Government Regulation and Administrative LawIntroduction to Graduate Public Administration

Introduction

• Political value: Capitalism• Capitalism involves:

• Free-market competition – basis of U.S. and other free-enterprise economic systems in which the means of production and distribution of goods and services are owned by private organizations or individuals, and the government’s role in the economy is limited.

• The problem with capitalism is that it can lead to:• Market failures – the inefficient allocation of resources in a free market.

• Monopolies• Overconsumption• A good is not provided in the free market

• The inevitable result of market failures is the need for:• Government regulation – government activity designed to monitor and guide private

economic competition.• Economic regulation• Social regulation

• The need for regulation leads to independent regulatory boards and commissions (see lecture on structure).

Introduction

• The rise of regulatory bodies then creates a need to figure out how to empower these administrative entities while ensuring they do not go out of control (accountability). This leads to:• Administrative Law – body of law that pertains to the legal

authority of public administrative entities to perform their duties (part I) as well as to provide necessary limits and controls (part II).

Introduction

Capitalism Market Failures

Government Regulation

Regulatory Agencies

Administrative Law

Economic Regulation

• Two initial purposes for regulation:• Placing limits on prices and practices of those who produce

commercial goods and services.• Promoting commerce through an incentivized structure (grants, subsidies)

• Until late 1800’s, economic regulation was a responsibility of the states.• What caused the change?• Rise of industrialism and the advent of the railroads creates national

economy.• Intrastate regulations often conflicted with other states’ regulation.• Need for national regulation (Article I, Section 8)• Problem: lack of expertise by legislative bodies• Solution: create agencies with expertise to regulate the economy• Interstate Commerce Commission (1887)

• Economic regulation keeps growing

Social Regulation

• Social regulation – regulations that seek to regulate matters related to the general public such as individual health, environmental protection, and public safety.• Purpose is to reduce risk of harm.• What is an unacceptable level of risk?

Explanations for the Rise of Government Regulation

• Public administrators and politicians seek to expand their power.

• Citizens demand regulations• Protection from one another (e.g., employers and

employees).• Protection for a profession or economic sector • Barriers to entry

Administrative Law

• Administrative Law – body of law that pertains to the legal authority of public administrative entities to perform their duties (today) as well as to provide necessary limits and controls (judicial control).• Guided primarily by two forces:

• Judicial decisions (precedent)• Administrative Procedures Act of 1946

• Typical Subject Matter:• Constitutional Authority of Agencies

• Delegation• Statutory Authority of Agencies• Access to Information Held by the Government• Procedural Requirements of Agencies

• APA• Rulemaking• Adjudication• Enforcement

• Judicial Review of Agencies• Liability• Public Employment and Rights of Public Workers

Administrative Law and Due Process

• 5th and 14th Amendments to the Constitution.• “nor be deprived of life, liberty, or property, without due process of law” (5th Amendment)• “Nor shall any State deprive any person of life, liberty, or property, without due process of law;

nor deny to any person within its jurisdiction the equal protection of the laws.” (14th Amendment)• Procedural Due Process (procedural fairness) – set of procedures designed to ensure

fairness in judicial or administrative proceedings.• Highlights three values:

• Public participation• Fair procedures• Judicial review of action• See list on Milakovich and Gordon pg. 472

• When due process is triggered, the question is what process is due?• Substantive Due Process – law must be fair in content and application.• Why is due process important?

• Ensures that agencies do not operate in an arbitrary and capricious manner.

Agency Procedures

• Rulemaking – quasi-legislative power delegated to agencies by Congress.• Agency statement of general applicability and future affect.• Has the force of law• Proposed Rules:• Proposed rules must be published in the Federal Register.• https://www.federalregister.gov/

• Public has a chance to comment on rules.• Final rules are codified in the Code of Federal Regulations

Agency Procedures

• Adjudication – quasi-judicial power delegated to agencies by Congress under which agencies apply existing laws or rules to particular cases.• Adjudication procedures are triggered when someone is exceptionally

affected by agency action.• Decisions have the binding force of law• Types:• Informal• Basic requirements:• Advanced notice• Opportunity to be heard (orally or in writing)• Decision by impartial decision maker

• Formal

Agency Procedures: Purpose?

• Procedural Due Process• These processes answer the question of what process is

due?• If you are exceptionally affected by an action of an agency, you

are due adjudication (hearing).• If the agency passes a rule that has general applicability, it

must follow rulemaking procedures.• These processes are outlined in the Administrative

Procedure Act of 1946.

Functions of Agencies

• Policy Making• Administration• Establish policies under the president’s direction• Provide services to citizens

• Enforcement• Prosecute violations of bureaucratic, legislative, or judicial

policy• Regulation• Establish policy as a response to legislation• Price controls• Licensing (tattooists, egg graders, etc.)• Standards

Functions of Agencies

  Agency Procedures

Agency Activities Rulemaking Adjudication

Policy Making (regulation) Always √ Sometimes √

Enforcement NEVER Always √

Future of Regulation

• Deregulation• Regulation

Topics Not Covered

• Structures and Procedures of Regulatory Bodies• Politics of Regulation• Administrative Law Case Law• Government Regulation of Tobacco Products