Bierschbach Admin

8/6/2019 Bierschbach Admin

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I. THE CONSTITUTIONAL POSITION OF ADMINISTRATIVE AGENCIESx

a. What Is An Agency?

• What Is Administrative Law? Most broadly defined as legal control of government. Mostnarrowly it consists of those legal principles that define the authority and structure of administrativeagencies, specify the procedural formalities that agencies use, determine the validity of administrative decisions, and outline the role of reviewing courts and other organs of government intheir relation to administrative agencies.

o Three Bodies of Administrative Law : (1) constitutional law , (2) statutory law , includingAdministrative Procedure act (APA), and (3) federal common law embodied in judicialdecisions that don’t have clear constitutional or statutory source.

• What is An Agency? Agency means each authority of the US government, excluding the threebranches of government (congress, judiciary, executive). Examples FTC, EPA, FCC, Library of Congress, Secret Service, PTO. Any government power that’s not one of the three branches of government is an agency.

o APA § 551(1) “Agency means each authority of the Government of the US, whether or notit is within or subject to review by another agency, but does not include (A) congress, or (B)the courts of the US.”

• APA says any kind of authority except congress and the courts. It doesn’t except the

president.• Agency’s Connection To Three Branches of Government Where do agencies fit in to this

structure?o Article 1 “ All Legislative Powers shall be vested in Congress , which shall consist of a

Senate and House of Representatives ”o Article 2 “ Executive Power shall be vested in a President ” o Article 3 “ Judicial Power shall be vested in one Supreme Court , and such inferior

courts as Congress may from time to time ordain and establish. ”

• Was It Framer’s Intent To Give Legislative, Executive and Judicial Power To CreateAgencies ?

o No - Legislative + Executive Have No Power To Create Agencies Alito argues thatLegislative + Executive Branches Don’t Have Power To Create Inferior Tribunals (Agencies)because if framers intended to allow them to create agencies, then would have explicitlyincluded it in text the power to create subordinate bodies as it did with for judicial branch inarticle 3.

o Yes – while constitution doesn’t spell out that the branches can create agencies, there isassumption for legislative and executives that they can. It is up to congress to createagencies for judiciary, judiciary doesn’t have power. constitution doesn’t forbid creation of agencies

• Article 1 - Necessary + Proper Clause Article 1, Section 8, Clause 18 " TheCongress shall have Power - To make all Laws which shall be necessary and proper forcarrying into Execution the foregoing Powers, and all other Powers vested by thisConstitution in the Government of the United States, or in any Department or Officerthereof ."

Contemplates congress having subordinates that are actually in branchthemselves. For example congress can make law saying we’re going tomake agencies because contemplates congress making laws providingfor themselves support personnel.

• Article 2 – Section 2 “The President may require the Opinion, in writing, of theprincipal Officer in each of the executive Departments, upon any Subject relating tothe Duties of their respective Offices”

o Clearly there is assumption that executive will need executive departments toget things done. Also has procedure for confirming appointments of inferiorofficers. Also take care clause “ he shall take Care that the Laws be faithfully

Administrative Law - Bierschbach 1



executed ” is interpreted to mean he takes care by appointing agencies toexecute law.

• What Branch Does Agency Fall Under Which branch are agencies under? SEC has office of judges . . . where do they fit in. agencies do bunch of different things not clear where fit inconstitutional structure. All we know is that not one of three branches of government.

Boyce Motor Lines v. US (1952)•

Facts Interstate Commerce Commission (ICC) promulgates regulation that requires drivers of vehicles containing hazardous materials to “avoid, so far as practicable, and where feasible, byprearrangement of routes, driving into or through congested thoroughfares where crowds areassembled tunnels and dangerous crossings.” D in trucking business and drove through Hollandtunnel with hazmats and truck exploded killing people. Charged criminally for violating ICCregulation.

• Who Gave ICC Power to Promulgate This Law? Congress! ICC was delegated this power byCongress – Congress passed statute that says “ICC shall formulate regulations for safetransportation.” Usually agencies get their authority from congress through the agency’sorganic/enabling statute (statute that creates the agency).

• ICC Regulation Vague Defendant argues that ICC regulation is overly vague and does not

provide sufficient notice to D. here the congressional delegation was constitutional, but the ICCregulation was unconstitutionally vague.o Majority Can’t knowingly violate ICC statute because no way of knowing if conduct violates

vague statute.o Dissent When congress vests ICC power to define unlawful conduct, agency must do so

with precision. Here ICC failed to identify routes over which transportation of dangerouscommodities is unlawful.

• Laws Which Constrain Agencies1. Constitution Agency must promulgate regulations that give fair warning to put people on

notice of law.2. Organic Statute Agency can’t exceed power congress delegated to them in enabling statute

that created the agency.3. Federal Courts Judge made administrative common law.4. Agency Regulations Each agency has their own rules and regulations for how standard of

conduct and procedures for making laws.5. Executive Order president can issue executive order telling agency what president wants

them to do. President can say EPA in deciding rules to regulate environment must use costbenefit analysis.

b. Relation of Agencies To Congress

i. The Rise And Fall of The Nondelegation Doctrine

1. Separation of Powers And Checks and Balances

• Separation of Powers + Agencies Separation of Powers doctrine insists that infringements onpersonal liberty be imposed only by rules of general application, promulgated by electedrepresentatives, interpreted by independent jurists, and enforced by yet another branch of government. The creation of administrative agencies having each of the three types of powers thatthe constitution disperses among coordinate branches threatens the doctrine of separation of powers.

• Purpose of Nondelegation Doctrine – congress can’t delegate power given to it by thestates/citizens

(1) Accountability It ensures that significant policy decisions are made by the legislature,




the branch most responsive to the democratic will(2) Guidance For Agencies it assures that the agency receiving new jurisdiction will have an

“intelligible principle” to guide its exercise(3) Judicial Review it allows courts reviewing agency action to test it against ascertainable

standards.

• Delegation + Congress’s Accountability When congress delegates to agencies there is noaccountability – because congress is not accountable for legislation that that agency passes. Why

we like accountability? A lot of legislation imposes burdens on our liberties and we want electedofficials who have our interests in mind to make decisions on those sensitive morality issues. Alsowhen congress legislates, they get more input because legislature from around the company ratherthan an agency in DC – which think increases the quality of the law.

o HYPO Accountability Problem Congress thinks in public interest for RR to beaffordable, but knows RR will go out of business if force them to lower their rates. Socongress delegates power to regulate RR rates to agency which raises RR rates. Congresssays to constituents I can’t believe agency did this, we didn’t do it, we don’t control them.If allow congress to delegate too much then will lose important check in checks andbalances system.

• Why Congress Delegates? (1) Expertise Congress often delegates power to regulate rates to agencies because they

are not economists and specialized commission has more expertise in a certain field.(2) Time congress doesn’t have the time to regulate this.(3) Continuity congressman change by the year, but more consistency if delegate to

agency that is always there.(4) Independence agency will gather all the information and balance between competing

priorities. Congress is tied to their constituents. Congress will delegate things away toagencies that want to insulate from lobbying.

2. Agency’s Power to Legislate

• Non-Delegation Doctrine Congress Cannot Delegate Legislative Power Congress can’tdelegate its legislative power and if it does then the legislation is struck down as unconstitutional.Constitution says “all legislative power shall be vested in congress,” so congress can’t delegate thatpower.

• Different View of Nondelegation Doctrine1. Congress Can’t Transfer Any Legislative Powers The vesting of all legislativepowers in congress is not only an initial allocation, but also a final one. Congress cannottransfer its legislative powers to any other institution2. Congress Cannot Delegate Broad or Discretionary Power When congress enacts astatute granting authority to the executive the statute amounts to or effects a delegation of legislative power if the scope of the grant is too broad or if it vests too much discretion in theexecutive.3. No Delegation It Is Exercise When congress enacts statute granting authority toexecutive there is no “delegation” of legislative power no matter how broad the grant of howmuch discretion is confers. Rather than delegating legislative power, congress has exercised itby enacting the relevant statute.

• Pre 1935 Supreme Court Cases prior to 1935 the supreme court upheld a number of delegations of legislative power under a variety of different theories.

o Not Too Vague - The Brig Aurora – Court upheld Congress’s delegation to the President of the authority to lift an embargo of European trade when he found that the subjects of theembargo had “ceased to violate the neutral commerce of the US.”

o President Factual Determination - Field v Clark (1892) statute giving president powerto impose retaliatory tariffs when deems foreign tariff unreasonable or unequal. Court heldpresident not given legislative authority because his powers were limited to determining a




fact upon which the tariff was contingent. President just deciding fact – whether foreign tariff is reasonable. ( broad discretion because based on president’s opinion )

o Fill In The Details - US v Grimaud (1911) statute gives secretary of agriculture authorityto make provisions for protection against destruction upon public forests. Court upheldstatute saying didn’t delegate legislative authority but merely gave secretary power to fill upthe details . Secretary can only regulate if destruction of forests so that is constraint.

o Intelligible Principle - Hampton v US (1928) statute gave president power to revisetariff when he determined necessary to equalize costs of production in US and competing

country. Court justified “if congress shall lay down by legislative act an intelligible principleto which the person or body authorized to take action is directed to conform, such legislativeaction is not forbidden delegation.”

• 1935 Panama Refining and Schechter only in Panama and Schechter has the supreme courtconcluded that delegations have been unconstitutional. Nevertheless, the nondelegation doctrinehas never been overruled.

o Panama Refining v Ryan (1935) NIRA (national industry recovery act) enabled presidentto prohibit transportation of petroleum in amount exceeding amount authorized by state.President could impose fine or imprisonment.

Unconstitutional Delegation Congress didn’t establish standards to governpresident’s action, or where president was obligated to make specific finding priorto action. President held unlimited authority to implement the prohibition because

didn’t provide standard governing when the president was to exercise theauthorized power.o Schechter Poultry v US (1935) NIRA delegated to president authority to approve codes

of fair competition upon application by trade groups. President approved life poultry code.Unconstitutional Delegation Court says there were no adequate definitions onNIRA of subjects to which exercise of authority is to be addressed just says “Codesof Fair Competition” also no procedural safeguards for adoption.

• Procedural Safeguards in Panama Refining president regulating unfaircompetition and would have to engage in investigating, collectingevidence, and evaluating what’s going on in industry at time to see what’sunfair. In Schechter Poultry president regulating procedures for faircompetition and relying on private parties to come up with standards.

• Delegation To Private Parties delegation here to private parties wasunconstitutional because affirmatively coming up with the regulation, if justvetoing that’s ok.

o General Rule o f Panama an d Schechter a delegation of legislative authority that isfound to be wholly without standards specifying conditions pursuant to which it is to beexercised is unconstitutional.

o Cardozo Cardozo dissents saying no unconstitutional delegation in Panama but yes inSchechter because delegation was “unconfined and vagrant.” Authority delegated wasn’tconfined to specified acts or standards. Legislature seemed to create a roving commission toinquire into evils and upon discovery correct them.

• Post Schechter Delegation – Wartime Delegations o Price Controls – Yakus v US (1944) Emergency Price Control Act gave administrator

power to establish maximum prices on commodities when prices rose or to eliminateprofiteering, stabilize prices etc. Court ruled standards expressed in EPC with statement of considerations required to be made by administrator were sufficiently definite and precise toenable congress, courts and public to ascertain whether administrator in fixing pricescomplied with those standards. Delegation only kicks in when have to fight inflation.

o War Contract – Lichter v US (1948) upheld constitutionality of Renegotiation Act whichdelegated to administrator power to recover excessive profits on renegotiation of warcontracts. Court held not necessary for congress to supply with specific formula because fieldinvolves flexibility.

• The Modern Doctrine Court very liberal in modern era, only unconstitutional if congress




provides no standards at all.o Mistretta (1989) (See also Page 5 below) Sentencing Reform Act delegated the authority

to promulgate mandatory federal sentencing guidelines to the US Sentencing Commission.Court applied the intelligible principle test, upheld the SRA , holding that the act’sdeclaration of purpose and goals and its specification of factors to be considered by theCommission provided an intelligible principle. SCALIA DISSENT: Delegation UnconstitutionalWhere Only Delegating Lawmaking Function – The Commission is, in effect, a mini-legislature(“junior varsity”) since it has no function other than promulgating the guidelines. The

lawmaking function of the sentencing commission is completely divorced from anyresponsibility for execution of the law or adjudication of private rights under the law.

o Kent v. Dulles (1958) Sec. of state was authorized to “grant and issue passports…undersuch rules as the President shall designate and prescribe.” Secretary then barred, byregulation, passports to members or supporters of the Communist Party.

Constitutional Avoidance (like Benzene case ) : Douglas thinks that the “right totravel is party of the liberty of which the citizen cannot be deprived without dueprocess of law”. To hold that Congress had delegated the authority to restricttravel would pose a Constitutional problem, but Congress “has made no suchprovision in explicit terms,” and absent such a clear statement the secretarycannot so regulate.

1. The Court will narrowly construe all delegated powers

that curtail the Constitutional rights of citizens.2. The Court will only confront such conflicts when thereis a clear statement by Congress delegating the challenged authority.

o Amalgamated Meat (1971) Economic Stabilization Act (ESA) of 1970 gave presidentpower to “issue such orders and regulations as he may deem appropriate to stabilize, prices,rents, wages and salaries.” President issues executive order establishing 90 day price wagefreeze.

Why Delegation Constitutional (1) judicial review – court not worried aboutpresident exceeding authority because there is possibility of judicial review thatwill check his power. (2) procedure – president must go through process toimplement the rule so that constrains his power (3) legislative history –president can look to legislative history to get sense of what is allowable for a

standard. (4) limited duration – rule has limited duration so not worried going tobe applicable forever.o Intelligible Principle Standard Congress must identify an “intelligible principle” to which

the agency must conform. A delegation is only improper if the challenging party proves thatthere is an absence of standards governing agency, so that it is impossible for a court toascertain whether will of the legislature has been satisfied.

HYPO Is There Standard? Congress passes statute saying FCC can grantlicenses to companies for public convenience and interest. Standard ? there is astandard it is public convenience. Breadth ? All they are authorized to do is grantlicenses, so power is limited. FCC doing it not private parties .

ii. Dealing With Delegations

1. Problem of Legislative Language

a. Broad Delegation

• Dissenting Justices Argue Unconstitutional Delegation even though the supreme court hasnot struck down a federal statute as unconstitutional delegation since Panama and Schechter ,several justices have strongly advocated its application.

“The Benzene Case” - Industrial Union Dept. v. American Petroleum (1980)• Facts Occupational Safety and Health Act (OSHA) Secretary of Labor should set standards for

dealing with toxic materials in the workplace, “which most adequately assures to the extent Administrative Law - Bierschbach 5





discretion. A cost benefit analysis is not available, but EPA in theory could choose toeradicate any hint of direct health risk. If EPA concludes no principle available it can report tocongress with rationales for the levels it chose and seek legislation ratifying its choice.

• Court Does Not Strike Down Clean Air Act Statute the problem is really that congressdoesn’t explain what “requisite to protect the public health means.” Scalia upholds the law sayinghe’s upheld more vague things in the past, but in reality this statute is worrisome from thenondelegation standpoint because granting EPA broad authority to regulate because didn’t givethem clear standards.

o Why CAA Is Not Clear congress should have made the statute more clear, rather thansaying “requisite to protect public health.” Congress could have gone through all the types of particular toxins in the air and make a bright line rule of how much ppm is permissible foreach. But then congress would just be making the law itself and delegation would bepointless.

b. Narrow Delegation

• Mistretta Congress wanted to take away arbitrariness in judge’s decisions so delegated tosentencing commission the power to provide guidelines for judges to use when imposing sentences.Commission evaluates guidelines congress gave it (categories of D’s, minimus/maximums).Congress basically made delegation as descriptive as possible – went as far is it could without

making the law itself.o Delegation Unconstitutional Where Only Delegating Lawmaking Function Scaliadissents that this is unconstitutional delegation of legislative power because all that statutedelegated was lawmaking function, and not any other legislative power. Commission didn’tengage in any research or do anything aside from taking law congress gave them in statuteand enacting it under their own name. The lawmaking function of the sentencing commissionis completely divorced from any responsibility for execution of the law or adjudication of private rights under the law. Lawmaking divorce from exercise of judicial power because notsubject to control of any other body with judicial powers.

Public Citizen v. Young (1987)• Facts The Delaney Clause of the Color Additive Amendment provides that a color additive shall be

deemed unsafe it is found by the FDA to induce cancer in man or animals. Once deemed unsafe FDA

doesn’t have authority to list the dye. FDA wants to list some dies that have really low risk, but stillsome risk of cancer.

• Court May the FDA allow an exemption from the Delaney Clause for trivial or “de minimus risks”?No. Court says Delaney Clause does not contain an implicit de minimus exception for carcinogenicdyes with trivial risks to humans. Congress intended that if this rule produced unexpected orundesirable consequences the agency should come to congress for relief – court refuses to bedesired escape.

o Court Holds Agency To Narrow Language Of Enabling Statute

• De Minimus Doctrine The court must look beyond the plain meaning of a statute to the purposeof the statute it its literal application would lead to absurd or futile results in a cost benefit sense orlead to a result directly contrary to the primary legislative goal. But if as here the intent of congress

was purposefully rigid, the courts must defer to it. In passing the Delaney clause congress intendedthat any unexpected or undesirable consequences should be remedied by it.• Plain Meaning The Delaney clause is very clear direct language not allowing much discretion.

Saying if induces cancer then it is deemed unsafe – no wiggle room about it (though there is a littlewiggle room, doesn’t say when to test, doesn’t say what “color additives” are, doesn’t say what to“induce” cancer (though that’s harder)).

• Absurdity Doctrine allows Court to change language of statute to avoid absurd results. If youforce FDA to avoid carcinogens at all costs, then Agency might approve another dye that is moretoxic but doesn’t cause cancer. This is absurd.

• Holding Congress Accountable Court wants to hold Congress accountable for writing such aAdministrative Law - Bierschbach 7



rigid standard. FDA cannot approve these food colorings. This sends message to congress andmight get congress to give an actual standard to be used. However, if Congress just says somethinglike “feasible”, then it will be a problem again and it might go back and forth between Congress andCourt. Also, Congress might have used this strict language b/c the state of science at the time couldonly detect carcinogens in large quantities, so if you found something carcinogenic then you knew itwas really bad. Maybe in the future you can tell miniscule carcinogenic risks. So this could be acase of science getting away from Congress.

2. Other Legislative Response

• Legislative Veto legislative veto is a clause in a statute that says that a particular agency actionwill take effect only if congress does not nullify it by resolution within a specified period of time.

They vary: might have to be passed by one house, both houses, or simply by a committee. Purposeof veto was to allow congress an opportunity to oversee or veto agency decisions especially if actedunder statute that gave them broad discretion.

o Elements of Legislative Veto (1) Delegation - statutory delegation of power toexecutive/agency, (2) Exercise - exercise of that power by executive/agency, and (3) Veto -reserved power in congress to nullify that exercise of authority.

INS v Chadha (1983) One House Legislative Veto Unconstitutional• Facts Chadha outstayed his visa. AG suspended his order of deportation under Immigration and

Nationality Act. One provision of that act allows either house or congress to pass a resolutiondisapproving such suspension of deportation, which the house did without explanation. Court ruledthat this legislative veto provision was unconstitutional.

• One House Veto Is Congress Unconstitutionally Passing Law Court says the House’sdisapproval of the AG’s suspension order involving Chadha was an unconstitutional effort atlawmaking because revoking some of delegation given earlier to AG. Court says this isunconstitutional because it avoids correct procedure for passing a law in Art I of constitution. Therehas to be bicameralism and presentment. Presentment - all legislation must be presented topresident for his signature or veto before becoming law. Bicameralism - requires both house’sapproval of a bill before it can become law.

o Why Is This Legislative Because absent this provision the only way to undo the stay of deportation is for congress to pass a statute. Court says because it’s really a declaration of

policy.• Procedural Safeguards of Rights Problems with one house veto is that rights can be trampled

on without procedural safeguards. The initial INS decision was through a judicial hearing, and Housecorrected this outcome without much debate.

• Improving Laws Also, Congress might be lazy with passing initial statute knowing they have vetoas a backup. Members won’t try to hammer out a solid law. One worry is that lobby groups andspecial interest groups get an easier way to come in and bend things to serve their own needs

• Other Methods of Congressional Control There are still other ways for Congress to control.Generally, they can:

o Cut Funding Cut agency’s fundingo Dismantle Agency Kill the agency, dismantle it.o Rewrite Enabling Statute Rewrite the statute that gives agency their authority.o Consent For Appointments Advice and consent for appointments (usually rubber stampish

and lax).o Oversight If you don’t like what the agency is doing, you make them come in and explain

themselves. Implicit message is that if you don’t shape up we can use some of our harshertactics.

c. Relation of Agencies To The President

i. Appointment




• Appointment Clause - Article 2 Section 2 President “shall nominate, and by and with theadvice and consent of the Senate, shall appoint ambassadors, other public ministers and consuls,

judges of the Supreme Court, and all other officers of the US , whose appointments are not hereinotherwise provided for, and which shall be established by law: but the Congress may by law vest theappointment of such inferior officers , as they think proper, in the President alone, in the courts of law, or in the heads of departments.”

o President’s Power To Appoint Empowers the President of the United States to appoint

certain public officials with the "advice and consent" of the U.S. Senate. This clause alsoallows lower-level officials to be appointed without the advice and consent process.

• Appointment Clause Analysis if federal official is appointed by President, Courts of Law, orHead of Department Appointment requirements may apply

1. Officer or Employee ? First question - is federal official officer or employee? If employee, appointment clause doesn’t apply2. Inferior Officer or Principle Officer? Second question – is federal official principleofficer or inferior officer? If principle officer constitution requires appointment be by presidentand approved by senate. If inferior officer congress may give president, courts of law, or headsof department power to appoint.

• Inferior Officers Appointed By President, Court of Law, or Head of Department Appointment clause

says inferior officers may be appointed only by president, court of law or head of department.

1. Officer Or Employee

Buckley v. Valeo (1976)• Federal Elections Commission More substantial powers include enforcement power,

discretionary power to seek judicial relief – these are not merely an aid of legislative function of congress. If just have investigative powers then employee. Here commission has responsibility forconducting civil litigation in the courts for vindicating public rights – that makes commission “officerof US.”

• Definition of “Officer” Officer is one who has executive-like power, exercising “significantauthority” pursuant to the laws of the US. If officer then president must follow appointments clause

and get senate’s approval of appointment.

Freytag v. Commissioner (1991) Special Trial Judge In Tax Court – Inferior Officer • Special Trial Judge Is Officer Special trial judges are additional personnel who assist regular

appointed tax court judges in their duties. Supreme court held that special trial judges are inferiorofficers of US rather than mere employees for purposes of appointments clause, although specialtrial judges do no always render final decisions, they perform more than ministerial tasks - they taketestimony, conduct trials, rule on admissibility of evidence, have power to enforce compliance withdiscovery orders, and can render tax court’s decisions.

• Appointment By Court of Law or Head of Department ? o Court of Law is a tax court a court of law? Majority says “court of law” is not limited to

article 3 courts of law, courts of law include courts that carry out functions of courts bydeciding cases. Scalia disagrees and says only includes article 3 courts of law

o Head of Department chief judge of tax court is head of department because autonomousagency that not overseen by superior agency. DOJ and Scalia interpret head of department tomean not just cabinet level positions but other entities as well.

Landry v. FDIC (2000) Administrative Law Judge – Employee• Administrative Law Judge ALJ conducts administrative proceedings including hearings for

various federal banking agencies. Court distinguishes ALJ’s from Freytag STJ’s concluding that ALJ’sare employees, mainly focusing on fact that they don’t have authority to render final decisions andthat reviewing body doesn’t have to defer to their factual findings.




• Factors For Determining Whether Officer “Any appointee exercising significant authoritypursuant to the laws of the US is an “Officer of the US.”

o Authority To Render Final Decisions STJ’s have authority to render the final decision of the Tax court in declaratory judgment proceedings and in certain small amount tax cases. ButALJ’s can never render the decision of the FDIC – ALJ must file a recommended decision,recommended findings of fact, recommended conclusions of law and proposed order.Landrey says this was critical to Freytag decision.

o Engage In Fact Finding they engage in fact finding and take testimonyo Defer To Factual Findings in Freytag Tax Court was required to defer to STJ’s factual and

credibility findings unless they were clearly erroneous, whereas FDIC board doesn’t have todefer to ALJ, makes own factual findings.

o Office Established By Law the office was established by law which is a threshold trigger forthe appointments clause, and the duties salary, and means of appointment for the officewere specified by statute.

o Duties Established By Law its duties are established by law – ALJ and STJ take testimony,conduct trials, rule on admissibility of evidence, and have the power to enforce compliancewith discovery orders. Both exercise significant discretion.

2. Principle Officer Or Inferior Officer

• Principle Or Inferior Officer once determine that a federal official is an “Officer of the US” mustfurther determine whether that officer is an inferior officer whose appointment can be vested bystatute in the President, Department heads, or courts of law without senate consent.

o “Inferior ” Inferior can mean not as important or powerful or inferior can meansubordinate ( Scalia Dissent ).

a. Inferior Means Not As Important

Morrison v. Olson (1988) Independent Counsel – Inferior Officer • Independent Counsel Ethics in Government Act allows for appointment of independent counsel

to investigate and prosecute high-ranking government officials. Powers include initiating andconducting prosecutions, framing and signing indictments, filing information’s, and handling allaspects of case in name of US. Court says IC is inferior officer.

• Factors For Determining Whether Principle of Inferior Officero Removal By Higher Ranking Official IC is subject to removal for cause by higher executive

branch official – AG. Court says although IC not subordinate to AG in that has independentdiscretion to exercise her delegated powers, fact that she can be removed by AG indicatesshe is in some degree inferior in rank and authority.

o Limited Duties IC empowered by act to perform limited duties – investigation andprosecution. Doesn’t have authority to formulate policy for government, or administrativeduties outside those necessary to operate her office.

o Limited Jurisdiction IC can only act within scope of jurisdiction granted by AG. Andrestricted to certain federal officials suspected of certain serious federal crimes

o Limited Tenure IC office is limited in tenure – no time limit on the appointment buttemporary in sense that IC appointed to accomplish single task and when completed office is

terminated. Unlike prosecutors IC has no ongoing responsibilities that extend beyondaccomplishment of mission appointed for.

• Scalia Dissent (1) Removal – Scalia says that IC is removable only for good cause or physicalmental incapacity, so it’s harder to remove her than principal officers of the executive branch whocan be removed by the president at will. (2) Limited Duties not limited duties because actdelegates to her “full power and independent authority to exercise all investigative andprosecutorial functions and powers of Department of Justice.” (3) Limited Jurisdiction + Tenure – notlimited tenure because she continues to serve until she decides her work is substantially completed.Not limited jurisdiction, no doubt that jurisdiction is small but far from unimportant. Federal judgesitting in small district is not inferior in rank and authority.




o Inferior Means Subordinate IC not inferior officer because she is not subordinate to anyofficer in executive branch (not even president). Necessary condition for inferior officerstatus is that officer must be subordinate to another officer.

b. Inferior Means SubordinateEdmond v US (1997)• Members of Coast Guard Court of Criminal Appeals officials perform adjudicatory functions

but do not conform to the requirements of Article III. Appointed by secretary of transportation (head

of department). Scalia majority court ruled they were inferior officers.• Factors For Determining Whether Principle of Inferior Officer “inferior officer” connotes

relationship with some higher ranking officer – must have superior. Inferior officers are officerswhose work is directed and supervised at some level by principle officer – who wasappointed by presidential nomination with advice and consent of senate.

o Important Responsibilities review court marshal proceedings that result in the most serioussentences to ensure that court marshal’s findings of guilt and sentence is correct in law andfact.

o Independently Weight Evidence unlike most appellate judges, CCA judges are not requiredto defer to the trial court’s factual findings but may independently weight evidence, judgecredibility of witnesses and determine controverted questions of fact.

o Removable Scalia says fact that CAA judges are removable without cause indicates

subordinate relationship. Power to remove officers is powerful tool for controlo Power To Render Final Decisions Scalia says it is significant that CCA judges have no power

to render final decisions on behalf of US unless permitted to do so by executive order.

• Is Morrison Still Good Law? it isn’t clear whether Morrison is still good law after Edmond, mostthink it isn’t.

• HYPO Congressional Committee Is Employee Congress sets up Civil Rights Commission, half members appointed by president without confirmation by senate, and other half are appointed byleadership in house and senate. CRC investigates voting rights discrimination and fraud, studieslegal developments, collects information, hires staff, holds hearings, issues subpoenas for witnessesto appear. Is this unconstitutional appointment

o Employee Can say just employees doing research, writing papers, assisting legislatures. They’re not exercising significant government authority other than aiding legislative function.Court says congressional committee is employee.

• HYPO Private Parties Can’t Appoint Even Inferior Officers Congress creates Federal OpenMarket Committee, to set interest rates, determine monetary policy on behalf of US, direct federalreserve bank. Committee has 12 members – 7 appointed by president and confirmed by senate and5 elected by board of directors of federal reserve bank (private financial institution).

o Exercise of Significant Authority This committee has significant authority – setting interestrates, so they are officers. Private parties are not allowed to appoint them underappointments clause, must be head of state or court of law and private party is neither.

• HYPO Senate Puts Restrictions On Who It Will Confirm Senate informs president we’re only

going to confirm district judges that you chose from short list prepared by senators in state wherethat judge will sit. We’ll confirm appointment in ND if on list that ND senators give you. Is thatconstitutional? Text of appointment clause doesn’t prohibit it though does seem like separation of powers. Probably constitutional.

• HYPO Senate Only Appoints House Senate adopts rule only going to appoint to house of representatives. President says you can confirm whoever you want as long as house agrees to theappointments. One argument is appointment clause gives senate alone authority to choose, andthey are delegating away authority constitutional commits to them to house. But they’re not bindingthemselves they can also just change their mind. This is probably ok.




• HYPO Inferior Officer Gets Promoted To Principle Officer Congress appoints FBI official tobe Independent Counsel. Does she need to be appointed? If the nature of their authority haschanged such that before might have been employee but now officer need to go throughappointment process again. Unless earlier method of appointing them was sufficient to cover theircurrent appointment.

• HYPO Inferior v Principle Officer Analysis US attorney by statute is appointed by presidentwith advice and consent of senate. Congress changes method of appointment so that AG now

appointees US attorney. Have to ask whether US Attorney is principle officer or inferior officer?o Is US Attorney Subordinate After Edmond question is are they subordinate to some otherexecutive branch official? Look to how they can be removed and whether they can make finaldecisions. US attorney is very important in that can bring down multi billion dollar financialinstitutions, they can prosecute who they want regardless of what AG says.

ii. Removal And Presidential Control Over Agency Action

• Constitution what it says about removal authority of officers? Constitution says officers can beremoved through impeachment by congress. Doesn’t say anything about executive. Presidentdoesn’t have role in triggering impeachment. All we have is case law which lays out lots of doctrineon this. would be problem if president can’t remove.

Myers v US (1926) President Has Unfettered Power To Remove Executive Branch Officials• Facts Myers was appointed postmaster general of Portland, Oregon, and was removed by thepresident without advice and consent of senate. Statute requires that postmasters be removed onlywith “the advice and consent of the senate.” Myers says president can’t remove him, and sues forback pay.

o Court Statute restricting president’s ability to remove is unconstitutional.

• President’s Removal Power because the president is vested with the power to enforce the lawsof the land, it is imperative for the adequate implementation of that constitutional directive that hebe deemed a having disciplinary powers to remove his subordinates, whenever he loses confidencein their intelligence, ability, judgment or loyalty. The president’s ability to control subordinates ismanifest under the executive powers conferred upon him by the constitution so that the statutessubject to his direction may be faithfully executed.

o Policy Need president to be able to remove executive branch officials, because needs to beable to control executive branch and go forward with his policy agenda.

• President Can’t Control Executive Branch Officials, But He Can Remove Them President can’t forceofficials to act in a certain way, decide cases according to how he wants, of force them to violateterms of statute, but he can remove them. There may be duties exercised by subordinates of adiscretionary or judicial nature over which the president cannot exercise control. Nevertheless, thepresident is free to remove subordinates who make decisions of which he disapproves.

• President’s Cabinet The Cabinet includes the Vice President and the heads of 15 executivedepartments-the Secretaries of Agriculture, Commerce, Defense, Education, Energy, Health andHuman Services, Homeland Security, Housing and Urban Development, Interior, Labor, State,

Transportation, Treasury, and Veterans Affairs, and the Attorney General. Under President GeorgeW. Bush, Cabinet-level rank also has been accorded to the Administrator, Environmental ProtectionAgency; Director, Office of Management and Budget; the Director, National Drug Control Policy; andthe U.S. Trade Representative.

Humphrey’s Executor v US (1935) President Doesn’t Have Unfettered Removal Power of OfficialsIndependent Of Executive Branch• Facts Humphrey appointed to Federal Trade States Commission (FTC) for 7 year term by

president. FTC Act provides that commissioner may be removed from office by the president for“inefficiency, neglect of duty, or malfeasance in the office.” President removed him. Humphreybrought action for back pay against US claiming he was wrongfully removed from office.




• Limiting Myers – Doesn’t Have Unfettered Removal of Agency Officials Court says Myersonly applies to purely executive offices. While its dictum may have been broad enough toencompass all federal officers, it has no application to an agency outside the executive branch thatexercises quasi-judicial and quasi-legislative powers. FTC commissioner not purely executive official,because has legislative and judicial functions.

o Is Agency Independent of Executive? Doesn’t turn on what agency is doing, so muchas whether it was established to be independent of the president. For example, congresscannot pass statute limiting president’s power of removal of cabinet member even if carries

out some legislative and judicial functions. Congress can’t insulate those cabinet officialsfrom presidential removal because want president to decide important policy decisions.

• FTC Independent Of Executive Branch whether congress may limit the president’s power of removal depends upon the character of the office. The FTC was established outside the executivebranch to exercise legislative and judicial responsibilities independent of the executive. Here,restrictions upon president’s removal power of constitutionally proper.

Bawsher v Synar (1986) President Has Unfettered Removal Power Over Officials Carrying Out Inherently Executive Functions• Facts President appoints Comptroller General with advice and consent of senate. Comptroller

heads General Accounting Office and investigates way that federal money is spent – supposed to beindependent of executive branch. Comptroller may be removed by joint resolution of congress for

the following reasons: permanent disability, inefficiency, neglect of duty, malfeasance, or felony orconduct involving moral turpitude. Gramm-Rudman Act says if congress and president can’t agreeon budget then comptroller issues report deciding what budget should be.

o Court Comptroller function in Gramm-Rudman Act is executive in nature. And socongressional control over removal of the comptroller is unconstitutional intrusion into theexecutive function.

• President Must Have Power To Remove Officials Carrying Out Inherently ExecutiveFunctions Gramm-Rudman act is unconstitutional because it gives comptroller power over thebudget which is inherently executive function, but doesn’t give president power to remove – canonly be removed by joint resolution of congress. Congress has no authority to give congressionalagent executive power – congressional agent because subject to removal by congress and longhistory of being part of congress. Unconstitutional scheme for president to have power to appoint

and congress power to remove – trying to make legislative officer carry out executive functions butpresident can’t remove.

• HYPO Statute Says President Can Remove Comptroller Only For Cause Statute providesthat comptroller is appointed by president with advice and consent of senate, but only subject toremoval by president for cause.

o Unconstitutional - Myer argue that this is unconstitutional because president needs to havepower to remove comptroller who is performing executive functions – budget.

o Constitutional – Humphrey argue that supposed to be independent of executive so presidentdoesn’t have to have power to remove. Comptroller not doing anything more executive thanSEC commissioner who we want to be independent. Comptroller is quasi legislative doesn’tonly carry out executive function so not characterized as purely executive agency.

• Congress Can Only Have Removal Power Over Purely Legislative Officials Letting congresshave authority over officers doing judicial or executive functions creates worry that congress willstart acting like the court or executive and usurping their powers. Where statute says congress mustsign off on removal, presumptively unconstitutional unless purely legislative agency.

Weiner v US (1958) Implied Removal For Cause Condition Where Agency Carries Out Inherently Judicial Functions

• Facts Weiner appointed by President with advice and consent of senate to War ClaimsCommission, body with power to adjudicate claims arising from WWII. Commission had three yearlife and there were no statutory provision governing removal. President removed Weiner from officeand Weiner brought action against US for back pay.




• President For Cause Removal Over Quasi-Judicial Sentencing Commission - MistrettaSentencing Commission created by congress, statutorily in judicial branch, to formulate sentencingguidelines to eliminate disparity in criminal sentencing. Executive has power to appoint memberswith advice and consent of senate, but can only remove for cause.

o President Can Have For Cause Removal Over Independent Administrative Agency In Mistretta have quasi-judicial sentencing commission created by congress in the judicialbranch over which president has power to remove for cause. Doesn’t violate separation of

powers. Court says congress may establish an independent rulemaking body within the judicial branch to that extent that the commission doesn’t have vested powers that are moreappropriately performed by other branches. President can have for cause removal powersover independent administrative agency.

• Summary Where does this leave us? Purely Executive Agency - Under Myers president must haveunfettered removal power over purely executive officers – cabinet level officers. Independent Agency– if congress specified bi-partisan, longer terms, independent of executive then it is ok to restrictpresident’s removal power.

• HYPO Congressional Removal Of Executive Officer - NLRB Chairman of National LaborRelations Board can only be removed by president for good cause and with consent and approval of senate.

o Unconstitutional this is unconstitutional because congress has to give consent for removal.Bowsher says unless officer is purely legislative then unconstitutional because don’t wantcongress aggrandizing power. if he is independent that’s not enough.

• HYPO Congressional Removal of Executive Officer - VA Deputy Assistant of Veterans Affairsonly removable with consent of senate.

o Unconstitutional VA is not purely legislative agency so unconstitutional for congress tohave power to remove. Any congressional involvement in removal is presumptivelyunconstitutional.

• HYPO President For Cause Removal of Certain Officials Congress tells president you canonly remove the following officers for cause

o Secretary of State or Secretary of Commerce - NO President must have unfettered ability toremove cabinet members. Unconstitutional for congress to put for cause limitation onpresident’s removal power of his cabinet members. Myer – purely executive.

o Assistant Secretary of Commerce - YES Congress can put for cause restrictions onpresident’s removal power of inferior officers or employees.

o Chairman of FCC - YES Congress can put for cause restriction here because FCC isindependent agency.

o Chief Judge of Tax Court - YES Congress can put for cause restriction because Chief Judge iscarrying out inherently judicial functions. Weiner

o Administrator of EPA -NO EPA is created by executive officer – not inferior officer more likecabinet member. President must have unfettered power to remove administrator of EPA.

o Federal Pardons Commission -YES President has constitutional power to give pardons. FPChas duty to recommend to president who he should pardon. They do not have the power to

actually grant pardons, just recommend so not restricting president’s power over purelyexecutive functions because president has ultimate say. Bierschbach says this isconstitutional to put for cause restriction.

• Advisory Commission If Congress creates commission that exercises president’sconstitutional power in a binding way, then president must have unfettered power toremove. But congress can create advisory commissions and put for cause restrictionson president’s power to remove.

• HYPO President’s Power To Control Cabinet Members With Removal Power Congresspasses law that says Secretary of Interior shall set speed limit between 35-65 for roads in nationalparks. Secretary picks 50 but president tells her do 55. Secretary would give in because otherwise




president can remove her because no for cause restriction. President forces cabinet members in lineby brandishing his removal power.

• HYPO President Can’t Force Cabinet Member To Do Something Outside of Her Statutory Authority President tells Secretary of Interior set it at 75. Congress only gave secretary power toset it between 35-65mph. President can’t force secretary to do something she has no power to do.Even if president removes her though he still can’t set it at 75 by an executive order because statutegives Secretary of Interior authority not president.

•

HYPO Defining For Cause President has power to remove FCC member for cause. FCC decidingwhether it will regulate internet phone calls. President wants FCC to regulate it and calls up and tellsFCC member to pus for regulation or president will remove for cause. President argues thatneglecting duty if not doing what president thinks is best for country constitutes inefficiency . Mostcommentators say that’s not for cause. Can argue that it is for cause because need strong executiveto coordinate policy objectives and disregarding those policy objectives is cause for removal.

iii. Executive Orders

• Executive Order US Presidents have issued executive orders since 1789. There is noConstitutional provision or statute that explicitly permits this, aside from the vague grant of "executive power" given in Article II, Section 1 of the Constitution and the statement "take Care thatthe Laws be faithfully executed" in Article II, Section 3. Most executive orders are orders issued by

the President to US executive officers to help direct their operation, the result of failing to complybeing removal from office.

• Executive Orders Are Binding On Cabinet Members o HYPO President Can Issue Executive Order Telling Cabinet Member Factors To

Consider In Setting Law President issues executive order telling secretary, I want you toconsider the safety of park visitors and the effect on wildlife population. Secretary consideredthose factors and set it at 35. Trucking industry sues saying president can’t set the law.President can issue executive orders telling Secretary to take certain things into account solong as the congressional statute doesn’t prohibit it. If statue says can’t use cost benefitanalysis executive order saying must use it is invalid. But if statute doesn’t exclude costbenefit analysis then president can issue executive order. This is important way for presidentto control actions by subordinate agency officials.

• Executive Orders Not Binding On Independent Agencies Executive orders don’t apply toindependent agencies.

o Executive Order 12866 Bush tries to draw more agencies into the requirements.o Executive Control Over Independent Agencies In terms of independent agencies presidents

do have some control. Often statutes that create the independent agency empower presidentto choose chairperson, require agency to ask president to submit budget requests, DOJrepresents them when involved in litigation. People resign quit and vacancies open up andpresident has ways of getting own people in there informally or formally. Within 7 monthsafter new president takes office usually have partisan majority on independent agencies tohaving people on there sympathetic to them.

d. Relation of Agencies To Judiciary, And Separation of Power

• Agency’s Power to Adjudicate although there was once vigorous debate over the issue of whether the legislature could delegate to an administrative agency quasi-judicial responsibilities,such delegation has since been deemed not to violate constitutional notions of separation of powers.

• Constitution Article 3, Section 1 - “The judicial power of the United States, shall be vested inone Supreme Court , and in such inferior courts as the Congress may from time to time ordain and establish . The judges, both of the supreme and inferior courts, shall hold their offices during good behaviour ,” Article 3, Section 2 – “The judicial power shall extend to all cases , in law and equity,arising under this Constitution, the laws of the United States, and treaties”

o Judges Have Life Tenure Why give judges life tenure? (1) Protecting Individual Rights –Administrative Law - Bierschbach 15



constitution gives judges life tenure so that they remain independent, unbiased and removedfrom political process of campaigning and running for reelection. Don’t want judges only torule in favor of those with money, (2) Separation of Powers – don’t want president andexecutive to accumulate too much power, limit frequency of appointments.

o Judicial Power Extends Only To Cases

i. Congress Delegation of Judiciary Power

•

HYPO Article 3 Judicial Court v. Article 1 Legislative Tribunal If dispute over your pensionwould you go to War Veterans Pension Board or court.o Court (1) no bias, (2) efficient - if going to appeal anyway then going to end up in this

court so more efficient to bring directly here.o Legislative Tribunal (1) expertise - issues specific to service that judge won’t know

anything about. Pension board will have more expertise because have seen this stuff beforeand more attune to these kinds of issues (2) efficiency – board designed to deal with thesenarrow issues they will be faster processing it, better procedures for dealing with this stuff (3)less expensive - cost more to go to court because have to get lawyer, might be able torepresent yourself in front of board.

• Policy Congress wants you in article 1 because set up to deal with those specifically. Thousands of claims don’t want article 3 courts to be bogged down with this stuff

• Can Congress Delegate Judicial Power Over Cases ? Article 3, Section 2 gives judiciary powerover “cases”. Argument made in all these cases is that judicial power vested in article 3 courts,which includes power to decide cases and controversies arising under laws of US, and congress can’tdelegate away something it doesn’t have.

Crowell v Benson (1932)• Facts Knudsen was injured on the job while employed by Benson. US Employees Compensation

Commission and they awards Benson compensation in agency proceeding under a federal statute.Benson appeals saying he wasn’t my employee at the time, it didn’t occur on navigable waters, andunconstitutional to force me to go to Article 1 Legislative court.

• What is A “Case?” case is an adjudication of a private right which involves liability of oneindividual to another. When one party sues another private party under a common law claim that is acase involving a private right. Public right cases involve citizens on one side and government on theother – these congress can delegate to article 1 tribunals.

o General Rule Congress can delegate public rights to Article 1 courts, but can’t delegateability to decide private rights cases to those courts.

o HYPO Congress Delegates All Criminal Prosecutions To Article 1 Court Congresspasses law delegating prosecution of all criminal cases in article 1 court. Is thatconstitutional? It is still an open question of how much of public rights congress can delegateto article 1 tribunals.

• Congress Can Delegate Fact Finding In Private Rights Cases To Article 1 Courts This caseinvolves a private right, an employee suing an employer. But court says that congress to makethings more efficient can delegate authority to article 1 courts to engage in fact finding before thecase is brought to an article 3 court. But where the factual determinations involve fundamental or

jurisdictional issues, article 3 courts are free to engage in de novo review. So that article 3 courts canindependently decide whether jurisdictional requirements of the statute have been satisfied. All otherfindings of fact by article 1 court will be reviewed by article 3 court using substantial evidencestandard.

o Jurisdictional Facts Jurisdictional facts are those that trigger federal power. here the twofacts that trigger application of the Employee compensation statute are (1) whether he wasemployee, and (2) whether injury occurred on navigable waters. Court said thesedeterminations will have de novo review by article 3 court. All other findings of fact aresubject to different standard of review – as long as substantial evidence supporting article 1




court’s findings article 3 court will uphold it.

• Rule of Case Congress can delegate public rights to Article 1 courts. Congress can only delegateprivate rights where there is Article 3 review, which includes de novo review of jurisdictional andconstitutional facts.

Northern Pipeline (1982) Congress May Not Delegate To Bankruptcy Judge Right To Decide StateContract Claims•

Facts Bankruptcy Act provides that Bankruptcy judges can decide bankruptcy matter and any civilproceedings related to the bankruptcy proceeding. Bankruptcy judge heard breach of contract claimbetween private parties. D refuses to go to bankruptcy court to litigate his state contract claim.

o Court Plurality of court says that congress cannot delegate to the bankruptcy court (anarticle 1 court) the ability to decide ordinary state contract claims. This is private right.

• Public Right these are controversies involving rights between the government and others. If theright is of legislative creation, it may be vested in non-article 3 forum even if an analogous functionhas historically been performed by Article 3 courts. Such powers may be vested in a legislative courtor an administrative agency.

• Private Right Private rights involve controversies between two individuals. Brennan - two differenttypes of private right

o Congressionally Created Private Rights when congress creates a substantive federal

right, it enjoys substantial discretion to prescribe the manner in which that right may beadjudicated.

o Common Law or State Law Private Rights These include other private rights forexample those created by common law or state law. Article 3 forbids substantial inroads intofunctions traditionally performed by judiciary.

• Distinguishing Cromwell In Cromwell there were also private parties on both sides, and so longas there was review by article 3 court it was upheld. Why doesn’t court allow delegation here?Brennan says these cases are different (1) common law right – in Cromwell claim arose under federallaw – wouldn’t have existed but for federal statute. Here this is common law claim – contract claim ismuch closer to core of private rights. (2) narrow delegation – the statute here can bring in lots of disputes to bankruptcy court swallowing up many private rights, but in Cromwell grant to the agencywas narrow. (3) level of review – in Cromwell there was more substantial review of what article 1court is deciding, than in bankruptcy courts.

Commodity Futures Trading Commission v. Schor (1986) Overrules Northern Pipeline, AffirmsCromwell• Facts Congress grants to CFTC the power to adjudicate ordinary stat law contract claims between

individuals. Statute created reparations proceeding where disgruntled customer could claimdamages for broker’s violation of Act. If customer uses agency procedure then the act permits theagency to adjudicate any related state counterclaims. Customer brought proceeding before CFTCand defendant argued state counterclaim and won.

o Court O’Connor says CFTC has authority to adjudicate state contract claim. Under thisscheme there was concurrent jurisdiction so that could go to court or to agency, so congressnot trying to usurp judiciary’s power and force litigants to go to agency. P was the one whobrought action in article 1 court, so waiver.

• Factors For Determining When Legislature Improperly Delegating Judiciary’s Powers (1)extent to which the essential attributes of judicial power are reserved to article 3 courts, (2) extentto which non-article 3 forum exercises range of jurisdiction and powers normally vested only inarticle 3 courts, (3) origins and importance of right to be adjudicated (4) concerns that drovecongress to depart from requirements of article 3.

o Policy all these factors are taken into account to see whether there is threat of separationof powers. Court declines to adopt formalistic rule rejecting Northern Pipeline

• Current Test the current test for determining how much judicial power congress can delegate




involves review of several factors: (1) Type + Quantity of Claims – What kinds of claims does thestatute allow to be brought in the article 1 tribunal? Is net so wide that going to draw in lots of claimsthat are traditionally state or common law claims? Does the action arise from a federal statute?(2)Article 3 Review – is there review of article 1 tribunals findings by article 3 court? What is standard of review? (3) Separation of Power – is congress trying to unduly expand the scope of the agency’spower and taking away power from article 3 courts. (4) Public v Private Right – if classic public rightthen delegation usually ok, if private right look to see if it is right under federal statute, common lawor state law.

ii. Combination of Functions At Agency Head Level And Potential Bias

• Tension – Don’t Want Agencies To Become Too Powerful Agencies have ability to adjudicatein same way that courts do – this is a fact of modern administrative state. But don’t want agencies toget too powerful. Don’t want congress to aggrandize itself and take power away from courts. Tensionbetween efficiency and the guarantee of individual’s rights.

• Combination of Functions sometimes the agency heads must both initiate the complaint andadjudicate it. Agency heads are specifically exempted from commingling prohibitions of APA.

Withrow v. Larkin (1975)• Facts Dr performed abortions at his office. Wisconsin medical board instituted proceedings for

license suspension for violation of public health. Board has power to conduct investigation andenforce provisions of licensing rules. Dr sought injunction against Wisconsin board on grounds thatcommingling of investigatory and decision-making responsibilities deprived him of due process.

• Due Process Argument Larkin says this is unconstitutional because have same people whoinvestigate me being the ones making decision of suspension. It’s as if you get arrested police andagents who do investigation then also sit at your trial as judge. He says that can’t be constitutional.

• Court Court says no violation of due process person investigating can be person deciding. Courtsays there is a presumption of honesty and integrity that must be disproved for it to beunconstitutional. Just the fact alone that one entity is both investigating and prosecuting doesn’tmake it unconstitutional.

•

Application To Agency Heads SEC, FEC, FTC all do both. They all have agency people who comeinvestigate and then have proceedings or penalties and hearings also before same agency. It isdifferent office within agency but everyone knows each other. That makes things efficient. If this wasdue process violation it would complete change the shape of the administrative state by requiringeverything to be brought in independent article 3 courts. Presumption of honesty and integrity notgoing to worry about this

• Examples of Unconstitutional Combinations Functions The following are examples wherecourts have said that it is unconstitutional for the same agency to be doing the combination of things.

o HYPO Adjudicator Has Pecuniary Interest In Outcome Mayor of small town’s salaryis paid from fines imposed by mayor for violations of local ordinances. You are accused of violating ordinance, have trial before mayor and he says you’re guilty. This is due process

violation because mayor has direct financial interest in you being found guilty. Theprobability of bias is too great where adjudicator has pecuniary interest in outcome.o HYPO Indirect Pecuniary Interest State board of optometry made up entirely of solo

practitioners, half of state solo practitioners and half work for pearl vision. Association bringscomplaint to state board saying pearl vision violating rules of professional conduct, and stateboard suspends license to practice optometry. Is that due process violation? Does board havepecuniary interest? They have incentive to keep pearl vision out because takes away theirbusiness. Court says this is due process violation. Pecuniary interest doesn’t have to bedirect but can be career related interest Gibson.

o HYPO Too Indirect NJ already has too many lawyers, bar exam graded by practicinglawyers who have incentive to reduce competition. Guy who fails bar exam sues saying due




process violation claiming examiner had career incentive to fail him. Court says this is notdirect enough – the more direct interest the stronger the claim.

II. AN INTRODUCTION TO ADMINISTRATIVE PROCEDURE

a. Principles of Administrative “Common Law”

i. Requirement of Consistency

• Administrative Common Law APA is only 60 years old, before that administrative law was judgemade law.

SEC v Chenery I (1943)• Facts Chenerys were controlling directors of “Federal” a public utility holding company. During

reorganization of Federal, Chenerys purchased common stock which would again give themcontrolling interest in Federal so that they could retain control. SEC found that Chenerys werefiduciaries and they were under duty of fair dealings not to trade Federal’s securities duringreorganization and breach that duty when buying up preferred stock. SEC issues order to amend planso that Chenerys can’t control Federal. Chenerys say SEC didn’t have authority.

o Public Utility Holding Company Act Public Utility Holding Company Act of 1935 gave SEC

broad powers to reorganize the public utility conglomerates. Allows SEC to reject newsecurities issuance in corporate reorganization if it concludes that “the terms and conditionsof the issue or sale of the security are detrimental to the public interest or the interest of investors or consumers” allows SEC to approve a plan or reorganization that it deems to be“fair and equitable to the persons affected by such plan.” Vague Statutory Standard

• Court Court says Chenerys win! Chenerys didn’t breach any fiduciary duty of fair dealing, nothingin those rules say that Chenerys can’t buy up controlling share in reorganized company. So SECorder is null and void.

• SEC Argument Not In Public Interest SEC says maybe we interpreted fiduciary duties wrong butwe can reject the plan on a lot of other grounds. Allowing incumbent managers to retain control isdetrimental to public interest. This is not in public’s interest, SEC is uniquely situated to understand

that dangers that arise when Chenerys maintain control, so should defer to us.• Court’s Response Agency’s Duty To Interpret Law, Not Court Court says yes its true that SEC

could have said that this is not in public’s interest based on agency’s expertise but you didn’t saythat. You said that this breached their fiduciary duty of fair dealing and this is not a grounds uponwhich statute gives you authority to strike down the reorganization plan. Court says agency has tointerpret statute, not court. This facilitates judicial review to let agency provide an explanation fortheir conduct rather than have judge deciding. SEC is trying to get court to do decide whetherreorganization plan is permissible under the statute, and this is what congress wanted SEC to do.Court doesn’t want to deal with policy making which is the job of the agency.

• Chenery I Rule Court can only review reasons agency gave . Rule is that if a court finds thatthe explanation agency offered for action is insufficient, court has to remand. Courts “may not

accept appellate counsel’s post-hoc rationalizations for agency action” – this is unlike lower courtdecisions, which can be affirmed based on any grounds found in record.o Exceptions To Chenery Rule (1) If Obviously Valid – if court thinks its so obvious that

agency can easily provide a sufficient rational on remand, sometimes courts won’t remand,they’ll just affirm. If agency made clear mistake and sufficient rationale is staring them inface, they will uphold. (2) Bolster Agency Rationale – if agency’s reasons are pretty good,court will bolster it and pump it up a little bit and affirm.

• HYPO Statute Does Not Require SEC To Provide Reason For Rejection SEC rejectsFederalists reorganization plan without stating a reason, but the statute doesn’t require that theystate a reason. What should court do? There is a presumption that congress was acting




constitutionally when passing statute. Level of review is rational basis – if court can find any rationalbasis for statute it will uphold it. So reviewing court will have to think of reasons as to why congressmade statute. How do we square this result with court not wanting to interpret statute? WhyDifferent Level of Review For Agency Rulemaking Than Congressional Rulemaking?

o Check On Agency’s Power very easy for agencies to act arbitrarily and capriciously –agencies can do whatever they want so courts need to police them more than congress.Congress has constitutional process for rulemaking that discourages them from arbitraryrulemaking – both houses, presidential sign off etc.

o

Agency’s Responsibility To Determine How To Exercise Delegated Power Courtssay it is the responsibility of the agency to determine how to exercise its delegated power. Itis very political decision and court doesn’t want to get involved. But when it comes tocongress court says that they are coequal branch of government and they are supposed topolice agencies and offer publicly acceptable reasons.

• Analogy to Jury Instructions Jury makes finding and jury instructions are erroneous. There appellate court won’t say even if correctly instructed would have come outsame way. If wrongly instructed, verdict overturned and new trial. View juries morelike agencies – jury’s prerogative to weigh evidence however think it should. Notgoing to step in and weigh for them.

• Chenerys’ Options After This Decision Agency can offer reasons as to why not in public interest andsupport their findings. They can offer alternative rationales etc.

Lemoyne- Owen College v. National Labor Relations Board (2004)• Facts Faculty of college want to be part of union. NLRB only certifies collective bargaining units if

don’t consist of people in “managerial positions.” NLRB certifies faculty offering lots of evidence thatthey are merely employees and not managers, but didn’t’ distinguish from controlling precedent.College appeals, District court remands back to agency to distinguish controlling precedent.

• District Court Remands Case For Agency To Distinguish From Controlling PrecedentRegional director of NLRB didn’t distinguish controlling case. District court says this calls for Chenery remand because we can’t tell what NLRB’s reasons were for treating this case different thancontrolling YU case. Court refuses to substitute its own view of why precedent is distinguishable –facilitate judicial review so that agencies make the decisions not the court. On remand NLRB willexplain why distinguishable.

o Remand Requiring an adequate explanation of apparent departures from precedent thus

not only serves the purpose of ensuring like treatment under like circumstances, but alsofacilitates judicial review of agency action in a manner that protects the agency’spredominant role in applying the authority delegated to it by Congress. The NLRB may havean adequate explanation for the result it reached in this case. We cannot, however, assumethat such an explanation exists until we see it. We therefore remand to the NLRB for furtherproceedings.

ii. Estoppel and Res Judicata

1. Estoppel

• Estoppel When person reasonably and detrimentally takes action in reliance on government’sposition, then government is precluded from changing its position later on. Generally agency must

give notice before changes its interpretation so that public’s expectations are not being upset.Erroneous or unauthorized advice given by an agency official that contradicts a binding regulation isusually insufficient grounds upon which to sustain a case of estoppel against the government.

o Estoppel Factors (1) actions by defendant, (2) that lead plaintiff to rely (3) reasonably (4)to his detriment.

• HYPO Mistaken Post Office Manual Jeweler brings package of jewels to be shipped to postoffice. Postal worker assures him that jewels are “semi precious” after consulting manual andtherefore are eligible for insurance. Jeweler buys insurance, ships the jewels and then they are lost inthe mail. The manual was apparently mistaken, and postal regulation says his jewels were preciousand therefore postal service won’t insure. Jeweler argues post office owes him money, because




shipped package and bought insurance in reliance on manual.o No Estoppel Post office argues that if they are responsible for this error, then mail system

will bleed to its demise. If postal employees can bind government every time interpretmanual wrong way people will make claims, clog up courts, and drain of funds. As a policymatter even though this is good argument for estoppel, when government is involved thereare often big systemic reasons for denying application of estoppel.

Office of Personnel Management v. Richmond (1990) Private Litigant May Not Recover For

Estoppel Against US Government • Facts Richmond was welder who left his position after Office of Personnel Management (OPM)awarded him disability retirement for impaired eyesight. Under statute disability payments end if retired employee is restored to comparable earning capacity. Before 1982 ineligibility resulted if retired employee’s income equaled at least 80% of former salary for two calendar years. 1982 it wasamended to 80% for one calendar year. Richmond has part time job and wants to work overtime –but first goes to OPM and asks employee if this will make him ineligible, employee says no becauseover two years. Richmond lost his disability and said government should be estopped from denyinghim benefits.

• Private Litigant May Not Recover For Estoppel Against US Government o Appropriation Clause Under the appropriation clause money may be paid out only

through an appropriation made by law – payment of money from the treasury must be

authorized by a statute. An award to Richmond under an estoppel claim would be in directcontravention of the statute because his income exceeds 80% for one year.o Policy

(1) Open Floodgates For Litigation – will create wave of litigation and liability forgovernment,

(2) Agency Will Give Intentionally Erroneous Advice – Court is worried that employees canbind government, what if agency doesn’t like one year rule they will intentionallyadvise people that it’s two year rule and people will recover. Estoppel will enableagency to override statute. Agencies will collude with claimants to hand out money inviolation of statute.

(3) Agency Wont’ Give Advice – court is concerned that agency will stop doling out adviceso as not to be held liable. This would hurt people that can’t avoid lawyers who rely ongovernment’s help.

(4) Protects Taxpayers – protects taxpayer against the ineptitude and incompetence of government workers• HYPO Broad Appropriation Statute says $100,000 appropriated for retired navy disability

program. All that congress requires in this statute is that must be disabled and retired from navy.Would be more likely to apply estoppel in this case. Here the money is already appropriated toprogram so strong case that he should recover.

• HYPO Specific Appropriation Statute says $100,000 appropriated for retired navy disabilityprogram. Payments to be made in accordance with provisions in this chapter. Here to be eligibleapplicants have to follow procedures set out in statute. This is stronger case that giving money wouldviolate appropriation clause.

o Richmond Explanation Richmond says that can’t succeed on estoppel claim if paymentwould be in contravention of statute appropriating money. Statutory language makingappropriation is extremely important. If says only for payment made in accordance with

subchapter stronger case shouldn’t’ get money. If just says appropriated to this programstrong case that he should.

• HYPO Contravention of Agency Regulation Not Appropriation Statute Statuteappropriating money says 80% over 2 years. OPM passes regulation saying changing it to 80% over 1year. He asks agency employee and they say don’t worry it’s over 2 years you’ll be fine. Now hisestoppel claim is stronger, because payment would not be in violation of appropriation clause,because statute appropriating money says 2 years. Just in contravention of agency regulation butthat’s no big deal. Here policy concern that agency will stop giving advice.

Schweiker v Hansen (1981)Administrative Law - Bierschbach 21



• Facts P inquired whether she was eligible for her mother’s insurance benefits under the SocialSecurity Act and was erroneously informed by a government official that she was not.. Relying uponthat advice, she declined to file a written application for benefits. She was eligible but since didn’t filewritten application she doesn’t get payments.

• Social Security Act SS Act says entitled to benefits if file application. Agency regulation says onlyentitled to benefits if file written application.

o No Appropriation Clause Violation she’s not asking for money to be paid out in

contravention of the statute, since the payment complies with the statue – she made anapplication to government civil servant orally. Might succeed under Richmond .

• No Estoppel Court says while employee made an error in telling her she was ineligible forbenefits, it did not cause her to take action or fail to take action that she could not correct at anytime. If employee’s breach of the manual puts him in breach sufficient to estop her, thengovernment is put at risk that every alleged failure by an agent to follow instructions to the lastdetail in one of a thousand cases will deprive it of the benefits of the written application requirementwhich experience has taught to be essential to the honest and effective administration of SocialSecurity Laws.

o Explanation court says yes he made a mistake but she can’t recover. Basically court relieson policy argument. This is still good law. Schweiker her benefits are suspended onlytemporarily, if it were permanent forfeiture court might have treated differently.

• Declaratory Orders under the APA (§ 554(3)) parties may secure binding advice from a federalagency. However the issuance of a declaratory ruling is discretionary with the agency

• Lawyer’s Tip in cases of egregious facts estoppel might be available. Try to argue not in violation of appropriation clause. try to get agency opinion in writing like SEC no action letter which will be morebinding on agency.

2. Res Judicata

• Res Judicata the general principle of res judicata prohibits a subsequent suit on issues of fact orlaw already litigated and finally decided. Some efforts of administrative agencies to reverse priordecisions involving the same parties and facts have been struck down on grounds of being arbitraryand capricious. Other courts allow agencies to reexamine their statutory and factual conclusions and

change their minds at a later date

• Nonmutual Offensive Collateral Estoppel Example – in case 1 driver of your car sues otherdriver and court finds negligence, in case 2 you sue driver of other car and say invoking nonmutualcollateral estoppel negligence already decided by other court, we don’t have to litigate it again.Generally it is available in federal court if D have full and fair opportunity to litigate claim and it’sallowed under state law.

United States v Mendoza (1984) No Nonmutual Collateral Estoppel Against Government • Facts Mendoza challenged US government’s failure to implement law facilitating nationalization of

alien veterans. 68 Filipinos had already prevailed on the same claims in district courts –violation of due process. US didn’t appeal.

• Mendoza’s Collateral Estoppel Argument Mendoza says you violated my due process and youare estopped from claiming otherwise because court already decided arising out of same facts thatdue process violated. Don’t have to relitigate this. Invokes offensive non-mutual collateral estoppel.

• Nonmutual Collateral Estoppel Not Available Against Government Court says offensive nonmutual collateral estoppel is not available against the government because don’t want to forcegovernment to appeal every adverse judgment.

o Waste of Judicial Resources court says don’t want government to have to ignore budgetconcerns and government interest in alleviating crowded court dockets by appealing alladverse decisions in order to prevent elimination of further review. Wasteful for governmentto have to appeal every case so that decisions won’t be used against them in future.




o Political Argument decisions about whether government will appeal are very political. Everysingle appeal from adverse judgment must be authorized by Solicitor General who hascentralized oversight to make sure government taking consistent litigation positions, andthat position jives with political and policy priorities of executive. If court forces governmentto appeal this would force them to ignore policy decisions they generally take into account.

• HYPO Inter Circuit Non-Acquiescence SS administrator decides that soft tissue damage doesnot meet disability requirements. Agency implements this view by denying disability benefits to soft

tissue damage applicants and ALJ in DC affirms it. Applicant appeals to DC circuit and court sayscan’t deny benefits. You are ALJ in NY and people making claims for soft tissue damage. Still SS'sposition that not eligible for disability. What does ALJ do?

o Follow Boss ALJ would probably follow SS administrator because job is to implement law theway administration sees it. Argument that not court’s job to say what law is.

o Inter Circuit Non-Acquiescence sometimes agencies refuse to acquiesce to interpretationsof courts in other circuits – they’re not bound by that judgment. Why not acquiesce? Differentparty different facts, hoping party won’t appeal, make point because believe ininterpretation. Policy is that non-acquiescence rule is necessary to generate circuitdisagreements that will eventually produce a clarifying resolution from the Supreme Court.Controversial some say this violates Marbury v. Madison

• Courts Can Refuse to Acquiesce Until “Law of Land” By Supreme Court Ruling.

b. The Administrative Procedure Act

APA – Administrative Procedure Act• Definitions § 551 APA Establishes procedures agency has to follow if engaging in rule making,

important to understand statutorily what these things mean and that’s what definitions deal with.o Agency “means each authority of the US government, but does not include (A) Congress,

(B) the courts of US. ” APA applies to any entity exercising government authority except forcongress and judiciary.

o Rulemaking “agency process for formulating, amending, or repealing a rule .” Anythingthat leads to rule is rulemaking

• Formal v Informal Rulemaking different procedures required for formal and informalrulemaking. Formal rulemaking § 556 + § 557. Informal rulemaking § 553

o Rule “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 ” • “Particular Applicability” Language is confusing. Why include “ particular

applicability ?” because certain kinds of rules apply to one or two people and want toinclude that in rulemaking procedures. For example rate making for utilities.

o Adjudication “agency process for formulating an order ” Anything that leads to an order isadjudication.

o Order “the whole or part of a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than rulemaking but includinglicensing .” Anything that’s not a rule except licensing.

• Order is Catchall Order includes actions that agency takes like entering into

contracts, grant-making, advice, informal actions.• HYPO SEC Rule or Order? SEC proceeding where SEC determines “Gordon violates securities

act as we interpret it, and so is bared from practicing before SEC.” It fits into rule definition – agencystatement of particular applicability having future effect interpret Securities Act. But really more likean order.

• HYPO NLRB Rule or Order? NLRB issues statement saying faculty of YU are hereby certified asbargaining unit under National Labor Relations Law. This also fits into statutory definition of a rulebut seems more like an order.

o Both Orders Everyone agrees despite language of statute that both of these are ordersunder APA.




• APA Chapter 7 - Judicial Review Lays out basic framework for Judicial Review of agency actiono § 701(a) Presumption of Judicial Review of Agency Action “This chapter applies except

where (1) statute precludes judicial review or (2) agency action is committed to agency discretion by law. ” Default rule is yes judicial review.

o § 702 Right of Review This section deals with standing who has right of review.o § 706 Scope of Review This is most important section and sets out standard and scope of

judicial review. “ reviewing court shall decide all relevant questions of law, interpret

constitutional and statutory provisions, and determine the meaning or applicability of termsof agency action .” Talks about when court can set aside agency action etc.

c. Rules, Orders, and How To Choose Between Them

i. The Constitutional Distinction Between Rulemaking and Adjudication

Londoner v Denver (1908) Adjudication – Oral Hearing Required • Facts Londoner was a property owner who objected to a tax assessment by the city of Denver

based upon street improvements. Under Colorado statute the board of public works might order hepaving of a street, followed by an apportionment of its costs among property owners. Beforeassessment city of Denver was required to afford parties notice and opportunity to file written

objection. Londoner contends that he is constitutionally entitled to oral hearing.

• Procedure For Street Improvement The process is four steps, (1) board of public works transmits tocity council resolution authorizing paving of street after petition is filed by majority of owners of property fronting the street and after notice and opportunity for hearing on that petition. (2) citycounsel receives petition and passes ordinance adopting the resolution. (3) paving and board of public works figures out what costs are and then they apportion that cost through assessment onowners of property fronting the street. (4) counsel then has to approve and adopt the assessment viaordinance after notice and opportunity for written objection.

• Oral Hearing Requirement Court says constitutional minimum due process requirement fortaking property is oral hearing. City of Denver was required to offer parties notice and opportunity tobe heard at some point before the tax became irrevocably fixed. “Where the legislature of a state

instead of fixing the tax by itself, commits to some subordinate body the duty of determine whether in what amount and upon whom it shall be levied, due process of law requires oral hearing beforefinal.” Court implies if legislature had levied the tax oral hearing wouldn’t’ be required.

o Why Need Oral Hearing?• Participation Oral hearing is more participatory, everyone can come in and say

what’s on their mind.• Processing Remarks More likely decision maker will process what you say if he has

to be there to listen and he can’t ignore you. Much more effective than letter.• Accuracy Hearing may contribute to accuracy when issues simple. Can be cross

examined go back and forth. Increases level of detail.

Bi-Metallic Investment v State Board of Equalization (1915) Rulemaking – Oral Hearing Not Required • Facts Denver real estate owner sought to enjoin State Bard of Equalization from increasing the

valuation of all taxable property in the city by 40%. P argued that since he was given no opportunityto be heard, his constitutional right to due process had been violated.

• Court – No Oral Hearing Required when a large number of individuals are affected by agencyaction, it is impractical that they each be given a formal hearing otherwise machinery of governmentwould break down. The action taken here were analogous to that regularly performed by thelegislature. Even though the legislature can significantly affect the property of individuals there is noconstitutional requirement that a hearing be held before such action is taken.

o No Due Process Violation court says that there was no due process violation here (1)




process was sufficient – there was some process, time for hearing was fixed to submit writtenobjection but didn’t allow oral objections at hearing, (2) impracticable too many peopleaffected this is like legislative action which doesn’t implicate due process requirement of oral hearing – would be impracticable if required oral hearings giving each person effectedwhich is whole city opportunity to be heard and nothing would ever get done.

• Remedy – Lobbying Court says the recourse provided for such action, is not to get due processhearing, but to lobby to lawmakers to change the law. Lobbying is effective political remedy because

if enough people affected that complain to their elected officials then will change the law. But if smallgroup not going to be effective lobbying. But if Bill Gates effected he has political muscle to changethe law.

• Londoner + Bi-Metallic In Bi-Metallic court is effectively saying this is legislative type processand calls for legislative type response which is lobbying. In Londoner court says this is more likeadjudication, small group of people and remedy available to them is due process.

o Adjudication v Rulemaking these decisions illustrate the fundamental distinctions betweenadjudication and rulemaking. As the supreme court noted, there is a “recognized distinctionin administrative law between proceedings for the purpose of promulgating policy type rulesor standards on the one hand, and proceedings designed to adjudicate disputed facts inparticular cases on the other.”

•

Basing Rulemaking v Adjudication Distinction On Amount of People Affected Doesn’tAlways Work.o Adjudication Affecting Large Group of People In class action litigation thousands of people

effected by private party or government action and use judicial remedy to try to repair it. Notclear that hearing requires everyone to come into court can have main plaintiff with classaction type procedure.

o Legislation Affecting Small Group Of People Price Regulation- Utility rates legislativeaction that only effects small number of people or casino regulations but only one or twocasinos in state. Would that become an adjudication because only a few people? No. Wouldstill be legislative type of rule.

• Tricky to say if effects large group of people then legislative decision, becausepossible to have adjudication that affects large group of people like in injunctiveproceeding.

Adjudication Rulemaking• Effects Individuals Or Small Groups• Judicial Type Remedy (Injunction,

Damages)• Retrospective Effect• Particular Application• Adjudicative Facts (Who, What, Where,

When)

• Effects Large Groups Or Classes• Remedy In Political Process (Lobbying)• Statutes Are Prospective• General Applicability• Legislative Facts (Economic Policy, Broad Data

Gathering)

Southern Railway v. Virginia (1933)•

Facts Highway commissioner of Virginia, acting under VA law, without notice or hearing ordered RRto eliminate a grade crossing and construct an overhead passage. RR refused arguing that theprocedures employed failed to satisfy due process.

o Court Court says violates due process. Clearly a requirement to expend money toeliminate a railway grade crossing a construct a bridge in its place constitutes to the takingof property. Since the statute conferring powers includes no provision for a hearing or judicialreview it is unconstitutional.

• Adjudicative Facts Adjudicative facts are those surrounding the actors in an agency proceeding(what happened, who did it, when, where, why, and how). Adjudication is more narrowly focused toparties effected.




o Southern Railway Adjudicative fact highway commissioner will eliminate this particulargrade crossing he’s going to focus on interests of effected parties, whose complaining,people who live around this crossing and those who operating RR.

o Londoner if looking at how much assessment for paving this road thinking about who whatwhere when of what happened in past. How much did this cost, who did it effect, how muchwill it last.

• Legislative Facts Legislative facts are the general facts to which the agency looks in decidingquestions of law and policy. Legislature takes everything into account.

o Southern Railway legislature when deciding to eliminate grade structure thinks of costbenefit analysis, have committee reports. Solicit views from RR, operators, people ineffected area, city. Ask for advice from highway commissioner, lobbyists. Fact gathering theydo when making broad policy. This is a legislative fact.

o Bi-Metallic decision to raise taxes on entire county of Denver. What informs that decision?If deciding how much need to raise taxes for entire city look to how much revenue cityneeds, what effect has on spending of property owners. Economic considerations at large.Economic policy decision

• HYPO Zoning Permit Ordinance says no land may be developed without zoning permit fromboard of trustees. Ordinance doesn’t have any criteria for board of trustees to review applications.Developer applies for permit and board without a hearing says no. developer sues saying due processviolation and that he’s entitled to hearing.

o Adjudication Sounds like adjudication. Individual developer. Judicial type decision,retroactive in sense all facts already before court, to develop this land in this way. UnderLondoner seems hearing required. applying ordinance to individual seems adjudicative.Posner says this is rulemaking but he thought Londoner wrongly decided.

• HYPO Rent Controls Congress passes statute saying Administrator can recommend maximumrents in certain areas. If that still doesn’t alleviate the housing problem then Administrator canimpose rent controls. After trying maximum rents and failing Administrator imposes rent controls inwar time. Landlord charges higher prices. When would a hearing be required?

o Not Entitled To Hearing When Rent Controls Imposed when sets the general price that isvery broad rulemaking no right to hearing.

o Entitled To Hearing When Landlord Refuses To Comply, And Administrator OrdersReduction Then landlord comes in charges prices hire administrator orders reduction inprice is there right to hearing then? Yes that’s when hearing is triggered. What benefit is hegetting from hearing? he can generate some kind of controversy and political push back.but can’t get rule to be more favorable now.

• Distinguishing Bi-Metallic if plaintiff had not paid his taxes and would have tried toimpose penalty without hearing he would have had right to hearing.

Yesler Terras Community Council v Cisneros (1994)• Facts HUD rules are that public housing tenant can only be evicted after a grievance hearing in

front of a public housing authority. In cases of criminal evictions HUD can bypass the procedure if itcertifies a regular state court eviction procedures as satisfying due process. HUD certified Washingtonstate eviction procedures as satisfying due process. P is evicted without grievance procedure andsues.

o

Court Court agrees with Plaintiff that this was rulemaking and not informal adjudication, sounder APA § 553 required to provide notice and opportunity for comment. HUD didn’t’ giveany effected parties a chance for notice and comment so therefore rule was invalid. Requiredto have notice and comment and didn’t so unconstitutional.

• Plaintiff Argues It Was Rulemaking HUD treated this certification of Washington evictionprocedures as an adjudication – order stemming from an informal adjudication. Court maintains thatHUD’s certification met all the hallmarks of a rule – it had no immediate effect on anyone butpermitted to evict in future without grievance, and at same time affected rights of broad category of individuals not yet identified.






birthday shall be utilized or serve as a pilot on any aircraft while engaged in air carrier operations.” They went through notice and comment but didn’t have oral hearings because decided wouldn’tserve useful purpose and not in public interest. P argues this was not a rulemaking but was anadjudication and so he was entitled to oral hearing before took away his property – license to flyplanes

• Plaintiff Argues This Is Adjudication Plaintiff argues that this is effecting very limited pool of people, therefore they should have had a more individualized right to a hearing. Court says this wasantithesis of adjudication - it was the formulation of a general rule to be applied to individual pilots ata subsequent time.

(1) Due Process – they have license to fly planes, and being deprived of that license by thisrule that says if over 60 can’t. Required to have oral hearing before taking away theirproperty under APA,

o Court court says this really is general rule not individual so due process doesn’tapply. Court says for safety reasons - this is judgment about safety whichoutweighs concern about property. Idea of private property is subject toreasonable limitations that flow from general rules.

(2) Federal Aviation Act - whether one labels the issuance of the regulation rule- makingor not, § 609 of the Federal Aviation Act requires the Administrator to hold a hearing andpermit each pilot affected to submit evidence as to the fairness of the regulation before hiscertificate can be amended.

o

Court court says that this provision of FAA only applies when reexamining aperson’s license and doesn’t apply when agency makes a general rule.

• Eliminating Right To Hearing By Rule FCC charged with giving broadcast licenses. Under statute if your application is turned down you’re entitled to a hearing. FCC passed rule saying its not going togrant licenses to applicants that already have 5 or more stations. Party sued saying applied to forlicense and was turned down because had 6 stations. Argued you can’t foreclose my right to hearingthrough a rule and supreme court says yes you can if the rule is valid.

iii. Must The Agency Make Rules?

SEC v. Chenery II (1947) Agency Not Required To Proceed By Rulemaking• Facts On Remand SEC issues another order rejecting the Federlist’s plan of reorganization.

Chenery challenge that agency can’t proceed by adjudication but must proceed by rulemaking.• Court Says SEC Not Required To Proceed By Rulemaking Court refuses to hold that

announcement of new policy must always be accomplished prospectively through rules. Court saysagency should have flexibility to announce new policy through rulemaking or retroactively throughadjudication and this choice should be in discretion of agency.

o Not Ready To Make A Rule Court says agency needs flexibility to choose because, might beproblems which doesn’t have enough experience with yet to pass rule, or problems sospecialized or varying in nature (fact specific) as to be impossible of capture within theboundaries of a general rule, or might want to proceed incrementally

o Agency’s Discretion Court says so long as statute empower agency to engage in bothrulemaking and adjudication, the agency ahs discretion how to proceed.

• Jackson Dissent Retroactive Legislation This is basically retroactive legislation – no fairwarning of what’s going to happen, and broad grant of authority for FTC to decide what kind of planto approve. you shouldn’t be allowed to take away property with flimsy order. This is retroactiveupset to the Chenerys’ expectations through a retroactive announcement of a new order. Jacksonthinks they should have proceeded by rulemaking that way the rule would have been prospective sothat Chenerys’ or people like them have notice. Unfair to spring it on people without notice.

o Majority response to retroactivity argument Every case of first impression is in some senseretroactive. We’re not going to worry about it.

o Too Much Delegation To Agency Court says it’s up to agency to make general policydeterminations and so remanded to agency. But Jackson thinks that granting too much powerto agency, they can make up arbitrary reasons, and at least if have to proceed by way of rule




it is taking away property in such a way this is prospective and puts people on notice.

• In Londoner the agency tried to do an adjudication by passing a rule and the court says this was reallya rulemaking and required to provide opportunity for oral hearing. In Chenery II agency usesadjudication to make a rule, and court allows this.

• Lawyer’s Tip litigants can always argue that agency doesn’t have authority for rulemaking oradjudication under statute.

• Sudden Change of Agency Policy There are some cases where some adjudications are sounexpected that even if statutory authority is there, Court might strike down because the policychange is so different (either make them do by rule, or only apply prospectively). if agency changesposition in adjudication, court will hold to higher standard.

III. AGENCY ADJUDICATION AND THE DUE PROCESS CLAUSE

a. The Emergence of The “New Due Process”

• Constitutional v. Statutory Procedural Requirements We know from Londoner and Bi-Metallic , when you do adjudication Due Process applies, but in rulemaking it doesn’t . For adjudicationgenerally, Due Process and the constitutional floor is the more important . For rules, it’s the statutory

standards that govern (since Due Process not apply to rules) Most of the time the applicable statute(APA and organic statute) and the agency’s own rule will usually establish procedures aboveconstitutional floor.

• Due Process “No person shall be deprived of life, liberty, or property, without due process of law ” Due process clause in 5 th amendment applies to federal government and 14 th

applies to states. Just the fact that government hurt you doesn’t mean entitled to due process, mustbe deprivation of life, liberty, or property. But as long as government jumps through the rightprocedural hoops then it can deprive person of life, liberty or property.

o Due Process Analysis (1) Does due process clause apply? Is this Life, liberty or property? (2) How much process is due?

o Londoner says process is due if tax applying to small group of people, how much is due, musthave oral hearing written objection is not enough. Bi-Metallic says process not due because

this is rulemaking.• Evolution of Due Process

o Erosion of Privilege Concept the growth of government and its incensing and welfarefunctions made inevitable the result that adherence to strict notions of privilege would haveonerous consequences. Justice Frankfurter argued in 1950 that merely because the interestconferred is deemed to be a privilege does not warrant the conclusion that government mayrevoke it arbitrarily

o Privilege-Right Distinction on The Run beginning in the 1960’s several federal courtsbegan to view the privilege-right distinction as archaic and ill-conceived. Even though aperson held no right (to a liquor license, or to travel, for example)the courts held thatgovernment could not deprive an individual of a liberty or property interest without dueprocess of law

o Due Process Explosion Goldberg v Kelly decision is high water mark holding of supremecourt on question of what process is due.

EXERCISE – WHEN IS PROCESS DUE?1. Alice is bus driver for local public transit authority. Her employment is at will. She has just

received pink slip informing her that she is being discharged. Alice wants a hearingo Her employment is at will she doesn’t have right to hearing

2. Bert lives in a small town where police chief routinely circulate to shopkeepers a flier picturing“suspected shoplifters.” He just learned that his face appears on the flier and police wants todistribute. Bert wants a hearing

o Seems bad because it is a badge of infamy, he should have right to hearing becauseAdministrative Law - Bierschbach 29



don’t know if charge is accurate or just someone who hates him.3. Cathy has just learned that the state highway department has decided to condemn her house by

eminent domain in order to demolish it and build an interchange for a new federally assistedhighway. Cathy wants a hearing

o This is taking her property, nature of loss and history of government giving hearings soshe should have too.

4. Donald owns a chain of hotels and casinos. He has just learned that the local district attorneyhas decided to seek indictment against him for defrauding the public. Donald wants a hearing.

o Liberty , must have hearing5. Ernie owns a small machine shop. His shop has been cited by local safety inspector, who said the

company must install safety railings at considerable cost or else company must shut down.Ernie wants a hearing.

• Things to Consider the following are things to consider in determining whether there is dueprocess violation. (1) Nature of loss (2) History/Past Practice (3) Accuracy (4) Text (meaning commonlaw right of reputation is not as important as liberty interest) (5)Availability of other Remedies (6)Government Interest (7) right vs. privilege (8) value of additional procedures (9) “Dignity” (10)legislative facts (11) Gov. Efficiency

Bailey v. Richardson (1950)• Facts Bailey hired by US government, who had right to fire her if investigation disclosed she was

disloyal to government. Government fired her after learning that she was communist. Governmentinformed her that learned that she was communist. She had hearing with witnesses and testified atproceeding. Government fired her. She wants hearing with cross examination

• Question 1 Due Process Clause Doesn’t Apply government employment is neither a libertynor a property interest, so due process clause is inapplicable. So not entitled to hearing beforedismissal.

• Question 2 Bailey Thinks More Process is Due Bailey complaining that she didn’t get all theprocess that was due, she wants to cross examine the other side. Court doesn’t’ even address thisquestion, it says you don’t get past question one because not deprivation of life, liberty or property.

Greene v. McElroy (1959)•

Facts Greene was executive for a defense contractor, lost his security clearance because of allegedassociation with communists. At hearing, P denied charges and US produced no witnesses.

• Court Doesn’t Address Due Process court doesn’t talk about due process, but say it was unfair .Court says because we’re concerned about fairness, we will read statute so that it doesn’t delegateauthority to do this troublesome procedure (this is same as Kent ).

o Constitutional issues of due process can be avoided because case is decided on othergrounds. Where government action seriously injures individual, and reasonableness of theaction depends on fact findings, the evidence used to prove the government’s case must bedisclosed to the individual so that he has an opportunity to show untrue.

o What About Kent Kent it was the same procedure, didn’t get to hear other side’s facts.Bailey is different court, earlier decision might have been different statutory scheme.

Cafeteria Workers v. McElroy (1961)• Facts Brawner had worked for more than six years at government cafeteria on security base.

Department of defense revoked her security clearance without hearing or explanation because failedto meet security requirements. Brawner argues that she should be advised of specific grounds for herexclusion and be accorded a hearing to refute them.

• Analysis Analysis is confusing. Court says not deprived of life liberty or property because she hasno constitutional right to be on the security base in the first place. But doesn’t stop at question one,court goes on to question two and says the only process that is due is non arbitrary and capriciousdischarge. Court admits even at will employee can’t be fired for arbitrary or discriminatory reasons,




based on religion for example. But when reason for discharge are rational no hearing required.o it’s not clear that she needs hearing here, it’s also not clear that because you can’t fire

because of someone’s religion, that the job is a property interest , it’s almost embracing theprivilege versus right distinction, though it doesn’t say that.

Goldberg v. Kelly (1970) Due Process Requires Pre-Termination Hearing• Facts Welfare recipients challenged NY procedures which sought to terminate their welfare without

a formal pretermination hearing. The procedure was written notice, a pretermination opportunity to

submit a written response, termination of welfare payments, and a post termination opportunity for aformal oral hearing. If the welfare recipient prevailed at the formal hearing, she would be paid allmonies erroneously withheld. Plaintiffs argue that entitled to hearing before benefits are terminatednot after.

• Question 1 Welfare Benefits Are Property government doesn’t even try to argue that welfarebenefits aren’t property because AG knows not politically popular to make that argument, or maybedecided we’ll win on question two. Even though government doesn’t argue it, court still as to addressit.

o Statutory Entitlement Is Property Interest Statute creates property right, court citesarticle and in end concludes that welfare benefits do constitute property.

• Individual Rights + Social Welfares – Reich it is more realistic today to regardwelfare entitlements as more like property than a gratuity. Much of existing wealth in

this country takes for of rights that do not fall within traditional common law conceptsof property. Social security no longer regarded as luxuries or gratuities, to therecipients they are essentials, fully deserved, and in no sense a form of charity.

• Question 2 Oral Pretermination Hearing Required welfare recipient is without financialresources, beyond those provided by government. It would be unconscionable to terminate benefitswithout a pretermination formal hearing in the face of this brutal need. Extent to which individual isentitle to procedural due process is largely influenced by extent to which would suffer loss.

o What Process Is Due? Court says statutory “fair hearing” provides recipient with fulladministrative review. Court lists extensive procedures, need oral testimony, crossexamination of adverse witnesses, can bring attorney, impartial decision maker, opinion withformal findings and statement of reasons for findings, full record.

• Balancing Test For Determining What Procedures Are Due Where does court

get these procedural requirements from? Court draws them from some preexistingconcepts of notice and opportunity but must be balancing between what you’re takingaway from the person and the administrative cost of the procedure requiringgovernment’s interest in conserving fiscal, administrative resources. Here they saidpretty grievous need and procedures are not that harsh. These procedures arevaluable because court makes assumption easier for poor people to get point acrossin oral proceeding.

b. When Is Process Due?

Board of Regents of State College v. Roth (1972)• Facts Roth hired as professor by Wisconsin State University for one-year term and wasn’t rehired at

end of term. Roth claims failure to give him hearing violated 14 th amendment. • Question 1 No Property Interest In Employment After One-Year Term Court says this is

not about your need to keep your employment but about whether you have a statutory entitlement tothat specific employment. Which he doesn’t. Court says we look to see whether there is any legalentitlement. There is no state law saying you have right to employment past one year term of contract you signed, so no property interest here. Property interests are defined by whether there isindependent legal entitlement.

o Liberty liberty interests embrace the pursuit of happiness: the right to contract, to engagein one’s occupation, to acquire useful knowledge, to marry, to establish a home and raisechildren, and to worship god. Here O’s reputation has not been injured, his right toemployment elsewhere has not been infringed.




• Explanation In order to have a constitutionally protected property interest, the individual must havemore than a unilateral expectation to it. He must have a legitimate claim of entitlement. Propertyinterests are not created by the constitution, but step from an independent source, such as state law.Here P had no legitimate claim to reemployment after his one-year term.

Perry v. Sindermann (1972)• Facts Sindermann was involved in a public disagreement with the Board of Regents, and so the

Board voted not to renew his contract, issuing a press release setting forth allegations of

insubordination. Sindermann brought 1983 action alleging removal was in retaliation for exercise of his 1 st amendment rights.

• Question 1 Yes Property Interest In Tenured Employment Is there property right?o Liberty First the court held that if the Board’s failure to renew Sindermann’s contract was

in retaliation for Sindermann’s exercise of first amendment rights, that action would be anunlawful infringement of constitutionally protected “liberty” regardless of the fact thatSindermann lacked tenure or a contractual right to renewal. Government may not deny abenefit to a person on a basis that it infringes his constitutionally protected interest,especially his interest in free speech. So he was entitled to oral hearing to prove hisallegations that failure to renew was based on exercise of his free speech.

o Property Second, court considered Sindermann’s claim that despite the absence of aformal tenure system at the college, there was an informally system of tenure that gave him

a “property’ interest in continued employment, protected by due process, requiring that hebe given an administrative hearing before board decides not to renew. This is not merely hisexpectation that had tenure but court takes into account objective evidence of his legitimateclaim of entitlement. Court says all these things gives him chance to get him over hump of question 1.

• School Policy School policy says has no tenure system but that faculty should feelthat has permanent tenure as long as teaching satisfactory etc. Argued that this reallywas tenure, so property right created by school policy.

• Sindermann’s Expectation Is court endorsing idea that Sindermann thought would get reappointedand had job security and therefore he has property right? No. Court says can’t have unilateralproperty right. Not endorsing he thought have right then have property interest. Must be someobjective evidence of legitimate claim of entitlement. Not just statute or regulation but can be

informal practice or custom.

• Sindermann + Roth In Sindermann there is provision in faculty guide saying that basically hastenure. Suggested that if worked 7 years would continue to renew. In Roth it was one year contractwith no right to renew or implication of renewal.

Town of Castle Rock v Gonzalez (2005)• Facts Gonzalez gets restraining order against her husband and asks police to enforce it. Husband

kidnaps kid and murders the child and then commits suicide. Police had duty to use all reasonablemeans to enforce the restraining order. Gonzalez claims that she had a liberty and property right, andpolice deprived her of entitlement to that right by not enforcing restraining order. She was deniedenforcement without some kind of hearing.

• Question 1o Liberty Does she have liberty interest here? Not traditional liberty right to contract, to

marry etc.o Property Did Colorado law give Gonzalez a property interest in having restraining order

enforced by police? Gonzalez claims that state establishes property right and that she can’tbe denied enforcement of that right without some kind of hearing. Court says we do notbelieve that the provisions of Colorado law truly made enforcement of the restraining ordermandatory . Because well established tradition of police discretion exists with mandatoryarrest statutes.

• Dissent Dissent says restraining order says that this “shall enforce” language was put inAdministrative Law - Bierschbach 32





• HYPO Property Or Breach of Contract City school hired part time coaches to work 20 hours

per week for one year. Contract will be renewed so long as work is satisfactory and services areneeded. If principal decides services not needed must explain to coach in writing. School hires Dorisand doesn’t renew contract even though needs coach or next year, and principal doesn’t givereasons.

o Property? Court here says property interest because had interest in second year. Is everycontract terminated early in breach of contract procedural due process violation? One

consequence of Roth is that maybe they do. Posner dissent says this is just breach of contract claim.

• HYPO Liberty – Reputational Harm City issues statement that “Bert is active shoplifter.” DoesBert have right against reputational damage?

o Liberty? The more serious the reputational harm + difficult of getting a job then courtswill be more likely to hold that this is liberty interest. But if Bert can show that it will be moredifficult for him to get hob in town, that he’s being ostracized and excommunicated then hehas stronger claim to liberty interest.

Roth says I’m being fired and people will think that I’m a troublemaker. But court saysthere is no evidence here that you won’t be able to get future jobs and suffer a stigma– no liberty interest.

• HYPO State Defines Scope of Right Congress replaces welfare scheme and instead providesblock grants to states telling them to use the money in any manner reasonably calculated toaccomplish purpose which is to move people off welfare to getting a job. Says in bold “no individualentitlement.” This statute shall not be interpreted to entitle any individual to any monetaryassistance under the terms of this program. Recipient’s benefits are withdrawn without apretermination oral hearing. State argues look at the statute this isn’t property interest. Roth saysstates define property rights. Bierschbach says this probably would be viewed as ok today

c. How Much Process Is Due?

• Goldberg Hearing Requirement Majority in Goldberg said that all the requirements for aformal, trial type hearing must be conferred to a welfare recipient prior to termination of welfarepayments, except for verbatim transcript and testimony under oath. Goldberg says must have

pretermination hearing with: oral hearing, cross examination, notice and explanation fortermination, right to bring lawyer, impartial decision maker, decision based on record, writtendecision with explanation.

Mathews v Eldridge (1976) Balancing Approach For Determining Whether Procedure Was Sufficient • Facts Eldridge awarded disability benefits in 1968. 1972 after reviewing her completed

questionnaire and reports from her physician the Social Security Administration informed her thatdisability had ceased and offered her the opportunity to submit additional information. Theninformed benefits were terminations, but that could seek post-termination hearing.

o Decision court says procedures provided were constitutional. Backs off robust proceduralprotections of Goldberg

• Question 1 Disability Benefits Are Property Clear after Goldberg if getting benefits and

government is going to take them away that is property interest. This is conceded.

• Question 2 Do Procedures Satisfy Due Process The Procedures – someone who getsdisability benefits has to fill out questionnaire with medical records and send to state agency forreview. Then recipient gets statement of proposed termination from state agency with justification.Recipient has opportunity to response in writing. State agency makes final determination, it isreviewed by SSA, and if SSA approves termination it becomes effective after two months. Court saysto determine whether process is sufficient balance three things:

(1) Individual Interest the private interest affected by the government’s actionIndividual Interest Affected Eldridge has interest in keeping his disabilitybenefits. Court says that this interest is not so great as compared with Goldberg




where he needed the money to pay rent. Court makes assumption that disabledpeople aren’t as desperate as poor people because people only entitled to welfare if have no money, whereas disabled people can get disability regardless of how muchmoney they have. Court focuses on Eldridge here who has money and not generalcategory of disability recipients. As a general matter look at category of peopleaffected and not person in front of court.

(2) Risk of Error And Probable Value Of Additional Procedure the procedures utilize,the risk they pose for erroneous deprivation, and the probable value of increased procedures.

Risk of Error And Probable Value of Additional Procedural Safeguards whatis the Risk of Error? SSA is evaluating medical issue and is reviewing documentationsubmitted by Drs as evidence. They look over the x-rays, lab tests and Dr reportswhich goes to issue of eligibility. And on top of that recipient can submit furtherwritten documentation to argue they are entitled. It doesn’t seem that the risk of erroris so high.. Value of Oral Pre-termination Hearing – if allowed oral hearing doesn’tseem like it will add much, because most of evidence is documents. But on otherhand, not 100% disability purely medical condition, could be psychological, if haveoral hearings could cross examine Drs bring your own in. Can probe errors in writtenreport.

• Distinguishing Goldber g Disability ordinarily can be determined accuratelyupon assessment of medical reports rather than evaluating truthfulness andcredibility of witnesses. In welfare, poor and uneducated would have lots of

difficulty in filing written pleadings, not true in disability case.(3) Government’s Burden government’s interest is need to protect its finite fiscal andadministrative resource

Government Burden the financial and administrative costs of requiring a formalpretermination hearing could likely be substantial. At some point the costs of additional procedures outweigh the benefits. Government’s interest in avoiding theadditional fiscal and administrative burdens of giving this extra process is greaterthan the benefit.

• Assessing Accuracy + Risk of Error How do we know what accurate disability determination is?Let’s says studies show oral hearings result in more benefits being granted. Is that persuasive thatoral hearings should be taken into account in second factor? No doesn’t mean more accurate.Maybe more claims granted because natural human tendency to sympathize with injured person.

And when close case gives to P, doesn’t mean correctly decided.• HYPO Machine Determines If Welfare Recipients Capable of Getting Job There is

machine that determines with 100% accuracy by doing a brain scan whether someone is able to geta job. Government removes hearing requirement and says everyone will be machine tested todetermine eligibility. Guy sues saying violates procedural due process.

o Additional Value of Procedures here there is no probability that more procedure would bemore accurate, so under Matthews would be constitutional.

• Goal of Accuracy v Participatory Value Mathews assumes that accuracy is the overriding goal.But maybe due process requires more than just accuracy of procedural value. Brennan wrote thatone of things that made Goldberg problem is denied important procedural participatory values thatcitizens entitled to when trying to makes case to government. Matthews narrows sphere of values of

procedural due process. Court mentions – in response to Goldberg - we’ve seen what cost of constitutionalizing these procedures will be and it wasn’t good.

Van Harken v City of Chicago (7 th Cir. 1997)• Facts Chicago changed way to contest parking tickets saying if challenge ticket in person, police

officer not required to appear. P claims this violated procedural due process because can’t crossexamine the police officer.

• Posner’s Mathematic Formulation Posner says if Individual Interest (I) x Probably value of additional procedural safeguard (P) outweigh Burden to government (B) = then win on proceduraldue process grounds. (I x P > B). I = $55 P=2.5% chance of increased accuracy = $1.38. Question is




$1.38 more than 67,000 police officers time. At end he says this is obviously less than government’sburden no due process violation. This is what courts wind up trying to do. Posner says a little strangeto make constitutional procedure depend on math.

• Government Burden - Cost Of Having Police Officer Appear Court calculates how much itcosts to have officer appear at every hearing. 200,000 parking tickets challenged, but only 67,000challenged in person. Takes a couple of hours for officers to attend = city would have to hire 67 fulltime officers a year.

•

Probable Value of Additional Procedural Safeguards – Added Value of Officer AppearingCourt is weary of whether or not having the officer appear even benefits the contestant.

• Judicial Balancing v Agency Balancing This is example of Judge trying to do balancing, but maybeagencies are in better position to do this type of balancing. They have better access to information.Matthews test is repetitive presumably agencies or congress already did this balancing whendecided what procedure to provide. . One criticism is why just tell courts to redo what politicalbranches have already done.

Hamdi v Rumsfeld (2004)• Facts US citizen captured in Afghanistan and held as enemy combatant given no opportunity at

all to challenge detention or designating as enemy combatant. Argues that he should at least havesome procedural opportunity to challenge his designation as enemy combatant, which triggers

presidents power to hold him this way.• Court Court balances Matthews test and says clearly private at stake is liberty which is great.

Court says what process is due? requires notice of basis of classification and fair opportunity o rebutgovernment’s factual assertions but not entitled to full trial. Also ok if presumption in favor of government

o Balancing Test How does court get to those requirements from Matthews test? They sayweighty and sensitive government interest in time like this is the burden. Individual interestis liberty. P the value of these procedures. They don’t’ really say much with P. They seem tobe mostly worried about a tourist being accidentally detained. We want to make sure thatthose kinds of people aren’t erroneously detained and there is some value in that

• Risk of Leaving Balancing To Government Maybe don’t always want to leave it to elected

branches. The balancing here is almost impossible to do. How do you put weights on liberty and theburden. And how do you get from that to these precise requirements? Where do those come from?Seems they are kind of just making it up. Maybe if need someone to make it up as check on otherbranches better to have judiciary do it. Plus if have no procedure the marginal value of additionalprocedures is high.

• Due Process Sum Up Question 1 Old distinctions between right v privilege is dead, existenceof protected interest is determined by some reference to federal statues, state laws, and custom.Must have some legitimate claim to property. Or protected liberty interest – courts look to judicialdecisions carving out fundamental rights – like education. Question 2 Matthews balancing test isthe law

IV. AGENCY RULEMAKING AND THE APA

a. Triggering Formal Rulemaking

• Rulemaking Procedures The APA and the agency’s organic statute drive rulemaking procedure. The organic statute tells the agency what to do, and how to go about it, and the APA has proceduresfor when agency engages in rulemaking, formal and informal. Due process is not at issue, althoughit is important for adjudication.

• Rulemaking Process How does rulemaking start? Who influences rulemaking>(1) Agency agency can say this is in pubic interest we should change it. They generallyhave ongoing investigations and monitor areas where have jurisdiction(2) Private Citizens Constituents and Lobbyists can complain and write letter to senator




to make a rule.(3) Legislature Legislature can write a statute giving agency power to regulate in acertain area, and can have a committee hearing where they call agency and say this is withinyour statutory mandate so make rule.(4) President can call agency and say I want you to address this topic via rule as part of my policy agenda.

• HYPO Rulemaking Process Under APA Agency wants to make a rule, how should they goabout doing it? First they must see if they have authority under their enabling statue.

o Publication of Notice of Proposed Rulemaking § 553(b) First agency has to publish

notice of proposed rulemaking in public register. Must state the time place and nature of therule, reference legal authority, and give the proposed substance of the rule. Unlessinterpretive rule, or good cause not to.

o Interested Persons Opportunity To Participate § 553(c) Written Hearing If Statute Doesn’t Require Agency Hearing if the statute doesn’trequire rule to be made on the record after opportunity for agency hearing, then giveinterested persons opportunity to participate via written hearing. “interested persons”means anyone interested, no legal overlay. Can send letters everyday and they haveto read it.Oral Hearing If Statute Does Require Agency Hearing If statute requires thatrules be made on the record after opportunity for an agency hearing then §556 istriggered and party is entitled to present his case by oral or documentary evidence,submit rebuttals, and cross examination. Almost the equivalent of trial. Agency has toissue decision based on record and initial decision made by ALJ.

o Notice + Opportunity to Comment § 553(d) Two major requirements of informalrulemaking are notice and opportunity to comment on rulemaking.

US v Florida East Coast Railway (1973)• Facts Interstate Commerce Commission (ICC) promulgated rules designed to provide an economic

incentive to RR to promptly return boxcars to their owners. The Interstate Commerce Act providesthat the ICC “may, after hearing” promulgate various rules affecting use of boxcars. ICC conductedtwo oral hearings on different occasions and couldn’t come up with suitable law. Finallycongressional subcommittee tells them you need to make a rule now, so ICC makes a rule withoutoral hearing first. RR challenged rule on grounds that this was formal rulemaking and §556 and §


APA § 553 RULE MAKING

(b) General notice of proposed rule making shall be published in the Federal Register,unless persons subject thereto are named and either personally served or otherwise haveactual notice thereof in accordance with law. The notice shall include -

(1) a statement of the time, place, and nature of public rule making proceedings ;

(2) reference to the legal authority under which the rule is proposed; and

(3) either the terms or substance of the proposed rule or a description of thesubjects and issues involved. 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 practice ; or

(B) when the agency for good cause finds (and incorporates the finding anda brief statement of reasons therefore in the rules issued) that notice andpublic procedure thereon are impracticable , unnecessary , or contrary to

APA § 556(d) Hearings; Powers And Duties; Burden Of Proof; Evidence; Record AsBasis Of Decision

A party is entitled to present his case or defense by oral or documentary evidence , to submitrebuttal evidence, and to conduct such cross-examination as may be required for a full and truedisclosure of the facts. In rule making or determining claims for money or benefits or applications



557 apply.o Court Court says this was informal rulemaking, so oral hearing not required. §556 + §557

not triggered.

• Is This A Rule? Yes? Ratemaking is clearly rulemaking, APA definition of rule includes setting rates.

• Exceptions To § 556(d) Oral Hearing Requirement § 553(d) says agency can dispense withhearing requirement if people won’t be prejudiced. And adopt procedures for submission of

evidence in written form. ICC tries to invoke this exception that the RR won’t be prejudiced. Districtcourt says Florida was prejudiced so rule is invalid.

• Formal Rulemaking Triggered If Statute Says Rules Must Be Made “ On Record After Opportunity For Agency Hearing ” Supreme court says that § 553 applies as this was informalrulemaking. § 556 and § 557 were not triggered because statue only said after hearing, and didn’tsay on the record after opportunity for hearing. Must track language of APA precisely to triggerformal rulemaking.

• What Does Statute Require When Says “Hearing” RR tries to argue that InterstateCommerce Act says after hearing so that requires oral hearing regardless of what APA says.Rehnquist says hearing under the act means hearing entitled to when make a general rule, so it isonly a paper hearing, doesn’t mean trial type proceeding. Judge Friendly argues that ICC statute

“After hearing” language actually did require trial type evidentiary hearing.o Lawyer’s Tip Even though formal rulemaking not triggered under the APA, can still argue

that based on language of enabling statute oral hearing is required.

• Policy Issues With Decision As a matter of statutory interpretation this may not be a good decisionbecause APA passed 50 years ago and enabling statutes were in existence way before then, anddidn’t know what talismanic language to use that would trigger formal rulemaking requirements.

• Functional Considerations For Informal Rulemaking formal rulemaking procedures are oftencounterproductive and may not get to accurate result. Lengthy proceedings with oral hearings andcross examination not always necessary and takes too much time. Court concerned that formalrulemaking wastes money and is not always necessary. So court says unless congress explicitlytracked language of APA then we’ll give agencies a lot of freedom to make rules with lot lessprocedural constraints.

• Two Important Points Of Case (1) Must Track Language of APA For Formal Rulemaking This interpretation frees up agencies to do a lot of informal rulemaking becauseformal rulemaking is not triggered unless enabling statute tracks that language of APA, (2) APANot Only Procedural Constraint On Agency Rulemaking Must consider all proceduralconstraints on agencies, just because not in formal rulemaking under APA doesn’t mean theenabling statute or the due process clause doesn’t require more procedure.

b. The Rise and Fall of Hybrid Rulemaking

• Interplay Between Rulemaking and Adjudication as a result of East Coast Railway mostagency ratemaking is through informal, legislative, notice and comment procedures. This frequentlyresults in the absence of an agency record for purposes of judicial review, thereby frustrating

judicial challenges to agency action.

• Development of Hybrid Rulemaking Prior to Vermont Yankee many courts insisted thatagencies promulgate their rules via “hybrid” procedures which were less than formal trial typeprocedures of § 556 and § 557 but more than informal notice and comment procedures. Courtswould require opportunity to comment meaningfully which means agency had to discloseeverything. Idea of notice is to fully appreciate and be aware of and have chance to respond to allaspects of proposed rule relevant to substance and validity.




• Challenging Rule After Passed another way that courts tried to review rulemaking was to saythat though there are not a lot of procedures going into making the rules, when the rules are appliedand challenged the plaintiff can challenge the underlying validity of the rule. Courts would end upsaying that this is not permissible. Once the rule is validly established the only issues left for courtto review in enforcement proceeding is application of the rule – whether the rule applies to thisplaintiff.

Vermont Yankee Nuclear Power v. Natural Resources Defense Counsel (1978)•

Facts VT Yankee sought permits from the Energy Commission to build nuclear power facilities. The NSDC rejected issuance of a license. AEC instituted rulemaking proceedings to asses theenvironmental consequences surrounding spent nuclear fuel. AEC did not offer the opportunity forformal, trial type proceedings, but offered de minimus procedures specified for informal rulemakingunder § 553.

• Issue may the judiciary insist that federal agencies offer procedures beyond those expressed inthe APA where the substantive issues under consideration are complex, technical or involve “issuesof great public import?” Court says No.

• Courts Can’t Require More Procedural Requirement Than APA the APA expresses themaximum procedural requirements that congress was willing to have the judiciary place uponagencies. While agencies are free to offer greater procedural opportunities, courts are not free to

insist that they do.o Reasons (1) Unpredictable – if let courts just impose what procedures they think is

required, there will be no clear test for agencies to follow, and impossible for agencies tocomply they need notice of what procedures must be. (2) Court Abusing Power – if there is noreal guidance for agencies then courts can invalidate rules when don’t agree with thembased on procedures that were supposedly required. Don’t want to allow court to makepolicy decisions.

o Criticism Many criticized that need meaningful review of what agencies are doing. Want tomake sure agencies not being lazy or actions misguided, and there is no way for court to dothat if don’t have a record to review.

• Hybrid Rulemaking Environmental groups were pushing for more procedure than APA required. They wanted opportunity for oral hearing with cross examination of government’s evidence. DC

court granted their request. This is hybrid rulemaking basically taking § 553 proceeding and tryingto make it more formal, but not as formal as formal rulemaking. Supreme court says circuit courtscan’t do this – agencies are constrained by their own rules, organic statues and the APA. Courtscan’t impose additional constraints.

• Courts Can Still Review For Arbitrary and Capricious Rulemaking you don’t need to imposeprocedural requirements to make sure agencies are not making rules improperly. Courts can stillreview rulemaking to see if arbitrary and capricious in violation of due process. If on appeal, all theagency has is a 20 page statement by one guy in support of their rule – a bare bones record – then

judge can remand back to agency to explain itself and that it respond to comment, or it can strikefor being arbitrary and capricious.

• Exceptions To VT Yankee (1) Quasi-Judicial Determinations – if the agency is deciding a

controversy involving a small number of persons, each of whom are exceptionally affected onindividual grounds, like Londoner then court can require more procedure. (2) Changed Procedure – if the agency makes a totally unjustified departure from settled agency longstanding procedures, (3)Constitutional Constraints – Constitutional due process may require more procedural opportunitiesthan those specified in APA, or (4) Exceptionally Compelling Circumstances.

PROBLEMS - Procedural Requirements for Agency Adjudication and Rulemaking After FloridaEast Coast

1. Industrial, an electric utility, applies to the Environmental Protection Agency (EPA) for permissionto discharge heated water into a nearby river. EPA’s enabling statute prohibits the discharge of anypollutant unless the discharging entity has obtained a permit from the EPA. Industrial concedes that




its discharges do not meet EPA’s effluent limitations. Instead, it seeks an exemption from thoseeffluent limitations pursuant to § 316(a) of the enabling statute, which requires a permit to be issuedto any discharging entity who, “ after public hearing ,” can demonstrate to the satisfaction of theagency that the EPA’s standards are more stringent than necessary to protect aquatic wildlife.

a) Is Company Entitled To Public Hearing? Industrial’s permit request is denied withouta public hearing. Has the agency acted unlawfully? What are Industrial’s best arguments?

Entitled To Hearing Under APA •

Adjudication or Rulemaking? This seems like adjudication that deals withlicense under APA definition.• Formal or Informal Adjudication? Is it formal or informal adjudication?

Florida East Coast says informal adjudication unless enabling statute trackslanguage of APA § 554 saying “ on the record after opportunity for an agency hearing .” The language here “after public hearing” does not trigger applicationof formal adjudication requirements of oral hearing. Can argue that reasoningof Florida East Coast only applies to rulemaking and not to adjudication.Rehnquist says don’t ever really have oral hearings for legislative typedeterminations only have paper hearings so more evidence to think that noformal hearing required there. But here we are dealing with adjudication andadjudicatory facts with this company in particular who what where when whydeterminations. Presumption for adjudication is you do have hearing – so read

language more loosely to trigger § 554 formal adjudication requirements.o Does Florida East Coast Apply to Adjudication ? – Not Necessarily DoesFlorida East Coast requirement that enabling statute track language of APA exactly to trigger formal rulemaking requirements? There is a four-way circuit split on this question. Some courts say presumption in favorof formal hearing, others say presumption against but just apresumption can overcome even though magic words don’t appear.Other courts defer to agencies reasonable resolution. Others say gostatute by statute no presumptions look deeply into each statute. Jury isstill out on what triggers formal adjudication. Trigger is a little easierbecause it is adjudication. But important point is that courts don’t thinkFlorida East Coast applies to adjudication. The rationale is that thereare different presumptions and different constitutional considerations.

Entitled To Hearing Under Organic Statute company can say that statuterequires “public hearing” which denotes a true public hearing with an open forumwhere can voice concerns. Traditional public hearing usually means oral hearing withability to probe the other side.Entitled To Hearing Under Due Process (1) What is interest here? Companyargues this is property right interest in entitlement to permit. Since permit notgranted yet there is no hearing under due process. If not granted then not takingaway property. (2) What process is due? Even court did say this was property interest,probably apply balancing interest test and wouldn’t need formal hearing.

b) A public hearing is held before an ALJ at which Industrial and a local environmental group,Save the River, are permitted to offer evidence and cross-examine one another’s witnesses.

The ALJ denies Industrial’s request for a permit. Industrial appeals to the Administrator of the

EPA, who assembles a panel of six in-house advisers to assist with his technical review. Thispanel submits a report finding that Industrial had met its burden of proof. Relying on thisreport, and without any further oral hearing, the Administrator grants Industrial’s permitrequest. You are the lawyer for Save the River. Has the agency acted unlawfully? What areyour best arguments?

In Formal Proceeding Agency Can Only Base Decision On Record Below Firstargument is that this is formal adjudication so § 556 and § 557 apply. § 556(e) saysthat agency can only base its decision on the record that has been developed below.Can argue that agency looked outside the record. Argument is formal proceeding sayscan only base decision on record that has been developed, and they were entitled toopportunity to cross examine that new evidence.






important industry or public-interest groups. Unlawful?Statement of Basis And Purpose Agency is required to explain itself, whichincludes the requirement to respond to major comments. This requirement survivesVermont Yankee . Reviewing court will decide whether or not it adequately respondedto the major comments it received, or it just ignored them.

• § 553(c) “After consideration of the relevant matter presented, the agencyshall incorporate in the rules adopted a concise general statement of their basis and purpose .”

c. Has Hybrid Rulemaking Risen Again

Connecticut Light & Power v. NRC (1982)• Facts Nuclear Regulatory Commission (NRC) establishes rules governing fire safety for nuclear

power plants. CT Light & Power objects to the program, specifically that in NRC’s notice of proposedrulemaking, they didn’t clearly specify the technical basis relied upon for formulating proposed rule.Also the rules adopted differed in many respects from the proposed rule.

• No Reversible Error Court finds that the notice was ok, but by the skin of their teeth. Court don’tfind a reversible defect in this case because even though agency didn’t disclose it technical studies,it was widely understood that these technical studies were driving the whole debate on fireprotection and they were subject to criticism beforeand, and anybody involved in proceeding would

have known.• Opportunity For Interested Parties To Participate In Meaningful Way The process of

notice and comment rulemaking is not to be an empty charade, it is to be a process of reasoneddecision-making. One particularly important component of the reasoning process is the opportunityfor interested parties to participate in a meaningful way in the discussion and final formulation of rules. Procedures by NRC came dangerously close to foreclosing useful participation in rulemakingprocess.

o Opportunity to comment is meaningless if parties don’t know what supposed to becommenting on.

• Agency’s Explanation of Rule while agency need not justify the rules it selects in every detail,it should explain the general bases for the rules chosen. This explanation will assure public

confidences in the rulemaking process. Disclosure of the agency’s rational is important in order thatreviewing court may fulfill its statutory obligation to determine whether the agency’s choice of ruleswas arbitrary or capricious.

• Must Disclose Technical Basis For Proposed Rule NRC’s notice of proposed rulemaking failedto indicate or explain the technical basis on which it had relied in selecting the proposed rule. If thenotice failed to provide an accuracy picture of the reasoning that has led the agency to the

proposed rule , interested parties will not be able to comment meaningfully upon the agency’sproposals. Otherwise agency will operate with one sided picture of the issue. Important for agencyto identify and make available technical studies and data that it has employed in reaching decisionsto propose particular rules. Agency commits serious procedural error when it fails to reveal potionsof the technical basis for proposed rule in time to allow for meaningful comment.

d. Exceptions To APA § 553

• APA Exceptions To Notice And Comment § 553 requirement of an opportunity for notice andcomment does not apply to (1) interpretative rules, (2) general statements of policy, or (3) rules of agency organization, procedure or practice. § 553(b) also authorized an agency to dispense withnotice and comment when it “for good cause finds” it to be “impracticable, unnecessary, or contraryto the public interest. The agency still must publish the rule in the federal register, but doesn’t haveto solicit comments from interested parties.

o Interpretive Rules those that “merely clarify or explain existing law or regulations thatare essentially hortatory and instructional, and do not have the full force and effect of a




substantive rule, but are in the form of an explanation of particular terms. The existence of asubstantial impact from the rule does not preclude a court from a finding that the rule isinterpretive.

o General Policy Statement general policy statement (i) must not have a present effect,cannot be imposing rights and obligations and (2) must leave the agency and its decision-makers free to exercise discretion. Court may consider the agency’s characterization of itsown action, however it is not decisive. American Hospital Association v Bowen.

o Procedural Rules this includes actions that do not alter the rights or interests of parties

but merely alter the manner in which parties present themselves or their viewpoints to theagency. Court rejects substantial impact test concerning agency procedural rules,recognizing that strictly procedural measures may affect rights of parties.

American Hospital Association v Bowen (D.C. Cir. 1987)• Facts Congress mandated the creation of Peer Review Organizations (PROs) to oversee Medicare

expenditures by doctors and hospitals. The PROs would contract with the Department of Health andHuman Services (HHS) to review the performance of the doctors and hospitals. HHS promulgatedregulations concerning the organization, activities and enforcement power of the PROs withoutnotice and comment procedures under the APA.

• Present Binding Effect Test a rule is not an interpretive rule or general statement of policy if (i)it has a present effect on food producers, and (ii) the agency and its decision makers are bound

by the regulations .• Procedural Rule + Statement of Policy Exception to APA Notice and Comment the agency

rules and regulations regarding PROs are procedural in nature and thus exempt from notice andcomment requirements, since they merely organize the PROs and did not impose direct substantiveobligations on the hospitals. The contract terms between HSHS and the PROs requiring hospitals tomeet enumerated substantive standards were rules and regulations concerning goal setting andthus considered mere statements of policy.

o Statement Of Policy court says a statement of policy doesn’t establish a binding norm,because it’s not a final determination of issue or rights. It’s just giving its explanation forwhat thinks term means, but it’s prospective and a little tentative. It is a general predictionthis is how we plan to apply law. Statement of policy doesn’t bind agency.

• Interpretative v Substantive Rules Interpretive rules merely clarify whereas substantive rulesactually impact rights, obligations or interests. American Hospital just says if it affects privateinterest this it is a substantive rule. But a lot of statements of policy have practical effect of deeplyeffecting private interest. A rule saying unfair trade includes not putting octane levels on pumpssounds like interpreting what unfair trade means but also affecting substantive right station owners.

o HYPO FAA Approval For Sale Of Route FAA statute says airline that sell license to flyparticular route to another airline has to get FAA approval. FAA decides not involved enoughin M & A with airlines so interpret statute to mean where there is sale of controlling block of shares, such that company buying airline gets airlines licenses, must get FAA approval.Interpreting what it means to “sell a license” so interpretation with a substantive effect. Mostsubstantive rules will also be interpretive rules in sense that they are explaining what statutemeans..

American Mining v. Mine & Safety Health Administration (D.C. Cir. 1993) Legal Effects Test • Facts Mine & Safety Health Administration (MSHA) has statutory authority to make rules for mine

safety including authority to require operators to file reports. MSHA passes rule with notice andcomment saying operators have to report specified instances, including accidents and illness within10 days. Then agency issues PPL without notice and comment, explaining what illnesses must bereported.

o Court Court says PPLs are not substantive rules they are interpretive.

• Legal Effect Test If the interpreted rule has a legal effect then it is substantive. Ask the followingquestions, if answer yes to any then it is substantive legislative rule.

(1) No Adequate Legislative Basis For Enforcement Whether in absence of rule there would notAdministrative Law - Bierschbach 43





and rules governing how adjudication will be conducted. FAA says this is procedural rule. Court saysno it is substantive.

• This “Procedural Rule” Substantively Effects Rights Court explains that this really changeswhat defendants will have to go through in defending themselves and will effect their rights. Noticeand comment will be required where the rule substantially affects a civil penalty defendants right toan administrative adjudication. Party has right to notice and hearing (administrative adjudication)before being forced to pay a monetary penalty under due process and APA.

• Dissent Dissent says that if the rule is controlling conduct involved in the presentation of yourcase then it is procedural. But if it controls primary conduct outside of the courts in the real worldthen it is substantive. If you’re just looking to see whether something alters or effects rights thenthis would sweep in too many procedural rules to be treated as substantive.

• Good Cause Exception if giving notice + comment would allow public to immediately evadewhat agency trying to do then not necessary. Also if statute must be passed to get something donein time, notice + comment not necessary

• SUMMARY There is no clear rule for when these exceptions will be invoked and upheld by courts. The overarching question is not whether it is interpretive rule, or statement of policy or procedures. The real question is whether this rule is a substantive rule. Courts look to impact on parties and

agency, how much it binds the agency, the legal effect test. Best guidance is Appalachian Power if agency treats private parties as if rule is binding, and feels bound by it itself, then it is substantiverule. (Bierschbach likes this one).

V. JUDICIAL REVIEW OF AGENCY ACTION

a. Scope of Review

i. Overview, And Review of Agency Factual Findings

• Standards of Review Questions of law and fact call for different standards. This is the spectrumof review from least deferential standard to most deferential.

o

De Novo questions of law are generally de novo review, reviewing court does not need todefer.o Abuse of Discretion only overturned when court abuses its discretion. Usually applies to

mixed questions of law or fact, like negligence. Or where lower court overruled objectionsthat should have been sustained

o Clearly Erroneous reviewing court will overturn when lower courts findings are clearlyerroneous.

o No Rational Fact Finder reviewing court will only overturn if no rational fact finder couldhave found the fact at issue – he was speeding. Usually applies to jury determinations.

o No Review reviewing court has no jurisdiction to review the findings of the lower court.

• APA Standards of Review § 701 – § 706o § 701 Presumption of Review there is a presumption that judicial review is available

unless the enabling statute precludes judicial review or it committed to agency discretion.§ 701(a) This chapter applies, according to the provisions thereof, except to theextent that - (1) statutes preclude judicial review; or (2) agency action is committedto agency discretion by law.

o § 702 Right of Review Person is entitled to review if he suffered a “legal wrong” withinthe meaning of statute.

§ 702(a) A person suffering legal wrong because of agency action, or adverselyaffected or aggrieved by agency action within the meaning of a relevant statute, isentitled to judicial review thereof.

o § 706 Scope of Review Reviewing court shall decide all questions of law – this sounds like




de novo review.§ 706(a) To the extent necessary to decision and when presented, the reviewingcourt shall decide all relevant questions of law , interpret constitutional and statutoryprovisions, and determine the meaning or applicability of the terms of an agencyaction. The reviewing court shall—

(1) compel agency action unlawfully withheld or unreasonably delayed;and(2) hold unlawful and set aside agency action, findings, and conclusionsfound to be—

(A) arbitrary, capricious , an abuse of discretion , or otherwise not inaccordance with law ;(B) contrary to constitutional right, power, privilege, or immunity;(C) in excess of statutory jurisdiction, authority, or limitations, or shortof statutory right;(D) without observance of procedure required by law;(E) unsupported by substantial evidence in a case subject tosections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; or(F) unwarranted by the facts to the extent that the facts are subject totrial de novo by the reviewing court.

In making the foregoing determinations, the court shall review the whole record orthose parts of it cited by a party, and due account shall be taken of the rule of prejudicial error.

• Substantial Evidence Standard Applies To Review Of Fact Finding In Formal Rulemaking+ Adjudication The substantial evidence standard is embraced by § 706(2)(E). It applies toreview of formal rulemaking or formal adjudication (where proceeding is subject to § 556 and § 557or otherwise “on the record”). Substantial evidence is more than mere scintilla. It is such evidenceas a reasonable mind might accept to support a conclusion. Mere uncorroborated hearsay or rumoris not substantial evidence. It is such evidence as would be sufficient to justify a refusal to direct averdict, if case were before a jury. In determining whether an agency decision is supported bysubstantial evidence, courts must evaluate the whole record in its entirety, not merely thoseportions on which the agency relied.

• Substantial Evidence Standard Also Applies To Review Of Fact Finding In InformalRulemaking + Adjudication APA §706(2)(E) only applies to formal rulemaking and adjudication.But § 706(2)(A) still applies to fact finding in informal proceedings and says that reviewed forarbitrary and capriciousness. Courts have “arbitrary and capricious” as requiring same inquiry asrequired by substantial evidence test. As technical matter substantial evidence doesn’t apply butcourts just say that arbitrary and capricious imports substantial evidence standards.

NLRB v. Universal Camera (2d Cir. 1950)• Facts NLRB reversed the hearing examiner’s findings that employee was discharged for

insubordination, and NLRB ordered employer - Universal Camera to reinstate the employee whothey said was fired because of his involvement in union activities. Employer argued that NLRB’sconclusion was not supported by substantial evidence.

•

Factual Dispute In Formal Adjudication this is a classic factual dispute. The hearing examinerfound that the employee was not discharged for union activities, and appealed to board within theagency and board reverses and says this was retaliation. Employer petitions for judicial review andcourt finds that not enough facts to support retaliation finding.

• Substantial Evidence – Standard of Review For Agency Fact Finding standard of review foragency fact finding is substantial evidence. Findings of fact shall be conclusive if supported bysubstantial evidence on the record considered as a whole.” Court says substantial evidence meanslook through whole record and look at evidence on both sides and say in light of all the evidence isthere substantial evidence supporting the agency’s decision. Court explains that we cannot say thatwith all these circumstances before him, no reasonable person would have concluded that




employee’s testimony was one of the causes of his discharge.o Hand’s Approach look to record as a whole, both sides, and if enough evidence to

support agency board’s findings, then defer to board. This approach gives no special weightto what hearing examiner found. Only overturn board’s decision if no reasonable personcould conclude that retaliatory.

(1) Look At Whole Record Substantial evidence means look at whole record bothpros and cons.(2) Could Reasonable Fact Finder Have Reached Conclusion when deciding

whether test met or not ask whether a reasonable jury could have reached thatdecision.(3) No Special Weight To Hearing Examiner In doing that don’t give any specialweight to what hearing examiner found.

NLRB v. Universal Camera (US 1951)• Facts Supreme court overturned 2nd Circuit ruling that employee should be reinstated in

accordance with agency board’s findings that his firing was retaliatory.

• Old Substantial Evidence Rule if substantial evidence was found toe exist anywhere in therecord, irrespective of how heavily the countervailing evidence may prevail, so that courts couldmerely examine one side of the case; if substantial evidence existed there, contrary evidence couldbe ignored and the agency decision could be sustained.

o Criticism Supreme court says when congress added in language “on the whole record”means must look at contrary evidence as well.

• Supreme Court’s Approach Substantial Evidence Test After Universal Camera(1) Look At Whole Record look at whole record, both in favor and against what agencydecided.(2) Standard of Review Is Between Rational Fact Finder + Clear Error as questionsomewhere between no rational fact finder test – could any rational fact finder find in a waythat agency did. And clear error test – was this finding clearly erroneous. Universal languagesuggests clear error, but Mack used rational fact finder.(3) Hearing Examiner Determination Part of Record Although hearing examiner’sfindings should not be conclusive by an agency, neither should they be ignored. And forreviewing court examiner’s report is part of the record to be considered in determiningwhether agency’s decision is supported by substantial evidence.

Standard For Considering Contrary Evidence A reviewing court is not barred fromsetting aside a board decision when it cannot conscientiously find that the evidencesupporting decision is substantial, when viewed in light of entire record, includingevidence opposing agency board’s view. Court says ALJ hearing examiner’sdetermination should be considered as a factor – examiner report is part of therecord, so court must look at what examiner did. And if there is a difference of opinioncourt should look closer.How Much Weight Give To Hearing Examiner Court says defer more to examinerwhen he is impartial, experienced etc. Evidence supporting a conclusion may be lesssubstantial when an impartial, experiences examiner who had observed the witnessand lived with the case has drawn conclusions different from the agency Board thanwhen he has reached the same conclusion.What Remains of Substantial Evidence Standard Substantial evidence standard issomewhere between clear error and no rational fact finder, tough court never fullyrejects no rational fact finder standard.

• Reasons For Deference

o Deference to Hearing Examiner if examiner impartial and experienced give moreweight. Give deference because examiner better at judging credibility of witnesses in front of him. If case where ALJ would have better sense of the facts, give his decision due weight.

o Deference to Agency Board give deference to board because knows how competentexaminer is. If it is policy matter want to take reading of board over examiner – look to




nature of question and defer to board if question of law, but defer to hearing examiner if question of fact. Also if defer to board more predictable and reduce burden on courtsbecause less people will appeal. Lot of good reasons especially when policy concerned todefer to board over hearing examiner. Maybe agency needs latitude here to make policy

judgments so board to get deference

• HYPO What It Means To Look At Both Sides of Record NLRB conducts unfair labor practiceproceeding and charges Acme with intimidating employees out of forming union. Employee testifiesthat president called meeting and said “if you join the union you will be fired” also left unionmember voodoo dolls with pins. At holiday party president said if join union you won’t get Christmasbonus. ALJ and NLRB board both find that Acme engaged in unfair labor practice. Acme appealsseeking judicial review.

o Reviewing Court Must Look At Both Sides Will federal court of appeals hold upholddecision? Can’t decide just based on those facts, must know what Acme’s testimony is. Didother employee’s witness this? Was witness indicted for perjury? If evenly split between two,court of appeals would affirm the agency’s finding. Look to record as a whole and weigh bothsides is substantial evidence test.

o Reviewing Jury Finding – More Deferential If jury finding then court of appeals more likely touphold because more deferential to jury. Would look at what jury believed and if that’senough done, assuming nothing else in record shows jury crazy. Not going to go throughentire record.

Allentown Mack v National Relations Board (U.S. 1998)• Facts Mack hires 32 employees to work at factor. Employees didn’t think that union had support.

Union asked Mack to recognize it as the collective bargaining representative of the employees, andMack refused. It did hold an independent secret ballot of the employees, which the union lost. Unionbrought unfair labor charge before NLRB and NLRB found Mack guilty based on objectiveconsiderations that union continued to have support of majority of bargaining employees.

• Issue were the NLRB’s findings of act supported by substantial evidence on the record as awhole? ALJ and board say that Mack did not have a good faith reasonable doubt about majorityemployee’s union support. Court says no substantial evidence supporting finding as employer hadgood faith reasonable grounds to doubt union’s retention of majority support.

•

Board Did Not Consider Contrary Evidence NLRB raised every presumption against theemployer and in the favor of the union’s position reviewing the evidence court finds that there assubstantial evidence supporting the fact that the employer had a reasonable doubt as to the union’ssupport, and that there was no substantial evidence to support to the contrary. Board ignored lots of testimony from employees that they didn’t want the union to represent them.

• Question of Law Or Fact Reasonable Doubt Of Majority Status?

• Argument That Agency Board Should Have Gotten More Deference (1) Board Closer To Facts can argue board had the facts, witnesses in front of him andcan better gauge credibility and what really happened.(2) Policy Decision Should Be Left To Board Whether Mack met the standard of “goodfaith reasonable doubt of majority status” is a law. The agency should be permitted todetermine what is permissible to meet that legal standard that they set. Agency might think20% against union is not sufficient, but need 40%. Standard of doubt is policy making notfact finding it is an interpretive question. Rather agency than court interpret legal standard.

• Rulemaking Through Adjudication - Chenery Chenery says that agencies can make policy in

the guise of adjudication. Here agency could have issued rule saying presumption that no doubtuntil clear and convincing evidence to contrary. In Chenery agency interpreted standard of fair andequitable. Breyer Dissent says yes agencies can make policy through adjudication. Scalia says morecomplicated than Chenery because here the agency is not consistent in some places they say doubtand in other ratchet up meaning of doubt. They can’t say standard is more stringent now than whatthey were saying it was all along. Problem is agency has too much discretion to change their minds




about what doubt means, and this causes no notice to regulated parties, and no guidance for courtswho will be unable to determine if agency adhering tot heir laws.

o Maybe ok for agencies to make rules through adjudication so long as consistent and openabout what those standards are. If court confused that agency changing mind about meaningthen maybe remand for them to explain

• Lawyer’s Tip If arguing that court should defer to agency try to frame the question as a question of law that implicates policy making authority, if arguing that court should defer to ALJ then frame

question as question of fact. Boundary between questions of fact and law are blurry.ii. Review of Agency Legal Conclusions

• Factual Question involves the review of an agency’s interpretation of raw facts as applied to astatute about whose meaning there is little dispute.

• Legal Question legal question exists where the only dispute surrounds the meaning of astatutory term

• Mixed Question of Law And Fact includes cases in which there is some dispute over thepropriety of the agency’s findings of raw facts and their application to statutory terms, whosemeaning is disputed

1. To The Chevron Station• Legal Question APA instructs courts to decide all relevant questions of law, but the courts have

long said that some questions of law are for some agencies to decide. With respect to these legalquestions courts will defer to the agency’s judgment overturning the agency only if its legaldetermination is unreasonable, impermissible or arbitrary.

o When Should A Court Defer or Give Weight To An Agency’s Determination of A Legal Question?

NLRB v. Hearst Publications (US 1944)• Facts Hearst refuses to bargain collectively with a union representing newsboys. NLRB concluded

that full time newsboys were employees under the National Labor Relations Act and certified theunion. Hearst refused to bargain arguing that newsboys were not employees under the act, but were

independent contractors. Court of appeals independently evaluated the issue and found thatnewsboys were not employees within meaning of statute.

• What Is An Employee ? Statute doesn’t define employee. Court of appeals uses common lawstandards, and says that employee doesn’t include newsboy. Supreme court looks to history of theterm employee and purpose of the legislation to ascertain the meaning of the word employee.Ultimately court doesn’t say what employee is just says newsboy is employee.

• Statutory Interpretation Options How should court go about defining employee? Court can look tocase law, common law precedent, dictionary, legislative history, committee reports, industrycustom, statutory purpose, cannons of construction.

• Law For Legal, Factual, & Mixed Questionso Factual Question in making factual determinations, the findings of the agency, if

supported by substantial evidence, are conclusive. It is not the task of the court to substituteits judgment of factual questions for those of the agency if they are supported by evidence.

o Legal Question issues of statutory interpretation are for the judiciary to resolve, givingappropriate weight to the initial legal determinations of the agency. Example - What DoesEmployee Mean?

o Mixed Question of Law And Fact where the question is of specific application of a broadstatutory term in a proceeding in which the agency administering the statute must determineit initially, the reviewing courts’ function is limited, and defer somewhat. Here the applicationof the statutory term “employees” to these facts should be upheld if they have support in therecord and a rational basis in law . Example – Are Newsboys Employees?




Why Defer To Agency Interpretation? (1) Congressional Intent – congresscreated the agency to apply the Act and delegated to the agency the authority tointerpret the act, by deferring court just effectuating congress’s intent. (2) AgencyExpertise – agency has expertise in this particular area, more than courts, so better atit. (3) Political Accountability - Policy –There are essentially political choices andagencies will be politically accountable for these contentious policy decisions whereascourts will not be.

•

More Deference To Agency Determinations In Rulemaking Rather Than Adjudication If in thecontext of an adjudication agency decides that newsboy is employee, will court give as muchdeference? Can argue that in adjudication hasn’t been as much public input as there would havebeen if agency passes a rule. When pass a rule, get input form newspapers all over country, submitcomments, and then decide newsboy is employee. This would get more deference because morewell embedded process.

Skidmore v. Swift & Co. (US 1944) – WEAK DEFERENCE – “agency’s determination may guide courts,but not controlling” • Facts Employee of Swift brought an action under the Fair Labor Standards Act to recover overtime

wages earned during the evening they were on call to answer fire alarms. The trial court decided asa matter of law the time spent by the employees in the fire hall does not constitute hours workedunder the FLSA.

• Give Less Deference Where Agency Doesn’t Have Explicit Authority To Apply The Act The administrator can sue to enforce the act, but doesn’t have primary responsibility for applyingthe act in the first instance. So the administrator’s interpretations, while not controlling on thecourts, reflect a body of expertise to which the judiciary and litigants may resort for guidance. Theweight given such interpretations depends on the thoroughness evident in its consideration, thevalidity of its reasoning, its consistency with earlier and later pronouncements, and all those factorswhich give it power to persuade, if lacking power to control.

o Administrator’s Involvement In Suit This case involves an employee suing anemployer for back pay, this is not a case where party challenging agency rulemaking oradjudication. Congress created office of administrator to do conduct research on when partyis entitled to overtime. Administrator has power to bring injunctions against employers whodo not pay overtime. But can’t enforce through an agency proceeding, must bring case in

federal court. Here administrator filed an amicus brief citing his interpretive bulletin(practical guide)o No Congressional Delegation Hearst says for mixed questions of law and fact, and

agency determination is warranted in record and reasonable basis for it then courts shoulddefer. But here court does not defer to the administrator’s bullet which says this is overtime.Skidmore doesn’t apply Hearst because (1) agency not party to action – the determinationdidn’t come from a formal adjudication or rulemaking. If agency had brought an injunctionthen maybe more likely to defer, (2) no congressional delegation to decide this – congressdidn’t actually delegate to agency the responsibility of deciding these questions, didn’t setup fact finding body, or internal agency procedure for application of act, or interpreting theact. Congress only allowed agency to go into court to make these determinations.

o Policy For Deference The policies that usually justify deferral are not present in this case.(1) Congressional Intent – language makes clear that congress didn’t’ delegate this to

agency. Didn’t set up system where administrator could make these decisions, (2) Expertise(3) Political Accountability - interpretive bulletins are not binding so agency not reallyaccountable. Less argument that political process will work well if defer because not bindingon courts.

Chevron v Natural Resources Defense Council (US 1984) – strong deference, either congress,or agency • Facts EPA adopted regulation that defined each pollution emitting unit as a “stationary sources”

thus any modification of the unit would require a permit. EPA changed the regulation to allow statesto define an entire plant as a “stationary source.” This bubble concept allowed owners of plants tomodify units within the plan so long as the total pollution emissions from the plant did not increase.




Court of appeals held that CAA amendments didn’t’ allow EPA to permit use of the bubble conceptbecause it would subvert the congressional goals of the CAA which was to reduce pollution.

• Then get to Chevron big change in law. Courts working out. Legal issue is is the EPA interpretation of stationary source a reasonable one. What does stationary source mean. Does stationary sourceinclude an entire plant or just individual pollution. EPA interpreting Clean air act amendment.Supreme court.

• CHEVRON TWO-STEP TEST: Judicial Review of Agency’s Determination of Question of Law(1) Whether Congress Has Directly Spoke To The Precise Question At Issue +Intent Clear Whether congress has directly spoke to the precise question at issue? If theintent of congress is clear , the court must give effect to the unambiguously expressed intentof congress. If however, the court determines congress has not directly addressed theprecise question at issue, the court does not simply impose its own construction of thestatute, as would be necessary in the absence of an administrative interpretation.(2) Whether The Agency’s Answer Is Based On A Permissible Construction Of TheStatute if the statute is silent or ambiguous with respect to the specific issue, the questionfor the court is whether the agency’s answer is based on a permissible (reasonable)construction of the statute. If the agency’s view is within the range of reasonableness, courtswill defer.

• Did Congress Directly Speak To The Issue? How do we know when congress directly spoke tothis issue? And whether intent of congress is clear? (1) Clarity On Its Face – can look to face of statute and see if clear, (2) Clarity From All The Evidence – look at all the evidence, legislativehistory and purpose, traditional tools of statutory construction, look at whole body of law to see if fits in, dictionary etc and see if intent is clear.

• Agency Has Explicit + Implicit Authority To Fill In Gaps Stevens says if congress hasexplicitly left a gap for agency to fill in, there is express delegation of the authority to the agency toclarify a specific provision of the statute by regulation. Sometimes the legislative delegation to anagency on a particular question is implicit rather than explicitly. In such a case a court may notsubstitute its own construction of a statutory provision for a reasonable interpretation made byagency.

o Why Defer To Agency Interpretation Rather Than Court’s? For whatever reasoncongress decided to leave this open - didn’t consider question, couldn’t come to agreement,wanted agency to do it – court says doesn’t need to know. Do we really want to defer if congress didn’t think about it? Maybe worrisome, but argument is that agencies are stillexperts, and better to fill in the gaps than the courts. Agency has been delegated the policymaking ability and is at least a politically accountable body. Do we want to defer if congressthought about it, didn’t make a decision and left it up to agency? Might encourage congressto do noting when confronted with sensitive political issues, that congress should really bedeciding. This is what Rehnquist cautions about in Benzene . If we defer in these cases thenallow congress to make wholesale delegation of political questions in violation of nondelegation doctrine.

INS v. Cardoza Fonseca (US 1987) – SCALIA CONCURRENCE – SHOULD ONLY LOOK AT TEXT for STEP

1.• Facts Immigration act AG is forbidden from deporting aliens under a finding that the alien’s “life

or freedom is threatened” for reasons of race, religion, nationality or political believe. Mandatorysuspension - INS required aliens to show “ a clear probability of persecution ” to prevent deportation.Discretionary deportation - Also INS can refuse deportation if “ clear probability of persecution .” Isagency interpretation of discretionary deportation requirements correct.

• Step One Whether Congress Has Directly Spoken To The Precise Question At Issue +Intent Clear






• Facts US Code says all common carriers must file rate tariffs with the FCC. FCC has ability tomodify these requirements. As long distance competition became more open, FCC relaxed the filingrequirements for non-dominant carriers (in essence everyone except ATT). ATT petitions for review.Issue is whether FCC rule is valid exercise of its modification authority?

• Step One Whether Congress Has Directly Spoken To The Precise Question At Issue +Intent Clear Is the word “modify” ambiguous? Dictionary definition of modify means “to changein a minor fashion” and not wholesale modification. Here the change is radical and fundamental,

strikes at heart of common carriage section of communications act, as rate filings are essential toregulated industries. Revision affects 40% of industry. Congress didn’t intend FCC to have suchauthority. FCC is allowed to make limited changes, but this change introduces whole new regime of regulation that congress didn’t establish. Scalia says congress didn’t speak to issue of eliminatingfiling, because congress said FCC can only modify this stuff and modify means small changes. Instep 2 court says not reasonable interpretation and strikes FCC rule.

• Stevens In Step Two Look At Statutory Policy, Past Practices And Defer To Agency Stevens sayseven if the only dictionary definition of modify was “to make minor changes” more would berequired to strike down the FCC’s decision to relax the filing requirements. We must look beyond thestatutory filing requirements to assess the statutory requirement behind the tariff filing, which underFCC rule would be satisfied because market constraints on non-dominant carriers would obviateneed for tariff filing.. FCC’s reading of statute is informed by a practical understanding of the role

that filed tariffs play in the regulatory climate of industry.FDA v Brown & Williamson Tobacco (US 2000)• Facts FDA promulgated regulations under FDCA regulating tobacco as a “drug”. FDCA says FDA

can regulate “drugs” defined as “article intended to affect structure or any function of the body.” Tobacco companies objected on grounds that FDA did not have jurisdiction to regulate tobacco.

• Step One Whether Congress Has Directly Spoken To The Precise Question At Issue +Intent Clear question is does statute confer jurisdiction on FDA to regulate tobacco? Just lookingat text it is not ambiguous, FDA can regulate tobacco. But court looks at FDCA as a whole andinterprets statute in light of all surrounding provisions. Court considers the tobacco specificlegislation congress has enacted over the past 35 years, and concludes that congress did not speakto issue of FDA regulating tobacco. History shows when congress wanted tobacco regulated did it by

other means, didn’t think FDA had authority. Also if FDA were to regulate would have to ban outrightbecause tobacco has no pharmacological benefit, congress would not have wanted to ban tobacco. Therefore, congressional intent is clear.

• Clarity On Face or Clarity Based on All The Evidence? Is this clarity on face or all theevidence? On line because not clarity on face, text doesn’t on it face foreclose this but don’t lookdeep into legislative history on this inquiry. Court goes way outside normal tools of statutoryconstruction, not just confining itself to purpose of statute. Its looking at entire regulatory scheme,all other statutes congress has passed etc. and the FDA’s own view of what its jurisdiction was.Seems like this is clarity based on all the evidence

• Court Asserting Power court assumes that congress could not have intended to delegate a

decision of such economic and political significance to an agency in so cryptic a fashion. Reading

FDCA as a whole ad well as in conjunction with congress subsequent tobacco legislation, plaincongress has not give FDA authority seeks to exercise here. This is huge assertion of power bycourt. Do we really want to allow deference when highly sensitive political questions involved? Thisis driving a lot of what court did here. If congress really intended FDA to regulate, congress can doso explicitly.

o Cannon Of Constitutional Avoidance Bierschbach says statutory interpretationtechniques similar. Court strikes down wholesale delegation of major economic regulatorypower as in Shechter Poultry to avoid nondelegation issues.

• CHEVRON TEST REVIEWo Step One




What can you look at to determine if clear congressional intent or ambiguous ?• Scalia says look only to the text of the statute, and if not clear then go to

question 2. His reasoning is that if you go beyond the statute and look atlegislative history, whole code, cannons of construction then court are doingstatutory interpretation and never going to have situation where defer toagency.

• FDA v Brown & Williamson – O’Connor looks at statute as a whole, looks atother provisions of FDCA as well, and legislative history of tobacco litigation in

general.How does court frame the question ?• FDA v Brown & Williamson - court didn’t frame it as “is tobacco a drug,”

because that’s pretty ambiguous anything intended to effect structure of body.If frame it that way have ambiguous question. Instead framed it as question of

jurisdiction “does statue confer jurisdiction on FDA” clear under 1 that it doesnot because congress passed bunch of other statutes etc. having nothing to dowith actual text of statute. Wind up resting holding on bunch of reasons thatdon’t have anything to do with statutory text.

o Step 2 Secret about step two is that court never strikes down agency interpretation understep two. If agency survives step one, then likely they will win.

• When Does Chevron Test Apply?o Agency Interpretation of Enabling Statute Chevron applies to agency’s interpretation

of their enabling statute. Even if agency changes its position, Chevron applies.o Agency Interpretation of Jurisdiction many courts hold that Chevron does not apply to

agency’s interpretation of its own jurisdiction, this is for courts to decide. But Scalia says thatChevron test still applies, and defer.

HYPO EPA Waters of The US CAA gives EPA jurisdiction over waters of the US.EPA interprets that to mean wetlands. Should EPA be given deference under Chevron ?No. Give deference to EPA when determining how to exercise its delegated power, butcourt should decide the scope of EPA’s jurisdiction. Lower courts don’t apply Chevronwhen agency determining scope of jurisdiction. Scalia thinks no distinction existsbetween what is a jurisdictional term.

o Agency Interpretation of APA Does Chevron apply to agencies interpretation of he APA?Did congress intend in passing to APA to give authority to agency to interpret it. Point here isChevron doesn’t apply if talking about statute that the agency has no responsibility toadminister. For example if EPA interpreting statute that has to do with national labor, notgoing to defer to EPA.

o Agency Interpretation of Statute It Has Overlapping Authority What about statutethat gives power to two agencies to administer? Banking statute that says two agencies tomake rules in consultation. Most courts say not going to give deference. Congress couldn’t’have intended to give both agencies overlapping authority to interpret statute because of confusion that would result.

3. Chevron Step Zero

• Step Zero What is Chevron ’s scope? Does it apply to interpretative rules? litigating positions?these are the principle issues discussed in this section. If Chevron suggests a two step test for thelegality of agency interpretations of law, the inquiry into Chevron ’s scope might be taken tocomprise a “step zero” in the form of an inquiry into whether courts should turn to the Chevronframework at all.

Christensen v. Harris County (US 2000) Chevron Does Not Apply To Interpretative Rules Or GeneralStatements Of Policy • Facts Harris county sought an opinion from Department of Labor as to whether it could schedule

employees to use or take compensatory time (payment instead of overtime). DOL took the positionthat it could do so if the prior agreement specifically provided such a provision. Harris Countyimposed the requirement, and employees sued on ground that no prior agreement under DOL’s




interpretation. Court of appeals found that nothing in the statute or regulation prohibited employerfrom compelling the use of compensatory time.

• Does Chevron Apply To Statements Of Policy? Court says Chevron doesn’t apply to thesetypes of opinion letters. Chevron provides that a court must give deference to an agency’sregulation interpreting an ambiguous statute. The opinion letter here is neither a formal rule nor aformal adjudication subject to notice and comment procedures, and does not have the force of law.

o Chevron Doesn’t Apply To Interpretative Rules Or General Statements Of Policy

• Is Skidmore Still Good Law? Under Skidmore court is not required to give deference to non-binding statement of policy. Why didn’t court just say, don’t have to give deference see Skidmore ?When Chevron cam down lots of people interpreted it as overruling Skidmore . But here court saysthat Chevron doesn’t even apply because this wasn’t notice and comment formal adjudication orrulemaking. Makes sense that Chevron overruled Hearst , but Skidmore distinguished itself fromHearst by saying administrator wasn’t delegated authority to implement rule through formaladjudication so it was just interpretive ruling. This decision resurrects Skidmore and it is still goodlaw.

US v Mead (US 2001)• Facts Mead imports day planners. Between1989 and 1993 US customs treated them as under a

tariff exempt form import duties. Mead writes letter asking how they will be taxed in future, and

Secretary of Treasury issued a ruling letter reversing the exemption status.• When Entitled To Chevron Deference? An administrative interpretation of a statutory

provision is entitled to Chevron deference when it appears congress has delegated general authorityto the agency to promulgate rules having the force and effect of law, and the agency’sinterpretation was promulgated in the exercise of that authority. Delegation of such authority maybe shown in a variety of ways, as by an agency’s power to engage in adjudication or notice andcomment rulemaking, or by some other indication of a comparable congressional intent.

o Implicit Delegation Sometimes legislative delegation to an agency on a particularquestion is implicit. Also can imply from congress grant of rulemaking or adjudicatory powerthat congress would expect the agency to be able to speak with the force of law whenaddressing ambiguity in the statute or fills a space in the enacted law. Assume congresscontemplates administrative action with the effect of law when it provides for a relatively

formal administrative procedure.o Express Delegation express delegation of authority on particular question- agency

charged wit apply statute to make all sorts of interpretive choices.

• What Chevron Applies To After Mead (1) Chevron Applies To Informal Adjudication or Rulemaking (Notice +Comment) Mead provides safe harbor for agencies. If they issue a rule through notice andcomment rulemaking or adjudication then Chevron automatically applies(2) Chevron May Still Apply To Less Formal Proceedings Where Rule Has Force +Effect of Law Chevron might still apply in some less formal proceedings when thinkpolicies of deference especially present.

Court Court says Chevron doesn’t apply because authorization and custom’spractice in making rulings doesn’t go through notice and comment process, or anyother circumstance reasonably suggesting congress ever thought of classificationrulings as deserving deference claimed for them here. Here doesn’t apply because tooad hoc, agency change mind every day, and doesn’t seem like congress intended forthese rulings to have the force and effect of law.

• Policy + Criticism Court basically tells agencies if you want the power that comes with deferenceyou’re going to have to jump through some procedural hoops. Applying Chevron in these cases isgood because forces agencies to go through notice and comment rulemaking, giving public moreinput, and rules more fair. But on other hand this will force agencies to go through lengthy andcostly notice and comment rulemaking which is inefficient and will slow things down.




• What Are Rules That Have Force of Law? Court does make a lot of noise about Chevron onlyapplies to rules that have force of law but doesn’t say what means by the force of law. Not justtalking about the legal effects of the law, but the process in which it was adopted. Difference isprocess through which it has been run that’s what gives it force of law.

• Due Process Challenge Customs says you can import your stuff no tariff and then they say fromnow on tariff. Mead sue saying invalid exercise of agency authority why? Can never act arbitrarily under APA. Can challenge it on grounds of whether had notice and comment or not. If agency just

changed its mind with no warning then have due process challenge.Gonzalez• Facts AG issues interpretive rule saying allowing physician to prescribe lethal dose of drugs is not

allowed by Federal Controlled Substance Act because not dispensing drugs for legitimate medicalpurpose. Provision in controlled substance act saying AG can promulgate rules relation toregistration and control of manufacture distribution and dispensing of controlled substances. Controlis ambiguous word, so AG says I’m entitled to Chevron deference.

• Step Zero (1) AG action doesn’t fit into category one in Mead because interpretive rule wasn’tpassed through notice and comment rulemaking. (2) To see if AG action fits into category two of Mead look to whether congress delegated power to delegate that rule and whether AG actedpursuant to that power. Court says this is interpretive rule, no notice and comment and not formal

adjudication. Control provision of statute not evidence of that delegation because that requirednotice and comment and AG didn’t promulgate pursuant, though he has registration authority,statute says have to look at 5 factors no evidence and can really only do a lot of this in consultationwith secretary of hhs. As general matter congress didn’t want making medical judgments. In end AG

just doesn’t administer kind of authority to make medical judgments under this act that would berequired to make this kind of decision. No delegation not in Chevron framework. Sounds a lot likestep one analysis looking at language.

• REVIEW• Hearst says courts decide questions of law, but defer to agency on mixed questions of law and fact.• Skidmore another mixed question, but here court Hearst doesn’t apply completely, only give

deference to extent rule has power to persuade court. Skidmore not complete delegation, like inHearst where involved agency adjudication which is good evidence of congress’s intent to delegate

power interpretation to agency.• Chevron whenever have agency interpretation of statute, apply two-step test to see if court

should defer. (1) is there ambiguity? (2) If so defer to reasonable construction on of agency. Peoplethink Skidmore not good law after Chevron.

• Christensen says opinion letter or non-binding statement of policy is not subject to Chevrondeference because opinion letters don’t trigger presumption that congress intended to delegate.Only defer to agency interpretation that has force and effect of law, and court says this onlyincludes informal notice and comment rulemaking and formal adjudication or rulemaking.

• Mead (1) if agency action taken through notice and comment rulemaking or adjudication (formaland informal), then agency interpretation subject to Chevron deference. These proceedingsevidence congress’s intent to delegate interpretive authority to agency. (2) if agency action does gothrough notice and comment rulemaking, but was taken pursuant to a congressionally delegatedpower to act in that way and have the force of law, then also subject to Chevron deference. For

action to have force of law need to have congressional delegation and exercise of power pursuant tothat delegation.

• Gonzalez AG issues interpretive ruling, not through notice and comment rulemaking. Congressdoesn’t delegate power to interpret to AG, so Chevron doesn’t apply – step zero case. To see if fitsinto (2) in Mead look to whether congress delegated power to AG to make that rule and whether AGacted pursuant to that power. Court says even if delegation in statute AG didn’t act pursuant to thatdelegation which required notice and comment, conferring with 5 individuals for medical judgments,etc. No delegation not in Chevron framework.




• Chevron + Step Zero Analysis (1) first see if agency action is notice and comment rulemaking or adjudication (formal orinformal)? If yes then Chevron framework applies.(2) if no, then see if agency acted pursuant to a congressionally delegated power to act inthat way and to have the force of law? This is Mead step two. If yes, then Chevronframework applies.(3) If no, then Skidmore applies and give deference to agency rules that are persuasive.Court gives probabilistic deference – agree with position if good reason to think agencycorrect.

• Can Make Both Substantive + Procedural Challenges To Law Just because substantive aspectshere can always make the procedural arguments. Can have rulemaking where say rule is invalidbecause didn’t go through right procedures and also invalid because exceed agency’s authorityunder the law. In case like this where no notice and comment and can be characterized aslegislative rule then can make the procedure argument too. It has the effect of law, so it should bedone via N&C. Rules that impose new duties and are basically legislative rules, under the APA theymust be Notice and Comment.

• Tension Between Chevron + Marbury Is there tension between Chevron and Marbury? Chevronsays agencies say what the law is, Marbury says courts say it. You could have a case in which courtsays what statutory term means first, and then later agency says it means something different. Can

agency override the court? (if agency did it first, then agency would win in Chevron . so isn’t itstrange that the only thing that matters might be the order?) Policy (one of them) of Chevron isCongressional intent - so if we follow intent, then we could say that whether or not court has acted,agency gets interpretation. This really seems counter to Marbury. but SCOTUS says you have todefer in this case (although the courts previous decision would still be relevant in the Step 1 part of Chevron ). Even if SCOTUS itself gave an interpretation, but Agency came up with an interpretationthat was also reasonable, then it might defer.

• Is Chevron consistent with APA? Chevron didn’t even cite the APA. Courts seem a little confusedby administrative law still. This might fit in the review section of APA under arbitrary and capricious,or maybe § 706(2)(C).

• Agencies Are Winners In Chevron Who wins and who looses? big winner would be the agency.

Congress, it depends on the politics about the time. Congress might be happy because now theycan delegate away and to worry about it. But if it didn’t like agencies, then they might not be happythat a agency is given so much law making power. Congress so far seems happy with Chevron . Asbetween Congress and the Courts, it doesn’t really give any powers to court from Congress.

iii. Review of Agency Discretion And Policymaking – “Hard Look ”Doctrine

• Arbitrary and Capricious Standard And The “Hard Look Doctrine” between the extremesof de novo review and strong deference to administrative decision making, some courts have takena “hard look” at the agency’s decisional process, ensuring that they have considered all relevantissues and polices and taken a good look at the facts, while allowing the agency the discretion todetermine policy. Is the agency’s process and its justification or rationale for its selection of a policyalternative that becomes the focus of this approach.

o

Remedy the normal remedy is a remand for further proceedings in which the agency mayattempt to buttress its original policy choice with more extensive analysis and explanation.Court may find the decision to arbitrary and capricious because it is not adequately explainedor justified but the agency is free to try again.

o For agency fact finding in formal proceeding review is substantial evidence, for agency legalinterpretations do Chevron/Skidmore review. Courts apply hard look to things in between,policy like judgments or discretionary opinion.

• HYPO Potential Challenges To Law EPA has authority over “waters” of the US and canregulate pollutants. EPA interprets wetlands as waters, and passes a regulation through notice andcomment that requires farmers with runoff to get permit. What are grounds for challenging this?




o Challenge Legal Findings Can argue that wetlands are not waters within meaning of statute, and that EPA exceeded its authority. Court will apply Chevron

o Challenge Law As Arbitrary and Capricious Can also argue that this is arbitrary andcapricious – fertilizer rule is weird and could have accomplished this through better method.

This is in discretion of agency who has power to choose to implement their regulatory power.Hard Look Doctrine Applied -- Hard look is when evaluating what agency did, whatstudies relied on, how reached the decisions reached. Could mean take a look at

procedures , making sure agency itself took hard look. Did it gather evidence, do

testing, read comments, explain itself? But it could also be substantive, saying thecourt should look at the evidence itself and make sure agency decision made sense. The line between the two is not clear, and in the end it really means both.

Overton Park v. Volpe (US 1971)• Facts Secretary of Transportation authorized construction of an interstate highway through

Overton park. Secretary made no formal findings explaining his decision and its consistency withfederal statues, but provided litigation affidavits asserting that the decision was his and supportableby law. Federal legislation prohibited federal highway construction through public parts where “ afeasible and prudent alternative route exist.”

•

Arbitrary and Capricious APA requires reviewing court to overturn agency actions deemed to bearbitrary, capricious an abuse of discretion or otherwise not in accordance with law. Overton Park emphasized that his standard of review Is a narrow and that courts are not to substitute their

judgment for that of the agency. In essence, one must prove that the agency’s action is without arational basis, a difficult task to do.

• Standard of Review o § 701Presumption of Reviewability § 701 subject to judicial review because no statutory

prohibition on review and not committed to agency discretion by law. Narrow exception onlyapplicable in rare instances where statues are drawing in such broad terms that in given casethere is no law to apply.

o § 706(2)(E) Substantial Evidence this is not formal adjudication or rulemaking, sodoesn’t apply

o § 706(2)(F) De Novo Review – Unwarranted By Facts de novo review of whethersecretary’s decision was “unwarranted by facts” is authorized only in two circumstances:First when the action is adjudicatory in nature and when independent judicial fact findingwhen issues that were not before the agency are raised in a proceeding to enforce non-adjudicatory agency action

o § 706(2)(A) Arbitrary and Capricious requires a finding that the actual choice madewas not arbitrary, capricious, an abuse of discretion or not in accordance with law. To makethis finding court must consider whether decision was based on a consideration of therelevant factors and whether there has been a clear error of judgment . Although thisinquiry into the facts is to be searching and careful, the ultimate standard of review is anarrow one, the court is not empowered to substitute its judgment for that of the agency.

• Overton Park Three Step Process For Judicial Review(1) Is Agency Acting Within Scope of Its Authority? the court construes the relevantstatute to determine the scope and terms of the agency’s authority to determine whether theagency is acting within the authority conferred. The determination of the scope and terms of the agency’s authority determines the extent of the agency’s discretion if any.(2) Whether Agency Considered All Relevant Factors? If agency has discretion tochoose among two or more courses of action, court decides whether agency exercised itsdiscretion based on a consideration of relevant factors. What are secretary’s view of statutory terms “feasible and prudent?” Court didn’t say anything about what terms mean. Itis a procedural problem if agency doesn’t explain, and can’t just offer post hoc explanationmake up reasons after the fact have to explain as you were doing them like in Chenery .




Secretary didn’t explain whether considered feasible alternative route, statute requiressecretary to decide whether feasible alternative route exists – and secretary offers noevidence.

Court Remands Court remands and says we need procedural explanation based onwhat went into the decision at the time. Either (1) district court can look at everythingthat went into it, the whole record. But if it doesn’t exist or can’t get hold of materials,then (2) Can call in agency officials to testify to say what thought basing theirdecision on at time made it. Gives agency a change to go back and do it right.

(3) If Agency’s Weighting of Factors And Course Chosen Were Arbitrary or Capricious Court will consider whether the agency’s weighing of the relevant factors andthe particular course chosen were arbitrary capricious and abuse of discretion or otherwisenot in accordance with law. What made secretary decide ok to put highway through a park.Why no feasible and prudent alternative route?

Arbitrary + Capricious Arbitrary and capricious applies to whether feasiblealternative route. Standard of review is substantial error, clearly erroneous, verydeferential. Still require there be some rational connection between the evidence inrecord and agency’s’ conclusion. Agency can do whatever you do in terms of howprocedurally deal with that stuff. But when comes time for substantive review youhave to give an explanation. Court just saying we’re not doing your work for yousupply that explanation.

•

Chevron Chevron is about coming in after fact and saying, is what agency did within range of reason. This case is about inputs, what went into decision at the time. Chevron was decidedafterward.

Motor Vehicle Manufacturers v. State Farm (US 1983)• Facts NHTSA directs Secretary of transportation to issue MV safety standards that “shall be

practicable, shall meet the need for motor vehicle safety, and shall be stated in objective terms.”NHTSA passed standards requiring seat belts, NHTSA amends statute to only require detachableseatbelts or airbags. Revision of rule is challenged as arbitrary and capricious.

• Arbitrary and Capricious Standard normally agency rule subject to arbitrary or capriciousstandards, so rescission or modification of the agency’s action is subject to the same standard. Therevocation constitutes a reversal of the agency’s former views as to the proper course. Therefore

agency changing its course by revoking a rule is obligated to support a reasoned analysis for thechange beyond that which may be required when an agency does not act in the first instance.Arbitrary and capricious standard applies to discretionary implementation of decision – this is preChevron .

• When Agency Rulemaking Deemed Arbitrary and Capricious Scope of review is narrow butagency must review the relevant evidence and provide a satisfactory explanation to its resultincluding a rational connection between the facts and its conclusion. Agency rule could be deemedarbitrary and capricious if (1) the agency has relied on factors hat congress has not intended it toconsider, (2) entirely failed to consider an important aspect of the problem, (3) offered anexplanation for its decision that runs counter to the evidence, or (4) is so implausible that it couldnot be ascribed to a difference in view of the product of agency expertise.

1. Agency Failed To Consider Airbag Zoning Rule Agency decided passive seatbelts

wouldn’t work, but did not consider a rule requiring only airbags. At the time agency did notaddress this option. Only after the fact did they say it would be difficult to fit in small cars,and bad PR to do it because expensive for car companies. This explanation is not somethingthat court can uphold because agency didn’t say this at the time.2. Too Quickly Dismissed Safety Benefits Of Automatic Seatbelts Agency neverexplained why didn’t consider non-detachable automatic seatbelts. Agency explained thatthere were some worries about being able to get out of car if drove into river. Only offeredthis explanation after the fact.3. Court Takes Issue With How Agency Weighed This Evidence Would detachableseatbelts have had benefit or not. Court goes deep into agency’s view of evidence. Thisseems like substantive review as opposed to procedural review. Court says look maybe




weighted things wrong, view of evidence bad. That’s going pretty far says Bierschbach.

b. Availability And Timing of Review

i. Presumption of Reviewability + Preclusion of Review

• Presumption of Reviewability § 701 § 701 Default rule is that there is presumption of judicialreview. Even where the legislature has not explicitly provided for review, the absence of statutoryauthority for review is not interpreted by courts as constituting a problem. Only where there is ashowing of clear and convincing evidence of contrary legislative intent should the court restrictaccess to judicial review.

o Exceptions § 701 Exceptions to presumption of reviewability exist where (1) statutespreclude judicial review; or (2) agency action is committed to agency discretion by law.

• Statute That Precludes Judicial Review The presumption in favor of judicial review is strong,but statutes can preclude it. Congress might in enabling statute say we create agency A to do Z,and when it does Z it’s not subject to judicial review. Must be clear and convincing evidence instatute to preclude review – statute must explicitly say so though court sometimes find that it saysso implicitly.

Block v Community Nutrition Institute (US 1984) Implied Preclusion•

Facts Agricultural marketing Act authorized Secretary of Agriculture to issue milk market ordersestablishing minimum provides processors must pay producers for milk. Consumers challengedSecretary’s decision that higher price applied to reconstituted milk arguing made it uneconomicalfor handlers to process, and deprives consumers of source of less expensive milk. Statute empowersmilk hinders to challenge way prices were set through agency process. Can consumers sue?

• Implied Preclusion - Presumption of Review Overcome – o Look Beyond Express Language Of Statute Whether and to what extent a particular

statute precludes judicial review is determined not only from its express language, but alsofrom the structures of the statutory scheme, its objectives, its legislative history, and thenature of the administrative action involved.

o Must Exhaust All Statutory Remedies First Statute required handlers first to exhaustadministrative remedies made available by the agency. After these formal administrative

remedies have been exhausted, handlers may obtain judicial review of secretary’s ruling inany federal district court. The structures of this act indicates that congress intended onlyproducers and handlers, and not consumers to insure that the statutory objectives would berealized.

Illogical Wouldn't make any sense for congress to set up an elaborate scheme andat the same time allow consumers to go straight to court without participating in thisprocess and let court make final decision when scheme for exhaustion of administrative remedies that applies to handlers.

• Supreme Court Supreme court says should have looked at scheme as a whole and wouldn’t

make sense to give consumers. Classic illustration of implied preclusion from statutory scheme.Court says would defeat exhaustion requirement to give this to consumers. If handlers andconsumers can just get together.

Bowen v Michigan Academy of Family Physicians (US 1986) Presumption of Reviewability • Facts Secretary of health issued regulation granting higher reimbursement levels from Medicare

to family physical’s who were board certified than to those who were not board certified. Drsbrought suit to challenge the regulation, arguing that distinguishing between board certified andnon board certified physicians violated 5h amendment of Medicare act. Statutory scheme says canreview decisions for challenging reimbursements under part A inpatient services, but doesn’t sayanything about reviewing for part B outpatient services.

• Challenging Regulation Itself Rather Than Determinations Made Under Regulation courtdistinguishes between challenging the method by which such amounts are to be determined rather




than the day to day reimbursement determinations themselves. Presumption that can challengevalidity of regulation under statute which has to do with general method of calculation. That’sbecause only going to be able to challenge it once.

o Strength of Presumption Presumption is strong where challenging a regulation. Nature of the claim matters.

ii. Exception To Reviewability – “Committed To Agency Discretion By Law”

•

Committed To Agency Discretion By Law § 701(a)(2) APA allows judicial review except toextent statute precludes review or the agency’s determination is committed to its discretion by law.What does it mean for something to be committed to agency discretion by law? It means that thereis absolute no law to apply. Can review broad standards, but if no legal standard by which tomeasure legality of agency action then can’t review this. Where statues is drawn in such broadterms that in given case there is no law to apply. Thus although agency action may be committed toits discretion by law, review is permitted where the agency abuses its discretion .

Webster v. Doe (US 1988)• Facts Director of CIA terminated employee because he was gay. NSA provides that director of CIA,

“in his discretion , may terminate the employment of any officer or employee whenever he shalldeem such termination necessary or advisable in the interest of the US.

•

Committed To Agency Discretion By Law Government says yes this is completely committedto agency discretion by law, therefore no judicial review. Statute says in his discretion when hedeems it he can fire. If he deems it to be national security threat, there is no way for case to reviewthat. No law to apply to this specific statutory claim

o Policy the structures of the NSA and CIA suggest that termination decisions werecommitted to agency discretion, since the effectiveness of the agencies and the ultimategoal of national security depends on a reliable and trustworthy workforce. The director musthave complete termination discretion to ensure the integrity of the agency’s employees.

• Test For When Committed To Agency Discretion Two different views of what “committedagency discretion means” that come out of case :

a. No Legal Standard no legal standard by which to measure agency action, Webster make that claim specific test. gives so much discretion that no standard by which to test

legality.b. Functional View – Certain Areas Courts Don’t Get Involved In courts take a holistic viewand don’t get involved in these decisions because of not good policy and for functionalreasons. Says some areas like reviewing national security and executive decisions is not

judicially cognizable – courts stay out of it. Much less doctrinal view of no law to apply andfunctional view of areas in which doesn’t make sense to get court involved

• Constitutional Claim Is Reviewable court says this his constitutional claim is reviewable.

iii. Problem of Agency Inaction

Heckler v. Chaney (US 1985) rebuttable presumption of unreviewability when agency fails to initialenforcement proceedings(just like prosecutorial discretion not to indict); but NOT FOR initiating

rulemaking (Mass v. EPA)• Facts Respondents were sentence to death by lethal injection. They petitioned FDA, claiming the

drugs used for injection were not approved for use in human executions and FDA was required toapprove the drugs as safe and effective for human execution. Urged FDA to provide warning labelsand prosecute those who intend to use drugs for human execution. FDA commissioner refused to acton the enforcement requires.

• Agency Inaction Is Action how can they petition for review of inaction? § 551(13) “ agencyaction ” includes the whole or a part of an agency rule, order, license, sanction, relief, or theequivalent or denial thereof, or failure to act ” APA says failure to act counts as an action.




• Inaction Is Committed To Agency Discretion By Law are failures to act precluded fromreview because they are “committed to agency discretion by law?” YES presumption that inaction isnot reviewable. Agency decision not to enforce requires the presumption that judicial review is not available . How To Rebut The Presumption This presumption may be rebutted by showing thatthe substantive statute provides guidelines for the agency in exercising its enforcement powers.

o Agency Best Situated For Determining How To Use Its Resources agency decisionsto enforce require balancing of many factors, including whether a violation has occurred,costs and likely success of the enforcement. The agency is better suited than the courts to

make enforcement determinations. Agency best situated for determining how to use itsrecourses. Non-enforcement decisions involve resource allocation.Policy involves research allocation agency expertise in determining not to enforce.Court is saying decisions not to enforce more broadly concern because thousands tothem every day. May be question of volume rather than qualitative difference indecision.

o Not Coercive agency refuse to enforce does not generally result in a coercive power overan individual’s liberty or property rights, areas that courts normally protect.

Policy when agencies make enforcement decisions and use their enforcement powerthen that is good time for court to review it. But when they don’t use coercive powerok not to review it because doesn’t effect anybody. Regulatory agenda will be guidedby people guided to sue and not public interest.

o Like Prosecutorial Discretion agency refuse to enforce is similar to traditional executive

branch power not to indict. Ordinarily the discretion of a prosecutor whether to initiateenforcement action has been shielded from judicial review.

• Functional Analysis here says no reviewability looks to 701(a)(2) committed to discretion bylaw, cites “no law to apply” language but then it doesn’t seem to apply that test and goes off onfunctional analysis. Major policy decisions about how to use resources, not to enforce are notcoercive, no focus for judicial review, lot like prosecutorial discretion which is immune, of thosereasons not going to review FDA decision here.

• When Can Get Review For Agency Decision Not TO Enforce This is just presumption that can berebutted by statute that provides guidelines for agency to follow in exercising its enforcementpowers. So maybe you can get review of decision not to enforce, or at least that’s the implication.

• Chaney The Chaney court relied on 3 features of nonenforcement decisions in arriving atpresumption of unreviewability

1. Agency Expertise First, such decisions require a high level of agency expertise andcoordination in setting priorities.2. Not Exercising Coercive Power Second, the agency in such situations will notordinarily be exercising “its coercive power over an individual’s liberty or property rights.”3. Prosecutorial Discretion Third, such nonenforcement decisions are akin toprosecutorial decisions not to indict, which traditionally involve executive control and judicialrestraint.

• HYPO Reviewability of Agency Inaction Congress passes statute saying EPA shall put wastedumps which in his judgment are seriously contaminated on ultrafund list which provides forexpedited clean up of bad sites. In compiling list EPA should consider 10 factors. Dump not on siteand citizens group petitions to have it put on. EPA says this is unreviewable because committed toagency discretion by law. Assuming administrator applied guidelines and found dump not to be sobad, then not reviewable because he has discretion.

o Administrator Not Listing Any Dumps On List Statute hs these guidelines, andadministrator isn’t listing anything on ultra fund list.

Reviewable By Courts ? Is This Reviewable? In case of wholesale abdicationBierschbach thinks courts will get involved. Abdication is where agencyconsciously and expressly adopted general policy so extreme that amounts toabdication. In that case reviewing court would probably require agency to provide a




reason for this inaction or tell them to act. Taking bribes, or wrongful action like thatalso amounts to an abdication.Congressional Remedy Congress could tell agency I’m not going to give youfunding, may alter statutory mandate, etc.

o Administrator Only Listing Some Dumps - Discriminatory Intent What if petition isfiled and there is allegation that meets statutory criteria. EPA doesn’t put on list because inminority community so don’t care. Other dumps that meet criteria in similar way were listed.

Court Reviews Constitutional Challenges Can court review? Yes if there is

constitutional claim, court is more likely to review. In Heckler court focuses on factthat no colorable claim is made that agency’s refusal violated constitutional rights.But if it did more likely to review.

• Many Exceptions To Presumption of Unreviewability of Agency Inaction it’s not as if decisions notto enforce are never reviewable, there are exceptions. If constitutional claim, court can enforce. If statute clearly requires agency to bring action and they don’t courts can review as well. Example if statute says NLRB must bring unfair labor action if finds probable cause in 60 days, agency findsprobably cause but doesn’t bring action. This is easily reviewed by court because there is clear legalstandard that triggers obligation to enforce.

American Horse Protection Association v Lyng (D.C. Cir. 1987) Reviewability Of Agency Refusal ToInstitute Rulemaking•

Facts Congress passed Horse Protection Act to end practice of soaring horses, by forbidding theshowing or selling of soared horses. Secretary of Agriculture exercising rulemaking power, issuedregulation that prohibited soaring devices that were above a certain weight. Agency says,conducting study to see if lighter should be forbidden as well and will address later on. AmericanHorse Association complains, that since then studies have come out that show lighter soaringdevices also ijnure horse and should amend regulation.

• Reviewability of Agency’s Refusal To Make Rule Where Interested Party Petitioned ForRulemaking Decisions not to institute rulemaking are reviewable and are subject to abuse of discretion standard of review.

o Interested Parties Can Petition For Rulemaking § 553(e) “Each agency shall give aninterested person the right to petition for the issuance, amendment, or repeal of a rule. ” and,when such petitions are denied, to give “ a brief statement of the grounds for denial ,” Agency

must allow parties to petition to institute rulemaking. Congress expected that agenciesdenying rulemaking petitions must explain their actions.

o Distinguish Chaney (1) under APA agencies must allow parties to petition to instituterulemaking, whereas APA doesn’t have provisions for petitioning to enforce a rule, (2)refusals to institute rulemaking turn upon questions o flaw, whereas nonenforcementdecisions are intensely factual decision. (3) Refusals to institute rulemakings are likely to berelatively infrequent By contrast thousands of nonenforcement decisions made daily. Forthese reasons court says it will review decision not to amend an existing rule.

o Arbitrary And Capricious Standard of Review Case requires a determination of whether the Secretary’s failure to act was “arbitrary, capricious, an abuse of discretion, orotherwise not in accordance with law” under § 706(2)(A). Court applies analysis similar tohard look doctrine –review will be extremely deferential but agency still needs to providereasons.

What Court Considers In considering a refusal to grant a rulemaking petition, thecourt must examine the petition for rulemaking, the comments, pros and cons of rulemaking, and agency’s explanation for decision to reject the petition.Change In Factual Basis Of Law when a petition has sought modification of a rule onthe basis of a radical change in its factual premises court holds that “an agency maybe forced by a reviewing court to institute rulemaking proceedings if a significantfactual predicate of a prior decision on the subject (either to promulgate or not topromulgate specific rules) has been removed.”

• Decision Agency gave court Conclusory statements made by people in agency and court says weneed better reasons so send it back for agency to provide more reasons. It does not order agency to




institute rulemaking. Then maybe court would say must institute rulemaking if don’t come back withreasons.

Mass v EPA (US 2005)• Facts CAA says EPA shall by regulation set standards application to air pollution by classes of

motor vehicles. EPA says• Supreme court embraces this view in Mass v EPA case. CAA says administrator of EPA shall by

regulation do standards applicable to air pollution to classes of motor vehicles that in EPA’s

judgment causes or contributes to air pollution that reasonably expected to endanger public welfare.Massachusetts petitions EPA to prescribe regulation governing tailpipe emissions from cars. EPAsays emissions are not air pollutants within meaning of statutory section.

• Two Issues: (1) Is EPA interpretation of statute OK? And (2) Is EPA’s decision not to instituterulemaking OK?

o EPA Interpretation of Statute What is standard of review? EPA says GHG emissions arenot air pollutants within meaning of statute. Apply Chevron (1) is air pollutant ambiguouswithin meaning of statute? If ambiguous defer to agency. Stevens says its not ambiguous,(CO2 clearly within CAA’s definition of air pollutant, and statute says to regulate any airpollutant. it is clear from statutory text that air pollutant includes GHG emissions. Statutorytext forecloses EPA argument that GHG are not air pollutants.

o Distinguished from Tobacco Case Tobacco would have had to have been banned; not

the case here, just regulated and would even have a delay to develop tech. Also Tobaccocase had other statutes enacted and statements that FDA lacked authority over tobacco; notthe case here.

o Decisions Not To Institute Rulemaking EPA says even if GHG emissions are airpollutants we have discretion not to act. Supreme court embraces exception to agencyinaction unreviewability saying this is reviewable because it is a decision not to make a rule,and not a nonenforcement decision. Abuse of Discretion – EPA gives reasons that basicallynew president came in and policies changed – different priorities. Court bats it away and saysok president has different priorities but that doesn’t change fact that statute says you needto regulate on this issue if satisfy this criteria. You can give policy based reasons but have totie them to this statute. Court remands back to agency to either regulate or give reasonsconnected to statute for not regulating.

iv. Exhaustion And Ripeness

1. Exhaustion

• Exhaustion no one is entitled to judicial relief until the prescribed administrative remedy hasbeen exhausted. Stated differently, a party may ordinarily not seek judicial review of administrativeagency action until she has first utilized all her appellate opportunities with in the agency.

• Why Require Exhaustion (1) agency expertise - agency has been established to apply thestatute in the first instance so desirable to allow the agency the first opportunity to develop thefacts and apply the law . (2) efficiency - more efficient to allow agency to proceed withoutinterruption than to allow judicial review at the various intermediate steps (3) develop record -

judicial review is enhanced by allowing agency to develop a factual record and apply its expertise.

Judiciary can more efficiently employ its resources by reviewing the agency record than bycompiling its own independent findings of fact (4) don’t want to weaken agency power - party whois forced to exhaust her administrative remedies may choose not to appeal adverse judgment.

Judicial interference in administrative process would weaken agencies by encouraging parties toignore their procedures.

• Waiver Of Unrepresented Or Unexhausted Claims ordinarily party must raise all issues before theagency before appealing its final decision to courts. The courts will however occasionally reviewissues not raised below to avoid hardshi

• Rationale for Exhaustion:Administrative Law - Bierschbach 64



Separation of powersAllow agencies to correct mistakes

o Common law test (when APA inapplicableMcCarthy (1992 Blackmun) Involves a Bivens action (sue federal official for violationof individual rights, a constitutional claim). The federal prison system has a procedurefor you to follow if you have been wronged: (1) consult people informally, (2) filewritten complaint in 15 days, (3) if you don’t receive satisfactory response by wardenin 15 days, you can appeal w/in 20 days, (5) court has 30 days to respond. Must

follow this procedure before can courts.Holding : McCarthy did not need to through administrative process b/c qualified forexception in exhaustion doctrine. To create this exception, the court created abalancing test (intensely practical):

• Litigant’s interestso Undue Prejudice

Unreasonable timetableIrreparable harmDefense to criminal liability (can challenge reg. even thoughcriminal prosecution)

o Whether agency can grant effective relief Challenge to ag. procedure – forcing them to go thru proceduremakes no senseLack of institutional competence

Type of relief o Bias: hard to determine that the agency has bias; generally are not

really sympathetic to prisoners complaining about wrongful treatment.• Government’s interests

o Allow correction of mistakes – always true, in balance but notdispositive

o No special expertise• Judicial system’s interests

o Judicial economyo Creating a record

o Administrative Exhaustion (APA applies)

§704 (APA): “Otherwise final is final” whether or not reconsideration sought• Otherwise final is final could mean two things:

o Exhaustion: can appeal without reconsideration; makes more sense b/cthe statute must do something

o Finality: exhaustion is a separate requirement, reconsideration notnecessary for finality; nonsensical b/c finality would not matter unlessyou had exhausted

Darby (1993 Blackmun): Darby finds a loophole to get loans for multi-family dwelling.HUD never tells him that he can’t do it, but they are upset that he is doing this. Theagency therefore decides to debar him from participating in HUD game, debars himfor 18 months – he’s upset because he did not technically break the rules. Heimmediately challenges the agency decision in court. Agency claims has notexhausted administrative remedies.

• Holding : The court finds that 704 would be pointless if had to exhaustadministrative remedies even after final decision before he appeals – there isno point for the APA to talk about finality in 704 if he still could not appealwithout exhausting administrative remedies. Exceptions (where required toexhaust):

o The organic statute requires exhaustiono The regulation requires exhaustion (the agency can do w/o special

procedure according to APA).o So if the organic statute and the regulation is silent and it’s an APA

case, then they do not have to exhaust (the bottom line is simple, hardto get there).




• This is such an important issue here b/c working through the administrativeprocess is easy to mess up and can cause you to lose suit, etc. This case wasso surprising that some subsequent cases required exhaustion if meansspecified, but that was not the case, the circuits eventually caught on toDarby.

• Bierschbach Explanation exceptions to exhaustion will generally revolve around hardship. Thisdecision is unusual because complete disconnect between decision and exhaustion policies. In case

of purely legal question agency expertise isn’t going to help. No factual development to be done. Noworry of opening floodgates. Not as if everyone will try to get out of draft by becoming solesurviving son and then changing. If ever advising clients always tell them to exhaust.

2. Ripeness

• Ripeness when one seeks discretionary relief from the judiciary for an agency action, the courtsmay resist review until the controversy is “ripe.” This avoids premature adjudication of disputes thathave not reached sufficient concreteness to warrant judicial interference, and avoids disruption of agency decision making until the impact thereof has run its course.

o Look At Ripeness From Court’s Perspective Rightness is what is case look like from court’sperspective, unlike exhaustion where looking at from agency perspective have they hadchance to do what need to do. Ripeness is whether case is well presented before court.

Abbott Laboratories v. Gardner (1967) Fitness + Hardship Test • Facts FDA promulgated regulation after notice and comment requiring drug manufacturers to

include generic names on the labels of their prescription drugs. 37 drug manufacturers objected ongrounds that commissioner has exceeded his authority. Nobody has been prosecuted yet by FDA

• FDA’s Argument FDA says (1) this is completely unreviewable under § 702 because didn’t’ sufferlegal wrong – no presumption of review. “A person suffering legal wrong because of agency action,or adversely affected or aggrieved by agency action within the meaning of a relevant statute, isentitled to judicial review thereof.” (2) Can’t Challenge Law Until Applied To You - FDA says can’tchallenge every law you don’t like until it’s applied to you and then raise challenging law as defense.No case or controversy until applied – courts don’t’ want to issue advisory opinions. Ripenesssupposed to keep courts from getting involved unless truly have something to rule on.

• Ripeness Policy Basic rationale of ripeness doctrine is to prevent courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrativepolicies, and to protect agencies from judicial interference until administrative decision has beenformalized and its effects felt in a concrete way by challenging parties.

• Ripeness Test Court evaluates both the (1) fitness of the issue for judicial decisions and (2) thehardship to the parties of withholding court consideration.

o Fitness of Issues For Judicial Resolution Rule is final and the dispute is over a purelylegal issue of whether FDA exceeded its authority. Involves interpretation of statute. Courtsays this is capable of judicial resolution because purely legal issue, and it is a final agencyaction with nothing left for agency to do.

o Hardship To Parties From Withholding Review What is the impact of the regulation onplaintiffs. The impact is sufficiently direct and immediate as to render the issue appropriatefor judicial review. Drug companies must either break the law or burn old labels and print outnews ones at considerable expense. Onerous burden either way. Hardship here of withholding review is severe

• Court Explanation Government argues that if do pre-enforcement review it will be harder for us toenforce the law. Court says this review will clarify immediately whether you are even permitted toenforce the law and assess penalties.

Toilet Goods v. Gardner (US 1967) • Facts FDA passes regulation if inspectors are denied access to facilities FDA can withholdAdministrative Law - Bierschbach 66



certification until access is granted. Toilet goods brings pre-enforcement action challenging the law.

• Ripeness Test here court says can’t bring pre-enforcement challenge. Why? What’s differencebetween this and Abbot .

o Fitness For Judicial Resolution Court doesn’t know if FDA will really withholdcertification because law only says that they may withhold certification. In Abbott regulationsays drug companies must print generic names on labels. Court says here regulation is lessdirected at primary conduct of industry. Don’t know yet if agency will enforce the law. Court

says need to let it play out a bit more to see how agency applies the law.o Hardship To Parties From Withholding Review Court says it’s not clear that any

parties will have to take any immediate burdensome action if court doesn’t hear the case.Fact that regulation directed to agency enforcement priorities rather than primary conduct of companies has a lot to do with this

Toilet Goods Case II• Facts FDA regulation expanded definition of color additives which FDA has to approve before

manufacturers can use them. Companies bring pre-enforcement action against agency. Court saysthis action is ripe for review.

• Ripeness Test Under first prong as long as legal issue and agency done everything it can do thenchallenge is ripe. Under second prong court says this is more like Abbot where putting party in

position of breaking law or incurring significant expense so that there is hardship.• Where Does Ripeness Requirement Come From ? Prudential standing requirement that judges

have constructed against background of constitutional norm of cases and controversies. Not clearlyunconstitutional for court to hear case not ripe but strong prudential reasons not to.

• Congress Anticipates Challenge To Statute Statute can clearly authorize the court to hear achallenge – 30 days after final whoever wants to challenge can go to DC court to do so. Wherecongress anticipates challenge to regulatory scheme.

v. Standing

• Constitutional Standing Requirements Article 3 of constitution limits judicial power to cases

and controversies. Courts can hear cases and controversies which involves injury in fact, causationand redressability. One who seeks judicial review must allege suffered some actual or threatenedinjury as a result of the illegal conduct of the defendant, that the injury is fairly traceable to thatdefendant’s actions, and that it is likely to be remedied by a favorable decision. Administrative lawalso has statutory component, which raises different set of issues - who can march into court to sueto vindicate statute.

• Statutory Standing Requirements APA § 702 – “ A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevantstatute, is entitled to judicial review thereof .” l

o Must Be Vindication of Legal Right Courts say can’t point to law and say I don’t like it,must be vindication of your own legal right before come to court and sue – tort, contract,statutory. Can’t just say FAA regulating airways, I have interest in living in country whereplanes not flying overhead all the time.

o Zone of Arguable Interest P must show injury arguably within zone of interestprotected/regulated by statute.

• Competitors Have Standing Agency relaxes restrictions for standing when a competitor ischallenging a law that benefits his competition. Example agency relaxes restrictions on credit union,bank challenges saying violates statute. Regulation doesn’t directly affect bank but has standing tochallenge because injures banks business.

• HYPO Protecting General Legal Rights Secretary approves highway through park. You thinkviolates statute, do you have standing to sue? Ask question do you have legal right? Generalized




grievance that right to enjoy public parks being violated. One of problems with legal rights tes t isa lot of statutes that protected general rights of public would have lots of statutes aimed atprotecting public welfare at large that nobody would be able to vindicate. Other problem with legalrights tests, is asking if you have legal right is same as asking does P have cause of action so littlebit of circular tests.

Data Processing v Camp (US 1970)• Facts Comptroller says banks can provide data processing services to other banks and customers.

Data processing challenges saying this is violation of Banking statute which says banks can onlyengage in “bank services”, so banks can’t market data processing services.

• Legal Rights Tests Legal rights test says individual only has standing if the right invaded is alegal one (e.g. arising out of contract, property, tort, or statute). Would Data Processing havestanding? Is there legal right to be free of banks providing these services? Can take some view of statute and say it does. Court rejects this test saying goes to merits of controversy and not issue of standing.

• Zone of Arguable Interest Whether the interest sought to be protected by complainant isarguably within the zone of interests to be protected or regulated by the statute or constitutionalguarantee in question? Is P within arguable zone of interest congress intended in creating statute?

o Two Part Test Must Show: (1) Injury in Fact + (2) That In Zone of Interest. Zone of

interest test requires two step analysis. What are the interests arguably protected by thestatutory provision at issue, and are the plaintiffs interests affected by the agency action inquestion among them.

Banking Statute Arguable that banking statute brings a competitor within the zoneof interests protected by it. banking statute purpose was to prevent banks fromengaging in nonbanking activity.

o Arguable As long as asserting some interest arguably related to statutory scheme youhave standing.

• HYPO Incidental Effects Not In Zone of Interest FAA enacts rule saying no pilots over age of 60. Side effect is it reduces number of individualized licensing hearings held, and stenographershave less business. Stenographer goes into court to say that rule violates the statute. FAA says youdon’t have standing

o Is Stenographer In Zone of Interest ? She has injury in fact, and can say arguable that oneof purposes of regulation is to preserve jobs for bureaucrats that enforce the regulations.Hard to argue regulation for pilots is to make sure stenographers have stream of business.

This is totally incidental how much business stenographers have.

Clark v Securities• Facts McFadden Act only permits national banks to sell discount brokerage services to public. The

act limits the national bank branches to instate branches where deposits are received or checkspaid, or money lent. Comptroller determined that discount brokerage services were not brokeragesunder act allowing national banks to open discount brokerage offices. Association of securitiesdealers sued comptroller for exceeding his legal authority.

• Zone of Interest Test Is McFadden Act arguably designed to protect securities dealers?Congressional intent in passing the act included the desire to limit national banks ability to branchwithout regard to state law, prevent banks from obtaining monopoly control over credit and money,and forestalling dangers of unlimited banking. Purpose of banking statute was to protect potentialcompetitors of banks from too much competition by banks, and securities deals competitors. Thuscongressional intent does not preclude securities dealer association from judicial review.

o Congressional Intent reviewability turns on congressional intent.

• Who is Not In Zone of Interest? Zone of interest test denies a right of review if the plaintiff’sinterests are so marginally related to or inconsistent with the purposes implicit in the statute that itcannot reasonably be assumed that congress intended to permit the suit. Want to be sure congresswould have contemplated these kinds of people bringing suit




Air Courier Conference v. American Postal Workers Union (US 1991)• Facts Statute gives USPS legal monopoly over certain kinds of mail delivery. Postal services

issues rule suspending operation of statute – and says in public interest for certain internationalrouts postal service will give letters to private carriers and let them deliver, instead of USPS going toItaly will give to DHL. Postal Employees union brings suit saying rule is invalid under statute.

• Zone of Interest Do they postal employees have standing? They have injury in fact because

losing jobs. Are they in zone of arguable interest? Purpose of statute was to protect revenues not toprotect jobs. Statute passed before there were even postal employees, congress couldn’t havethought about this. Court says no standing.

o Arguable? Isn’t it at least arguable that statute that gives monopoly is also designed toprotect market share of this organization? And isn’t it arguable that contemplated that wouldmean more jobs for employees?

National Credit Union v. First National Bank (US 1998)• Facts Credit Union Act requires federal credit union membership be limited to groups having

common bond of occupation or association, or to groups within a well defined geographic region.NCUA interpreted it to permit credit unions to be composed of multiple unrelated employee groups.Banking organizations challenge interpretation because taking over their market share.

•

Zone of Interest regulating credit unions affects credit unions market shares. And any affect onmarket share affects competitors so therefore within zone of interest.o Competitors Court allows competing businesses to get within zone of interest because of

general thought that when regulate business by implication going to be some spillover oncompetition so think competitors are in it

• O’Connor Dissent O’Connor dissent says regulation meant to make sure credit unions responsibleand solvent. Nobody had any thought at all about banks competing or market share. Interestingpoint. How majority applies test is not good because everybody who establishes some kind of injuryin fact pretty much has standing.

• Zone of Interest Summary Being with in zone of interest means that your interestsystematically coincide with interests that congress meant to regulate or promote with the statute

in question. Usually this means if you’re a competitor you have standing. Just has to be arguablethat coincide, but still has to be arguable.

• HYPO Zone of Interest Test - General Public Interest I live in area in which Radio Stationwants to broadcast subject specific content that I want to hear. FCC denied license under statute.Can I go into court and sue? I have injury in fact because can’t hear that content. But not really inzone of interest. Not competitor.

o Public Interest Within Zone of Interest FCC has to consider public interest, so maybewithin zone because have public interest argument. DC circuit held that you are within zoneof interest so who knows whether Supreme Court would agree or not. Those cases are onborder.

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