Administrative Law

Why Administrative Law?

Why do we study administrative law? Touches the lives of every American.

“Today’s citizens awake in the morning to breakfast of bacon and eggs, both certified as fit for consumption by the United States Department of Agriculture

(although the Department of Health and Human Services would urge you to eat a breakfast lower in cholesterol).

Breakfast is rudely interrupted by a phone call; the cost of phone service is determined by a state regulatory commission.

When our citizens drive to work, their cars’ emissions are controlled by a catalytic converter mandated by the Environmental Protection Agency.

The cars have seat belts, padded dashboards, collapsible steering columns and air bags required by the National Highway Traffic Safety Administration.

When our citizens stop for gasoline, they pay a price that is partly determined by the Department of Energy.

To take their minds off the bureaucracies regulating their lives, the bureaucratic citizens turn on their radios. Each radio station is licensed by the Federal Communications Commission and all advertising is subject to the rules and regulations of the Federal Trade Commission.”

Introduction

Introduction This is where citizens have the most face to face

interaction with government. Administrative law makes up the bulk of

government policy.

Five Themes Bureaucratic government has existed in varying

degrees in nearly all organized political systems. The effects of administrative government

influence us literally every moment of our lives. Bureaucratic government has provided no

utopian cure for the shortcomings of capitalism. Administrative law seeks to reduce the tendency

toward arbitrariness and unfairness in bureaucratic government.

Administrative law is a relatively new and open-ended field of law.

Theme One: Why does bureaucracy exist in nearly all organized political systems?

The Development and Growth of the U.S. Bureaucracy Early American History

The United States originally only 3 cabinet level departments (State, Treasury and War).

It would be changes in the economic situation that would drive a change in the bureaucracy.

The United States economy was predicated on the idea of the concept of laissez faire.

Laissez faire – hand off (no interference) by the government. Promotes open competition between businesses. This idea remained in place in the United States until the late 1800’s.

Members of the elite (the Supreme Court included) subscribed to the idea of Social Darwinism.

Social Darwinism – survival of the fittest in the economic marketplace. “Those who are rich deserve to be rich, and those who are poor are simply

not working hard enough – they deserve to be poor.”

Theme One: Why does bureaucracy exist in nearly all organized political systems?

Post-Civil War, Industrialization, and the Railroad Industry The Railroad Example:

1870’s Railroads begin to use anti-competitive pricing practices This would upset members of the agricultural, mercantile, and industrial sectors who would

make a call for regulation. Initially, railroads would be regulated exclusively by the states (duty of the states to monitor)

Established in the Granger cases (1877) Munn v. Illinois (1877)

Wabash v. Illinois (1886) Interstate Commerce Act (1887)

Passed by Congress which establishes the ICC (first independent regulatory agency). ICC v. Cincinnati, New Orleans and Texas Pacific Railway (1897)

The ICC cannot set rates Relied on the equal protection clause of the 14th Amendment.

ICC v. Alabama Midland Railroad (1897) Created exceptions to the short-haul/long-haul clause that rendered it useless. Railroads therefore raised rates.

Sherman Antitrust Act of 1890 Supreme Court excluded application of the Act to the oil, steel, sugar, and manufacturing

monopolies saying that these industries were not part of “commerce”.

The Shortcomings of Laissez Faire Economics

Markets contain within them forces that tend toward collusion, toward eliminating or reducing competition, toward monopoly.

Markets go through boom and bust cycles. No requirement for producers of goods to

pay for the indirect costs of production. Air pollution, water pollution.

People have a tendency to cheat.

The Need for Bureaucracy and Regulation

To prevent market failures that are the result of monopolies or monopolistic practices.

To create consistency in economic performance in markets (smooth out boom and bust cycles).

To force producers to cover the indirect costs of production.

To create fairness and ensure those do not “cheat” in the economic marketplace.

To create expertise to deal with increasing technological complexity.

Why Government Bureaucracy Grows?

Technological complexity Government grows naturally as the

size of the population grows. Public Pressure Crisis situations

Theme Two: The Broad Reach of Administrative Action and Power

Types of Bureaucratic Organizations at the Federal Level

Cabinet Level Departments Department of Agriculture Department of Education Department of Energy Department of

Transportation Department of Veterans

Affairs Department of Commerce Department of the Interior Department of Homeland

Security

Department of Defense Department of Labor Department of Health

and Human Services Department of Justice Department of Housing

and Urban Development Department of the

Treasury Department of the State

Types of Bureaucratic Organizations at the Federal Level

Independent Agencies Independent of any cabinet level agency Report directly to the president or

Congress. Types:

Independent Agencies Independent Regulatory Agencies

Types of Bureaucratic Organizations at the Federal Level

Government Corporations Examples:

United States Postal Service Amtrak Federal Deposit Insurance Corporation Corporation for Public Broadcasting Federal Reserve System

Types of Bureaucratic Organizations at the Federal Level

The Political Agencies of the President and Congress The Presidential Bureaucracy Congressional Bureaucracy

Theme Three: The Shortcomings of Regulatory Government

Level of goal formation Broad goals don’t account for

tradeoffs Levels of goal attainment may create

moral problems How far should we go to achieve our

goals?

Bureaucratic Pathologies Pathology – symptoms of a disease.

Thus, bureaucratic pathologies are the symptoms of “disease” in the bureaucratic system.

Red tape The idea that there is more emphasis on adhering to

rules and regulations than helping citizens. Agency capture

Agencies that are charged with regulating a sector of the economy seek to protect and advance the interests of the industry rather than the general public.

It was not deliberate on the part of Congress.

Summary and Moving Forward The federal (and state) bureaucracy has considerable scope and power

Possess all three powers of government: Executive Legislative Judicial

Administrative law is concerned with all of these functions and powers, including defining these powers and ensuring that the powers are limited.

Bureaucracy potentially suffers from a variety of problems Agency capture Unfair procedures Inefficiency Ineffectiveness Administrative law is concerned with addressing these problems and providing outlets for

citizens when agencies suffer these problems. Agencies are created for a variety of reasons, but politicians seek to maintain

control over the bureaucracy. Administrative law acts as a check on administration by defining the processes of

agencies and limits on administrative power (next chapter). Administrative law empowers administration by giving legitimacy to administrative

actions (next chapter).