What is ad law?- Study of the legal control of the structure and process of federal govt

o Legal principles that define the authority and structure of administrative agencies, specify the procedural formalities that agencies use, determine the validity of administrative decisions, and outline the role of reviewing courts and other organs of govt in their relation to administrative agencies

o Includes executive branch, and in particular: (1) Cabinet levels are where admin agencies are located (2) Entities w/in cabinets (3) White House staff

Chief of Staff (4) Staff of executive office of president

OMB (Office of Management and Budget) (5) Free-standing executive agencies

EPA (but now it’s a cabinet agency) (6) Independent commissions and agencies

More distance from president than the above, so president has less control

NLRB, SEC Constitutional bases of these are more questionable than others

(7) Govt chartered corporations Post Office Run more like a regular corp

(8) Officials who discharge executive functions Independent Counsel

Problems thought to call for administrative regulation:- (1) Admin regulation as attempt to solve various problems of “market failure” identified by

economists; many market defects fall within one of the following categories:o Need to control monopoly powero Need to compensate for inadequate information, in particular when

Suppliers mislead consumers whose available remedies, such as court actions, are expensive or impractical

Consumers can’t readily evaluate the info available (drugs) Market on the supply side fails to furnish needed info

o Collective action problems Prisoner’s dilemma

o Need to correct for externalities (spillover costs), or existence of transaction costs that make bargaining difficult

Price of a product may not reflect costs that its production and use impose on society

- (2) Less conventional economic arguments for admin regulationo Need to control windfall profits

Goal is to transfer undeserved profits from producers or owners to consumers

o Need to eliminate excessive competition Excessive competition could force out most firms, and the one firm left can

raise prices Helps industries with large fixed costs and cyclical demand Against predatory pricing – dominant firm sets prices very low, with object

of driving out competition, and then raises prices to recoup losses before others can enter market

o Need to alleviate scarcity TV licenses

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o Agency problems When someone other than the buyer makes purchasing decisions for the

buyer, like medical care- (3) Redistribution

o regulation is justified as means of redistributing resources from one group to another unequal bargaining power is invoked as the rationale not clear that these efforts work

- (4) Nonmarket or Collective valueso regulation as an effort to promote values on the part of some segments of societyo govt engages in a degree of preference-shaping

- (5) Disadvantage and Casteo regulation as attempt to overcome social disadvantage (civil rights law)

- (6) Planningo Regulation justified on ground that w/o it firms in an industry would not produce

their products in an economically efficient manner- (7) Paternalism

o Regulation justified on the grounds that government has a certain obligation to protect individuals from their own confusion and irresponsibility

Admin Law has very broad coverage- We’re focusing on just the general framework

The Classic Regulatory Tools- (1) cost-of-service ratemaking

o most commonly used method for regulating prices in a wide variety of individual industries

- (2) allocation in accordance with a public interest standardo commonly used when govt wants to hand out a commodity in short supply

- (3) standard-setting- (4) historically based price-setting, or allocation- (5) screening or licensing- (6) fees or taxes- (7) provision of information- (8) subsidies

o used to regulate agricultural prices- (9) noncoercive efforts to produce cooperation through moral suasion or political incentives- These programs operate and are subject to the following four constraints:

o (1) regulator and regulated are likely to have an adversarial relationship b/c regulator often compels industry to act in ways it would not choose to act

o (2) regulator is an institutional bureaucracy operated by administrators who may well prefer to design rules that they can administer with relative ease

o (3) new regulatory programs usually copy old oneso (4) regulatory decisions are subject to the requirements of administrative law,

including the APA (Administrative Procedure Act)

Agencies have several methods for using these tools:- adjudication

o AdLaw judges, just like a court case Disability (SSI)

- Rule-makingo Looks legislative

- Courts are more insulated politically- Courts don’t have to give reasons for decision like agency heads- Agencies can use enforcement procedures, use penalties against those violating agency law

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Three unifying themes: (sources of law)- (1) Constitutional law

o what ought to govern, what’s most efficient- (2) Statutorily based course

o two sources: Administrative Procedure Act (APA)

Quasi-constitutional status, provides default structure for all agencies

Organic statute Sets up particular regulatory regime involved Clean Air Act, for example

o Courts are increasingly using cost-benefit analyses when language is variant among statutes

- (3) Common lawo Courts sometimes ignore what legislatures say and go with common law

Other themes:- (1) Try not to limit focus to Court decisions; also focus on Agencies, Congress, and the

President- (2) Goals of particular regulatory statutes- (3) Goals of a modern regulatory state in organizing society

o Start can be with the New Deal, which had these two objectives: (a) Centralize decision-making in executive branch

attempt to take advantage of technical expertise, and under a unified entity (the president)

avoids some collective action problems Institutionalize a different sort of democratic decision-making

o attenuated political accountability, (it’s under the president who is accountable, but agency itself isn’t as accountable)

o allows for wider participation by interested citizenso agencies must explain why they chose one particular route

over another (b) attack on common-law ordering

don’t accept laissez-faire as the natural ordero society must justify its decisions, not just accept one as

the end-all-be-all common-law is a choice, and it can be assessed against other

systems of regulation

History and Background- first hundred years, most regulation was through courts, state govt or private markets- beginning of administrative state came in the Progressive Era (1890-1915)

o driven by fears of monopolieso Interstate Commerce Commissiono Federal Trade Commissiono All these agencies were independent agencies, so president could not fire heads of

the agencies- Real beginning is with the New Deal

o Many say this brought change in constitutional structure Reconception of individual rights, federalism, separation of powers; before

New Deal: There had been fear of giving fed govt too much power People believed state govt was more democratic

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o 1944 FDR promulgated Second Bill of Rights Right to useful job, to earn enough to eat, to decent home, to decent medical

protectiono Pragmatic readjustment of capitalism in shadow of enormous economic crisiso Designed to redistribute wealth, promote confidence in economy, and regulate

people in their social roles (as a consumer, laborer, etc.)- Rights Revolution (1970s)

o Biggest growth of administrative state, says Garretto Shift to expand regulation in three areas:

Civil rights (end of discrimination laws) Expansion of New Deal focus to redistribute wealth; Johnson’s war to

stamp our poverty Expansion of risk regulation

OSHA EPA National Highway Traffic Safety Admin

- Today’s era of regulation: reconsidering some of the tenets of the New Dealo Some has been undone in the last decade

Reassertion of old-time rights Laissez-faire choices are defended more often now

Reinventing government, using different tools of regulation Market-mechanisms as regulation

New emphasis on cost-benefit analysis in all regulatory areas Some in Congress have pushed for a new APA mandating that

every regulatory decision comply with cost-benefit analysis Trend toward devolution

Sending things back to state and local levels, like welfare

Agency’s Power to Legislate - Early cases said legislative power which Constitution had delegated to Congress could not be

redelegated to otherso Congress specifically granted this authority in the Hepburn Act of 1906, and courts

simply assumed the constitutionality of thisState ex rel. Railroad & Warehouse Commission v. Chicago, Minneapolis & St. P Ry.

- state constitutional challenge to Minnesota legislature’s delegation of rate-setting authority to an administrative commission

o rates for milk carried on passenger trains were brought down by the Commission, and they brought a mandamus action in state court t compel railroad to obey its order

- Court says if just look at plain language, it’s perfectly evident that legislature wanted the rates decided on by the Commission to be more than just advisory

- Question is whether legislature can confer such powers upon the Commission- YES

o Public highway can’t be under control of private ownerso Legislature did not delegate power to make the law, but rather conferred an authority

of discretion to be exercised under and in the pursuance of the lawo Legislature can’t set rates b/c they meet only once every two years for 60 days, and

there needs to be someone on top of the situation at all times- Question of whether intrusion is justified in the Railroad industry

o Monopoly problem was main argument for regulationo Also concerned about allocation of wealth – may want to help farmers transport their

goods; or should we make farmers subsidize the RRs?o Passengers – should they pay higher rates in order to help farmers?o Within RR industry, there are various types of RR companieso Should we directly subsidize?

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o Is systematic regulation better as a whole for the RRs?o Two basic reasons for regulation here:

Redistributive arguments to deal with monopolies Prevention of excessive competition Can you have both at same time? Should we worry about excessive competition?

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- Rational for Regulation:o deals with monopoly problem

but have to be able to define relative market what is regulatory strategy?

What kind of profits and costs will be allowed for?o Redistribution

From whom to whom? Consumer-producer, opposite, consumer-consumer?

Is it just interest group clout? Is regulation the best mechanism for redistribution?

Maybe should be transparent subsidies, or higher taxes- Is too much competition bad?

o Yes: can lead to monopolieso Yes: can lead to poor quality products, corner-cutting by competing companies

- Perhaps lack of information (on part of the consumers) is the problem here, so regulation wouldn’t be the right way to go

- Other rationales for regulation:o Want to give entire population ability to use rail system

- What institution should implement the regulations?o Court discusses administrative industry vs. legislators

Election: Legislators can be TOO responsive to constituents (b/c they’re more accountable politically); also have favored constituents

Need balance between accountability, arbitrariness But it may be easier to influence a regulatory commission (if it has

just three people on it, easier to get to them then to get to the entire legislature); also, many regulators go into the business that they regulate when their terms are up, so they may want to look good for the Railroads and have sympathies for the industry

Expertise: a commission may have more expertise in the area But legislators have lots of staff, access to other experts and

outside sources In Illinois the legislature only met for 60 days every two years Why not use a Court?

Need expertise Need progressive legislation

o Court would have to decide on case-by-case basis

Delegation (or Nondelegation)- Federal Constitutional question

o What does the Constitution allow for in regards to delegation of authority from legislature to agencies?

Constitution does not really allow for delegation b/c it stresses separation of power

Lockeian notion that powers given to a particular branch should not be delegated

Constitution gives all legislative powers to the Congress But it can delegate power to implement and execute these

decisionso To satisfy Constitution, need to have:

Political accountability: Initial decisions are made by legislature, and they are accountable for this decision;

Agency accountability – must show the reasons behind the actions; we can hold agency responsible for not following the directives of the legislature

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How do we determine what is “reasonable”? Question is, has Congress delegated too broadly so that it has given

away legislating power? Or just executive and implementation power?

J.W.Hampton - Are there intelligible guidelines? Is it “fair and reasonable”?

- Bleak side of delegation:o This is just a way for legislatures to kow-tow to a particular industry

- Transactional model:o Regulation can distribute or narrow costs and benefits to various groupso 4 quadrants:

concentrate benefits, distribute costs concentrate benefits, concentrate costs

people taking the hit (here, farmers) will be upset, so it’s a zero sum game; will want to delegate to agency so they can take the abuse for bad parts, but take credit for good things

o relies on information asymmetry (railroads know, but farmers don’t)

but these are political-savvy groups, so it’s not likely

distribute benefits, distribute costs distribute benefits, concentrate costs

Pollution is good exampleo Find polluters to pay, or put excise tax on particular

activities Will voters remember the benefits? Do they even vote? And will

those harmed come back after you? Argument is that legislators will do things that are largely symbolic

– don’t want to harm businesses, ones who take the hit, but want to do good things for voters

o So here, delegate to regulators the enforcement problems so you can claim credit for the benefits, and regulators take blame for problems

When a large number of groups want a change, but can’t decide on the change, legislators will delegate the choice so the agency can auction it off

- Delegation:o Constitution is not very helpfulo There are systematic pathologies in legislative process that show that delegations can

actually be part of a pathology (want credit for good things, don’t want credit for bad things)

o How important is it to have judicial review of agency decisions?

Choice among institution (courts, legislatures or agencies) – where to locate responsibility:- kind of decision (technical)

o agencies probably more technically advanced, have more experts- ability to make a good decision- legis. perhaps more accountable b/c elected

o although agencies have to be transparent- Goal is to minimize sum of decision costs and error costs

o Maybe agency b/c has more expertise, may be cheaper, where legislature has to find the expertise; also easier to get three people to agree then 300

- Is this too simplistic a formula (the decision and error costs formula)? o When we emphasize cost, we may deemphasize other areas inadvertentlyo Hard to measure costs

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Better to monitor and make decisions every so often, or to have progressive (fire-alarm theory – let agency do it, and allow for alarms (industry complaining) to tell legislature when problems are occurring)

o Some decision costs are deliberately made, so aren’t really costs but are legitimate decision making

Reasons some find delegation to be a problem- legislators avoiding blame perhaps

o assumption of information asymmetryo assumption that interest groups capture agencies

some institutions resist capture, but which methods work best?o They want concentrated benefits and distributed costs

- What’s an illegitimate delegation based on Constitution?o Hard to deciphero “It’s a matter of degree,” says Scaliao Needs to be executing the law, not making the lawo SCt says to look for “Intelligible Principles”, says J.W.Hamptono Schecter and Panama Refining are the only two cases where SCt has struck down

legislature on nondelegation However, the nondelegation principle is mentioned quite often (Benzene

case)

The Nondelegation Doctrine in Federal Law- Only year Supreme Court used nondelegation to invalidate a statute was 1935- 1933 FDR passed the National Industrial Recovery Act (NIRA) with objective to have

representatives of management and labor in each industry meet and develop codes of “fair competition”

o critics feared development of a “corporate state”o the codes contained regulations for hours worked, wages paid, devices of price

competition, etc.o Panama Refining Co. v. Ryan involved challenge to NIRA’s Petroleum Code; SCt

held this section of the NIRA was unconstitutional b/c it did not provide a standard of governing WHEN a president was to exercise the authorized power

- But watch out, Currie thinks delegation doctrine is coming back, says it’s reason for the decision in the Line-Item Veto case; also the ATA case

Schecter Poultry- with Panama Refining, the other 1935 case that used nondelegation to invalidate a statute- “Live Poultry Code” provided for hours and wages, and type of chicken that could be sold- “The Congress is not permitted to abdicate or transfer to others the essential legislative

functions with which it is vested.”- The codes try to stamp out “unfair competition”, but this term has a much broader range and

new significance than has been used in other statutes, says the Courto Delegation of power to industrial and trade groups for the purpose of rehabilitating

and expansion is unknown to our law and inconsistent with the duties of Congresso Actions of agencies have no sanctions beyond the will of the presidento Section 3 gives President unfettered discretion to approve or proscribe codes for

trade and industry, and there are no rules of conduct prescribed in the code; therefore it’s unconstitutional delegation of power

- FTC was allowed to do things to halt “unfair competition”o This has cabining principles that come from the background and history of what was

known as “unfair competition”- Here, purposes of NIRA are very vague

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o But substantive stuff is not really that vague, most things like this are usually found constitutional

Court knew that they couldn’t base it on substantive grounds, so went to procedural grounds…

- Court says FTC has procedural safeguards that are not present in NIRAo Court notes that FTC is a quasi-judicial agency, which may protect against arbitrary

decision-making- 2 strands in nondelegation doctrine (in general)

o Separation of powers Credential of legislature

Depends on subject matter who is making the decision, b/c each branch has special exclusive area where they may have more discretion

Try to avoid tyranny by dividing power Substantive concerns mostly address this, separation of powers

o Arbitrariness of decisions Legislature has to stand for reelection, so they will probably be arbitrary Not as concerned about substance of a statute here, but rather the procedure

involved One way to police is to make sure the decision-making process is

comported in a way that we believe provides due process This is usually adjudication is some way

Procedural concerns get at the problem of arbitrariness- Why treat an agency different than Congress? Why have these concerns of arbitrariness?

o Congress is more accountable, have to be re-electedo But under NIRA, power is given to president, who is also elected

President usually redelegates his power- The industry groups make the codes, and president approves them if they pass muster; he

approved all of them, pretty much just rubber-stamped themo Delegation was to interest group, whereas in Amalgamated Meat Cutters delegation

was to private, disinterested groupso Breadth of delegation wasn’t really problem here; problem was interest groups cut

their own deals, and president just signed it This happens all the time in Congress however – interest groups get their

own stuff passed- Negotiated Rule Making (RegNeg)

o Get all interested parties in a room and have them work out regulationso Just expands Schecter so that all interested parties are involved

- Broad delegations are almost always time-limitedo Don’t know who will end up with the power (could be change in president)

- Cardozo concurrence:o If codes eliminate “unfair” methods of competition, it’s fineo This code has no reference to standards though, so there is unfettered discretion;

code does much more than just stamp out “unfair” competition

Amalgamated Meat Cutters v Connally - Meat Cutters Union challenged Economic Stabilization Act (1970) on grounds of excessive

delegationo Said it gave president a “blank check” authorityo broad power delegated to president to help with inflation problems

Economic Stabilization Plan Trying to deal with labor and wage inflation through wage and

price controls- Court sustained constitutionality of act

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o “Concepts of control and accountability define the constitutional requirements”o Burden is on party who assails legislature’s choice to prove there is an absence of

standard for the guidance of the Administrator’s action so that it would be impossible to ascertain whether will of Congress has been obeyed

o Standards of a statute derive meaningful content from the purpose of the Act, its factual background, and the statutory context

- “We think there is fairly implicit in the Act the duty to take whatever action is required in the interest of broad fairness and avoidance of gross inequity”

o The broad equity standard is inherent in a stabilization program- Also, delegation of power is only for a limited term of months, and the standard developed by

the Executive at the outset limits the latitude if subsequent Executive actiono Act is also subject to the APA, unlike the NIRA from Schecter

Historically Based Price Regulation- charge the prices you charged on date X plus Y

o economists disagree whether system ever works, or should be used to combat inflation

o no simple way to determine what Y is either when there is a Y, this may be called a price cap b/c prices aren’t allowed to

go above price + Y system works as long as relative costs remain constant

o the more time that passes, more likely changes in relative price occur

Schecter vs. Amalgamated- In Schecter, delegation was to industry heads, and it was VERY broad delegation- Substantive guideline in Amalgamated was to avoid gross inequity; this determined by:

o History of wage and price controlso Look at the times (this one passed in emergency economic period)

Here they had contemplated a three-month freeze in congressional discussions, so obvious they were looking to enforce some major regulations

o Also, when the statute was rewritten in 1971, they added that the president had to give reasons for decisions to show that they would not result in treating certain industries in a grossly inequitable manner

o Both Shecter and Amalg are time-limited delegations, which goes to avoiding gross inequity

- Procedural guidelines in Amalgamated were seemingly more important than the substantive ones to Judge Leventhal

o These don’t seem to flow out of Schecter Schecter said need to have open decision-making and intelligible standards

from Congresso Amalg says there needs to be intelligible standards on the part of the Agency as well

as Congress Does this make sense? It means Congress didn’t make the decisions for the

Agency Leventhal says Agencies must have transparent policies so that we don’t

have a problem with arbitrariness; concern is not with the separation of powers

If Congress fails to name standards that give an intelligible principle, then Agency should be able to address these problems on their own; this is a major departure from past practices

“Blank check” rhetoric is blunted by fact that subsequent action by Executive must be in accordance with actions taken in the past;

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standard developed by Executive at beginning limits latitude of future decisions

Canon of constructional doubt: if there is a path that makes a statute valid constitutionally, then take that path (this is opposed to the ATA case, where the judge says it’s NOT constitutional)

- Is Court in best position to decide whether agency made the right decisions?o Usually can’t find specific intent within legislation, so court has to reconstruct

legislative intent

Other Delegation Cases- No SCt case since Schecter has invalidated federal legislation on the grounds of overly broad

delegationo A number of decisions have upheld other delegations that seem fairly extreme (p66)o Occasional decisions suggest the nondelegation doctrine still lives (p67)

- Some commentators advocate a return to more stringent version of the doctrine as a way of preventing the use of agency power for non-public purposes and of forcing legislatures to consider legislation more carefully (p69)

- Others argue the doctrine has met a proper demise (p69)

Industrial Union Dep’t, AFL-CIO v. American Petroleum Institute ( The Benzene Case ) - Industry challenged adoption by Sec of Labor of regulatory standard limiting occupational

exposure to benzeneo Industry set standards for OSHA, but they were not rubber-stamped like in Schecter,

they were reviewed closely Determined .10 was good level

o NIOSH determined that .01 should be used as emergency standard b/c they had determined benzene was a carcinogen

Ct of Appeals refused to adopt this emergency standard 5th Cir said Sec was under duty to do a cost-benefit analysis, and the record

lacked substantial evidence of any discernible benefits- Stevens delivered opinion

o SCt agrees that as threshold matter Sec must determine the toxic material poses a significant health risk, and that a new, lower standard is “reasonably necessary or appropriate to provide safe or healthful employment and places of employment” (quoting §3(8) of the OSHA)

Unless this finding is made, it is not necessary to address the further question whether there must be cost-benefit analysis

Agency must also determine what is a “significant risk” Here, studies failed to show dose-response relations that would predict

cancer incidence at lower exposure levels, so they just set it as low as possible

Unreasonable to assume Congress gave Sec this unprecedented power over American industry

Therefore Sec must quantify the risk, or it would be a “sweeping delegation of legislative power” like in Schecter (BUT, in Schecter you had industry people making the regulations, and here there are non-industry people)

o The benzene standard is “an expensive way of providing some additional protection for a relatively small number of employees”

Petroleum industry would spend $82,000 per employee, and petrochemical would spend $39,675

o Legislative history supports conclusion that Congress was concerned not with absolute safety, but with elimination of significant harm

- Powell opinion, concurring in part and in judgmento Agrees with 5th Cir that agency must do a cost-benefits analysis

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o “standard-setting process that ignored economic considerations would result in serious misallocation of resources and a lower effective level of safety”

- Rehnquist, concurring in judgmento Believes this legislation fails the nondelegation doctrine

He says there are three functions of the nondelegation doctrine: Important choices are made by Congress When Congress does delegate, it provides recipient of that

authority with an intelligible principle to guide the exercise of the delegated discretion

Gives courts ability to test the exercise of delegated legislative discretion against ascertainable standards

He says the legislation here fails all three (so is he saying it should be thrown out? I think so)

- Marshall dissento Responsibility to scrutinize does not authorize court to strike its own balance

between costs and benefits (although plurality did not strike it down on these grounds)

o Language in statute saying “reasonably necessary or appropriate” should not mean “more likely than not”, as plurality says

- What are the three visions of what the statute says?o (1) Marshall and US Govt – any risk requires regulation, up to point where industry

will cave; not accepted by main opiniono (2) Powell and Industry approach – cost/benefit test; regulate when it makes sense in

a cost/benefit analysis; this leaves a lot of discretion; not adopted by Stevens eithero (3) Stevens and majority – when there is a significant risk, regulate; this is a

threshold matter (to determine whether there is a significant risk) But how does one determine what is a “significant” risk?

o Rehnquist says there is no standard at all, so it violates the delegation standard and should be struck down; Stevens uses aggresses Leventhal approach to put in a standard so that statute is constitutional

- OSHA has since developed a mathematical value of sorts to quantify risk: if exposure level increases death risk by 1.64 per 1000, they will regulate

o However, we have different assessment of risks based on culture, age, sex, etc.o Are there risks we are willing to run? “Selective Fatalism” is a term for this (from

Sunstein) Examples: Voluntariness (give higher assessment based on whether risk is

taken voluntarily), who the risk affects (some say it’s ok to value young lives over old lives), dread heuristics (some risks we simply dread – cancer); people also want to eliminate a risk rather than reduce it

Regulation usually reflects these beliefs- three choices for court:

o Marshall: any risk should trigger regulationo Powell: cost/benefit analysiso Stevens: if significant risk is determined, then regulate as far as technologically and

economically feasible- Does the statute assess risk in a conceptual way where lay assessments should be included, or

does it appear to call for expert determinationso Many of these assessments turn on value judgments however based on society’s

wants and desireso Seems Congress wanted experts involved b/c of NIOSH’s involvement

- Stevens is not clear about what constitutes “significant risk”- Can risk assessment be done in a vacuum, or must cost be taken into account?

o Stevens seems to say it should be cost-independent

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o Recent DC Circuit holdings (Michigan v. EPA) have said that Agencies should assume Congress wants a cost-benefit analysis done, unless Congress CLEARLY says to ignore costs in determining risk strategies (Judge Williams, same guy as in ATA); Clean Air Act says must reduce risks that contribute “significantly to nonattainment”, which in Williams’ mind means Congress wants to give flexibility to Agency, but under the rubric of a cost-benefit analysis (“significance” includes consideration of cost, which is how Williams interprets the Stevens opinion); basically sets a default rule that ambiguous statutes include a cost-benefit analysis

o Chevron (post-Benzene, but pre-Michigan v. EPA) is SCt decision that says when there is an ambiguous statute, it’s up to the Agency to determine what it means

This means Marshall’s position in Benzene has won out But Powell’s position is being defended in DC Circuit

o Requirement of cost-benefit analysis seems to make regulatory regimes more rational

o BUT, in past Congress there have been acts requiring cost-benefit analysis for ALL Agency decisions, but they have failed to pass

- No determination of what must be done when a “significant risk” is determined, b/c case was sent back to determine what constitutes a “significant risk”

- So what should be done when significant risk is found? § 3(8) of OSHA (p.55) says adopt practices “reasonably necessary or appropriate”

o § 6(b)(5) of OSHA (p.55) says “to the extent feasible”o Cottondust – SCt says Congress would have said directly if they wanted pure cost-

benefit analysis; paramount concern is workers’ safetyo Can always remand it and allow Agency to determine what these terms mean

- How does the nondelegation doctrine help us in deciding between the three opinions in Benzene?

o Pushes us in direction that constrains the Agency the mosto Seems that Stevens’ approach gives more discretion than Marshall perspective,

which is an automatic trigger This regime (Marshall’s) would be very intrusive however b/c there would

be a lot of regulation This is perhaps Stevens’ point on p.59 (see star) Also, Stevens’ regime forces a public account of what constitutes a

significant risk (gives more transparency to decision); Marshall’s plan means they only need to explain why they did regulate, not why they didn’t

- So what did Congress really want here?o One canon of construction: interpret statute in way that does not stir the waters too

much (proportional construction, rather than a draconian construction) Under this, the error costs aren’t as high if a judge gets it wrong Also less of a chance that Congress is going to have to get involved (with

draconian regime, more people would freak out and Congress would be more likely to have to respond); may be more of a public relations problem for Congress too

- Very broad language in a statute:o Can strike it downo Can pour content into ito Can allow Agency to determine it

Does this take into account the separation of powers aspect of the nondelegation doctrine? (See the three reasons for nondelegation, as put forth in ATA; Williams says that the third reason, separation of powers, is not as important so we can allow the Agency to determine it)

American Trucking Associations v. Environmental Protection Agency (The ATA Case)- Clean Air Act Issue

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o § 109 EPA sets standards for national ambient air quality (NAAQS)o Scientific experts give advice

- Biggest Administrative Law case in this time; both sides have been granted cert by SCt- Court ruled cost can not be considered in assessing the standards- EPA decided to reformulate standards for ozone

o Had been at .09ppmo Advice was to set standard from .07 to .09ppm, but said it was a policy decisiono Decision was to set it at .08ppm

Scientific community didn’t prefer .07 Effects at .07 are closer to background levels which can’t be differentiated

from those caused by peopleo Also redid standards for fine particulate matter

- What are the intelligible principles used here?o Look at the three principles for relaxing the nondelegation doctrine on p.3, which are

absent hereo Must look at statute itself tooo Cost-benefit analysis was off the table b/c of holding in Cottondust

- Court looks for standards that will guide Agency in future (intelligible standards)- Court (DC Cir) finds construction of Clean Air Act on which EPA relied effects an

unconstitutional delegation of legislative power, and remands case for EPA to develop a construction of the act that satisfies this constitutional requirement (vacates coarse PM standards, and invites briefing on question of remedy for fine PM standards)

o EPA has articulated no “intelligible principle” to channel it application of the factors used in determining the degree of public health concern

§109(b)(1) says EPA must set each standard at the level “requisite to protect the public health” with an “adequate margin of safety”; however, there is no determinate criterion (says court) for drawing lines

EPA used CASAC (Clean Air Scientific Advisory Committee) number of .08, but this body gave no reasons for its recommendation

EPA frequently defends decision on basis that there is greater uncertainty that health effects exist at lower levels, but no principle reveals how much uncertainty is too much

EPA recognizes that the question is one of degree, but offers no intelligible principle by which to adopt a stopping point

They are free to pick any level from zero up to the killer concentration of London’s Killer Fog

o There are no special conditions that justify a relaxed application of the nondelegation doctrine either (like a war)

o Court does not strike down statute, rather remands it so agency can extract a determinate standard on its own

No ex ante specifications as in Amalgamated Meat Cutters—goes to arbitrariness concerns—doesn’t speak to separation of powers concern See two justifications for the delegation principle given in Schecter

There is no safe level here—no intelligible standards by which to chose one level over another

Policy decision This is a matter of politics Courts get nervous when they think that decisions are being made because of

politics as opposed to expertise—but this is good because is executive is subject to democratic control

Expert body couldn’t come to any consensus Sunstein—process of ceiling and floors

Agency should come forward with regulation and describe more strict and less strict regulations and describe why those weren’t chosen

o

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- Suggestions for how the EPA can changeo Can NOT use cost-benefit analysis b/c EPA not allowed to consider any factors other

than health effectso In theory, could set all at zero, but that’s not what anyone wantso Could develop a rough equivalent of a generic unit of harm that takes into account

population affected, severity and probability (Oregon system) Must give appropriate weight to persons with disabilities

o If no principle is available, can go to Congress with rationales for its choice and seek legislation ratifying it

Other alternatives for Judge Williams given his view of the statute (wants to leave the EPA with some flexibility) Could have decided what the statute requires through aggressive statutory

interpretation as in Benzene Could have struck the statute down as unconstitutional—make Congress go back

and re-legislate Could have looked to whether decision was arbitrary and capricious

Doesn’t require ex ante specification Each decision has to be reasonable and well explained

Some argue that this is ATA is really a arbitrary and capricious decision with a big hammer

Pragmatic problems with requiring ex ante standards and holding them to those: Might reduce the agency’s flexibility in ways that the agency may regret Ossification—procedures for changing ex ante standards may be so arduous that they

are unlikely to change Error costs—shift costs from the legislature to the agency

- DISSENTo §109’s delegation is narrower and more principled than delegations the SCt has

upheld since Schecter See p6 for list of times that SCt granted broad delegations

o First Circuit upheld constitutionality of Clean Air Act’s “requisite to protect the public health” language in South Terminal Corp. v. EPA

o Clean Air Act also requires EPA to base standards on criteria that accurately reflects the latest scientific knowledge

EPA did this by adhering to the CASAC’s recommendationso .08 was good number b/c levels below this were found in natural occurring

environmentso See p8 for summary of argument

The Executive and the Agencies

- Serious coordination problem exists within federal govto In many areas, potential conflicts and overlaps of dutieso Legal Circumstance: many statutes give the legal power to make regulatory decisions

not to president, but to head of agency, cabinet secretary, commission, etco Political circumstance: constituencies affected by a particular regulatory decision

often have ongoing relationships with Congress of the agency, but not necessarily the White House

o Other groups likely to be better informed about details of a particular matter than White House

o Problems exacerbated by Congress’s growing tendency to create more and more subcommittees

- President’s control over administration has been governed by two SCt decisions for much of the century, Myers and Humphrey’s

Unitary Executive Branch

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Three views (1) Strong—everything that is executive or administrative has to be done in a way that it is in

the domain of the President—everyone who helps the President is under her control (2) Weak—there are some executive or administrative functions that happen under the

President but others are not controlled by the President—this view is mostly concerned with checks and balances

- (3) The President has the ability to fire all the administrative officers at will

Myers v United States- Strong view- Myers was postmaster under statute that said he could be removed by President with advice

and consent of Senateo Govt claims removal was lawful b/c it’s unconstitutional to limit the president’s

power to remove an executive branch official by requiring Senate’s agreement- SCt agrees: power to remove subordinates is inherently part of executive power in Art II, § 1

o Constitutional provisions: Article II, §1—executive powers vested in the president President to see that laws are faithfully executed Opinions clause

o Moment president loses confidence in his subordinates, he must be able to remove him w/o delay; delay in going to Senate is untenable

o Doesn’t matter what duties the guy was performing But if he’s doing acts that may be quasi-judicial and president can’t

properly control them, pres can let him go only if actor has not intelligently or wisely exercised his functions (so president does discharge his own constitutional duty of seeing that the law be faithfully executed

o Senate CAN limit the power of pres to remove inferior officers, but they had not given President any particular power here, so Myers appointment must be considered a major one and hence be left to discretion of president

Requirement of Senate consent History—Decision of 1789 (p 78-9)—Departments of War, Treasury and Foreign Affairs

Three possibilities Fired by President alone President plus advice and consent of Senate Congress’s discretion to decide what the procedure should be

The original Congress believed that the Constitution required the President to be wholly in control of these officers

But legislative history is contradictory—eg Treasury was somewhat insulated from President (Comptroller—prosecutorial position—was pretty independent) as opposed to War and Foreign Affairs

Exceptions Inferior officers—Congress has the ability to vest the appointment in whichever branch they

want—for civil service (comes from Constitution) Quasi-judicial function—comes from due process concerns

o Congress specifically vests the decision in the agency administrator

Humphrey’s Executor v. United States- President trying to remove Commissioner of FTC- Govt says removal provision in § 1 is unconstitutional interference with power of Pres, a la

Myers SCt says here that Myers only applies to purely executive officers; FTC is not an arm or

eye of the executive, and it acts in a quasi-legislative and quasi-judicial manner (FTC has adjudicative powers and performs as an arm of Congress for fact-finding, etc.)

Basically, Congress has power to create “independent” regulatory agencies

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o Power of pres to get rid of commissioner threatens independence of the commission and infringes on separation of powers

o He could get rid of commissioner only for one or more of the causes names in the applicable statute

- Future decisions depend on the office in question Translators—faithful to Framer’s principles but adopt structures that didn’t exists because of

change of times (Abner Greene) The Constitution is not a set of rules but standards which can be altered to effectuate the

intent of the Framers Larry Lessig—the Weak conception is right but this must be translated into Strong

conception for modern times because of voting- There is no Congressional aggrandizement in this case

- 4 ways to read the power of a president:o Strong, based on history (Currie)o Weak, based on history (Cooper)o Strong, based on text (Lessig)o Weak, based on text (Abner Greene)o Scalia says strong, based on both history and text

Weiner v United States- Suit for backpay based on alleged illegal removal as member of War Claims Commission- Congress made no provisions for removal, and here President did it- Must look to nature and function that Congress vested in this Commission

o Congress did not want Pres to influence Commission in its decisions on particular claims, so a fortiori we can infer Congress did not want Pres to fire them for his own reasons

o No power is implied by the lack of specificity in the statute either- What are president’s powers when statute is silent on firing?

o Must look at what the job entails Agency is involved in pseudo-judicial acts (adjudicatory functions), or

needs to have independent functions, then should read into statute that president can’t interfere

Independent agencies- Often have more than one head- Often have mixed terms of years so they all don’t change at once- Congress usually feels they have more influence (but Garrett says this isn’t necessarily true)

The Legislative veto- Clause in a statute that says a particular executive action (by a pres or agency) will take effect

only if Congress does not nullify it w/in specified period of time- Three essential elements:

o Statutory delegation of power to Executiveo Exercise of that power by Executiveo Reserved power in Congress to nullify that exercise of authority

- Advocates say it allows Congress to reclaim some of its original constitutional responsibilities- Also shifts preference to sitting Congress, b/c you have to get it past this Congress, not the

enacting Congress; so try to mold bill away from original intentions, and look to the current Congress

o BUT, maybe this takes account of changes in the political environment- Congress may want to protect itself from delegating too much power, and this is the easiest

way to keep some of this power- Congress also wants to keep some powers for itself

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o Had delegated power in Chadha to Atty General so decisions were made with less political shenanigans; perhaps they were ruing this decision

- Purpose is to get more control by Congress into the decision-making process

Immigration & Naturalization Services v. Chadha- Atty general suspended Chadha’s deportation, but section of statute allowed Senate or House

to disallow a suspension, and they did so; the decision was made with no public hearing and no recorded vote (basically a one-house veto)

- SCt analyzes the Presentment Clauses of Art I § 7:o Every Bill, Order, Resolution or Vote shall be presented to the President for approval

This was uniformly accepted in the records of the Constitutional Convention

Represents effort to check power of Congress Also assures that a “national” perspective is grafted on the legislative

processo SCt also looks at Art 1 § 1, which says power consists of House AND Senate

Bicameral requirement ensures legislation won’t be passed unless looked over by both groups and debated

- This action by House can only be done in one way: bicameral passage followed by presentment to President

o This is because it was a legislative action, so it must be subject to standards in Art I- There are only four provisions in Constitution where one House can act alone without review,

not subject to veto of president (see p.84)o This action does not follow within any of these

- Court strikes it down based on intrusion on separation of powerso Delegation cases: some agency is making legislative decisions, and thus impinges on

separation of powers Courts just want “intelligible principles” Delegation is a matter of degree, and when it goes too far it must be

overturnedo This case: Congress is trying to legislate without using bicameralism and

presentment to president, so this too impinges on separation of powers More formalistic kind of test here and Bowsher and Line-item veto case

(Congressional aggrandizement) than the delegation cases - why this change?

Is there difference when Congress delegates too much, versus where Congress continues to use its power AFTER it delegates?

In over-delegation cases, Congress can constrain through time limits, can give power to agency not under president, can influence through budgetary actions; Congress in effect can protect itself

In Chadha, can Executive protect himself? Could veto bill, but then he has to veto entire bill; Congress aggrandizes, and Executive has no real way to protect itself

o Would Congress have given this power to Atty Gen w/o a legislative veto? Is it “severable”?

- DISSENT: J. White’s formalistic argumento Says court killed off over 200 statutes where Congress has a legislative vetoo Ct should have rested decision on separation of powers onlyo The legislative veto does not give Congress power to write new law, just undo what

an agency or Executive dept has proposedo Art I § 8 – Necessary and Proper Clause

Power to make all laws necessary and proper, and Congress can make this decision in its best judgment

o SCt has allowed independent agencies to use a veto power, but now says Congress can’t have the power itself

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o The legislative veto is a necessary check on the unavoidably expanding power of agencies

- Debate over Chadha reflects two styles of constitutional interpretation, one stressing text and original understanding, the other broad purposes

- Congress still has some powers that allow it to accomplish some of the veto’s objectiveso Can require legislation delegating authority expires every so often so it’s reviewedo Can tailor statutes to limit executive powero Congress makes the budgets for each agencyo Can condition legal effect of delegated authority on subsequent enactment of a

confirming statute- Many courts have upheld statutes b/c the veto was “severable” from the rest of the statute,

meaning Congress would have passed the statute w/o the vetoLegislative Vetoes, cont.

- Are details in committee reports the law? Noo But if Executive branch ignores these reports, appropriations committees may not

give them as much money- It’s a give and take: allow president some discretion, but still keep a legislative veto- There hasn’t been a formal exercise of a legislative veto since Chadha; the vetoes are put in

bills as more of a threat- Why do you see these in cases of appropriations in particular?

o Legislative branch wields much power in area of appropriations, and is aware that any giving away of this power dilutes their own power

Bowsher v. Synar- Can Congress constitutionally delegate to comptroller general the power to review estimates

of likely budget deficits, to determine if deficit will exceed specified amount, and if so, how much money a President must sequester (not spend) in particular programs

- SCt say Congress can’t reserve for itself the power to remove an officer charged with execution of the laws except by impeachment

o Statute said Congress could remove him at any time for one of five reasons (see p.91)

- Congress has attempted to intrude into the executive function b/c this job is executive in nature, so only president can control

- OMB had always been under control of the Executive historicallyo 1974 Congress took some of this power by saying any appointments had to be given

the advice and consent of Congresso Structure changed in 80’s to where there were a series of deficit targets in hopes of

eliminating the deficit completely Delegated sequestration power in hands of comptroller general (watchdog

of Congress – oversees spending), who was seen as an impartial judge, a third party

Sequestration: cut everything by uniform percentage, as required to reach target

o Some programs specifically exempted out (Social Security), and some limited cuts (Medicaid)

o In general though, a pretty automatic procedure Hope was that sequestration threat would force Congress to make

the hard decisions; but Congress simply raised the deficit targets so there were no sequestrations

- Ct does not say it’s too broad a delegation, nor do they say it’s an independent agency; problem is that it’s a delegation to someone under control of Congress

o Power of removal was limited to five particular factors (p91)

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o President could not fire comptroller alone, and could not initiate firing either- Holding: Executive power can’t be controlled by Congress

o The sequestration power is an Executive power, so it can’t be controlled by Congresso Entangles Congress too much after the lawmaking has already been done; it’s

Congressional aggrandizement This assumes that President can’t protect himself

- DISSENT (White)o SCt being too formalistic hereo “necessary and proper” clause allows for thiso President accepted statute, so it’s oko No threat to separation of powers

- DISSENT (Blackmun) Sever removal authority and allow rest of statute to stand

Status of Independent Agencies- Humphrey’s Executor legitimates existence of independent regulatory commissions, defined

as those agencies whose heads do not serve at the pleasure of the presidento Bowsher and Myers can be read as cases of encroachment and aggrandizement,

whereas Humphrey’s can be read as a case of independence (and hence, constitutional)

Scalia in Morrison argued in his dissent that Humphrey’s held Congress could create independent agencies only if commissioners exercised quasi-judicial and legislative functions

MWAA – SCt held board was a constitutionally invalid encroachment by Congress

If board’s powers were executive, Bowsher forbids vesting of such power in agents of Congress

If board’s powers were legislative, Chadha requires that such powers be exercised through the normal legislation process

- Two efforts to reconcile these cases:o Cases in general suggest Ct will uphold legislation delegating power when:

The power is at least arguably related to the basic function of that branch The specific text of the Constitution does not forbid the delegation The delegation of the power to one branch does not unreasonably interfere

with the ability of a different branch to carry out its constitutionally mandated duties

o Independence is acceptable, encroachment and aggrandizement are not Key question is whether there is independence (which is acceptable so long

as president can exercise his constitutional functions) or encroachment and aggrandizement

- The “Independent” Agencieso For a list, see p100

Independent b/c Congress has limited president’s authority to remove their leaders

o From a strictly legal point of view: Congress limits presidential removal authority, and this creates

independence President can’t dictate policy to any unit insofar as that policy runs counter

to the statute under which the unit operateso From practical point of view

President can often determine who will run agency, despite what statute says

But there are some executive department officials that president can’t remove, so the organizational position does not necessarily correspond with policy independence

President has other ways to affect policies of independent agencies

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DOJ often intervenes in agency proceedings President retains control over some selections of certain agency

personnel Pres controls budgets Pres can introduce substantive legislation and reorganize govt

Hypothetical- Commission setting salaries is set up with 2 legislators, 2 judges and 2 executive officers

(presidential appointees); is this constitutional?o The two legislators:

Not if the commission is supposed to be a type of executive power, b/c there are legislators exercising executive power (Congressional aggrandizement)

Not if it’s legislative power either, b/c legislators are gone based on Chadha (legislators are legislating without going through bicameralism)

o The two judges Depends on whose salaries we are talking about; under Mistretta, judges

can be involved in areas where their expertise is warrantedMistretta v. United States

- SCt upholds constitutionality of the US Sentencing Commission, a body composed of 7 members, statutorily located in “judicial branch”, with legal power to write sentencing guidelines binding on federal judges

- P claims Act violates separation of powers; SCt says noo Framers did not believe the branches should be entirely separate and distincto Congress’ decision is not unconstitutional unless they vest in the Commission

powers more appropriately performed by other branches or that undermine the integrity of the Judiciary

o SCt has approved the assumption of other nonadjudicatory activities by judicial branch

Substantive judgment in field of sentencing is appropriate to the judicial branch, and the methodology of rulemaking remains appropriate to that branch

o Service on commission will not interfere w/ judges’ ability to carry out normal worko President has power to appoint and remove judges to the commission

Act does not allow president to interfere with status of Art III judges however; and his removal power is limited

o Congress neither delegated excessive legislative power nor upset the constitutionally mandated balance of powers

Line-Item Veto Case – Clinton v. New York- Original case brought by Senator Byrd, but SCt said he did not have standing; only if member

of Congress can show his vote was rendered null and void can he have standing, especially given that private parties could bring suit in the future

- President has amended two Acts of Congress by repealing a portion of each, and there is no provision in Constitution that authorizes President to enact, amend or repeal statutes

o Art I, § 7 allows for president to “return” a bill, but this is different b/c it occurs before the bill becomes law, where the cancellation occurs after the bill becomes law

o Constitution is silent on subject of unilateral Presidential action that either repeals or amends parts of duly enacted statutes

Ct says this silence should be construed as an express prohibition- Govt relies on Field v Clark, which gave President power to suspend tariff exemptions on

other nations unilaterally

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o Ct says this case is dispositive for three reasons: Power given to pres then was contingent upon a condition that did not exist

when the Act was passed Pres had duty to suspend when certain things occurred; here he has

discretion Pres was not relying on his own policy judgments, like here

- Critical difference between this statute and all predecessors is that this Act gives pres unilateral power to change the text of duly enacted statutes

- Act’s cancellation provisions violate Art I, § 7 (and hence it’s unnecessary to address separation of powers)

o Any change in this power must come through a Constitutional amendment- Garrett thinks this should be analyzed as a delegation case, not under Chadha, and that under

current state of delegation doctrine Act is constitutional Garret’s concern with the court’s analysis is that it throws into some doubt sequestration

and other kinds of impoundments that have been used for several years—eg Antideficiency Act—these have been taken as being relatively unproblematic

Now, all of these things may be seen as rendering a law without force or effect and thereby amending legislation—but these things relate to appropriated monies as opposed to that which is under consideration in the Line Item Veto Acto If refusal to spend money is legislative (as majority says), than all impoundments

should be legislative How Ct defines cancel – “render without legal effect”; this affects their

outcome With respect to tax provisions and entitlements, the cancellations are not considered

to be rescissions which changes the court’s view significantly The court didn’t take the pragmatic delegation approach—had the court used the

delegation approach and rendered the Act unconstitutional, this decision would have thrown the whole administrative state into doubt

- Line-item veto in state governments allows governor to cut out (usually appropriations-related) things after a bill is passed

o Here, president has to sign into law the bill, then he has five days to cancel certain spending provisions and must alert Congress to the cancellations; if Congress doesn’t like the cancellation, they can enact a disapproval bill to try and override the cuts, which would need 2/3 majority to override the president’s eventual veto; if Congress does NOT act, the spending does not occur

Applies to 3 types of spending Appropriations (defense, for example) – 79 of 82 cancellations

were here; most gubernatorial veto acts only addressed this type of spending, and it’s rather routine

NEW items of direct spending (entitlement spending – Social Security, Medicaid, etc)

Tax expenditureso So it’s NOT an actual line-item veto as we know it from state govts

- Sort of depends on whether we take a pragmatic approach or a formalistic approacho Is there specificity, or does it violate delegation doctrine

- Should have called it a cancellation bill insteado Here, president had more discretion than OMB had in Bowsher; Scalia and Breyer

make it out to be an easier case than it really is Bryer and Scalia Analysis—looking at act from delegation perspective

Standards—not overwhelmingly specific Language has three requirements—the cancellation will (1) reduce the federal budget

deficit, (2) not impair any essential governmental functions, and (3) not harm the national interest

Legislative history has other requirements—eg want the President to get at special interest legislation (pork)

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Legislative intent is tricky here because the immediate intent is to enact the given provision but there is also the meta-intent that is to allow the President to cancel certain provisions—this suggests that Congress’s interest in the Line Item Veto Act is primary because otherwise Congress could have exempted the particular provision from the Line Item Veto Act

This is a time-limited delegation Will the agency itself create some of its own cabining procedures?—the President didn’t

really do this here The Joint Tax Committee described what it would see targeted provisions to be, gave

examples of targeted provisions, described what 100 affected entities would be, etc—this was used by lobbyists to created laws that would not fit these descriptions

- Bryer’s idea of separate enrollment—you take one bill and then split them into separate bills and the President can either enact the one big bill or whichever of the separate bills he wants—Constitutional problem?—One Congress person could seek to unravel the bill

- Scalia, DISSENTING in parto Only individuals can bring suit, as statute says, so any the one guy can bring this

suit; but he would hear case on writ of certo No difference between Congress authorizing money to be spent on particular item at

president’s discretion and authorizing him to cancel a spending itemo Presentment clause has been fully complied with here, so does not violate Art I § 7

- Breyer, DISSENTINGo Act is constitutional b/c does not violate any specific textual constitutional

command, nor does it violate any implicit separation of powers principle No need to referee dispute between other branches Pres did not repeal or amend a law, he simply followed the law as written;

he has simply executed a power delegated to him by Congress Congress has delegated this type of power before

o No violation of separation of powers; must ask three questions: Has Congress given Pres non-Executive power? No Has Congress given pres power to encroach upon Congress’ own

constitutionally reserved territory? No Has Congress given away too much power, violating the doctrine of

nondelegation? Is there an “intelligible principle”?

o Act creates a principle in 3 ways: procedural, purposive, and substantive

Court has upheld equally broad delegationso Admits that Pres need not develop subsidiary rules, as agencies often do, and pres’

actions aren’t reviewable; but these aren’t determinative

Notes on the case- Since 1974 pres has been able to rescind federal spending, so in some ways the Line Item

Veto is just a change in way Congress authorizes rescissions- See p21 (AdLaw) for ways Congress may try to get around this decision

Homework pp102-138

Presidential Control of the Regulatory State- Recently, presidents have agreed that some centralized review of agency regulatory policies is

important, and they have created a review system that has emphasized both coordination and cost effectiveness

o Review now takes place in OMB, in the Office of Information and Regulatory Activities (OIRA); the administrator is a high-ranking politically appointed official

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o Major constitutional source for this review consists in article II’s statements that the “executive power should be vested in a President”, that “president shall take care that the laws be faithfully executed”, and that he “may require opinion, in writing, of the principal officer in each of the executive departments, upon any subject relating to the duties of their respective offices

Executive Orders This is not a partisan issue The main actor is the OMB and in particular of OIRA A shift from thinking that politicians set policies but administrators are experts who

administer policies in a non-political way to the growing role of the OMB which recognizes that politics is difficult to sequester and is not illegitimate in regulation—and the politics in regulation should be done by a politically accountable body

A desire to inject cost-benefit analysis The President should play a more limited role There has been overall poor priority-setting (Bryer p 192-93) There has been a mismatch in the tools of regulation and the problems they aim to solve There has been insufficient attention paid to the effects of regulatory decisions This is the way the President is making sure that the laws are being faithfully executed Clinton includes independent agencies in the ambit of the Executive Order

Humphrey’s Executor says that the independent agencies should be insulated from any other body

Part of the Take Care clause or faithfully executing the laws means that the President should have control in this way over independent agency

Ultimately, the decision for how to regulate remains in the agency’s hands—the agency head can even disagree with the Vice President

The executive orders nevertheless have profound influence over the regulation process

Clinton’s Executive Order (12,866) – see other outline OMB can’t delay agency rule-making—series of deadlineso No judicial review allowed by the request of individualso See outline for details of various Executive

Proposals for super-mandates in Congress that require cost-benefit analyses- Executive Orders don’t vary terms of underlying statutes; if statute says don’t use cost-

benefit, don’t use it- Legislative proposals would affect ALL statutes and force cost-benefit analyses on all

How to divide power among the branches of government- JW Hampton: “intelligible standard”- Amalgamated Meat Cutters – agency restrains itself through ex-anti standards- Chadha, Bowsher: Congress grabs power- What makes sense pragmatically? How do we achieve goals?

o Need understanding of institutionso Need to check ambition with ambitiono Chadha, Bowsher, Line-Item Veto: modern state demands creativity b/c it’s so

complex says Garrett

Agency’s Power to Adjudicate

Crowell v Benson- Under what circumstances does article III require a court to decide a matter? To what extent

does it forbid Congress to take a matter away from courts and give to agency for a decision?

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o In Crowell and several other cases, SCt has referred to or used concept of “public rights” in an effort to determine whether Congress can grant adjudicatory power to nonjudicial body

- Why would Congress want agency to adjudicate disputes under Longshoremen’s Act?o Specialization of agencyo More uniformity, better procedures perhapso Congress concerned courts hostile to laboro Commission more affiliated with Congresso It’s a less formal process, so perhaps people feel they are more connected to the

process; but does this impinge on due process?- How can Congress delegate this without contravening Constitution?

o Not clear that ALL powers must be within one, single branch (so not all judicial power must be in judicial branch)

o Necessary and proper clause gives Congress oko Agency decisions subject to court review, so Art III power not really infringedo More flexibility to adjudicate public rights versus private rights (Art III arguably

only applies to private rights) What’s the difference between the two rights?

Public right: suing federal govt on claim over which govt has waived sovereign immunity; Govt has ability to avoid claim completely with sovereign immunity, but waives this, then they still have ability to put case in a federal agency

- How does Court come to the outcome in this case and differentiate it from the Marathon case?o Private right here is one created by federal statute, not one in common law

Marathon – Ct in plurality makes distinction between public rights, which are between the govt and others, and private rights, which involve the liability of one individual to another; there can be no constitutional objection to committing public rights to an administrative agency

Schor – O’Connor repudiated Marathon and reaffirmed Crowell, in a sense, saying the public-private distinction is not determinative, although danger of encroaching on the judicial power is less when public rights are involved (so maintains separation of powers)

o Greater involvement of Art III courts here What kind of review must Art III court conduct on questions of law?

Here they say de novo What about on questions of fact? Crowell establishes two-tier system:

Constitutional and jurisdictional facts get de novo reviewo Here, did injury occur on federal waters? This is

constitutional issue that turns of the fact-finding, as opposed to determining if actor was drunk, which has no constitutional issue

Otherwise look at whether fact-finding is supported by “substantial evidence”

Turns out that courts don’t follow this two-tier system, give all agency fact-findings same standard of review, except for one area: determining whether someone arrested is an alien for immigrant purposes

Crowell not overruled though, but courts just don’t really follow it Brandeis says de novo review not good b/c loses expertness of agency

which increases chance of error (higher error costs); also increases decision costs (duplicate work)

May want some infusion of political values, so want agencies On the other hand, what would be problem with having NO appellate

review at all? Agency won’t have to support decisions as strongly b/c not subject

to review; decision costs are lower b/c less scrutiny involved

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- Two important lessons of Crowell:o Despite private v. public rights distinction, as long as there is supervision by Art III

courts private rights will be enforcedo Courts routinely defer to fact-finding results of agency, so de novo review isn’t that

important

Questions of Fact

- NLRB v. Universal Camera Corp (I) – 2d Ciro Arises on a petition to enforce an order of the NLRB, whose direction was to

reinstate an employee with back payo Examiner found employee was rightfully discharged, but NLRB overturned this

decisiono Question is, how does court treat the reversal by the NLRB?

Ct says it’s impossible to consider the Board’s reversal as a factor in the court’s own decision (so disregard the Examiner’s findings)

- NLRB v. Universal Camera Corp – SCto Statutes require courts to uphold rulings on “questions of fact, if supported by

substantial evidence on the record considered as a whole” o APA and Taft-Hartley Act require courts to assume more responsibility for the

reasonableness of NLRB decisions than some courts have shown in the past Board’s findings are entitled to respect, but must be set aside when

unjustified/unreasonable Plain language of statutes require courts to look at all evidence, including

examiner’s report (remands to 2d Cir for further deliberation)o SCt gives examiner’s findings some undefined weight as a relevant part of the

record, and sets aside agency’s decision if it does not meet the substantial evidence test

- NLRB v. Universal Camera Corp (II) – 2d Ciro Ct examines record as a whole, and rules that NLRB was incorrect and should have

dismissed complainto Concurrence makes distinction between primary and secondary inferences (see

p217), which are dependent on witness testifying and determines what the NLRB must accept and what they need not accept

Universal Camera Litigation as a whole- Key facts:

o Question of appropriate standard review of NLRB, an independent agency, for findings-of-fact that are in a record

o Employee says he was fired b/c of anti-employer testimony he gave at a hearing; employer says guy got fired b/c he was insubordinate

o Hearing officer finds in favor of employer, NLRB reverses- Three holdings in Universal Camera:

o In deciding whether there is substantial evidence supporting a finding of fact, court should look at whole evidence on the record and not just evidence supporting decision

o What is substantial evidence? 1st decision: very deferential to Board’s decision, and closer to “no review”

than de novo After SCt decision, move closer towards the de novo side (but still more

deferential than not) Here, organic statute requires substantial evidence, as did APA; always

follow the organic statute, only use APA if statute is silent on review

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How does APA see role of courts vis-à-vis agencies? Courts must assume more responsibility for reasonableness and

fairness of Labor Board decisions than some courts have shown in the past (p212); so in other words, more than the 1st decision but still not de novo

o What happens when expert (ALJ – hearing examiner) decides one way, and Board decides another?

Whose fact-finding do we believe more? 1st decision said ignore ALJ’s decision; SCt says no, can’t do this,

need to take account of what ALJ foundo ALJ is closer to the decision, sees witnesses and hears

testimony in person But Board may have a better feel for the policy as a whole

Frank, J. says should give more weight to primary inferences (which depend on testimony on which ALJ was present at) and less to secondary inferences (facts which ALJ inferred from oral testimony) – see p217; Garrett likes this

- Substantial evidence, defined in hornbooks: such relevant evidence as a reasonable mind may accept as adequate; do more than create a suspicion; must do enough to justify (if it was jury trial) refusal to direct a verdict; assess not the correctness, but the reasonableness

o Expertise really matters in fact-finding- What about questions of law, or questions of fact and law mixed together?

o The Benzene case: a question of lawo Not a lot of deference to the agency here

- Alternative standards of reviewo Substantial evidence test is dominant standard for judicial review of factual

determinations by agencies, at least in “on the record” proceedings This is specified in the APA, §706(2)(E) But in informal proceedings, APA calls for arbitrary or capricious review of

agency decisions, including decisions involving factsUniversal Camera (in a nutshell)

- Substantial evidence standard for review of facts- Court looks to entire record, which includes findings of ALJ and agency- ALJ’s determination of credibility should be given weight

Questions of law, and mixed questions of law and fact

- United States v. 53 Electus Parrots o Decision is based on determination of what “wild” means in the statute; court adopts

govt position This is a question of law, and then apply the facts of the case

- Some (esp legal realists) urge that distinction between questions of law and fact is manipulable, depending on whether judge wants to exercise control (question of law) or defer to agency (fact)

- A major question is what standard of review should be used for mixed questions of law and fact

- NLRB v. Hearst Publications o Question is whether paperboys are considered employees under the NLR Acto Ct looks at history, terms and purpose of legislation to define employee

Under common law, they are independent contractors, not employees Board says newsboys are employees under the Act, and the Court agrees This is a pure question of law

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o “Questions of statutory interpretation, especially when arising in the first instance in judicial proceedings, are for courts to resolve, giving appropriate weight to those whose special duty if to administer the questioned statute. But where the question is one of specific application of a broad statutory term in a proceeding in which the agency administering the statute must determine it initially, the reviewing court’s function is limited.”

Board’s determination is to be accepted if it has warrant in the record and a reasonable basis in law, as it does here

Basically says in regards to pure issues of law, courts do NOT defer; they may give appropriate weight to agency, but courts really do the statutory interpretations; in questions of mixed fact and law, the decision is more like the fact questions and hence more deference should be given to the agency

This means that there is an important distinction to make between questions of pure law and ones involving facts

- These cases leave us with a murky situation, where one must make a distinction between fact and law

o Under Chevron, even pure questions of law should look to agency and its policy considerations for some guidance

Legislative Rules versus Agency Interpretations (legislative vs interpretive rules)

- Skidmore v. Swift o Ct tries to determine whether time spent by firemen constitutes overtime under the

Fair Labor Standards Acto Administrator has promulgated bulletins, which Ct discusses

General tests point to exclusion of sleeping and eating time and inclusion of all on-call time

o Skidmore test: rulings, interpretations and opinions of Administrator under this Act, while not controlling upon the courts by reason of their authority, do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance; the weight of such an agency judgment will depend on (1) the thoroughness evident in its consideration, (2) the validity of its reasoning, (3) its consistency with earlier and later pronouncements, and (4) all those factors which give it power to persuade, if lacking power to control

o Seems to be a question of law: what constitutes working time? And the activities that the firemen are doing, so they fit under this definition?

Judiciary will have a free hand here, but they can give appropriate weight to the agency (as Hearst case orders)

o FLSA gives administrator enforcement powers only, and to courts the responsibility of legal determinations; so courts have substantial leeway here, even with mixed questions of law and fact

o Appears to give less deference in mixed-questions, then was given in Hearst

- Legislative vs. Interpretive rules:o Legislative: product of an exercise of delegated legislative power to make law

through rules If constitutional, within the granted power, and properly issued, is “law” as

if it were a statute, and is “controlling upon courts”

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Batterton v. Francis : If Congress expressly delegates a power to prescribe standards, the regulation can only be set aside if Secretary exceeded his statutory authority, or if regulation is ‘arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with law’

o Interpretive: any rule an agency issues without exercising delegated legislative power to make law through rules

Not binding on a court, but may have power to persuade, if lacking power to control (from Skidmore)

o What determines HOW much deference will be given to a rule, legislative or not? Thoroughness evident in its consideration, the validity of its reasoning, its

consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control (from Skidmore)

Was agency’s interpretation made near time statute was enacted, is interpretation long-standing?

Nature of agency’s specialized experience Sometimes Congress gives instructions as to how much weight should be

given to an agency’s viewso How should a court interpret a Congressional statute?

Legislative history, language, structure, history, purpose of program, and also factors mentioned directly above

o Two reasons why court might defer to agency: Statute granted agency discretion to decide issue Court might accept agency’s resolution as presumptively correct

Court here will be more reluctant to allow agency to change a long-standing interpretation, as opposed to first reason

o Sometimes agencies with legislative authority choose to issue interpretative rules instead; these are usually easier to adopt, have less formal requirements

o How can we tell the difference between the two? Does rule itself provide enforcement action to ensure performance of duties Is rule published in Code of Federal Regulations Agency tells you it’s a legislative rule Rule effectively amends a prior legislative rule Judge Williams has four questions to ask which determine if it’s a

legislative rule (see p247)o Deciding whether Congress has given agency power to promulgate rules with the

force of law may be difficult

Chevron: Synthesis or Revolution- Chevron v. Natural Resources Defense Council

o Case concerns interpretation of “stationary source” in Clean Air Act Under Reagan, this was viewed as a plant-wide source, so could get permits

as long as entire plant went down in pollution, even though some of the factories within the plant actually increased pollution; previously under Carter, all individual factories had to get permits (which applied to the individual factories, not the entire plant)

Ct of Appeals said this definition would undermine Congress’s goal of speedy compliance with national air quality statndards

SCt reverseso Seems to be a question of law: what does stationary source mean in this statute

Under older cases, the court would decide this But the SCt gives deference to the Agency instead (BIG CHANGE)

With respect to regulatory statutes, the Ct is changing so that questions of law are deferred to agency

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Under Chevron, agencies and Congress determine meaning of the law

o Chevron 2-step: (1) If intent of Congress is clear, court and agency must give effect to the

unambiguously expressed intent of Congress Case is at an end Courts must use “traditional tools of statutory construction” to

ascertain intention of Congress (2) If statute is silent or ambiguous, question for the court is whether

agency’s answer is based on a permissible construction of the statute (is it reasonable?)

If Congress left a gap, there is an express delegation to agency, and such legislative regulations are given controlling weight unless they are arbitrary, capricious or manifestly contrary to the statute

Can not challenge the wisdom of an agency construction, just its reasonableness

o SCt says Congress did not have a specific intent, and EPA’s use of the bubble concept is a reasonable policy choice, so it’s ok

Looked to language of statute, legislative history, and policy of EPAo Garrett says standard for fact-finding is still more deferential than questions of law,

but they are very close after this case- Is this a big break from Hearst, which dealt with jurisdiction of the agency?

o Maybe way to reconcile the two is to say that in Hearst “employee” is ambiguous, and common law definition is NOT the right answer, so some of constructions have been ruled out b/c of Congressional intent; however, there is still flexibility for agency to choose among the other options that have not been precluded

o Under Hearst, question of law is determined by court, so had to find out if it was a question of fact or mixed fact and law, which determined level of deference

Chevron simplifies things, b/c classifications don’t matter as much; now deference is the same

o Now agency determines all issues, even questions of law; do we want this? Congress can monitor agency, so shouldn’t be too concerned with agency

abusing power Agency is politically accountable through the president Sometimes it’s hard to determine what is a question of jurisdiction and what

is not Most cases dealing with jurisdictional matters ignore and invoke

Chevron so agency has deference Scalia says there should be deference even with jurisdictional

issues, b/c it’s hard to determine exactly what is a jurisdictional question

Justice White says that is there’s a jurisdictional question, there should be NO deference given to an agency

In most cases, Chevron deference is applied to questions of jurisdiction

Sunstein says no deference should be given where a decision would have huge ramifications for the jurisdiction of the agency, but in questions that have minimal affect on jurisdiction, grant deference

- What happens to Skidmore after Chevron?o Should we still distinguish between interpretive and legislative laws after Chevron?

Yes, it still applies – Christiansen case this past term in SCt said that Skidmore distinguishing still applies

Gives less credence to positions taken in litigation, b/c these positions don’t go through the same rigorous process

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- Is Chevron limited to legislative rules?o Case has been applied to other areaso Scalia says Chevron overrules Skidmore, and this is the only test to be used (but this

isn’t true)o There are frequent references to Congress’ delegation of authority to agencies

Skidmore focused on expertise of agencies, but Chevron looks more at delegation

In some cases, Congress has delegated power to agencies to interpret ambiguous terms

o Deals with legislative rules or adjudications Would have applied to Hearst Had Benzene came after Chevron, possible that Marshall’s position would

have won- What is basis for the Chevron rule?

o Some say separation of powers justifies it If it’s policy, want the experts deciding it

o Congress should be understood to have delegated power to agency to interpret ambiguous language

J.W. Hampton – intelligible guidelines Courts should allow agencies to interpret, as long as they do so reasonably

o Stronger version of Chevron: Scalia Rejects separation of powers argument, says courts make policy

determinations all the time Says it should be a background presumption – if statute delegates power,

necessarily within that delegation is power to interpret ambiguous language, IN ALL CASES

He supports across-the board presumption that, in the case of ambiguity, agency discretion is meant

Wants to mimick the intention of Congress; but Scalia is a textualist, looks at the language, not intent behind the words

2 reasons he says this:o Having a background presumption ensures that Congress

knows who will interpret statutes (the agency); clear rule like Chevron is better default rule

o But should we use the background presumption for laws enacted prior to Chevron?

Scalia says in these cases, we have a choice between courts and agencies, and it’s better to locate these decisions in democratically appointed agency rather than in an insulated judiciary (there is political accountability in an agency)

Scalia says SCt is simply doing what Congress has told them to do, b/c Congress has delegated power to interpret ambiguous terms to the agencies

How do we know Congress has made this delegation? This may not be obvious in all statutes, but where we don’t know if Congress has made this delegation, Scalia says Chevron should apply to all statutes if Congress does not explicitly deny the delegation has occurred

o Expertise of agencies is a compelling reason Scalia is strongest proponent of deference under Chevron

o Weaker version of Chevron: Breyer Says we should figure it out on a case-by-case basis whether we should use

Chevron deference Will have higher decision costs, obviously, than Scalia approach

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May make error costs less though, at least in cases prior to Chevron

Some factors to consider: p248

o Are there indications that Congress likes strong Chevron rule? There are tensions between Chevron and §711 of APA (p1011), which

seems to defer to court, not to agencies, in making interpretations- Can agencies amend rulings?

o Seems like there may be a range of permissible interpretations, so yeso A tension in Chevron is how inconsistency in an agency is going to be viewed

Cardoza Fonseca – Scalia in concurrence says that inconsistency should not affect deference

Maislin – court says stare decisis trumps Chevron; once court has decided what the law is, don’t go to deference (step 2 of Chevron)

- INS v. Cardoza Fonseca o This case can be understood as an attempt to cabin the reach of Chevrono Question is whether two statutes of the Immigration Act have the same burden of

proof; wanted to apply same legal standard for both SCt says two standards are not the same, agency interpretation was wrong

Ct looks to Congressional intent, legislative history, and say there should be different legal standards for the two statutes

So under step one of Chevron, legislative history is importanto What is “well-founded fear”?

Seems like a question of law Under Hearst, no deference Under Chevron, seems like deference

o Scalia concurs, but says Chevron is used incorrectly, b/c Ct implies it can substitute own interpretation if they are able to reach a conclusion as to the proper interpretation of the statute using the traditional tools of statutory construction

Scalia worried that SCt is backing away from Chevron rule Scalia says Chevron is as much a question of law as this case, so

no reason to distinguish; SCt seemed to think that deciding question of burden of proof should be decided by court, since that’s something they normally do

Scalia says that there is language in the opinion which seems to imply that with questions of law there is less deference, so going back towards Hearst; this language was repudiated in United Food Workers – Cardoza Fonseca has NO FORCE anymore

o This case is a step one AND a step two case – things were ruled out by looking at the legislative intent (step one), and of the permissible ones left, agency picked an unreasonable interpretation of the statute (step two)

Discussion of Step One of Chevron

- What tools of statutory interpretation are valid?o Scalia: relationship exists between whether one is a textualist and how keen one is on

Chevron; one who finds meaning of statute apparent from text is less often to find that Chevron deference is necessary; textualist more often solves case at step one, so less often has to defer to agency; intentionalists look more often to legislative history and tend to defer to agency more, which means they will more often be stuck with a decision that they don’t necessarily agree with, but is a reasonable one so the court must accept agency’s decision

- When is a statute ambiguous, and when is it not?

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o Scalia: Ambiguity between 50% vs 50% almost never exists, there is no such thing as a tie; Congressional statutes must be seen as ambiguous when there are two or more equally reasonable, but not necessarily equally valid, statutes

- Public Citizen v. Young (Delaney Clause Case)o Issue is whether FDA could allow an exemption to the literal language of the

Delaney Clause for trivial or “de minimis” risks Clause says that any color additive that induces cancer in man or animal

shall be deemed unsafe Problem is that some dyes have very small risk of cancer, but still are

prohibitedo Govt says the de minimis doctrine should apply (“the law does not concern itself

with trifles”) Failure to employ this doctrine may lead to regulation that is absurd and

directly contrary to the primary legislative goalo Ct says de minimis doctrine should be used with a view to implementing the

legislative design Here, Congress has been extremely rigid due to a great concern over a

specific health risk, the apparently low cost of protection, and the possibility of remedying mistakes (through renewed consideration by Congress)

This indicates that Congress did not intend to allow an implicit de minimis exception here

o Congress later amended clause with respect to pesticides, and interpreted “safe” to mean “reasonably safe after aggregate exposure”

- Canons of construction (also see section below)o Textual canons – using dictionaries, linguistic interpretationso Substantive canons – have policy considerations behind them

De minimis canon – it’s an absurdity canon, don’t allow statute to be read in any way that makes it look absurd; more of a social policy

Delegation principle – Amalgamated Meat Cutters: interpret statute to restrain agency; attempt to keep constitutional requirements

These are “canons for the regulatory state”o Can only use canons where there is ambiguity in the words, and there is really no

ambiguity in the statute here (Delaney Clause); if meaning is clear, can’t use canons (canons just help you pick between reasonable alternatives)

Since use of canon assumes ambiguity, it really should be used in Step two, not Step one; but courts generally use them at step one

But textual canons could be used at step one, b/c Congress uses the dictionary meanings too

o Cts justify canons as mimicking legislative intento If Court decides that de minimis canon is inherent in this statute, that binds agencies

b/c stare decisis trumps Chevron

- How much deference must be given under Step two?o If agency invokes canon (like de minimis), make agency justify the use of the

particular canon (says Garrett)o Courts already require reasoned explanation for policy choices (it’s a “hard-look”

level of deference)o Garrett says policy review and Step two review should be the same

- Babbitt v. Sweet Home o Best example of a textual canon says Garretto Ct attempts to determine what the terms “take” and “harm” mean in Endangered

Species Act

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Definition determines whether taking of lands will mean govt must compensate

o Majority says this is a step two case b/c ambiguity as to what harm and take mean, so they’ll defer to agency

But Scalia (dissenting) says statute is clear, so they go through a Step one process first

This becomes a “battle of the dictionary” Choose dictionary from time of when statute was written? Or a

modern dictionary? Or a legal dictionary? Or a descriptive dictionary? Or Webster’s 2nd, or 3rd?

Is the use of a dictionary appropriate?o Textualism is NOT literalism; also look at structure of

statute, the context, etc. Ct determines ordinary understanding of the word “harm” supports

it Opinion also says broad purpose of ESA supports decision, and legislative

history supports it tooo Is it legitimate to use legislative history though?

Extremely helpful to get at the purpose of the statute Is it appropriate for use at Step one?

Depends on what kind of interpreter you areo If you’re an intentionalist, than legislative history is

usually used at step one b/c it’s seen as giving the purpose (Stevens); aim is to get at intent of Congress, and legislative history is seen as credible evidence of this

o If you’re a textualist, don’t use it (Scalia); one argument against using it stems from separation of powers – Congress is supposed to determine what the law is, so using legislative history to vary from the words of the text makes the history law itself (response: we’re not using it as “law”, but to determine what the purpose is); pragmatic argument against it is that those who lose out in the law will try to get their stuff in the legislative history, which will perhaps later be used, so leg. history is unreliable (Vermuelle says judges can’t themselves determine what legislative history is good and what has been added by interest groups)

Does use of legislative history at step one mean more cases are solved then or less? Does it reduce the number of possible interpretations, and make step one decision more likely, or does it expand the number of meanings?

o Scalia says it expands the number of meanings and encourages judges to support iffy decisions with a little bit of legislative history

o Garrett says it helps decide more cases at step one, if legislative history is used correctly

o Scalia, dissenting Looks at other dictionary definitions of “take” and “harm” which support

his side Makes textual argument that only action directed at living animals

constitutes a “take” Scalia would have stopped at step one, but Court went to step two

- How is textualism changing the Chevron doctrine?o Most judges are NOT textualists

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Intentionalists use legislative history at step oneo Textualists won’t use legislative history for the most part

Renewed emphasis on text of statutes Garrett says this is good Shift in formulation of Chevron to be more consistent with textualist

approach Focus is more on language, not intent

- MCI Telecommunications Corp. v. American Telephone & Telegraph Co. o Dispute turns on meaning of phrase “modify and requirement” under 1934

Communications Act Petitioners say it gives FCC authority to make basic and fundamental

(major) changes in the scheme, but SCt says NOo Ct looks at dictionary definitions of “to modify” and says it means to change

moderately or in minor fashion It’s a battle of the dictionaries; petitioners found one that says it means

make an important change, but Ct says all other dictionaries do not say that, and focus should be on dictionaries that were around when the Act became law (1934)

o Since agency’s interpretation of a statute is not entitled to deference when it goes beyond meaning that the statute can bear, the Commission’s permissive policy can be justified only if it makes a less than radical or fundamental change in the Act

Highly unlikely that Congress would leave determination of whether an industry will be entirely or substantially rate-regulated to agency discretion

Seems quite unlikely Congress would have delegated such a broad power in this manner; they would have been much clearer if that had been the case

o Stevens, dissenting: Commission’s reading of statute is not unreasonable, and is imply a

relaxation of a costly regulatory requirement that recent developments had rendered pointless in a certain class of cases

Food and Drug Administration v. Brown and Williamson- Question is whether FDA can regulate tobacco- SCt says Congress has clearly precluded the FDA from asserting jurisdiction to regulate

tobacco productso FDCA gives FDA authority to regulate drugs and devices

1996 FDA determined nicotine was a drug and cigarettes were drug delivery devices, so they believed they had authority to regulate cigarettes based on its authority to regulate restricted devices

Act requires FDA to prevent the marketing of any drug or device where the potential for inflicting death or physical injury is not offset by the possibility of therapeutic benefit

The findings of the FDA logically imply that FDA would be required to remove tobacco products from the market, in effect banning them

o Congress however has foreclosed the removal of tobacco products from the market Ct looks to recent statutes regulating cigarettes, which clearly do not order a

bano FDA also found that a ban may be dangerous to those who are addicted, which could

harm the health care system and create a black market If tobacco cannot be used safely for any therapeutic purpose, yet they

cannot be banned, they “simply do not fit” in the FDCA’s regulatory scheme

o Ct also looks at legislation over the past 35 years

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Congress considered and rejected bills that would have given FDA jurisdiction

FDA disavowed jurisdiction too (so now they are changing their position) Congress has precluded a meaningful role for any administrative agency in

making policy on subject of tobacco and healtho Congress could not have intended to delegate a decision of such economic and

political significance to an agency is so cryptic a fashion (a la MCI Telecommunications v American Telephone); Congress has clearly spoken on this issue and precluded FDA from regulating tobacco products

o Could be looked as a weakening of Chevron doctrine so step one inquiry operates not as a general presumption applicable to all regulatory statutes, but as a judicial strategy used only where it appears that Congress actually intended courts to defer to agency interpretations of ambiguous statutory text

- Breyer, dissenting:o Tobacco products do fit within statute

If statute is read literally, it covers tobacco Basic purpose of statute is to protect health, and this supports inclusion of

cigaretteso Not entirely clear from statute that FDA would have to ban cigarettes and remove

them from market Congress’s overall desire is to protect health, and this purpose requires a

flexible interpretation that allows FDA to choose from a number of statutory remedies

o Congress has been unable to give FDA authority, but also has been unable to deny the FDA authority; these post-1965 statutes only shows Congress’s general legislative silence

o FDA’s formal denials of its tobacco-related authority are not binding FDA has new evidence proving tobacco makers intended to distribute the

drug and knew the consequences New evidence of adverse health effects

o Says that if there is such a canon of construction that requires courts, when interpreting statutes, should assume in close cases that a decision with enormous social consequences should be made by Congress, it does not control the outcome here

- Is it a step one or two case? Step one – majority says Congress’s intent in unambiguous

This way the court need not look at whether there is “intent” on part of tobacco makers

o Tobacco companies said “intent” here means that they had to have marketed the product explicitly to “affect the structure or any function of the body”

o Breyer in dissent says it simply means the product intended to affect the body, and has nothing to do with marketing

o Majority says tobacco products are a “special” area, and there must be a specific delegation to FDA to support their power over tobacco products

o Textualists will also look at other provisions around the statute, look at the structure of the act, and look at the entirety of the US Code

Try to make statutes fit together as a whole (coherence) Less focus on literal terms here, b/c words seems to support FDA’s

regulation Congress couldn’t have meant to ban cigarettes, based on other statutes;

there are lots of statutes regulating cigarettes, but they all seem to assume that FDA does not have this power

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But more recently, some statutes say that Congress’s regulations should not have any bearing on FDA’s jurisdiction

15 bills failed to pass that would have given FDA jurisdiction over tobacco products

What does this prove though? Can’t be really sure 2 philosophies of interpretation:

o Introducing bills that don’t go anywhere: positive inaction (Congress has opportunity to act but failed to do so)

o Subsequent enactments: Congress passed legislation on basis of their understanding that FDA did not have jurisdiction

Many of these bills were years after the enactment of the FDCA however

o Court says if tobacco falls under FDA, only policy choice available is to ban cigarettes, which would be crazy

FDA contests this though, as does Breyer Hard to separate out questions of law and policy

o Lots of reference to FDA’s consistent position over the years of refusing jurisdiction But this is inconsistent with Chevron, which allows agency to change its

position based on new evidence Majority says it just shows that the FDA position has mirrored the

Congressional intent until now; provides background; this means that a change in policy can actually be held against an agency but not go against Chevron

o Ct also says this sort of major delegation would only have been made more explicitly Ct cites to MCI case, also to Breyer’s soft view of Chevron Breyer’s response:

Cites Kent v Dulles and says Congress is not only choice, that agency is also politically accountable

- Canons of constructiono Textual canons

Used in step oneo Substantive canons

De minimis, absurdity canons One canon says in regulatory decisions, courts can defer to either Congress

or agency; one canon says close cases with enormous social consequences should be made by democratically elected members of Congress

Garrett says not sure that these should be used in step oneo Constitutionally based canon, one closer to the Amalgamated Meat Cutters version,

comes out of Kent v Dulles Kent Case

Can Secretary of State refuse to issue a passport? There are constitutional rights to freedom of travel, and also first

amendment rights too Ct says don’t want to rule on constitutionality, should allow

Congress decide b/c this sort of discretion should not be assumed to have been given to the secretary

Comes out of Ashwander case: when court can interpret language narrowly to avoid constitutional issues, court should do so

This forces Congress to do the thinking Sounds like the delegation canon: avoid constitutional problems by

narrowly construing delegation powers Should these canons (Ashwander, Kent) be used in step one or two?

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Step one says Garrett; if want agency to pick narrow construction, it’s really not up to agency’s discretion

o Most of these canons are applied at step one Textual, always at step one Substantive at step one, but they usually aren’t addressed

o Clear statement principle: Sometimes courts interpret statutes narrowly so as to avoid invalidity Sometimes courts interpret narrowly so as to avoid ruling on a serious

constitutional issue (this allows for more judicial bending of statutes) Idea is that Congress, not agencies, must make particular decisions

when constitutionally sensitive issues are at stakeo Some cases suggest that the principle of clear statement takes precedence over

Chevron, that an agency may not interpret an ambiguous statute so as to raise a serious constitutional question

Rust v Sullivan Agency not required to establish rules of conduct to last forever,

but rather must be given ample latitude to adapt its rules and policies to the demands of changing circumstances (from Chevron)

Chevron deference would be withdrawn only if the constituted issue were “grave”

Step One of Chevron – Paper by Garrett- Step One does not dictate that courts use any particular method of statutory interpretation;

most courts, including the Chevron court, view their interpretive role as requiring them to discern legislative intent; other judges follow a method called textualism, which focuses on the plain meaning of the statutory text

- Courts should use the traditional tools of statutory construction in step one, which includes the text of the statute, the statutory structure, purpose, and framework, dictionary definitions, and legislative history

o Most courts will consider legislative history at step oneo Textualists spurn legislative history for the most part b/c, they argue, it’s unreliable

and strategically used by legislators to influence the courts- Textual canons of construction are tools of statutory construction available for judicial use at

step oneo Look to discern plain ordinary meaning of statutory provisionso Use of dictionaries

- Substantive canons are typically considered traditional tools of statutory construction available at step one; some courts don’t use the substantive canons protecting important social values and policies at step one, deferring to the agency the decision whether to take account of such policies in its interpretation

o Three sets of substantive canons: Substantive canons related to values of the democratic process designed to

account for problems in the environment in which legislation is drafted Protect underenforced constitutional norms

nondelegation doctrine, for example Protect important social policies and values

- Court must find at step one clear statutory meaning on the precise issue before it, or otherwise must defer to a reasonable agency interpretation of the statutory language

More Chevron puzzles- The place of legislative history

o First step of Chevron is satisfied when statute on its face is unambiguous, or when it’s unambiguous using legislative history

Textualism points to it being unambiguous on its face Courts today do use legislative history though

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Scalia criticizes this:o It such a huge bureaucracy, can’t assume Congressman

has read or even knows about everything he votes for Breyer supports it:

o Words of a bill or statute are carefully reviewed by those it affects most

o Allowing courts to look at legislative history makes it easier for Congress to pass laws, b/c otherwise bills would be enormous and everyone would insist their side be represented in the bill, which would make passage more difficult

o P337 – 5 circumstances in which a court might turn to legislative history if help interpreting a statute

o Sometimes in step two courts discuss congressional intent as well (like in Cardoza Fonseca)

o Text and intent may not give clear answer, but they should provide the bounds for where a decision may be located

There are some things Congress could NOT have meant (Dulles v Kent – Congress could not have implicitly given such power)

o Garrett says ok at step one or two, but better ordered if all congressional intent discussion were done at step one

Would Benzene Case turn out different under Chevron?- Garrett says yes, b/c statute was ambiguous and then would have deferred to agency; Stevens

picked his own interpretation though, and says it’s required under Schecter (says Marshall’s interpretation would raise delegation issues)

- Stevens could have said govt’s interpretation was too broad, but then send it back to agency for an explanation

Synthesize Skidmore with Chevron- Skidmore: today when talking about informal letters, interpretive rulings, etc, there is less

deference shown, and the amount of deference turns on the reasons given in Skidmore- Step one is the same in all universes; it’s the level of deference in step two that is questioned

o Some say in a Skidmore-like case, just give less deference, ask for greater explanation

Step two of Chevron

- Determination of whether agency’s interpretation is reasonable, not whether it’s the preferred interpretation

AT&T Corp. v. Iowa Utilities- Whether FCC has authority to implement certain pricing and nonpricing provisions of the

Telecommunications Act of 1996, as well as whether the commission’s rules governing unbundled access and “pick and choose” negotiation are consistent with the statute

o Telecommunications Act of 1996 introduces competition in local markets; imposes duties on LECs (guys already in the market)

FCC was delegated authority to determine what types of goods had to be leased by the LECs

FCC says new entrants can determine whatever they want- Ct looks at unbundling rules, and term “network element”

o Term is defined very broadly by statute, so FCC’s interpretation is reasonable

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o However, FCC did not adequately consider the “necessary and impair” standards, so FCC did not interpret terms of the statute in a reasonable fashion

- Ct looks at “pick and choose” ruleo FCC’s interpretation is reasonable given the pertinent statutory languageo Congress knew the ambiguities in the statute would be resolved by the agency after

Chevron- Souter, concurring and dissenting

o Thinks agency reasonably interpreted all of the statutes, and Chevron deference requires court to accept this interpretation

- Breyer, concurring and dissentingo Says unbundling rules are inconsistent with Congress’s approach, and there is no

satisfactory explanation for their choice- Garrett says this opinion is a step two opinion

o It’s an ambiguous statuteo FCC did not interpret part of statute in a reasonable fashion

- What are the delegation issues?o Lots in common with American Truckingo Discussion of absence of FCC’s providing limiting standards to indicate how it will

use discretion; no limiting standards that can be rationally related to the act Requires agency to set standards to limit itself, like American Trucking

o Like Schecter, because delegation is given to private entities to determine what elements they want (which is main reason Ct finds delegation unreasonable)

- Two ways to look at this case:o Opinion that draws from the delegation caseso Another way to look at it: problem here is the policy that the FCC chose, it’s a bad

policy (this is Breyer’s point); FCC did not explain it’s policy decision satisfactorily Breyer cites State Farm, which is a hard-look case that looks at policy

decisions, not legal problems; it’s a question of policy, not a question of law As opposed to legal problem, which would be interpreting language in an

unbalanced way that does not mesh with the statutes

Hard-look doctrine

- Within range of permissible explanations, agency must pick one and provide a reasoned explanation for their choice

- Different then Chevrono If agency’s choice is found impermissible under Chevron, agency must have new

choice; under hard-look, agency can come back with exact same choice, but just needs to explain it with different reasons that justify it to the court

- What is the point of hard look review?o Courts may be trying to improve the democratic character of the administrative

process Requirement of adequate consideration might be seen as effort to ensure a

form of interest representation at the agency level May also be seen as part of judicial effort to ensure process of democratic

deliberation at agency levelo Means judicial review is done to ensure the political process workso Also can be defended as means of preventing serious errors of analysis and also the

distortion of expertise by narrow political interests

Legal vs policy determinations- Difficult to tell between the two

o May depend on what Congress wanted in the statute- Modes of operation for agencies

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o (1) Agency can act through formal adjudication Hearst case Trial-like proceedings with particular parties

o (2) Formal rule-making Very trial-like features; agency goes through very formal process (Sec. 556-

57 of APA) Very infrequent

o (3) Informal rule-making, or “notice and comment” rule-making Sec 553 of APA What most agencies use to promulgate legislative rules Chevron, Benzene

o (4) Informal adjudication Overton Park case Any other way agency uses that doesn’t fit into other three (catchall section)

o (5) Other informal actions Policy statements, letters agency send out Outside scope of APA Won’t discuss most of these

Informal Rule-making- Goal is have process be participatory, rational and comprehensive

o Executive orders require listing of goals at beginning of yearo APA § 553

Publication in Federal Register Must give time for responses “A concise general statement of their basis and purpose”

o APA § 706 – scope of review Seems to be in conflict with Chevron Always look at organic statute first, it may determine the scope of review

itself APA seems to combine questions of policy with questions of law Seems like a different review for informal rule-making (“arbitrary and

capricious”) vs. §556-57 review (“substantial evidence”) But Scenic Hudson’s review looks a lot like Overton Park’s and

they were done under the two different scopes of reviewo 1960s and 70’s: Era of rule-making

Shift to using informal rule-making Didn’t seem to think much would be done under informal rule-making Framers of APA didn’t want courts to give a blank check to agencies;

arguably an arbitrary and capricious review does thiso People begin to distrust agencies

Felt they were captured by special interests Judges became independent, non-partisan check

o Agencies begin to focus on “new-property” programs Judges act as check again

Scenic Hudson Preservation Conference v. FPC (I)- ConEd wanted to build hydroelectric project and had to get license from the FPC; FPC

granted it- Ct says in a case like this where public interest and concern is so great, Commission’s refusal

to receive certain testimony and info on fish protection devices and underground alternatives exhibits a disregard of the statute and of judicial mandates instructing the Commission to probe all feasible alternatives

o Commission has affirmative duty to inquire into and consider all relevant facts- Statute required “substantial evidence” review by courts

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o No better alternatives could exist either- Agency did not look at gas turbine alternative

o Garrett says this is an aggressive interpretation of statute for the side of conservationalists

Maybe interest groups are involved, and court decision is taking the middle road between the various interest groups

Maybe it’s the court updating an older statute, infusing current policy decisions into an older statute

Maybe the personal preferences of the judges are driving thiso Ct remands it back to agency to reconsider

Opinion says nothing about the substance of the decision though – this is a procedural hard-look

Some say this has led to ossification of agency procedures; agency has to go through tons of bells and whistles to get stuff done, so they get a lot less done

- Agency comes back 5 years later with lots more explanation, and agency adopts virtually the same rule

o Were these 5 years spent in vain, given it was the same outcome? Procedures themselves provide some use though as well

o Plant was never built

- Soft-procedural hard-looko No requirement of additional particular procedureso Just give an appropriate explanation

- Hard procedural hard-look, court says what procedures to look at and what kind of testimony they want

- When read with Overton Park, very little difference between the two levels of review (substantial evidence v. arbitrary and capricious)

Ethyl Corp v. EPA- A general question involves the competence of the courts to apply a hard look or adequate

consideration approach to review agency policy choices involving complex technical issues- Chief Judge Bazelon, DC Cir, in Ethyl Corp:

o Substantive review of mathematical and scientific evidence by technically illiterate judges is dangerously unreliable

o Better to concentrate on strengthening administrative procedureso Procedural hard-look argument:

Courts should look at procedures themselves, either as hard procedure or soft procedure hard-look

Doesn’t think courts should second-guess agency on substantive issues- Questions:

o Where in APA do you find support for this searching-review? Doesn’t really exist

o What are costs of this type of review? Systematic effects of turning §553 into more formal procedure? Will it lead

to ossification?o Is procedural hard-look a way to input substantive values through the backdoor?

- Judge Leventhal in response (substantive hard-look argument):o Congress has assumed judges can both have the important values secured by

generalist judges and rely on them to acquire whatever technical background is necessary; there is role to play for judges in substantive decisions as well

Absence of specialized courts proves this, he says But where in the APA is this review authorized?

o Obligation of a judge is not jettisoned b/c technical understanding may not be as high as in other areas

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o Agency’s reasoning and record must be looked at

Overton Park

- THE hard-look case in the SCt

Citizens to Preserve Overton Park v. Volpe- Statutes prohibit authorization of federal funds for construction of highways through public

parks if there are “feasible and prudent” alternative routeso Secretary gave funds, but did not indicate why he believed there were no feasible and

prudent alternativeso SCt says formal findings were not required, but judicial review based solely on

affidavits was not adequate Legislative language shows there is a plain and explicit bar to the use of

federal funds for highways through parks, except for the most unusual situations

Congress indicated that protection of parkland was to be given paramount importance

- Petitioners claim Secretary is subject to either the substantial evidence standard of §706(2)(E), or in the alternative de novo review under §706(2)(F)

o Ct says no, but generally applicable standards of §706 require a substantial inquire (arbitrary and capricious)

- Other inquiry is whether Sec followed necessary procedural requirements- SCt remands to DCt for plenary review of Secretary’s decision

o DCt on remand found Secretary had not given serious consideration to alternative routes

- Delineates hard-look doctrineo Has been softened by DC Circuit (Syracuse Peace Council)

- This case is classified as informal adjudicationo There were a series of hearings however, but they weren’t “formal”o Marshall tries to determine what the standard of review should be, which is the

“arbitrary and capricious” standard §553 is arbitrary and capricious; only if 556 and 557 are triggered do you

move to substantial-evidence (so Marshall was wrong on p360) §706 de novo review has very limited reach

language in this case determines scope of de novo review, which is authorized when formal adjudication has been faulty, when new facts are alleged in proceeding to enforce nonadjudicatory action, or when organic statute calls for it (organic statute trumps APA)

o Ct must determine if actions are within scope of statutory authority Also must determine if decision was arbitrary, capricious or abuse of

discretion Review is narrow, but searching and thorough

Chenery – only thing court can use for explanation is what agency used for its explanation

APA says that in informal rulemaking agency must put out general statement of rules; but to pass the searching review of Overton Park and Scenic Hudson, need much more than this (need extensive and formal findings)

o This court does not require any particular findings though; however, there’s a de facto requirement of much more than is required under APA

So Ct can reverse and remand decision that is in scope of agency’s authority if agency was arbitrary, didn’t look to alternatives; looks like hard-look in

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Scenic Hudson, even though that was substantial evidence test (so these two tests are really the same)

o Hard-look review is a procedural requirement of additional findings and evidence

Overton Park structure of judicial review of questions of law:- (1) Construe statute to determine scope and terms of agency’s authority to determine whether

agency acted within authority conferred- (2) If agency has discretion, court must decide whether agency exercised its discretion based

on consideration of relevant factors- (3) Was agency’s weighing of relevant factors “arbitrary, capricious and abuse of discretion”

Motor Vehicle Manufacturers’ Assoc v. State Farm Mutual Automobile Insurance Co. (State Farm)- SCt looks at whether NHTSA acted arbitrarily and capriciously in revoking requirement that

cars be equipped with passive restraintso Determines agency failed to present as adequate basis and explanation for rescinding

the passive restraint requirement, and agency must either consider the matter further or amend Standard 209 along lines which its analysis supports

- What’s the standard of review?o Ct says arbitrary and capricious standard of §706

This is more deferential with administrative agencies than with legislatures, Ct says

This is informal rule-making under §553o Lower court said there should be higher standard of review b/c this was a rescission

of a standardo The standard of review for a rescission is arbitrary and capricious, as determined by

this court and now is the accepted position; thus we apply an Overton Park thorough and searching analysis

Ct wants something more than just a better explanation (in part VB (p373) of the opinion) for the agency’s decision

If there is uncertainty, shouldn’t be sacrificed on side of safety; safety is of paramount importance

There’s a “common sense” approach to this part of the opinion; it goes beyond the procedural hard-look in some ways (White seems to say he doesn’t believe the studies); this is more of a substantive hard-look, close to Leventhal’s position (but Garrett says this is NOT ordinary – the normal approach is in the next two cases, where more deference is given)

o An agency rule is arbitrary and capricious if agency relied on factors which Congress didn’t intend to be relied upon, failed to consider an important aspect of a problem, offered an explanation for its decision that runs counter to evidence before agency, or is so implausible that it can’t be ascribed to a difference in view

SCt says NHTSA’s rescission of passive restraint requirement of Standard 208 was arbitrary and capricious

NHTSA gave no consideration to requiring airbags Agency was too quick to dismiss safety benefits of automatic

seatbelts Agency failed to articulate basis for not requiring nondetachable

belts under Standard 208- State Farm is regarded as having endorsed a relatively intensive version of “hard look” review- Agency did not explain why it did what it did in the rule, and SCt said there must be

explanation; this too has been softened by the next two cases

Syracuse Peace- Agency relied on comments of broadcasters (and the agency decision was in favor of the

broadcasters), but DC Cir goes with agency anyways

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- Also, agency had not explained its decision in detail, but Judge Williams says it’s obvious and remanding to force an explanation would be a waste

o Softening of Overton Park and State Farm- FCC has authority to reject “fairness doctrine” if it concludes, without being arbitrary or

capricious, that it no longer serves the public interesto Ct says they are not arbitrary here

- Wald dissents from Part Vo Decision not supported by record; agency did not articulate a plausible basis for

decision to eliminate first prong

American Dental Association v. Martin- OSHA promulgated rule on bloodborne pathogens (hepatitis B and AIDS)

o Three employer groups challenge the rule, say it shouldn’t apply to them b/c it’s too strict

o OSHA did not do cost-benefit analysis, but instead asked whether restrictions would materially reduce a risk to human health without imperiling the existence of the health care industry

o OSHA did not disaggregate the risk industry by industry- Posner opinion; says judges shouldn’t take decisions from agencies on medical health-care

issues where judges don’t have the expertise, which the agency does have- Here, alternative is disaggregating the regulation industry by industry

o Posner says they did a good enough job OSHA’s evaluation of the effects of the rule can’t be seriously faulted

o Ct says it’s OSHA’s responsibility to choose happy medium so all groups aren’t lumped in to one big group, but also so that they don’t have to report on every little group out there

- Garrett says Posner’s review is searching enough, but not as much as State Farm; perhaps he is taking a more deferential view of the agency

o Posner thinks the regulation is not the best one, but given that Congress has spoken, he’s going to be deferential; Ct says their duty is not to determine if it’s a good rule, just that it’s within the bounds of reasonableness, which it is

Hard-look review- Applies to rescission as well as regulation

o Through State Farm, review under arbitrary and capricious seems same as substantial evidence review under Scenic Hudson (searching and thorough review)

Cts don’t ask for anything in specific, but it must be more than the general statement required in APA

- Politics do play a role in agency decisionso Still must have justification, participation by many affected powerso Must also comply with statutory directives

- Alternatives must be assessed, agency must justify why they chose particular routeo But how many alternatives? Which ones?

Salient ones that had been involved in past decisions Plausible better cost-effective and less burdensome alternatives Alternatives brought up in comments

o More the court requires, more it burdens agencies and arguably leads to agency ossification

- State Farm Case: best hard-look example, and high-water mark of the doctrineo Agency must examine: (1) all relevant evidence, (2) explain decision in detail, (3)

show connection between means and ends, (4) justify departures from past practice, (5) consider all reasonable alternatives

o Williams and Posner are the norm today though; gives more deference to agencies (AMA and Syracuse Peace)

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Cts shouldn’t apply own views- As arbitrary and capricious review becomes less stringent, there WILL be a difference

between this standard and the substantial evidence standard of reviewo Substantial evidence standard will like Overton Park and State Farm

- Breyer: contrast Chevron with hard-look reviewo As long as there is some ambiguity, should be deferential to agency (Chevron)o Hard-look review is much more in depth; when there are policy questions, Ct seems

to be more aggressive, even though cts seems to be less adept in this areao Breyer says courts have it backwards, should be more aggressive with statutory

interpretation than with policy Same core concerns for each though – ensuring democratic process exists;

the two just go about it in different manners- So what alternatives does an agency have to consider in making a rule?

o Unfunded Mandates Refund Act – do cost/benefit analysiso Can be a substantial burden on an agency

May have to look at a lot of unreasonable alternatives to cover their asses May ex-anti make an agency less likely to regulate

K. Davis excerpt- Courts should not say delegations are unlawful, but instead assert that they are lawful and

desirable as long as the broad legislative purpose is discernible and as long as protections against arbitrary power are provided

o This change is necessary b/c underlying problem is broader than control of delegation, it’s to provide effective protection against administrative arbitrariness; this requires protection against undelegated power and discriminatory enforcement

- Criterion for determining the validity of a delegation should be the totality of the protection against arbitrariness

- Crucial consideration is not what statute says, but what administrators doo Thus, must provide administrative safeguards and standards, not statutory safeguards

and standards- Davis hopes the nondelegation doctrine will evolve into a broad spectrum of judicial

protection against unnecessary and uncontrolled discretionary power

Various cases- Soglin v. Kauffman

o Expulsion and prolonged suspension may not be imposed on students by a university simply on the basis of allegations of “misconduct” w/o reference to any preexisting rule which supplies an adequate guide

- Hornsby v. Allen o Woman was not afforded opportunity to know, through reasonable regulations

promulgated by board, of the objective standards which has to be met to obtain a license

o If no ascertainable standards have been established by which an applicant can intelligently seek to qualify for a license, then court must enjoin the denial of licenses until a legal standard is established and procedural due process provided

- Holmes v. New York City Housing Authority o Due process requires that selections among applicants be made in accordance with

“ascertainable standards”- Fook Hong Mak v. INS

o There is no rule which requires a case by case approach; AttyGen may proceed by regulation

It was reasonable for AttyGen to conclude that aliens admitted as transits w/o visas were not within spirit of §245 and thus could not deserve favorable exercise of his discretion

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- Asimakopoulos v. INS o Reliance on a test that prevents the exercise of discretion is reversible error

Rulemaking and Adjudication: The Constitutional Distinction

- Londoner v. Denver o Council’s action in authorizing improvements without notice and opportunity for

hearing did not violate due process, b/c the proceedings did not include or necessitate any assessments

o Due process of law requires that at some stage of the proceedings before the tax becomes irrevocably fixed, the taxpayer shall have an opportunity to be heard

Something more that submitting written objections is needed Here there was no hearing, so assessment is void

o This was an administrative arm of the state assessing a state tax; SCt implicitly conceded that no notice or hearing is required if state legislature directly assessed tax

o Citizens wanted notice and ability to be heard Hearing granted

- Bi-Metallic Investment Co. v. State Board of Equalization o Plaintiff says it was not given opportunity to be heardo Decision to increase property values across the board, but no hearings were provided

again Hearing not granted

o Question is whether all individuals have a constitutional right to be heard before a matter can be decided in which all are equally concerned

SCt says where a rule of conduct applies to more than a few people it is impracticable that every one should have a direct voice in its adoption

Disagreement should be registered at the polls

- How to distinguish between the two caseso Lots of people affected in Bi-Metallic

So as matter of practicality difficult to do hearing Londoner decision dealt with only a small number of people who were

exceptionally concernedo Garrett says one can be heard more in the legislative process b/c there are more

people affect, so they can band together to get people to listen; in Londoner, only a few people were affected, so they are unlikely in a majoritarian system to have influence in legislature

Proxy of this is how many people are affected Disagreement is to be registered at the polls (with large groups)

o Bi-Metallic does not say no hearings at all, just no individual hearing; it has to be through the legislative process

When large group affected, don’t worry as much about people being singled out (another distinction between the two cases)

o These cases are both due process caseso Different Paradigms

Bi-Metallic is legislative paradigm Londoner paradigm is adjudicatory, looks more like a trial

- Objectives of hearings:o Ensure accuracy and legitimacy to some extento Restrain against arbitrary decisions

These two are important with adjudicative facts as opposed to legislative

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Raising taxes in general is a policy question (Bi-Metallic), but applying them in individual cases though necessitate particular facts (Londoner)

o Dignatory component People obey if they feel they’ve participated in process People feel they have a right to a hearing; more likely to obey things they

don’t agree with if the process is open to participation by all- Does it look like a court or a legislature? This can help determine whether hearings are

necessaryo Hypotheticals

State decides to cut all welfare benefits Sounds legislative But perhaps we’re more concerned with those who are relatively

voiceless in legislature (so we have to be more careful in cases like these, says Garrett)

Anaconda Rule limiting sulfur-content; Anaconda says they should get

individual hearing b/c they are the only plant that was affected Sounds more like Londoner, but Ct said NO

o It’s an industry-wide standard, so there are enough people threatened to be hurt that don’t need to hear from one particular party

- Requirements for hearings o If you are singled out, and can produce adjudicatory facts that will affect outcome,

you have a constitutional right to a hearingo Professor Davis says key in determining whether a trial-type hearing is required is

whether controversy turns on “adjudicative facts” or “legislative facts” Adjudicative facts pertain to the parties and their businesses and activities;

these are intrinsically the kind of facts that ordinarily ought not be determined w/o giving parties a chance to address unfavorable evidence, b/c the parties know more about the facts than others

Parties may often have little or nothing to contribute to development of legislative facts though

Need individual hearings with adjudicative facts (particular facts about particular instances), not legislative facts (more general issues of policy – don’t need individualized facts)

Also need hearing when adjudicating on a specific set of factso In Bi-Metallic, particularized facts not necessary to

increase the tax; each property owner can make statement at the polls

o May need hearings when tax is applied to each person though, to determine what each person owes

- O’Connor in Minnesota Bd. for Community Colleges v. Knighto Constitution does not grant to members of public generally a right to be heard by

public bodies making decisions of policyo Inherent in republican form of govt that direct public participation is limited

- Benzene caseo Notice and comment case; should they have had hearings?

Garrett says they were still at a legislative level; when they start applying to individual industries, then may need particular facts and thus hearings (with enforcement proceedings, need a more adjudicatory hearing)

- Cases under due process clause, not delegation, although they sound very similar (p427-31)o Concern in these cases is that there has been too much discretion, and agencies must

set out how they are going to use their discretion (promulgate rules ex-anti)o Most of these are brought against state agencies, so delegation is not an optiono What are problems of forcing ex-anti clarification?

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Sometimes impossible to be more specific Reduces flexibility of agencies to deal with unexpected circumstances; rules

give more notice, but less flexibilityo Fook Hong Mak and Asimakopoulos

Garrett says these cases can’t be reconciled FHK says ok to limit discretion and apply one rule to all Asim says people are entitled to individual hearing in these cases, don’t

want to subject everyone to one rule How far can ex-anti specifications go? At some point it becomes so rigid

that agency gives away too much discretion

The Procedural Requirements of the APA and the Interplay between Rulemaking and Adjudication- Procedural provisions of the APA

o Provide basic structure of procedures for federal administrative agencies Although APA may be overridden by organic statute

o Requirements are geared to the fundamental distinction between rulemaking and adjudication

APA §551(5)-(9) determine what constitutes rulemaking and adjudication Adjudication involves almost every variety of administrative decision other

than issuance of rules and regulations; includes resolution of specific litigation controversies, but also broad array of other administrative decisions (so it’s not really adjudication in a conventional sense)

- 4 basic categories of administrative procedures:o (1) Formal On-the-record adjudication

If statute governing agency’s action in an adjudication requires that decision be made on the record after opportunity for agency hearing, requirements of §554 apply, which in turn invoke §556-57

These three sections establish a set of trial-type procedures for formal adjudication

Normally conducted by an administrative law judge who prepares an initial decision, which then may be appealed to agency head, based on the record and submission at the hearing

§706(2)(E) provides for judicial review of agency fact-finding under substantial evidence standard

Courts tend to interpret the statute as providing for a hearing on the record in cases where the agency is imposing a sanction or liability on a party

o (2) Formal On-the-record rulemaking In cases where relevant statute provides that rules be made on the record

after opportunity for an agency hearing, §553(c) requires that an agency engaged in rulemaking use the procedures of §556 and §557

Traditional understanding was that formal rulemaking was generally required in setting rates and similar requirements that determined revenues and profits of regulated firms

This was restricted by SCt in Florida East Coast, when they said statute must explicitly provide for a hearing on the record

o (3) Informal Notice and Comment Rulemaking In a case of rulemaking where the applicable statute does not provide for a

hearing on the record, the basic procedures for rulemaking is the notice and comment procedure provided in §553, which calls for:

General notice of proposed rulemaking in the Federal Registero Doesn’t apply to interpretative rules or general statements

of policy Opportunity for interested persons to comment

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Concise general statement of basis and purpose once rule is promulgated

Shall not be effective in less than 30 days after promulgation §553 does provide for exceptions though where agency may avoid

these requirements Purpose is to enlighten decision-maker by exposure to viewpoints of

interested persons Substantial evidence standard of review does NOT apply Agencies have increasingly turned from adjudication to rulemaking in order

to decide basic issues or regulatory policyo (4) Informal adjudication

In instances where relevant statute does not require adjudicatory decisions be made on the record after opportunity for agency hearing, there are no APA standards to follow

Overton Park stated that review should be based on administrative record under an “arbitrary and capricious” standard

- Rulemaking v. adjudicative procedures for setting agency policyo Traditionally, most major regulatory agencies relied on adjudicationo More recently there has been a change to rulemakingo National Petroleum Refiners Assoc. v. FTC

Whether FTC is empowered to promulgate substantive rules of business conduct (Trade Regulation Rules)

Specifically, commission’s rule declaring that failure to post octane rating numbers on gas pumps was unfair method of competition and deceptive practice

Ct sustained FTC’s claim to substantive rulemaking Commission will be able to proceed more expeditiously, give greater

certainty to businesses subject to the Act, and deploy its internal resources more efficiently with a mixed system of rule-making and adjudication than with adjudication alone

Rules, as contrasted with case-by-case adjudication holdings, are more specific as to their scope, and industry compliance is more likely simply b/c each company is on clearer notice whether or not specific rules apply to it

Chenery (I)- SEC made decision on basis of equity law principles

o Ct says this is wrong, equity principles do not support the SEC’s positiono No deference is given here b/c cts usually decide equity principleso Ct says if SEC reached same decision through structure of statute and own expertise,

they would be fine with that, as long as the SEC explained the decision- Ct will look at decision only in regards to what the agency looked at

o Agency has special competence to make determinations under statute in a particular way that allows for political accountability and nobody can substitute for this process

o Agency will be assessed only on findings that it useso Chenery requirement that agencies explain their exercise of discretion is an

important foundation of the hard look approach; case also requires agencies to explain their decisions on the quality of agency deliberations and decisions

- Consistent with Overton Park and Scenic Hudsono Don’t require any particular requirements; it’s a hard-look without requirement of

particular procedureso Gives SEC lots of leeway

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Here, SEC made same decision but based it on their expertise under the statute; created brightline rule that reorganizers can’t buy stock in company when reorganization is going on, and SCt accepted this in Chenery (II)

But problem is they reached this decision on the rule in an adjudicative procedure; Ct defers, but thinks rulemaking would have been better

Formal On-the-Record Rulemaking (Requiring specific procedures – the harder hard-look procedure)

- Florida East Coast Railway o Ratemaking case

ICC decides to increase per diem charge, and wants to do it quickly with informal comment and rulemaking

Formal adjudicationo APA § 554, 556, 557o ALJ acts like trial judge, proceeding is like a trialo Must be a finding with reasons, and appeal is on the

record Formal rulemaking

o §553(c), 556, 557o Same as formal adjudication for the most part, except no

need to have separation between adjudicator and prosecutor as there is in formal adjudication

o Envisions testimony in written form Notice and comment rulemaking (informal rulemaking)

o §553 Informal adjudication

o §555 – ancillary matterso Overton Parko Very few provisions in APA deal with this

ICC here wants to be in third category (informal rulemaking)o §553(c)

Were 556 and 557 triggered by ICC statute? Ct says no; what’s required in organic statute is “after a hearing”

with a decision to be made “on the record”o These are MAGIC words; statute must have this to

trigger 553(c)’s last sentence 553(c) is also triggered for constitutional reasons (due process),

like in Londoner where only a few people are exceptionally affected

o Majority says this is a Bi-Metallic situation though; can have hearings on enforcement, but not on overall rate; dissent says this is more Londoner

Question is not whether you get heard, but in what manner Enforcement procedures necessitate adjudicative facts, so probably need

individualized hearings theno Does Act itself require more formality?

“After hearing” probably did not mean purely formal rulemaking, and resonates of a judicial requirement

This case rules out reading ambiguous statutes to require formal rulemaking But hard to envision that writers of statute envisioned notice and

comment rulemaking Ct requires a very clear statement before formal rulemaking will

apply

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Ct is updating the Interstate Commerce Act to fit w/in the new predominant method of rulemaking

But shouldn’t we require Congress to go back and update on its own? Or to change the APA?

Is presumption that there is informal adjudication? Black-letter law is that when you use word “adjudication” in a

statute, it means formal adjudication In cases of adjudication, courts are readier to find that an organic

statute triggers formal hearing procedures even without the magic words (see p584 for why); this may impede effective administration however

Presumption to informal rulemaking applies only to rulemaking, not to adjudication

In some cases though word adjudication is translated to a more Overton Park, legislative hearing type, when the statute seems to point in that direction

o What happens after this case? Very few formal rulemaking b/c very few statutes have the magic words to

trigger formal rulemaking Gives agencies ability to proceed almost exclusively through informal

rulemaking Formal rulemaking is very unusual today And Cts have decided to be tougher on hard-look doctrine and scrutinize b/c

of use of informal rulemaking Some, especially in DC Cir, have ordered particular procedures –

birth of hybrid rulemaking, or on-the-record §553 rulemaking (because ct requires a record)

o Require second round of notice and comment, increased testimony, etc.

o Want something more than §553 but less than formal rulemaking

o DISSENT: Not within due process to allow agency to impose new rate or fee without a

full hearing that includes right to cross-examine and present oral argument, as required under §556 of APA

- Basics of Florida East Coast Railroad:o Congress must use “decision on the record” and “hearing” before formal rulemaking

requirements of APA are required o Transforms agencies to §553 notice and comment agencies for the most part

(informal rulemaking)o Must have clear statement, even in organic statute; this updates old statutes to

today’s standardso But how can judicial review be meaningful when all there is is the record required by

§553? Growth of hybrid rulemaking is the response

Developed by DC Circuit, who exerts a lot of control over administrative law

Congress seemed to allow for the hybrid rulemaking in some statutes

Halting Judicial Transformation: The Vermont Yankee Litigation

Vermont Yankee- Puts abrupt stop to ordering particular procedures

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- How to license nuclear power plantso Agency said disposal problem was trivial, didn’t give much weight to ito DC Cir says it doesn’t work

Provides hard-look, says there is no adequate explanation for their decision Bazelon, J. could be read as requiring other procedures (list on p608)

- SCt read it as requiring particular procedureso SCt didn’t like hybrid rulemakingo Main holding: Courts cannot impose additional procedures beyond the APA

Bazelon’s approach of hybrid rule-making is illegitimate Procedures in APA are only legitimate requirements (other than those in

organic statute) SCt interprets §553 of APA as establishing the maximum

procedural requirements which Congress was willing to have courts impose upon agencies in conducting rulemaking procedures

If court had to decide which procedure was “best”, judicial review would become totally unpredictable

Agencies would adopt full adjudicatory procedures to get out of court’s shadow, and this would lose the inherent advantages of informal rulemaking

Courts will manipulate procedural requirements to control policy decisions that should be left to agencies

- Did SCt get this right?o Cts can’t impose additional requirements? Or does APA simply provide a floor?

There is legislative history that implies APA is just a minimum expectation But this doesn’t tell us WHO can impose the additional procedures; SCt

says it’s not courts, rather agencies can impose additional requirements Hard-look doctrine will require some additional procedures in itself

- What about the policy? Does it make sense to rule out court-imposed procedures in world of informal rulemaking and hard-look doctrine?

o The move to informal rulemaking caused this problemo Hybrid rulemaking was a way to adapt to the new Florida East Coast worldo Hard-look makes agency guess more, while hybrid rulemaking gives agencies more

guidelineso This case has been criticized a lot for not giving cts ability to adapt to the new

Florida East Coast world

- Basics of Vermont Yankee:o SCt says no hybrid rulemaking, can’t provide for additional procedureso §553 sets forth the procedures

Agencies can add to these procedures, and Congress can too, but courts can NOT add to them

o Also applies to informal adjudication Courts can’t add procedures in informal adjudications either (like in

Overton Park)

Can we reconcile Vermont Yankee with Overton Park, State Farm, Scenic Hudson etc.?- Overall reconciliation of hardlook review plus Vermont’s requirement that decision be made

on the record only (what’s required by §553)o Cases admit that additional procedures may be needed, but question is where to put

the responsibility for choosing the procedures Vermont puts responsibility on agency, takes it away from the DC Circuit Under hardlook review, agencies don’t know what specific procedures are

needed; may force agencies to undertake extra procedures to avoid courts (ossification)

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DC Circuit has come up with some procedures though that allows flawed agency decisions as long as they don’t have substantial affects

On the other hand, courts work with procedures all the time, this is their area of expertise

o Substantive hardlook survives Vermont however; if agency makes decision in arbitrary and capricious manner, can still be overturned

- Where is APA’s sanction of hardlook review?o §706 – scope of review

Agency’s decision to promulgate decisions between rulemaking and adjudication

- Chenery (II)o Some agencies like to make policy through case by case adjudication, through

precedent- Excelsior

o Ct says a rule must be promulgated through rule-making, not adjudicationo Under the APA, can Union use adjudication to promulgate a rule?

It was formal adjudication, so satisfies §556 and 557 However, adjudication leads to orders, while rulemaking leads to rules,

under the definitions of §551 This here sounds like a rule, so need to have rulemaking

Rules have prospective, orders (adjudications) have retroactive, effects But this is hard to determine, because orders seem to have

proactive effect at times too Rules are more binding in future

- Wyman-Gordon o They reached result by relying on rule that was overturned in Excelsior, so had to be

remandedo 6 justices said not ok to use adjudication for prospective laws

Ct will usually defer to agency in its choice between rules and adjudication though, except for in prospective adjudication like here

Garrett says one time court will strike down adjudication is when it substantially affects other parties prospectively

Rulemaking is prospective, while adjudication is retroactive- Transparency issue:

o Adjudication can regulate in less accountable ways; hard to figure out exactly what the rule is, and how it became so, by looking at a bunch of cases

o Bias for preferring rulemaking to promulgate policies, even for those with prospective effects

Informal Notice and Comment Rulemaking: the Exceptions to Rulemaking- Courts have often found it difficult to determine just when these exceptions apply- The Exceptions:

o Rules of agency organization, procedure or practice Don’t substantially affect people’s rights

o General statements of policyo Good cause exception – impracticable, unnecessary or contrary to the public intent

Time constraints; concern is with strategic behavior Has been narrowly interpreted

o Interpretive rules Under Skidmore, cts are less deferential

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Fall outside of §553, so no need for notice and comment

- Difference between interpretive and legislative ruleso Distinction is important for the exceptions of §553

Agency gets more deference in legislative rule, less deference in interpretive rule; this is why the distinction between the two is important

This is because it’s harder to get legislative rule passed due to requirements of §553

o Look at functional affects of rule Definition of plant as an example

Can’t attack legislative rules in later enforcement action b/c already had chance to attack previously

o Is it published in Federal Register? If so, it’s legislativeo Judge Williams:

Interpretive rules don’t have §553 notice and comment, so in enforcement procedures their validity must be subject to attack

Otherwise (if can’t attack them) these rules will become legislative w/o the scrutiny that we want for legislative rules

Can attack interpretive rule as being “goofy”- Will agency still use interpretive rules if they can be attacked in any enforcement procedure?

o Trick is getting right mix of legislative and interpretive rules to shape behavior of those being regulated

- Community Nutrition o Interpretive and legislative rules are binding, legislative just are more binding;

review of legislative takes place in §553 procedures while interpretive review takes place in the enforcement proceedings

o Ct says actions here have a present effect and are binding, so these aren’t interpretative rules and thus agency must utilize notice-and-comment procedures

- American Hospital Assoc. v. Bowen o The exemptions of §553 accommodate situations where policies promoted by public

participation in rulemaking are outweighed by the countervailing considerations of effectiveness, efficiency, expedition, and reduction in expense

o Function of interpretive rule exemption (first §553 exemption) is to allow agencies to explain ambiguous terms in legislative enactments without having to undertake cumbersome proceedings

Interpretive rules do not create law, but are statements as to what an administrative officer thinks the statute or regulation means; they are essentially instructional

Cabais : where agency activity reminds parties of existing duties, it is interpretive, not legislative

American Postal Workers : mere fact a rule may have a substantial impact does not transform it into a legislative rule

Substantive (or legislative) rules grant rights, impose obligations, or produce other significant effects on private interests, or which effect a change in existing law or policy

o Function of second §553 exemption for general policy statements is to allow agencies to announce their tentative intentions for the future without binding themselves

Two-criteria test set forth in American Bus Assoc: Statement of policy may not have a present effect Whether purported policy statement genuinely leaves the agency

and its decision makers free to exercise discretion

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o Purpose of third §553 exemption for rules of agency organization, procedure or practice, is to ensure that agencies retain latitude in organizing their internal operations

Covers agency actions that do no themselves alter the rights or interests of parties, although it may alter the manner in which parties present themselves or their viewpoints to the agency

Focus has shifted from asking whether given procedure has substantial impact on parties to inquiring more broadly whether the agency action also encodes substantive value judgments or puts a stamp of approval or disapproval on a given type of behavior

- Professionals Patients for Customized Care v. Shalala o FDA issued without notice and comment CPG regulations describing when FDA

would initiate enforcement actions against pharmacy actions; listed circumstances when FDA will enforce

o Ct said these circumstances did not establish that CPG was a legislative rule, b/c CPG did not draw a line in the sand that, once crossed, removes all discretion from the agency and its enforcement personnel

- United States Telephone Asso. v. FCC o FCC adopted order without notice and comment to adopt specific standards for

assessing penaltieso Ct says this was not a general statement of policy

Hard to imagine that agency would publish such an exhaustive list of sanctions if it did not intend to use that framework to cabin its discretion

- American Mining Congress v. Dept of Labor (D.C. Cir)o Ct held that PPLs were interpretive and not subject to notice and comment

requirementso Formulated test to distinguish between legislative and interpretive rules:

Whether the purported interpretive rule has legal effect is the key, and this can be answered by asking:

Whether in absence of the rule there would not be an adequate legislative basis for enforcement action or other agency actions to confer benefits or ensure the performance of duties

Whether the agency has published in the Code of Federal Regulations

Whether the agency has explicitly invoked its general legislative authority

Whether the rule effectively amends a prior legislative ruleo If answer is YES to any of these questions, it’s a

legislative rule, not interpretive- Agency’s interpretation of its prior substantive regulations

o Agency first adopts rule through notice and comment rulemaking, and subsequently issues interpretation of the rule by issuing second rule

When an agency promulgates legislative regulation by notice and comment, it may not subsequently repudiate the announced meaning and substitute for it a totally different meaning without using notice and comment rulemaking normally required for amendments of a rule

Where guidelines don’t make a substantive change in existing regulations however, it’s ok

o Jerri’s Ceramic Arts v. Consumer Product Safety Commission The interpretation has a clear intent of eliminating a former exemption and

providing Commission with power to enforce violations of a new rule; it thus make substantive changes and must be done through the notice and comment requirements

See two other cases on p625-26- Rules of Procedure

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o Air Transport Assoc of America v. Dept of Transportation FAA implemented penalty rules program without notice and opportunity for

comment Where nominally procedural rules encode a substantial value judgment or

substantially alter the rights or interest of regulated parties, rules must be preceded by notice and comment

Penalty rules substantially affect defendant’s right to an administrative adjudication, so there should have been notice and comment

- The Good Cause Exceptiono §553(b)(B) exception

One situation where this is successfully invoked is where the agency is imposing new requirements that might be evaded if advance notice were provided

Also used sometimes where agency must act pursuant to a statutory deadline, and agency wants to skip notice and comment on account of the delay involved

Sometimes this doesn’t work though

Consequences of the transformation of notice and comment rulemaking

- Practical consequenceso Increased procedural requirements imposed on informal rulemaking have probably

created a fairer system, on that will lead to rules based on info contained in a public record, and a system that permits courts to review the rationality of the resulting rules

o However, have created more cumbersome and legalistic system, which means delay On average it takes EPA 3.5 yrs to promulgate a major rule

85% chance of court litigation- Framework for Analysis

o Florida East Coast Created rule for reading federal statutes narrowly so very few imposed

formal rulemaking requirementso To control and regularize the power given to administrators, courts began to read the

language specifying procedural content of notice and comment rulemaking as imposing fairly strict procedural requirements

Vermont Yankee eventually halted this developmento Courts have begun to read the §553 notice and comment exceptions more broadly,

thereby reserving the more elaborate notice and comment procedures for more important legislative rules

- Assessments of current arrangements and possible alternativeso Some say hardlook review and paper hearing requirements have improved

decisionmaking b/c agency must be prepared to exposthe factual and methodological basis for its decision and face judicial review on a record that encompasses the contentions and evidence of the agency of its opponents

The procedures promote the flow of information and, arguably, the democratic accountability of agency decisionmaking

o Others say the delays and costs of formalized rulemaking outweigh the benefits, and doubt whether these procedures have improved agency decisions

Ossification argument: the rulemaking gauntlet has caused agencies to switch from rulemaking to adjudicatory techniques that are less effective in furthering regulatory goals

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Burden of notice and comment rulemaking has led agencies to make policy through interpretive rules, policy statements, guidelines, and other informal arrangements

o One suggestion is to relax the rigor of hardlook review and accompanying demand for extensive records and elaborate explanations

o Other suggestions: Eliminate ability of litigants to challenge a rule immediately; referral of

major rules to Congress for adoption through fast-track legislation; greater reliance on executive oversight and control

Consistency of Agencies

Negotiated Rulemaking- Some agencies have tried to develop rules through process of negotiation

o Reduces average time for a major rule to about 2.25 yrs, and likelihood of subsequent litigation is far lower than 85%

o Has been tried with only a few major rules however See p638 for when it works best, and problems too See 639 for discussion of the Negotiated Rulemaking Act, passed in 1990,

and when it authorizes negotiated rulemaking- Wald excerpt

o Attempt to model regulatory process on political process has been troubled by three problems:

Which interest groups should be represented What kind of participation is appropriate What procedural rules govern the process of coming up with a consensus

- Negotiated rule-making (or RegNeg) takes place BEFORE §553o Hasn’t had much effect says Garrett, and may not achieve the goals we think it doeso Advocates say:

Negotiation by direct stake-holders would add legitimacy to rulemaking process

Reduce delay and judicial challenges, which would hopefully end problems with ossification that were brought on by the hardlook doctrine

o 1990 Negotiated Rule-making Act This supplements the APA Takes place before the §553 requirements Must put notice in Federal Register that lists possible affected interests and

proposals No judicial review over decision of who takes part in the committee Hardlook doctrine still takes place, but looks at §553 procedure Need unanimous support for a rule, which is then sent to agency who

provides basis for §553 review process Under USA Group, agency can’t just adopt the consensus; agency

has to conduct independent review, and can change rule if it wantso This looks a little like Schecter Poultry

But here all interests must be accounted for, although this doesn’t always work out

And there is also review by the agency after the rule comes out of the negotiated rulemaking

- Two main goals of RegNeg: reduce judicial challenges, and reduce delay of ruleso Cognilazi: negotiated rulemaking does NOT satisfy these goals

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Saves only about 3 months time on average, but may actually take up more staff time

6 of 12 rules were challenged in court; so the gains hoped for didn’t happen But should we have hoped for big gains? Garrett says no – court

challenge can come from anyone, not just those involved in the negotiations

His final thought – regular rulemaking isn’t as bad as we think, there really isn’t ossification

Consistency and Estoppel

- Hypothetical: Sarah sues from 1958-60 saying she was overcharged; brought one claim and won, but now bringing second claim she deserves more

o NO – res judicatao Can Mike bring the second suit?

Yes - Res judicata doesn’t bind someone who wasn’t party to first suito Can Sarah bring suit for 1960-62?

Maybe issue preclusion, but could bring case and argue different grounds- 1955 agency makes rule that says rates over .80 are unreasonable

o Now Sarah says anything above .60 is unreasonable No – can’t change result of rulemaking in an adjudication This is what Arizona Grocery stands for

General proposition of case: an administrative ruling until changed binds both the outside world and the agency, and the agency is obliged to adhere to its existing regulations when adjudicating and may not make ad hoc exceptions or departures

Exceptions to general rule have sometimes been permitted where the regs in question concern internal agency procedures or where a rule is waived to permit more lenient treatment of a person

Something more binding about a rule than there is about an adjudication

Comes out of belief that is it reasonable for rules to have a binding effect

If you want to change 1955 rule, must go through rulemaking process again General rule about rules – they are prospective only

- Agencies must apply their rules consistentlyo True for interpretive rules as wello Extremely informal and private decisions won’t always need consistency, but usually

consistency is requiredo May depend on reliance, but consistency is generally a requiremento Can change in adjudication something made in earlier adjudicationo Subsequent rulemaking can change prior rulemaking (Chevron, State Farm)o Can’t change rule in adjudication however (Arizona Grocer)

- Ways an agency may adopt and then change a policyo Adopt policy through adjudication, then change policy through second adjudication

Courts in limited situations invalidate as arbitrary, but general rule is it’s oko Adopt policy through rulemaking, then change through adjudication

Arizona Grocery holds such changes are per se invalido Adopt policy through rulemaking, then change through rulemaking

Estoppel- Law governing estoppel of govt has undergone many twists; in recent past rule has gone from

hardly no estoppel, to some, back to hardly none

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o Doctrine of equitable estoppel: one who makes a representation to another who reasonably relies to his detriment is estopped to deny the truth of the representation or to gain by taking a position inconsistent with the representation

4 factors: (1) actions by the defendant, (2) that lead plaintiff to rely, (3) reasonably, (4) to his detriment

o By 1976, Professor Davis states the doctrine of equitable estoppel does apply to the government; but in 1982 SCt decided Schweiker, which started process back toward rule of rare or no estoppel of the govt

- Some say rule of estoppel is inconsistent with consistency ruleo But estoppel is applied to employees of agency who mischaracterize policy, but with

consistency it’s the agency itself held to prior standardso Fear that agency will be bound by all mistakes made by employees; could be huge

amount of liability, which means agency will be less likely to give advice This is seen in cases like Schweiker

- Caceres o Clear violation of IRS rules, and defendant seeks to exclude evidence gotten in

violation of these ruleso Marshall says should have consistency to protect due process of defendanto Majority says if this was APA case, might well require consistency; but here it’s a

criminal proceeding This is a very limited holding Even in some criminal cases consistency will be required too SCt says,

where there is evidence of reasonable reliance SCt didn’t want it to become a due process issue when there isn’t

consistency, b/c any lack of consistency would federalize a great deal of state regulatory practice

o General rule is consistency- But when it comes to representations that employees make, the rule is the opposite – agencies

can’t be estopped by representations of their agentso Schweiker v. Hansen

Social Security representative erroneously told woman she was not eligible for insurance benefits, so woman left without filing a written application; by Act’s terms, benefits are available only to one who has filed a written application

SCt says if this minor breach of a 13-volume handbook suffices to estop petitioner, the govt is put at risk that every alleged failure by an agent to follow instructions to the last detail in one of a thousand cases will deprive it of the benefit of the written application requirement which experience has taught to be essential to the honest and effective administration of Social Security Laws

Effect of adopting opposite rule would be to handcuff the govt, and may not give out any advice at all given repercussions of poor advice; we want govt to give advice

Garrett says there wouldn’t be less advice, just better advice, b/c govt would be held accountable

But black-letter law is that agency won’t be estopped absent a showing of affirmative misconduct

Garrett says there has never been a finding of affirmative action, as far as she knows

Would probably need to have representation in writing- Defining what constitutes the “affirmative misconduct” element of an estoppel against the

govt:o Mukherjee – statement that an alien would not be subject to an INS regulation was

negligent but not a deliberate lie so not affirmative misconduct

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o Fano v. O’Neill – plaintiff’s claim that INS had willfully delayed processing his application, singling him out for unjust discrimination, would, if proven, establish affirmative misconduct

- Officer of Personnel Management v. Richmond o Respondent got bad advice from employee relations specialist who relied on a pre-

1982 statute which had been changedo Opening door to estoppel claims would invite endless litigation over claims of

misinformation by disgruntled citizens Natural consequence of rule that made govt liable for statements of its

agents would be a decision to cut back and impose strict controls upon govt provision of info in order to limit liability

o Holding: No estoppel against govt by a claimant seeking public fundso Possible constitutional problem with estoppel

Appropriations clause – Congress must authorize any appropriation of money

Here, citizen would get money that had not been appropriated by Congress, so unconstitutional

Fear that this would become way agencies could get out from under congressional spending power

o Stevens, concurrence If there were intentionally bad actions by agency, Ct would have given

plaintiff money, so maybe this really isn’t a constitutional issue Also says should not look at individual appropriation, but appropriations as

a wholeo How does this case affect outcome of Schweiker?

Law is can’t give money to individual not included in terms of appropriation statute; it’s unconstitutional; Act itself precludes payment of benefit

In Schweiker, woman was covered under the Act, she just didn’t comply with the regulations of the law

So no constitutional problem as long as she fits under the statute Here, agency action precludes payment

If there is affirmative misconduct, could still get the money- Equitable estoppel does not work usually

o After Schweicker and Richmond there is little space for successful estoppel claims against govt, at lest where it does not involve an award of money

Possible estoppel where license or land is at stakeo But one recent case may breathe life into the doctrine

US v Winstar Doesn’t mention estoppel, but facts sound a lot like estoppel Govt was held responsible for damages on account of

representations made by agency But here the representation was very formal and binding; wasn’t an

oral representation, like in Schweiker; also, there was an express delegation by Congress to agency to make these promises, so when Congress changed law they were partly responsible based on this delegation

Collateral Estoppel (issue preclusion)

- Collateral estoppel: once court has decided an issue of fact or law necessary to its judgment, that decision is conclusive in a subsequent suit based on a different cause of action involving a party to the prior litigation

o No mutuality of parties needed

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o Approves of offensive use of collateral estoppel by nonparty to a prior lawsuito However, these doctrines come out of cases involving disputes over private rights

between private litigants- Govt is not bound in a case involving a litigant who was not a party to the earlier litigation

(United States v. Mendoza), so no collateral estoppel against government; rational:o Law allowing nonmutual estoppel against govt would substantially thwart

development of important questions of law by freezing the first and final decision rendered on a particular legal issue

o Application of nonmutual estoppel against govt would force Solicitor General to appeal every adverse decision in order to avoid foreclosing further review

o Could impose huge liability on govt, so scope of govt renders them differento Want to have percolation through circuit courts so SCt gets to see all sides of the

issue Issues would be frozen by first case otherwise

o Separation of powers Govt has reasons not to appeal based on political considerations, policy,

resources, etc, and issue preclusion would force govt to appeal all decisions as aggressively as possible to protect itself in the future, so it would impose on Executive decision-makers

o When govt acts as a landowner though, or as a private party, issue preclusion may apply

- Agency non-acquiescenceo Normally inter-circuit non-acquiescence, where agency abides in one circuit but goes

about its business in other circuits as if the decision didn’t happen (if it hasn’t been addressed in other circuits); problem is people will be treated differently based on where they live

o Doesn’t happen ofteno When the inter-circuit non-acquiescence situation may be good:

Agency at issue must have national jurisdiction over program Agency must have justifiable belief that its policy is within its range of

discretion Agency has to be aggressively seeking review in other circuits and Supreme

Court

Retroactivity

- 2 contexts: Adjudication and Rulemaking- (1) Adjudication

o Chenery II Suggests that balancing test is appropriate to evaluate the justifications for

an adjudicatory policy change against the harm to expectation interests that it would cause

o Excelsior and Wyman-Gordon Agency announced prospective only adjudication, which is odd, seen as

problematic (Wyman-Gordon)o Retroactivity is seen as accepted

But sometimes it’s thought courts can act prospectively; however, SCt is not likely to agree today, they think prospective laws are more legislative

Agencies aren’t courts, so maybe there should be more flexibility with the temporal aspect of their decisions

o There is a strand that indicates that retroactivity is not acceptable in some situations though

Atkinson

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Does employer have to follow law at the time of the discharge, or at time case comes to adjudication?

o There was a change in substantive law, where employer thought he was acting lawfully, but law changed after, so he’d have to pay penalty

o This sort of retroactivity is seen as especially bad When there’s just an increase in a fine already there, or a change in

jurisdiction or other procedural law, then we’re not as concerned about retroactivity

o Also look at importance of policy being vindicated by new law

o If new law is vast improvement, is necessary to protect employees, this may overcome negative feelings about reliance

o So based on Atkinson look at 4 things: Substantive vs. procedural Importance of right being vindicated What is the remedy?

What will happen to employer – big fine, big penalty, more worried here (See NLRB v. Local 176, p541)

How much of a surprise is the new law? Retroactivity in adjudication is a matter of balancing these four

o NLRB v. E & B Brewing Co NLRB’s new policy found impermissibly retroactive in that it worked

hardship altogether out of proportion to the public ends to be accomplishedo Leedom v. IBEW

Periodic adjustments in the contract bar rules are necessary to achieve statutory objectives, and immediate application of its revised rule was necessary to prevent an administrative monstrosity

- (2) Rulemakingo Defined in APA as being prospectiveo When an agency acts like a legislature, it normally acts in a prospective wayo Can agency apply new policy to prior behavior?

In a retroactivity challenge, a critical question is how the challenger’s conduct, or the conduct of others in its class, would have differed if the rule in issue had applied from the start

Severe impact on finances may outweigh negligible public interest in applying new provision retroactively

o Bowen v. Georgetown Univ Hospital Original rules were prospective only, but later were applied

retroactively as well SCt says legislative history shows that rulemaking power should

be exercised proactivelyo Statute itself is silent on the issue, so Ct uses canon of

construction that says when legislature delegates to agency a rulemaking ability, this is for prospective rulemaking only b/c that’s the power the legislature normally has

Can be overcome by specific language in statute, or by legislative history

There is a strong presumption against retroactivity for rulemaking

Protects due process concerns; people make decisions based on the rules at the time

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Scalia, concurringo Doesn’t like canons of construction, so finds different

reason to come to same conclusiono He’s uncomfortable with use of legislative history, so

reads definition of “rule” from APA, as requiring rules to have prospective effects only

o Breyer’s response: APA need not be read this way; in some ways retroactive effect may be justified

o Bowen indicates there is presumption against delegation of rulemaking that has retroactive affects; APA only allows prospective rules; organic statute and legislative history must show specific intent to allow for promulgation of rules with retroactive effect

Adjudication has retroactive effects, so agencies will use it when they want to do something retroactively

o Miriam case Retroactive effect here is secondary effect Often see grandfather provisions in statutes to protect people against

secondary retroactive effects Garrett says Miriam won b/c the statute’s goal wasn’t to catch people like

these

Separation of Functions

- Separation of Functions in Adjudicationo Potential source of unfairness is that same organization that initiates complaint

judges the resulting case; two aspects to this problem: Unfairness arising from the vesting of conflicting powers in commissioners

Can be difficult to resolve Unfairness resulting from conflicting duties within the staff

Can be relieved somewhat by intra-agency separation of those who prosecute a case from those who decide it

o Want to allow ALJs to use expertise of agency, but also want enough separation to satisfy due process concerns

o Wong Yang Sung v. McGrath Administrative hearing was not conducted in conformity with the separation

of functions requirements of §554 of APA Problem of commingling functions has been addressed before:

Should be avoided by internal division of labor Need to isolate those who engage in the activity APA adopts creation of independent hearing commission insulated

from all phases of a case Here, the practices exemplify the practices so unanimously condemned Govt says §554 doesn’t cover deportation hearings

§554 is limited to hearings required by statute, but Court says this only applies to those that the agency holds by regulation, rule, custom or special dispensation

Limits do NOT apply to requirements of a hearing which have been read into a statute by the Court in order to save the statute from invalidity

No basis for declaring an exemption in favor of deportation proceedings from procedural safeguards of APA

o 3 models of how “separate” they can be

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Can have agency separate from prosecutor and adjudicator Ash commission

General Counsel separately appointed by president, has a lot of autonomy from board (this is how NRLB works, and they’re the only one to use this model); less complete than first, but still some separation

Compromise is embodied in APA, which attempts to make hearing examiners (ALJs) independent within the agency

Internal separation; everyone works for same agency, but ALJs have some autonomy (not hired, fired by agency, but housed in the agency)

This is what is required by §554o Separation of Functions in APA §554(d)

Normally applies to adjudications when a hearing examiner presides at a hearing that the underlying substantive statute requires to be held “on the record” (does not apply to “on the record” rulemaking)

See p756-57 for details on §554 Does not apply in determining applications for initial licenses, or

proceedings involving rates, facilities or practices of public utilities or carriers

The separation of functions provisions of APA (§554, 556 and 557) apply only when an adjudication is required by statute, or given Wong Yang Sung, by the Constitution, to be determined on the record after opportunity for an agency hearing

When defendant in adjudication has complained of lack of independent hearing examiner, SCt has been willing to infer statutory requirement of an on-the-record proceeding without the magic words of Florida East Coast

- What is bias?o Easiest cases are pecuniary interests, where people regulate competitors, or stand to

make money on decisiono Concern that if adjudicator has also been prosecutor, there may be some bias

But mere familiarity with the facts does not disqualify person from judging on the merits (there’s a case that said this)

- Combination of Functions and Bias at the Agency Head Levelo No easy way to divide functions among commissioners; most commissioners issue

the complaint and decide the resulting caseo Withrow v. Larkin

Larkin obtained injunction against a “contested hearing” on the ground that it was unfair and unconstitutional to have the investigator make the final decision – SCt reverses

Combination of investigative and adjudicative functions creates an unconstitutional risk or bias which has a much more difficult burden of persuasion to carry

However, case law does not support DCt’s proposition that agency members who participate in an investigation are disqualified from adjudicating

o Here, no specific foundation has been presented for suspecting that the Board had been prejudiced by its investigation or would be disabled from hearing and deciding on the basis of evidence to be presented at the contested hearing

o Without showing to the contrary, state administrators are assumed to be men of conscience

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o Judges do it all the time – they grant arrest warrants, and then preside over the trial

Combination of investigative and adjudicative functions does not, without more, constitute a due process violation

- Other forms of biaso Gibson v. Berryhill

Board of Optometry in Alabama was composed solely of optometrists in private practice; they brought case against members of Lee Optical, a large business corporation that accounted for nearly ½ of all the optometrists practicing in Alabama

SCt affirms DCt decision that Board is constitutionally disqualified from hearing the case on the ground of possible personal interest

Those with substantial pecuniary interest in legal proceedings should not adjudicate these disputes

Here, private optometrists stand to gain a lot of business- Who Decides?

o One of major problems in large agencies is for commissioner to find time to decide the numerous cases that reach him while also deciding major policy issues

Commissioners thus rely heavily on staff assistance in deciding a caseo Morgan v. United States (I)

Ps allege Secretary delegated determination of issues with respect to the reasonableness of the rates involved

If Secretary had assigned to Assistant Secretary duty of receiving evidence, hearing argument, and making order upon findings, this would be a question of delegation; however, here the Assistant heard argument but did not make the decision – it was left up to the Secretary, who according to the allegation (which was thrown out by DCt) had neither heard nor read evidence or argument

If one who determines the facts which underlie the order has not considered evidence or argument, it is manifest that the hearing has not been given

Doesn’t matter if evidence supports the decision reached; the one who decides must hear

o Weight ascribed by the law to the findings rests upon assumption that the officer who makes the findings has addressed himself to the evidence

o Must be a hearing in a substantial sense, and officer who makes the determinations must consider and appraise the evidence which justifies them

o Defendants must answer the allegations to determine if proper hearing was granted

o How can commissioner have enough time, given last case? (1) Agency head can formally delegate decisionmaking to a different

official This depends on the wording in the statute

(2) Agency head can informally delegate the decision to others who will brief the agency head on issues, leaving the agency head to make the decision

o The Ash Council Report Made specific recommendations designed to free commissioners’ time for

policymaking See p789

o Agency head’s job is primarily one of reviewing decisions made by ALJs

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Due Process

- What process is due before termination of benefits?o Two-prong inquiry:

(1) Does he have constitutionally protected interest? (2) If yes, what kind of process is he due?

- (1) What are constitutionally protected interests?o Constitution says one can’t be deprived of life, liberty or property w/o due process of

law Interest must be of a certain type, rather than a certain weight (it’s a

category, not a balancing test), in order to qualify for due process protection Turns on positive law; must determine if it gives rise to a legally

protected entitlement It’s ironic b/c the less delegated statutes will more likely imply due

process concerns However, Justice Douglass argued due process should be triggered

whenever there is an “important” right, which is more expansiveo Goldberg – welfare benefits are property

Footnote 51 shows that these benefits are now going to be viewed as property interests (citing to the Reich article)

Areas where liberty is implicated instead of property (only these two ways):

o Incarcerated peopleo Winegar – employment termination done in a public

manner Almost never is life implicated, so almost always look at property

interests for due process concerns Reich said it’s good idea to think of govt benefits not as privileges,

but as property interestso This would protect beneficiarieso In modern society much wealth consists of advantageous

opportunities conferred by govt; when statutes provide that govt benefits shall be afforded to qualifying individuals, those individuals should be recognized as having property rights in such benefits, whose deprivation should be protected by procedural safeguards similar to those utilized to protect “old” property, such as land, from governmental deprivation

o Said there should be constitutional limits on new property; can’t use award or deprivation of new property to pressure people against use of their constitutional rights

o Should be substantive limits on govt in handing out benefits; factors considered by govt must be directly relevant to the program

o Also wanted procedural safeguards before one can take away or change new property rights, like hearing, oral testimony, representation by counsel, etc

o These rights protect those at lower end of socio-economic levels

o So must answer this question using the modern view of property rights as discussed in Reich

- (2) What kind of process is due?o This is defined in balancing terms

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Government interests against interests of individualo Problem with earlier procedures was that there were no oral hearings (and chance to

cross-examine), and no pretermination hearings Want procedure to allow people to feel like they participated, and was in a

dignified way (Brennan emphasized these – also see Gray Panthers), not just focus on accuracy

Difficulty of people surviving without the benefits (so peculiar nature of new property interests) was one reason pretermination hearings were needed

Why did agencies not want pretermination?o Less expensive to have post-termination hearings for the

agency b/c fewer people will appealo Mostly procedural reasons

Black’s dissent in Goldberg: He’s worried about the costs imposed on govt in having these

pretermination hearings, which will lead to reduction in benefits, and govt will be much stricter with eligibility b/c it’s harder to kick people out once they get in

Studies show the results have been mixed however Question should be, what are the tradeoffs?

- After Goldberg, people got worried about scope of caseo Roth and Sindermann should be seen as trying to cut back on the first prong of the

testo Trying to define what’s a property right for protectiono Roth

Positivist track: property interests are created by existing rules or understandings that stem form an independent source, such as state law or a contract; it’s not a constitutional issue, but can be by common law (see p673)

In Sindermann, there was something in the faculty guide that created legal interest and property right; Roth didn’t have a similar expectation

So what hearings are triggered depends on how the contract is structured, whether it gives rise to expectations of entitlement

If State had damaged Roth’s standing in the community, put his name, integrity, reputation in question, would have gotten a hearing

In Roth, lots of discretion, but no entitlement Horowitz – no property interest b/c it’s a subjective decision This is the positivist trap of Goldberg, Roth and Sindermann –

determination of whether there are property interests rests completely in the statute itself

Blackletter law is clear – whether source creates property interest depends on full factual context; must show as part of statute or contract an intent to create a substantive entitlement

- Once you determine what the entitlement is, look at what process is dueo There will already be procedures involved; question is, do we need additional ones?o Mathews v Eldridge tries to flesh out second prong of Goldberg

Balancing test with three factors: (1) Importance of interest affected (2) Procedural cost-benefit analysis

o Risks and flaws of current procedures, and what benefits do additional procedures provide

(3) What’s government’s interest (fiscal and administrative burdens)

o (1) Interest affected

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More than just interest in getting property; additional interest of getting them in between time terminated and time given due process; weighed more heavily with things like welfare, less with social security

Mathews – here Ct assumes there are other sources of income coming in, unlike welfare

o (2) Procedural cost-benefit analysis Accuracy is main, but not only, concern; how would new plan increase it?

Goldberg ’s requirement of oral hearing is based on increase in accuracy

Mathews – hearing here won’t have much value b/c won’t increase accuracy

Garrett says oral hearing increases costs, may not increase accuracy; we may be disregarding other effects; so is a court the right institution to be making these calls?

Lowdermill – constitutional objective is accuracy Garrett says there has been movement away from court deciding that what

is needed was what was granted in Goldberg, a big trial-like hearing Costs of that are expensive; trial type hearing isn’t always best way

to get at truth; people may feel better going through a less-formal process

o (3) Interest of the government In Goldberg, saves government money not to have pretermination hearing Pragmatice assessment: can govt recoup benefits that were improperly paid?

And can govt pay back funds that should have been paid earlier?- Arnett v. Kennedy (not assigned) – positivist approach and the “bitter sweet” argument of

Rehnquisto Sounds like Sindermann, it was at-will employmento So were procedures adequate to protect the interest?

Ct says yes, but there’s a split in WHY they say yes Rehnquist (and positivists) – adequate b/c they were what the

statute provided; due process can’t be read to force agencies to adhere to regulations more stringent than those already provided for by Congress; but limited this holding to where statute was focused on both substantive rights and also provided for procedure to vindicate this substantive right (the “bitter with the sweet” argument – Congress drafted statute so you have property right, but you have to accept the procedures given by Congress in the statute, which here don’t provide for pre-termination hearing)

Other justices said these procedures work under the Mathews balancing test

o Focus on Rehnquist (which is NOT the law) Seems to flow naturally from Roth and Sindermann, that positive law

determines substantive rights Statute defines the substantive right, the property interest, so why

not also the procedures that vindicate this right? Sounds like Crowell case, when you can get into an Art III court,

says Garrett (private v. public rights) Element of state being able to control use of proceeds

Robust Goldberg will force spending of money, takes money from beneficiaries

Loudermill opinion shows most justices don’t agree with this approach Cts feel like they have ability to determine procedural rights; it’s

what they normally do Need to use Mathews test

Easterbrook excerpt

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Procedural rules are measure of how much the substantive interest is worth, shows how much legislature is willing to give up to vindicate the right

Unfair for courts to change the emphasis given to the right by the legislature; changes balance worked out by legislature

Would Goldberg case under Rehnquist method have reached a different outcome?

If yes, then we have another trap for the unwary legislator Would Rehnquist have applied same rational to “old” property?

Doesn’t work as well, says Garretto What’s the argument against using the positivist approach in procedure? (the

Rehnquist approach) Congress is more focused on substantive rights, as are interested groups;

less salient are the procedures devised by Congress – people don’t focus on these as much, and they have less visibility

- Legislature can give property interest, but once they do, they can’t deprive someone of due process to protect this interest

STANDING

- Who can get into court?o Standing tries to identify parties who can get judicial review

- Constitutional aspectso Art III

Cases and controversies Interpreted to include standing requirement: need adverse parties

with personal interest in the matter in order to have a “case and controversy”

- 1970’s, SCt broadened concept of standing; in 1990’s, SCt has tried to narrow standing; Why this trend of restriction?

o (1) Art II is playing a role Broad standing is seen as compromising executive power to execute the law

So perhaps broadening of Executive power in various agencies results in decrease in standing

Want to allow executive to control agency powero (2) Increasing emphasis on distinction between objects of regulation and the

beneficiaries 1970’s, easier for beneficiaries to get in Now less likely for beneficiaries to get standing

See Scalia in Lujan- Easy cases:

o Govt sues to enforce rule, defendant has standing to object to ruleo Govt enforces new reg that forces people to change their behavior; those forced to

change behavior can sueo Govt refuses to grant license or a benefit; those denied can sue

- Hard cases:o Employees want to sue OSHA for failing to adopt asbestos regs

Trying to force govt to take action on 3rd party; they are the beneficiarieso Law students sue govt over plan to change Grant Park

- Historyo Pre-1910: notion of cause of action determined who could sue

No constitutional element of standing was used

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Currie says we should still look at whether we have a cause of action, and not focus on standing

Today, standing is a separate inquiry than cause of actiono 1910-1930

Standing doctrine emerged Helped keep court out of the regulatory state and empower agencies “Legal interests” were the important issue Alabama Power Co

Injury to plaintiff is a competitive one Ct says plaintiff is injured, but it’s not a legal injury; no common

law right to compete without these subsidies (so competitive injury doesn’t give standing)

Chicago Junction Movement from common law standing into more expansive

standing Sounds like same facts as Alabama, but here there is standing

o Reason is b/c here there is the Interstate Commerce Act which includes legal right to equality of treatment; so statute has changed standing

o Common law catalog is not exclusive, statutes can provide standing too

Here, statute defines legal interest But is the standing determination the same as determining the

merits? They ought to be different determinationso Here we can see that they are indeed different

determinations This really isn’t a big jump from Alabama

Sanders Brothers This IS a big jump from Alabama, says Garrett It’s a competitive injury

o Ct says Act isn’t designed to protect against thiso However, Act grants standing to “any other person

aggrieved or whose interests are adversely affected”; the plaintiff was injured, so he gets in

o You can get into court b/c you’ve been harmed in a way that isn’t necessarily part of the statutory scheme

APA § 702 Probably meant to just codify the earlier cases Legal wrong can be common law, or statute “Adversely affected” language picks up Sanders Bros

o 1970’s Cts start to put a lot more meaning into § 702 than probably was necessary

given the earlier case law; it was a broadening of standing Why the move to broader standing?

(1) Around this time that people become increasingly concerned about capture

o Objects of agency will probably be captured by the agencies and will be doing fine, so giving ability to beneficiaries too is probably better

(2) Catching up to other areas of the regulatory stateo Other stuff wasn’t rooted in common law, like ‘new’

property for exampleo Time of “rights-revolution”

New enthusiasm for regulatory state

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(3) Belief that objectives of regulatory state can be undermined as much by regulatory inaction as by regulatory action

o Want third parties to force actionData Processing

- Ct jettisons idea of “legal wrong”o Anyone harmed can bring suit; question is whether interest sought to be protected by

complainant is arguably within the zone of interests to be protected by the statute in

Data Processing- Foundation for modern standing doctrine; unanimous decision

o Ct jettisons idea of “legal wrong”- What’s the plaintiff’s interest?

o Interest in avoiding competitive injury that would have resulted form allowing banks to get involved

o Is this the kind of injury the statute is designed to protect? Banking Act not interested in competition like Alabama Junction cases and

ICC; interest more on keeping a stable banking systemo Ct says they are departing from old legal interest test, now using zone of interest test,

in which you need not show the statute was designed to benefit the plaintiff Ct thought old test was too closely tied to the merits Is P arguably within the zone of interest? Two-pronged test:

(1) Injury in fact must be demonstrated (constitutional requirement)

o Differentiated from old test in that it’s separate from the merits inquiry

(2) Zone of interest (prudential requirement) How does it differ from the legal interest test?

Ct not specific about how to satisfy this test; if there’s plausibility to the argument then you’re within the zone of interest (is it plausible that competitors were among the zone of interest to be protected here?)

Do not go into the merits to determine zone of interest; also, look at entire statutory scheme, not just the statute in question

This is easily satisfied for competitors- Ct sites to Art III “cases and controversies” for constitutional aspect, and also to prudential

requirementso Art III requirement must be satisfied

But prudential concerns may lead court not to hear case even if it satisfies Art III

o Congress can get around prudential doctrine, but not constitutional doctrine- Garrett says we can read this case as an interpretation of § 702 of APA

o Courts feel they have a lot of power to interpret § 702; this statute has changed meaning as the notion of standing has changed

Zone of Interest

Clark v. SIA- Discusses scope of zone of interest

o Was quite lenient test around this time Test: in cases where plaintiff is not itself subject of the contested regulatory

action, the zone of interest test denies a right of review if P’s interests are so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed Congress intended to permit suit

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This turns on congressional intent, and all indicators helpful in discerning that intent must be weighed

Garrett says there were almost no interests that would NOT fit under this test (it was so broad and lenient)

We art starting to have a tightening of the zone of interest test, says Garrett- Most modern cases address injury-in-fact and other constitutional requirements, not the zone

of interest test, which is a prudential requirement- Air Courier v. American Postal Workers Union

o Union sues, says workers will be affected by allowing competitiono Ct says workers may indeed be injured, but they aren’t within zone of interest of

particular statute It was concerned with competition, but not particular competitive interest

o Garrett says this has a different feel than Data Processing and Clark However, this case was not conducted under § 702 like the others But this case is not really an outlier (see Immigration Reform v. Reno,

p894)- 2 important notes:

o Zone of interest is becoming increasingly importanto Need for good lawyering, to link interest more tightly with clear interest served by

statute (see Air Traffic Controllers v. Pena, p895) – this shows it’s becoming more like Sanders Bros; more emphasis on how the lawyer frames the interests involved

- Garrett says Air Courier is the way the courts are headingo Don’t think that National Credit Union cabins Air Courier though b/c it’s a banking

case, and generally banking cases allow for competitors (like Data Processing and Clark)

- Zone of interest is prudentialo Congress can explicitly indicate how broad it should be, or how narrow

See Block, p885, where the statute explicitly forbade consumers from filing suit

Injury-in-fact

- Constitutional requirement of hearing only “cases or controversies” has three parts:o (1) Plaintiff must show injury in facto (2) P’s injury must be caused by the challenged governmental actiono (3) Must be possible for a victory on the merits to “redress” P’s injury

- Injury-in-fact immediately after Data Processing – See Sierra Club- Sierra Club v. Morton

o No question about zone of interest, but rather injury-in-facto No standing here, b/c Sierra Club failed to allege that any of its members were

actually using this land, so they had only an abstract injury (not a concrete injury, as required by constitution)

o Sierra Club thought there should be different standards for groups like itself, and they purposefully framed the suit so that it didn’t allege any of its members had used the area; on remand, they changed the complaint to include people who used it;

o Associational standing Rule is there aren’t any different standards; association has standing only if

it’s members would have standing under the traditional test; requirements of associational standing:

(1) Members must have standing in their own right (2) Interest group seeks to protect is germane to its purposes (3) Litigation doesn’t require individual members in order for there

to be relief

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Blackmun argues that associations should have different standing requirements

- Garrett says injury-in-fact is not really the limit, because many times those with injuries can’t sue; we want a legally cognizable injury, not an injury-in-fact

o Justifications for the restrictive standing doctrine: Want real “cases and controversies” Want real adversarial situation who have something at stake, and standing

helps ensure this Decision that courts aren’t the right place for this type of dispute; legislation

is the way to go to protect environment Bi-Metallic and Londoner – political remedies are available to

members of extremely large groups This is what happened in Allen v. Wright, says Garrett

o Racist schools still get tax-exemption, so black parents bring suit, and they’re denied standing

But in many cases these people have already been to the legislature, and problem is more in how the Executive enforces the law

o Scalia says once you have statute passed, Executive enforces it with limited resources; we should give leeway to executive branch in its decisions to enforce statutes; having tighter standing requirements gives executive more power to enforce (it’s an Art II argument)

o Response to this argument: Executive decision-making still must be reviewed; sometimes Congress allows for judicial involvement and that courts should respect what Congress has decided is the right level of judicial involvement

o Justification for injury-in-fact It’s a constitutional requirement

This turns a lot on what is legally cognizable, and statutes can be drafted so as to create a legally cognizable interest

- Injury-in-fact today – See Lujan- Lujan v. Defenders of Wildlife

o Ct says affidavits contain no facts showing how damage to the species will produce imminent injury to the two members of the Defenders of Wildlife

Profession of an intent to return is simply not enough P claiming injury from environmental damage must use the area affected by

the challenged activity and not an area roughly in the vicinity of it Also, even if injury was established, there was no showing that it would be

redressed by victory on the meritso P raising only a generally available grievance about government (claiming only harm

to his and every citizen’s interest in proper application of the Constitution and laws, and seeking relief that no more directly and tangibly benefits him than it does the public at large) does not state an Art III case or controversy

Vindicating the public interest is a function of the Congress and Executive Otherwise it would permit Congress to transfer from President to courts the

Chief Executive’s most important constitutional duty, to “take care that the laws be faithfully executed”

Redressability and Causation

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- Also constitutional requirements, along with injury-in-facto Redressability and causation are separate issues however; they are often linked, but

don’t necessarily need to be linked- Linda R.S. v. Richard D.

o There is injury-in-fact, but is it redressable? What happens if she wins suit? We don’t know if she’ll get the money or not

Incarceration of the father may not equal payment- Allen v. Wright

o Parents said public schools suffered; but Ct said no way to determine if denying the exemption will in any way affect the public schools

- Two things two noticeo (1) Where there is no redressability, it usually turns on how the issues are framed by

lawyer; the longer the chain between the two issues, harder to prove redressabilityo (2) Saying there is no redressability is also saying that you doubt the government’s

ability to redress the problem

Final Standing Requirements- Constitutional

o Injury-in-fact Concrete, actual and imminent Can’t be abstract Lujan – had to have plane ticket to show injury was imminent

o Causation Injury to P must be caused by D

o Redressability Lujan – look at chain of causation Good lawyering can change this – make chain shorter, so what you’re

asking for is directly related to and will directly redress the injury Associated General Contractors – didn’t argue that they aren’t

getting contracts, but that they aren’t getting equal treatment R.S. – maybe they should have argued mother wasn’t getting equal

treatment compared to married mothers- Prudential

o Arguably w/in zone of interest Air Courier – test is becoming stricter

o Whether injury is widely generalized Abstract injuries are usually widely generalized, but Akins indicates that

this isn’t always the case Idea is that injuries harming large groups don’t need to go to courts, can go

to legislature Scalia in Lujan says this is a constitutional requirement, but in Akins they

say it’s prudential This is important b/c Congress cannot get around constitutional

requirements, but can get around or change prudential requirements

Congress can exclude people w/in the zone of interest, but can’t include someone who doesn’t have an injury-in-fact

Informational Cases- Look at Kennedy’s concurrence in Lujan for hint as to what court would do with these

informational caseso He says problem is that majority engrafts common law notions onto the

administrative stateo Doesn’t rule out possibility that Congress could draft statute that would make this

injury concrete

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o 2 points he makes: (1) Fact that a lot of people share injury doesn’t mean it can’t be concrete

enough to be an injury-in-fact (2) Says flaw is in how Congress drafted the statute

o These show that standing may indeed be granted in later cases like Akins despite the holding in Lujan

- Solutions after Lujan to get around its holding:o Adopt the nexus argument by statuteo Give people property rights in animalso Give people bounties for bringing successful suits, which would create a concrete

interest But Scalia in Lujan doesn’t say injury from procedural rights will never be

enough for standing, just that it must be a concrete injury (see FN23, p908)- Steel Company v. Citizens for a Better Environment

o Suit was continued even after Steel Co had filed their reports Lower courts said statutes didn’t provide for cause of action after reports

were filedo Case turns on redressability and bounties

Can’t get declaratory judgment, b/c company admitted they were late Can’t get injunction, b/c it’s an abstract injury

Just because there’s cost in litigation, can’t have standing; bounty is something given by Congress, and can provide standing, but the costs simply associated with litigation don’t provide for standing

So no standing; but majority says it would have been different case if statute had given a bounty

- There is no guarantee that your grievance will be redressed though, is there? If they look at another environmental report, they can still go about doing the same things they did before

o Akins says yes, you still have a redressable injury despite this 2 arguments that come out of this:

Injury-in-fact isn’t what happens later, but whether the proper procedures were followed from the beginning; the injury is in not following the proper procedures, and it can be redressed by going through the procedures properly; OR

We require these procedures b/c we think they’ll have an impact on the ultimate decision

o This is in tension with Allen v. Wright, where court said there isn’t enough evidence that taking away benefits would change the results

o Garrett says Allen was incorrectly decided, that we should think when tax deduction is taken away things will change

- Akins o Most important standing case in recent history

Clarifies that problem of generalized interests is a prudential concern, not constitutional

o Question is, does denial of information give someone standing? Very important for things like the Freedom of Information Act; after Lujan,

there was concern that there was no standing Court says no prudential concerns here b/c Congress has told us they want

people to be able to sue who have these generalized grievances (from reading of FECA)

But what about injury-in-fact? Ct says there is a concrete harm suffered by these people as voters

when they can’t get this information

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o Information would help them determine who they want to vote for and support

Statute gives voters the interest here, creates an injury-in-fact where there wasn’t one before (just like Kennedy said in Lujan concurrence)

o Discusses Richardson case where plaintiff wanted information about CIA spending No standing in that case, said it was abstract injury Garrett says without FECA, same result would have been reached here; but

FECA gave the voters the right to sue hereo Scalia is outraged in dissent; makes Bi-Metallic and Londoner argumentso This case makes informational standing much easier

But to make sure, Congress should include bounties in the statute; otherwise, once agency gives the information, you have no suit (like in Steel Co)

o Has this case opened the door for generalized citizen suits? Garrett says NO:

It was important that they were seeking information as voters, in a special capacity

There are going to be redressability issues in other similar cases, and these can’t be fixed other than by giving the plaintiff a bounty (which isn’t in many statutes)

May still have prudential problems too, as generalized interests This may be why zone of interest test is tightening

o If Akins makes injury-in-fact much broader, there’s broader standing under constitutional requirements; so to cut back on standing, they’ll used the procedural requirements: general grievances and zone of interest arguments (like Air Courier)

- Note on procedural injuries o Procedural injury – agency’s failure to follow the required procedureso In several of the post 1980s standing cases, SCt has referred not only to article III but

also article II, especially in Akins, Allen v Wright, and Lujano In several cases, court has explicitly or implicitly drawn distinction between the

objects of regulation (those against whom an agency is proceeding) and the beneficiaries (those for whom a statute was created)

Distinction is most explicit in Lujan, where SCt said that an object ordinarily has standing, but much more is needed for standing when the asserted injury arises from govt’s allegedly unlawful regulation of someone else

Reviewability

- Presumption of reviewability comes from older cases like McAnnulty and legislative history of APA

- McAnnulty o Whether there was fraud sufficient for Postmaster General to deny mail deliveryo Here, no APA in effect (b/c 1902 case)

Could have used common law approach to justify review – letters are property, so should be reviewable

But language on 828 suggests courts have real role in making sure agency people don’t act arbitrarily

o This case inaugurates the presumption of reviewability Overton Park is the modern case which also supports this presumption of

reviewability Where does this presumption come from?

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APA § 701 – broad review, with only two exceptionso Other statutory language in APA supports this too

Legislative history also – see p837 for excerpts Constitution provides strong presumption too

o Crowell v. Benson o Madison v. Marbury o Art III

- The Modern Presumptiono Abbott Laboratories v. Gardner

Judicial review will not be cut off unless there is a persuasive reason to believe that was purpose of Congress

Courts start with presumption of reviewability, and implicit preclusion is rare

Only upon a showing of clear and convincing evidence of a contrary legislative intent should the courts restrict access to judicial review

Rejected Switchmen’s logic that selective review provisions in an organic statute impliedly preclude review under general jurisdictional statutes

o Debates over the strength of the presumption of review can be seen as debates over whether judicial involvement is (a) an indispensable safeguard against administrative illegality or arbitrariness, or instead (b) a way of producing delay and allowing the displacement of administrative judgment by judicial judgment

- Exceptions to reviewability in APA (§ 701)o (Talking about review of claims under APA)o (1) Statute precludes review

If claim is a constitutional one, then there is almost unrebuttable presumption of reviewability

Statute must be explicit; silence can’t be extrapolated to mean no review; silence or lack of clarity means there is review

But this is very rare, and it MUST be explicitly said in the statute Switchmen’s Union

Court said review was denied in statute because of it’s silence; Garrett says this is bad law in this sense; but where court got denial from it’s reading of legislative history, this is more debatable

Look at this case as an outlier; there was a lot of distrust of courts in labor area at this time

Block v. Community Nutrition Institute Listing certain groups for review meant that groups left out did

NOT have review It was important that some groups who could get review would be

likely to raise issues that consumers would have brought up Line-Item Veto Act

President not covered by APA, his actions are never within the coverage of the APA; but did Act preclude review of President’s actions?

Garrett says there could have been review, but it was not clearo (2) Agency action is committed to agency discretion by law

This is odd; three puzzles in particular: (a) How is it different from the first exception?

o Canon of construction that don’t want to interpret two statutes as saying the same thing; assume that they didn’t repeat themselves

o Webster v. Doe Is discretion so unbounded that no review is

possible?

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Looking more for a sense that there is no standard to apply in assessing agency’s actions

(b) How can it be that we can’t review something here?o Don’t we always do this when we apply an abuse of

discretion test? (c) If something is so broad that there are no meaningful standards

to apply, doesn’t that necessarily violate the delegation principle?o Calls for intelligible standards, which apparently are

lacking here Overton Park

Marshall says this is a very narrow exception; only applies if there is no law to apply; here there is definitely law to apply

6 characteristics where courts tend to find that no law applies: (a) Statute is ambiguous about whether there is any ability for

courts to review at all; seems that Congress didn’t anticipate review would be needed

(b) Tend to implicate decisions where there would be tons of decisions to be reviewed by courts

(c) Areas where there are very imprecise standards given for agency action

(d) Issue involved are extremely complex and difficult for courts to rule on; this is least important characteristic

(e) Tend to deal with managerial decisions, or with foreign relations/military decisions/national security

o Managerial – statute allows administrator to give bonuses; usually courts won’t get involved here

o National security, military, foreign relationsWebster v. Doe

- CIA fires gay employee; statute allows director to terminate employee whenever necessary or advisable to interests of US

- Was this decision arbitrary and capricious (under the APA)?- Also made a Goldberg claim, that he had a property claim in his employment

o Said it violated his privacy right and right to equal protection (substantive rights)- Ct says there is judicial review for the constitutional questions, but not for APA; this was an

agency action committed to discretion by lawo Rehnquist says there are no meaningful standards to review; it’s the director’s belief

that counts, not the facts; in other words, no law to applyo Scalia disagrees, says just because it’s broad discretion doesn’t mean that there are

not things still outside one’s discretion There can still be review, the broad discretion just dictates the review Says there are issues that have always been sheltered from judicial review,

such as the hiring and firing of spies, like here; this is vested entirely within Executive Branch

“By law” means things outside the realm of judicial review, like political questions; this is also why military/national security/foreign relations is involved, b/c these are the areas courts rarely get involved in

Garrett says Scalia is correct; just because it’s a broad discretion doesn’t mean there aren’t things outside that discretion

Also, Scalia’s interpretation gives the second exception a much different meaning than the first exception

(f) Refusal to act

Heckler v. Chaney

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- Agency decision not to act is not something courts are apt to reviewo This is an arguable issue, b/c a decision not to act is still a value judgment and may

not be in accordance with a statuteo But presumption is against review in these cases nonetheless

- APA however defines failure to act as still an action by agency- Ct says inaction is an agency action committed to agency discretion by law- FDA here gave reasons for it’s decision not to act

o Rehnquist ignores them, says Ct can’t review the decision of the FDA 2 strains of his argument:

Art II issue – agency decides how to allocate its resources, just as how prosecutors decide who to prosecute, and the court shouldn’t play a role in this allocation; Executive has power “to take care that the law are faithfully executed”

Should be more involved in decisions to regulate, which implicate property interests and liberty interests; inaction is just leaving everyone alone

o Marshall takes a better approach says Garrett Says they can review it, but there has been no abuse of discretion so it’s ok This is consistent with his Overton Park discussion; says the exception in

APA doesn’t apply here Marshall says there are limited resources, but we can still review using

abuse of discretion standards He’s very concerned about the second strain of Rehnquist; decision not to

act can be just as upsetting as decision to act; failure to act can have profound consequences

- How broad a holding is this?o It’s a one-shot enforcement actiono FN13 on p853 seems to limit decision to facts of this caseo Garrett says presumption of reviewability can still be applied to wholesale inaction,

despite this case; this is a narrow holding D.C. Circuit has agreed with this

Ripeness

So if you have standing, and it’s reviewable (not under the two exceptions of APA), next question is, is the controversy RIPE? (But note that Garrett thinks it’s inappropriate to apply ripeness doctrine to APA cases)

- Is it hypothetical, too abstract, does it make sense for court to get involved now; these are the issues involved in ripeness

- Abbott Labs o Issue over pre-enforcement review of a rule

FDA says rule isn’t effective, so court shouldn’t be involvedo Court goes through three steps:

(1) Have presumption of reviewability, but look to statute to see if there’s any explicit denial of review

Here, there was nothing denying OR permitting review (2) Look to APA, which is the default standard

§ 704o Review for final agency actions (which includes

promulgation of rules) for which there are no other adequate remedies

Garrett says this should have been the end of the caseo APA says there is review here, so they should stopo But court went one step further – ripeness

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Garrett says it’s inappropriate to apply ripeness doctrine to APA cases

(3) Look at prudential and equitable doctrine of ripeness This can overcome the first two steps

o Two factors in ripeness test: Fitness of issue for judicial resolution

It is a purely legal question, or does it term on facts that we don’t have now

o Here, it’s a question of interpretation of the statute, so it’s a question of law that doesn’t need any further facts

o Also, regulations are a final agency action Hardship to parties in delaying court consideration

Look at everyone’s interestso The regulated, the government and the publico Sucks for the drug companies here, b/c they’ll have to

spend lots of money to comply Fortas, dissenting on p960, addressed this issue

o He says this cuts off the administrative process of give and take

o Abbott Labs is the norm; pre-enforcement review is common- Before Abbott Labs, courts typically reviewed lawfulness of an agency’s rule when agency

enforced the rule, not when agency promulgated ito After though, courts typically find agency rules ripe for review when it is

promulgatedo Congress has in the past 50 years enacted many statutes authorizing agencies to use

rulemaking to implement programs that provide specifically for judicial review of rules on promulgation

- Arguments for preenforcement review of regulations:o Costs of compliance with invalid rules are savedo Uncertainty about legality of regs are more quickly removedo All affected parties receive similar treatmento Regulators are held strictly accountable

- Arguments against:o Tends to promote manufacturer incentives for noncomplianceo See p962 for more

- Pierce argues that preenforcement review has contributed to ossification of the rulemaking process by promoting hard look judicial review and giving agencies and other interested industries incentives to load the rulemaking with massive analysis and data about the cost, feasibility, and appropriateness of a rule whose validity is contested and resolved before it is ever applied

- Toilet Goods o Definitely a final action, and definitely standing, but not ripenesso Ct had problem with suitability requirement

A lot of things have to happen before we worry about enforcement; too many interim steps

Garrett says this is weak argument; question is a legal one, and don’t really need more facts to determine outcome

o Ct also looked at hardship Didn’t think it was a huge penalty Garrett says suspension could indeed be big problem

- Cts shouldn’t apply ripeness doctrine to APA caseso Duffy argument:

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Once APA enacted, that became the rule for timing APA only requires standing under 702, a final agency action, and

one where there is not as adequate remedy at law Finality is a jurisdictional aspect (it’s required in the APA), but

ripeness is a prudential concern- NALCC v. Shultz

o Is this a final agency action? Must have something that imposes obligation, denies a right, fixes a legal

relationship, has a binding effect Press releases don’t usually pass this test Here, letter was signed by head of agency; no indication of tentativeness, so

seemed like a final agency action

Exhaustion- 3 faces of exhaustion:

o (1) Agency hasn’t acted at all and citizen goes directly to courto (2) Agency has entered preliminary order and citizen wants interlocutory review

Socalo (3) Gone through administrative procedures, didn’t make particular argument, and

now trying to make argument in court McKart

- Ripeness vs Exhaustiono Ripeness: question is, is agency supposed to do more before they go to court; are

there more steps in the agency processo Exhaustion: citizen is supposed to do something more, not the agency

- Justifications for exhaustion o Agency should have first crack at things, should have chance to remedy it itselfo Justifications given in McKart case

Want agency to use its expertise Want agency to have ability to come up with consistent policies Will reduce decision costs if agency can deal with it

Autonomyo Delegation was from Congress to agency, so should

respect this delegationo From court’s perspective, premature review involves judges deciding issues not

sufficiently concrete, and can involve then in deciding issues unnecessarily, wasting time and effort

o From agency’s perspective, can deprive agency of opportunity to refine, revise or clarify the particular rule, and can deprive of opportunity to resolve the underlying controversy on other grounds

- Myers v. Bethlehem o Shows exhaustion was doctrine from pre-APA times

- Because it’s a judicial doctrine, has been flexible and pragmatico Exhaustion hasn’t been required where pragmatically it doesn’t make any sense

(exceptions to the exhaustion requirement): When courts don’t require exhaustion, they typically refer to factors such

as: Is the agency’s mind closed in respect to this issue? Is the question legal in nature, that is, is the agency comparatively

less expert in answering it than the court? Is the plaintiff likely to suffer serious injury in the absence of

prompt judicial intervention? If requiring further proceedings will cause injury b/c of delay

Myers deals with what we mean by injury for exhaustion

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Expense and inconvenience of litigation does not equal harm that can get you around exhaustion

Just like standing – costs of litigation can’t give you standing Where case falls clearly outside the jurisdiction of the agency

Extremely rare situation SCt has said that immediate review is available when the agency

plainly exceeds its statutory or constitutional authority Don’t have to exhaust procedures that are constitutionally deficient

Eldridge v. Mathews Can go directly to court to allege unconstitutionality Judge Becker argues the following requirements must be met:

o Unexhausted claim must be at least substantially collateral to the question whether plaintiffs should continue to receive disability benefits

o Agency must have taken a fixed and final position on the unexhausted claim, thereby rendering exhaustion futile

o Requiring exhaustion must impose substantial hardship on, or cause irreparable harm to, the plaintiffs

o Mathews met all three requirements Agencies can waive exhaustion, agree to go to court early

- § 704 of APA has explicit exhaustion provisiono What Duffy argues, and Darby v. Cisneros says, is that courts can only require

additional procedures if statute requires it, or if agency by rule has required additional procedures (and this is what § 704 says)

o If all you have are possible additional procedures, not mandatory ones, it doesn’t necessarily undermine the finality of a decision

o So courts should abandon ripeness concerns as well and only apply § 702-04 (says Duffy)

- Socal decisiono Second phase of exhaustion – can you take interlocutory appealso Issuance of complaint isn’t a final action says court

No interlocutory appeal here (basically means no review of this decision at all)

Socal has to go forward with the adjudication- Third face of exhaustion: gone through administrative procedures, didn’t make particular

argument, and now trying to make argument in courto McKart and waiver

Why no waiver here, that he didn’t fully litigate before in administrative proceeding?

It’s a criminal proceeding No facts in dispute, so bigger record from below wouldn’t help

much Allowing defense here will not encourage people to do the same

thing later on b/c the penalties are so severe

Review for Exam:- Reviewable case?

o Standing (APA allows for wider standing than regular courts) Constitutional

Injury in fact Causation

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redressability Prudential

Widely generalized interest usually no good, but Congress can say yes

Zone of interesto Presumption of reviewability

Overton Park Exceptions

Statute denies review Given to agency discretion by law

o Ripeness/Finality Abbot Labs test

o Exhaustion If it’s APA case, only those mandated by statute or agency rules and

regulations- Constitutional Problems

o Delegation Schecter – no intelligible guidelines, or delegation to purely private entities,

or will be struck down (doesn’t happen often) Great deal to do with statutory interpretation

Amalgamated Meat Cutterso Ct has aggressive interpretation to protect delegation

concerns ATA case

Requires agency ex-anti to announce rules to constrain their own discretion

Gets at problem of arbitrariness, to see if agency has acted arbitrary or capricious

o Chadha issues Separation of power problems other than delegation

Bowsher Question of agency overreaching

Question of independent agencies Line-Item Veto Case

o Article III Private rights - must be some judicial review of the process

- Has agency adhered to law, interpreted its statute correctly?o Skidmore

Non-legislative rules Cts somewhat deferential

o Chevron – applies to legislative rules, or adjudication pursuant to delegated powers Step 1

Ascertain whether congress has spoken unambiguously on this issue

Is statutory meaning clear and unambiguous Canons of construction

o Legislative history If there is ambiguity, then go to step two

Step 2 Is agency’s interpretation permissible Some step 1 issues here

o May find stuff that is clearly outside the statuteo Cardoza Fonseca case

o Deal with interpretation of the lawo See ABA Ad-law project

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o Once you understand the law, agency has lots of discretion in policy- Policy (how are we going to review policy determinations)

o From § 706 § 553 rulemaking – arbitrary and capricious

Overton Park and State Farm Formal rulemaking – substantial evidence to support determination

Scenic Hudson o Hard look

This is what the courts are doing in both of the above situations, it’s really the same review

o Softer procedural hard look – just need better explanation, need to show you looked at possible alternatives

Need to do a lot more than is required under § 553 to satisfy this Seems there is a softening of the hard look doctrine, at least with arbitrary

and capricious reviewo Temporal reach of agency action

Adjudications typically are retroactive There is a balancing test from NLRB cases

Rulemaking is either prospective only (Scalia) or there is clear indication from Congress that it can be retroactive – Bowen case

o Equitable estoppel Schweiker – have to prove affirmative misconduct by agency

- Facts – Universal Camerao Cts can review facts, but usually give extraordinary deference to agency

- Have appropriate procedures been followed?o Rulemaking v. adjudication

Chenery II, Excelsior Courts usually defer to choice of agency

o Does due process require rules ex-anti? Hornsby , Soglin Like the ATA case in a way

o Due process requires hearing? Londoner

Adjudicative facts require hearing Bi-Metallic

Legislative facts don’t need hearing Goldberg

Property, liberty, or life interest means hearingo Formal procedures triggered?

Use APA procedures if hearing is required by constitution, but usually statutes will give one

Can object under Mathews v. Eldridge If constitution doesn’t require, statute might

Florida east Coast Railway case Must say “hearing on the record”

o Hybrid procedures? Vermont Yankee – courts can’t require additional procedures, but Congress

can and agencies cano Exemption from § 553?

Good cause, interpretive rules, agency procedures, etco Internal agency rules that require procedures?

Consistencyo Evidence of bias

Pecuniary

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o Separation of functions Investigation and prosecution

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