/2011 09:51:00
Exemptions from 553
• Subsection (a) categorically exempts from the operation of 553 any
rulemaking involving a “military or foreign affairs function” or
matters of “agency magagement or personnel or…public property,
loans, grants, benefits, or contracts.
• Subection (b) contains exceptions from the notice and comment
requirements (except “when notice or hearing is required by
statute”) for “interpretative rules, general statements of policy, or
rules of agency rganzation, procedure, or practice” and for
situations in which the agency has “good cause” to dispense with
notice and comment.
Interpretative rules vs. legislative rules
• National family planning and reproductive health association
inc. v. Sullivan
o Interpretative rules : are rules that interpertert existing
legal duties
o Definition of interpretative rule: for a rule to be
considered an interpreative rule (also called “interpretive
rule”),it must not add anything to exisiting legal rules. Rather
it must merely inform the public of the agency’s views of the
maning of exiting statutes or regulations.
o Facts:
 The case with the doctors and the aboration shit where
they were not allowed to speak with patients aborations
o Court reasoning: (RULE)
 “The court stated that because the directive
substantially amended an exisiting regulation, it was
legislative rule and thus would only be effective after
notice and comment rulemaking. A rule amending an
existing legislative rule is itself a legislative rule.
o Conclusion:
  “The law seems clear that when an agency adopts a
new construction of an old rule that reputiates or
substantially amends the effect of the previous rules on
the public, after the older interpretation of that rule has
been advanced as a necessary interpreation of the
statute and has been argued to and validated by the
SC, the agency must adhere to the notice and comment
requirements of 553 of the APA.
• Hoctor v. United states department of agruculture
o A dealer raised exotic animals (mainly big cats), and USDA
ordered that the dangerous ones be fenced, with fencing
being a minimum of eight-feet high. However, the animal
housing standard only required that the fencing be sturdy
enough to prevent the animals from escaping. The eight-foot
rule established by USDA was considered arbitrary, and it did
not have to be followed.
o Holding:
 Judge posner, held that the memorandum that
purported to interpret the regulation was legislative
rather than interpretive, and therefore was invoalid for
lack of notice-and-comment procedure.
 Reasoning:
He reasoned that because the change in
application of the rule contained a fixed and
inflexible numerical component, the agency could
not maintain that the new requirement was
derived from the underling statute or regulation.
Negotiated rulemaking; strengthening the analytical
basis of policy making 12/02/2011 09:51:00
Negotiated rulemaking
• Rule: is a procedure under which a notice of proposed rulemaking
is formulated through negotiations among interested parties. These
negotiations are presided over by the agency. After negotiation
procedures a proposal, the proposal is subjected to a normal notice
and comment procedure.
• The largest user of negotiated rulemakeing in the federal
government is the EPA….
pg 546 – tells us the negoitaed rulemaking works
Notes and questions
• Raise a number of problems with negotiated rulemaking
• Delegation:
o What is the check on this?
 the notice and comment period that comes in
afterwards..

USA group loan services inc. v. Riley

• Any defects in the negoation process probably cured by the notice
and comment process through which all rules are ultimately
promulgated. Courts have not required agencies to adopt the rule
agreed to in negotiation.
• How does this case end up in front of the court?
o Congress passes a law that allows the agency to pass
regulation on third party servicers of loans…
• Rule is proposed that would elimante an liability…
• Consensus
o re: servicer liability (immunity)
 in re: RM
 NPRM
o Final rule was the worst possible scenrio
• Negoiated rule making will be part of the record…
• Notes and questions:
o Note 5 – pg 468
 Alternative disputes resolution can alsoe be used..
Strengethening the analytical basis policymaking
• Cost-benefit analysis
o Rule: cost benefit analysis is required is required only when
the statute clearly requires it…However, an agency may
decide on its own to use cost-benefit analysis unless
something in its statute precludes it.
 American textibble manufacturers institute v.
Donovan (the cotton dust case)
 A cost benefit analysis must be explicitly stated in
the statute…
 dealing with cotton dust
 “TO the text feasible”
• technical
o Engineering
• economic
o financial
• Final rule
 What are the plaintiff’s arguments?
 Feasible was defined narrowly….did not considerd
cost…just that it possible…
 Look to the enabling for instructions from
congress…
• What is cost benefit analyst?
o Trying to put a dollar value on certain things…
• What requires a cost/benefit analysis for regulation?
o Unless congress specically mandates it does not need take in
cost/benfit analysis just needs to take in feasible
Regulatory impact statements
• Impact statements improve decision making by forcing agencies to
focus on the effects of their actions and by providing an opporuntiy
for opponents of the agency’s plan to put pressure on the agency to
change or abandon its plan due to undesirebale external effects.
o The national environmental policy act: a statement
without impact?
o NEPA in the courts
  NEPA requires federal agencies to prepare an EIS
regarding “major federal actions significantly affecting
the quality of the human enviroment” and states that
the EIS, “and the comments and views of the
appropriate federal, state and local [environmental
agencies] shall…accompany the proposal thorugh the
existing agency review processes.
o What is meant by impact?
o Calvert v. atomic energy commission
 Involved an attack on rules promugalted by the AEC…
 informal passing of folders
 was procedurally following the statute but was not
really doing anything…
o Vermont yankee nuclear power corp. v. Natuual
resource defense council
 (agency was not required to include “energy
conservation” in EIS as alternative to nuclear power
plant because at the time the EIS was prepared energy
was not a known, feasible alternative)
 pg. 494 the court discuess alternatives…
o Strycker’s bay neighorhood council v. Karlen
 The housing of urban development was trying to put
together a housing develipment project
 Split housing develipment
 There were other groups involved in the project
 Local agencies in NY …determined that the proposal for
low income housing was not usfficent
 pg. 499
Agency authority to adjudicate; due process hearing
rights – the interest protected by due process
12/02/2011 09:51:00
Adjudication
• The delegation of adjudicate authority to admisntative agencies
raises tow generic questions in our legal system.
o 1) First, are there any limitations on the kinds of matters or
issues that may be delegated to adminstative agencies to
adjuicate?
o 2) Second, to the extent that adjudicate powers may properly
be delegated to agencies, what procedures must they follow
when they exercise such powers?
Adjuication looks like what courts do…
Looks at the issue of delegation….
How much authority and how much power can be given
• A. Agency authority to adjudicate
o Commodity futures trading commission v. Schor
 Brief Fact Summary. The Commodity Futures Trading
Commission (CFTC) issued a regulation permitting itself
to adjudicate counterclaims brought by brokers in
reparations proceedings. Schor brought suit against his
broker, who then filed a counterclaim against him.
Schor then challenged the CFTC’s authority to
adjudicate the counterclaim as violating Article III of
the United States Constitution.

 Synopsis of Rule of Law. Article III, Section:1 of
the Constitution provides that the “judicial power of the
United States shall be vested in one Supreme Court and
in such inferior Courts as the Congress may from time
to time ordain and establish.” However, Courts must
apply the principle that “practical attention to substance
rather than doctrinal reliance on formal categories
should inform application of Article III.”

 Facts. The Commodity Futures Trading Commission
(CFTC) is an independent agency that enforces the
Commodity Exchange Act (CEA). The CFTC was
authorized to adjudicate claims for damages, or
reparations, brought by customers of brokers for
brokers’ violations of the CEA or CFTC regulations. The
CFTC also issued a regulation permitting itself to
adjudicate counterclaims brought by brokers in
reparations proceedings. Schor sued his broker,
ContiCommodity Services of America (Conti), claiming it
was responsible for the negative balance in his trading
account with Conti. Conti counterclaimed, and the CFTC
ruled in its favor. Schor then questioned the CFTC’s
authority to adjudicate the counterclaim, and the
agency rejected the challenge. The Court of Appeals
reversed.

 Issue. Did CFTC’s assumption of jurisdiction over
common law counterclaims violate the Constitution?

 Held. No. The limited jurisdiction that CFTC asserts
over state law claims as a necessary incident to the
adjudication of federal claims willingly submitted by the
parties for initial agency adjudication does not
contravene separation of powers principles or Article III.
The CFTC’s powers departed from the traditional agency
model only in respect to its ability to adjudicate
counterclaims arising from the same transaction. This
did not impermissibly intrude on the providence of the
judiciary.

 Dissent. Article III, Section: I seems to prohibit the
vesting of any judicial functions in the Legislative and
Executive branches, but the court has recognized three
narrow exceptions: territorial courts, courts-martial,
and courts that adjudicate certain disputes concerning
public rights. The judicial authority of non-Article III
federal tribunals should be limited to these few, long-
established exceptions. Concurrence. None.
 

 Discussion. The CFTC’s assertion of common law
counterclaims is incidental to, and dependent upon,
adjudication of reparations claims created by federal
law, so any intrusion on the Judicial Branch is de
minimus.
Looking at the enabling act
• Look at the scope of authority
o Statutory interpretation question
 What does the statute say it can do…
o If there is regulations…looks towards the regulation and read
what it says
 Carves out the slither of counter claims allowed…
Dude was whinning after the fact…he had waved his right to be heard in an
article 3 court
Look at agency expertise …
Take home message
• Delegation
o Congress can delagte orders for regulation

Enabling acts
APA – 554, 556, 557
• formal adjuication
• informal adjuication
Due process
• 5th amendment
• 14th amendemnt
Due process hearing rights
• The more significant and interesting legal question posed by
administrative adjudication have to do with the procedures that
agencies must follow when they exercise a delegated adjudicative
power.
o Under federal law there are three primiary sources of such
procedural protections:
  1) the due process clauses of the ifth and fourteenth
amendments to the consitution
 2) the APA, especially section 554, 556, and 557
 3) Procedural providisons of specifc enabling statutes
Whether is there a protected interest or a deprevation of that
protected interest: (Theme of today’s clase)
• If there is a protected interest
o “whether”?
o “What + when?”
• Libery vs. property
o 14th
 liberty
 consitution + courts
 property
 comes from postitive law
 legit claim of entitlement
Red flags
• bishop
• Arnet
o P
o
  The interests protected by due process
 Goldberg v. Kelly
• Facts: A welfare recipient’s benefits were
terminated without an evidentiary hearing.
o
• Issue: Whether 14th amendment
procedural due process required that a
welfare recipient be afforded “an evidentiary
hearing before the termination of benefits.”
o
• Holding: Yes.
•
• Majority Reasoning: [Brennan] Welfare
benefits are a matter of statutory
entitlement. They are not mere charity but
a means to promote the general welfare.
Thus, termination of benefits without a
hearing may deprive an eligible recipient of
his “liberty” and “property”.
•
• Synopsis of Rule of Law. The extent to
which procedural due process must be
afforded is influenced by the extent to which
he may be “condemned to suffer grievous
loss.” Due process required a pre-
termination hearing prior to termination of
welfare benefits.
•
• Notes: In Bell v. Burson, a driver’s license
was held to be an entitlement under state
law, and so a state could not suspend a
driver’s license without a hearing to
determine fault in an accident.
What is a property right:
Welfare case
Arguing that the interest here is a property interest (in the context of
welfare)
Instance
• where we see notice and opporunitty to be heard matters….
Goldberg v. Kelly (1970)
• welfare befits
o post-term hearing
• require  “what”
o 1) notice
o 2) Opporunity to be heard
 oral testimony
 cross examine
 decisimaker explaintion
 record
o 3) right retain attorney
o 4) right to impratical decisionmaker
o
 Board of regents v. Roth
 Relevant Facts: Roth hired to teach at Wisconsin
State for one year, then told he wouldn't be
retained. Demanded to know why, which was
denied, and he had no opportunity to challenge it.
The school president's action complied with state
law and university rules.
•
 Issue: Under constitutional law, did the failure to
provide a state employee with a statement of
reasons or a hearing to challenge a decision to
decline rehiring that employee violate any
procedural due process rights?
•
 Holding: No. The range protected by procedural
due process is not infinite.

 Court's Rationale/Reasoning: The court based
its decision on two major principles within the Due
Process clause of the 14th Amendment. These
two principles were whether there was any
depravation of liberty or property in the decision
to not renew Mr. Roth's contract.

 In regard to the liberty interest, the Court
held that the university did not base its decision
on a negative charge, nor did it attempt to harm
the respondent's name or character within his
community. However, Roth argued that when he
looked for future employment and they asked him
why he was not rehired, he would have no proof
that he was "wrongfully" unrenewed. His
reasoning was denied and the lack of infringement
upon his "good name, reputation, honor, or
integrity" caused the Court to deny his claim. (via
Goldberg decision). Essentially, there is no liberty
lost when a person winds up the same way they
were, to find whatever job they wanted, upon
being fired.
 The second aspect of the 14th Amendment in
question was whether David Roth had a property
right for his position. The contract for Roth's
position had no clause that guaranteed him a
position with the University of Wisconsin.
Moreover, the ending of the contract was June 30.
Because he was not tenured, he was not granted
a hearing nor a summary judgment. His property
right, or lack thereof, resulted in the Court
reversing the case and ultimately leaving Roth
unemployed.
  Rule: School employees with tenure or
"continuing contract status" or who are fired for
stigmatizing reasons have a right under the 14th
Amendment to procedural due process.
 This due process includes notice of the charges
and a fair hearing before an unbiased party that
includes the right to counsel, to present evidence,
and to call and cross-examine witnesses.

 Important Dicta: No.
Roth and the Sinderman case
• What is going on in Roth?
o This case goes very much to the concept of property and
entitlement
o Liberty as a concept laid in the consition and laid in the
courts…
o Why did the court find that there was no protected liberty
interest?
 Because dude that was fired can still go out and get a
job and shit…
o There was no entitlement here it was merely and 1 year
renewable contract
o Proerpty interest are not created by the consitution but are
created by there dimiesion….
 property interest come from postitive law….
• Sinderman case
o pg. 532
 Court came to a different conclusion…
 This case was really examining
 Case was dealing with a protected property interest
  “the teacher whose contract had not be renewed
alleged that ambiguous assurances of continted
employment contained in offical colleged pubications
created a system of “de facto tenure” on which he had
legitimately relied. The SC found those allegations
sufficient to withstand a motion for summary judment
ion the gorund that plaintiff lacked a “property interest.:
 The court found a defacto tenure…

• Arnett v. Kennedy
o Facts: Kennedy was a United States Supreme Court decision
rejecting a nonprobationary federal civil service employee's
claim to a full hearing prior to dismissal.
 The governing federal law prescribed not only grounds
for removal but also removal procedures. The employee
could only be removed for "cause," but the procedures
did not provide for an adversary hearing.

o Overview: A federal civil service employee in the Office of
Economic Opportunity (OEO), was fired pursuant to the Lloyd-
La Follette Act, 5 U.S.C.S. § 7501, after he was found to have
recklessly made statements that an officer of the OEO had
been involved in bribes. The employee was advised of his
rights under regulations promulgated by the Civil Service
Commission (Commission) and the OEO on how he could
reply to the charges and appeal any subsequent dismissal to
the Commission or OEO.
o Appellee filed suit upon the claim that the discharge
procedures authorized by the Act had denied him and others
due process of law. The lower court sided with the employee.
o The Supreme Court reversed in a plurality opinion.
 Six of the Justices found that the Lloyd-La Follette Act
had created an expectancy of job retention requiring
procedural protection under the Due Process Clause.
  Five of the Justices then concluded that the procedure
given the plaintiff satisfied the requirements of Due
Process.
o Furthermore, the court concluded that post-termination
procedures provided by the Commission and the OEO
adequately protected appellee's liberty interest in not being
wrongfully stigmatized by untrue administrative charges.
Holding: Finally, the Court held the Lloyd-La Follette Act was
not impermissibly vague or overbroad in its regulation of
federal employee speech.
Class notes
• There was a civil service employee for talking shit about his boss…
• When there is a protected property interest we have to look to the
scoop of the protected proerpty interest…
• Bittersweet reasoning is not compatible with Sinderman and roth
o Bishop v. Wood
 Continued Pubilc Employment: If there is a state statute
or ordinance that creates a public employment K, or
there is some clear practice or mustual understanding
that an employee can be terminated only for "cause",
then there is a property interest. [Arnett v. Kennedy]
-But if the employee olds his position on ly at the "will"
of the employer, there is no property interst in
continued employment. [Bishop v. Wood]
 Here, there was a for cause provision
 The court found that there was no for cause provision
 Take home
 City ordinace reads for cause…
o Clevand BD. Or education Loudermill
 Issue: Whether a state-employed security guard can
be fired for failing to disclose a felony conviction on his
employment application if the terms of his employment
dictate that he may only be removed for cause and such
terms contained provisions for post-termination
administrative review?

  Rule:
 a) The right to DP is conferred not by
legislative grace but by Constitutional guarantee.
While the legislature may elect not to confer a
property or liberty interest, it may not
constitutionally authorize the deprivation of such
an interest, once conferred, without appropriate
procedural safeguards.
 b) In terms of the time of a hearing that would
comport with PDP requirements, the root
requirement of the DPC is that an individual be
given an opportunity for a hearing before he is
deprived of any significant liberty or property
interest.

 Holding:
 The state violated P’s PDP rights by not holding a
pre-termination hearing.
Found unconsitional because he was not afforded an oppounity to deal with
the dismissial…
There must be some floor of procedural protection
•
• Class Discussion:
•
o a) He worked for the state: the Cleveland Board of
Education.
o
o b) P was terminable for cause in this case. Termination for
cause meant malfeasance or bad behavior on the job.
o
o c) In this case, the statute that created P’s job created the
property interest. A state statute, regulation or contract as
well as custom or practice could create a property interest.
o
 o d) Here, there was no pre-termination hearing and the
USSC found that this did not satisfy PDP because P had a
property interest at stake and a state actor was trying to strip
that interest.
o
 (1) P’s interest in this case is in his continued
employment; in keeping his property right.
o
 (2) The government’s interests here are in not having
such hearings because that would be inefficient and
expensive.
o
o e) The majority recognizes PDP as a limitation on state
law, Rehnquist’s dissent does not: he is saying that the state
can do whatever it wants as long as there is some process in
place for redressing wrongs.
• O’bannon v. town court nursing center
o Issue: The question presented is whether approximately 180
elderly residents of a nursing home operated by Town court
nursing center, inc, have a consitutional right to a hearing
before a state or federal agency may revoke the home’s
authority to provide them with nursing care government
exepense.
o Holding: Although we recognize that such a reovcation may
be harmful to some patients, we hold that they have no
consitutional right to particpate in the revocation proceedings.
o
o The patients have no interest in receiving befits for care in a
parciular facility
o Medifcaed patients who are forced to move because their
nursing home has been decertified are in no different pisition
for purposes of due process analysis than financially
independent residents of a nursing home who are forced to
move because the home’s state license has been revoked.
The requirements of due process 12/02/2011
09:51:00
Whether a protected interest
• Liberty
o created by the consitution
o envisioned in the consitution
• Property
o created by postive law
o created by state statutes
o regulations
o or priovions laid out by a university…
Roth
• liberty, property
• Sinderman
Goldberg v. Kelly
• Welfare benfits
When there is a due process matter…requirement of a hearing..
Rule
• There is some floor …base line due process for entitlements created
when there is postive law…
•

2. The requirements of due process

• a. The Eldridege calculus
o Mattws v. Eldrige
o Relevant Facts: Eldridge's disability benefits were terminated
without any hearing or any other due notice.
o Issue: Under constitutional law, did the termination of the benefits
without any evidentriary hearing violate the Due Process Clause of
the 5th Amendment?
o Holding: No.
o Court's Rationale/Reasoning: Unlike Goldberg, Eldridge's
benefits were not based on need, but rather on other factors
designated by statute. The degree of potential deprivation is
significantly less than that of Goldberg as well. As to the length of
wrongful deprivation exceeds one year, and is also significantly less
in scope than in Goldberg. Despite the fact that a person on
disability is likely to be at some hardship, the Court reasoned that it
is not more than that of a welfare recipient.
o As to the fairness aspect, the Court found that there were
numerous safeguards to prevents errors in making decisions to
terminate disability benefits and argued that "[a]t some point the
benefit or an additional safeguard to the individual affected by the
administrative action and to society, in terms of increased
assurance that the action is just, may be outweighed by the cost."
 o As to the public interest, the burden actually weighs more on
Eldridge, as the Court cites the many hearings it would take to get
benefits back, as well as the increased costs of providing benefits to
that person while they wait to have their day in court or in a
proceeding, but not that expensive. However, the Court did find
that if the government were forced to pay out to everyone whose
claims were waiting, it could also be serving the interests of those
who have completely ridiculous claims, thus the cost on taxpayers
and the agencies would be burdened significantly from such a
policy.
o Rule: The nature of the hearing must be commensurate with
the interest affected, taking into account the state's
administrative needs:
o All courts must now employ the Mathews balancing test to
determine the type of procedures that are required by due process
when a governmental action would deprive an individual of a
constitutionally protected liberty or property interest. On the
individual's side, a court must assess two factors:
o 1) The importance of the individual liberty or property interest at
stake (private interest);
o 2) The extent to which the requested procedure may reduce the
possibility of erroneous decision-making (government's interest).
o On the other side of the balancing scale, the court must assess the
governmental interest in avoiding the increases administrative and
fiscal burdens which result from increased procedural requirements.
o (risk that procedures used will lead to erroneous decisions)
o Important Dicta: No.
The big thing they did in this case
• listed three factor
o 1) private interest
 What is the nature of the inters to the person…
 “when we are dealing with this first factor generally
the stronger the private interest the more process that
is going to be required”
 Goldberg
• wlelfare vs. disability
 o welfare is stronger
 disability is not as important
for the survial of sustiance
o 2) risk of erroneous deprivation
 “the greater the risk of erronesous deprivation
because of errournes procedres the more likely the
court is going to require better procedures.”
o 3) public (government) interest
 How much is this going to cost
 “generally the thoughest”
 “how much it is going to cost the agency”
No matter what entitlement is created..
• once that is protected property interest is created the court measures
what procedures are used…
•
Notes and questions:
• Note 4 – consultation prior to deprevation
o Requirement of opportunity to be heard
 Goss v. lopez
 very fact specific
• Note 5
o Emergency expcetion no need for opunrity

Ingrham v. Wright

• Case Summary
• Two Florida students who were paddled in school brought suit
in federal court arguing that the paddling was “cruel and
unusual punishment” and that students should have a right to
be heard before physical punishment is given. They lost in the
trial court and at the Court of Appeals, and then appealed to
the Supreme Court.

• The Court's Decision

 • In a 5-4 decision, the Supreme Court decided that public
school students could be paddled without first receiving a
hearing.
• Justice Lewis Powell wrote the majority opinion. He pointed
out that the Eighth Amendment's ban on “cruel and unusual
punishment” had always been applied to punishment of
convicted criminals.
o The Court therefore did not apply the ban to non-criminal
contexts, such as school discipline. Finally, Powell wrote
that “In view of the low incidence of abuse, the openness
of our schools, and the common law safeguards that
already exist, the risk of error that may result in violation
of a school child's substantive rights can only be
regarded a minimal. Imposing additional administrative
safeguards as a constitutional requirement might reduce
that risk marginally, but would also entail a significant
intrusion into an area of primary educational
responsibility.”
• Justice Byron White argued in dissent that the Eight
Amendment does not contain the word “criminal,” so the Court
should not impose that limitation. “The disciplinarian need only
take a few minutes to give the student 'notice of the charge
against him and, if he denies them, an explanation of the
evidence the authorities have and an opportunity to present
his side of the story.'” Justice White quoted an earlier case to
support his opinion: “The Constitution requires, 'if anything,
less than a fair-minded school principal would impose upon
himself' in order to avoid injustice.”
Looks at procedures and lawsuits…
If process is do what procedures are required?
Castle rock v. Gonzales
• mom tried to sue the 5-0 NUCCA!
• ther was an issue of due process.
Formal rule making phrase
• on the record after opprunity for a rulemaking…
 o triggers formal rulemaking process
 agency don’t really operate on this model anymore
 Rule making here looks more like formal
adjudication…

Section
• 554-deals with formal adjucation
•