ch 23 administrative agencies

what makes up the body of administrative law?

regulations that cover almost every aspect of a business’s operations

what is administrative law created by?

administrative agencies

what is an administrative agency?

a federal or state government agency created by the legislature to perform a specific function, such as to make and enforce rules pertaining to the enviornment

what happens when Congress (or a state legislature) enacts legislation?

it typically adopts a rather general statute and leaves its implementation to an administrative agency

T or F: administrative agencies are spread throughout only the federal government

FALSE

there are administrative agencies at the state and local levels as well

T or F: administrative agencies at the state level or not connected to an administrative agency at a federal level

FALSE

commonly, a state agency is created as a parallel to a federal agency

what takes precedence over conflicting state regulations?

federal agency regulations

what do the significant benefits of legislation and regulations entail?

considerable costs for business

given the high costs of regulations, business has a strong incentive to try to influence the regulatory environment through lobbying

who creates federal administrative agencies?

Congress

how is an administrative agency created?

Congress passes enabling legislation

what is enabling legislation?

a statute enacted by Congress that authorizes the creation of an administrative agency and specifies the name, composition, purpose, and powers of the agency

T or F: federal agencies can exercise only the powers that Congress has delegated to them in enabling legislation

TRUE

what defines an agency’s legal authority?

the agency’s enabling statute

what does the Federal Trade Commission (FTC) act do?

prohibits unfair methods of competition

prohibits deceptive trade practices

describes the procedures that the FTC must follow to charge persons or organizations with violations of the act

provides for judicial review of agency orders

what are the 7 “powers” that the Federal Trade Commission act gave the FTC?

1. create “rules and regulations for the purpose of carrying out the Act”

2. conduct investigations of business practices

3. obtain reports from interstate corporations concerning their business practices

4. investigate possible violations of federal antitrust statutes

5. publish findings of its investigations

6. recommend new legislation

7. hold trial-like hearings to resolve certain trade disputes that involve FTC regulations or federal antitrust laws

who appoints the five head members of the FTC?

the President

what are the two basic types of administrative agencies?

executive agencies

independent regulatory agencies

who makes up the executive agencies?

the cabinet departments of the executive branch and the sub agencies within the cabinet departments

what is the difference between executive agencies and independent regulatory agencies in terms of the person in power?

in executive agencies, the President appoints one person to oversee the agency. they can be removed by the President at any time

in independent regulatory agencies, the officers serve for fixed terms and they cannot be removed without a just cause

agencies’ powers include functions associated with:

the legislature (rule making)

the executive branch (enforcement)

the courts (adjudication)

what is legislative rule?

an administrative agency rule that carries the same weight as a congressionally enacted statutei

what is an interpretive rule?

a nonbinding rule or policy statement issued by an administrative agency that explains how it interprets and intends to apply the statutes it enforces

what kind of rules can administrative agencies pass?

legislative rule and interpretative rule

what is delegation doctrine?

a doctrine based on Article 1 Section 8, which has been interpreted to allow Congress to delegate some of its power to make and implement laws to administrative agencies

the delegation doctrine is considered to be proper as long as:

Congress sets standards outlining the scope of the agency’s authority

why are administrative agencies, which constitute the bureaucracy sometimes referred to as the fourth branch of the U.S. government?

because, in many ways, administrative agencies function independently, even though the three branches of government exercise certain controls over agency powers and functions

what is a bureaucracy?

a large organization that is structured hierarchically to carry out specific functions

how does the executive branch of government exercise control over agencies?

the President’s power to appoint federal officers

the President’s veto power

• the President may veto enabling legislation passed by Congress or congressional attempts to modify an existing agency’s authority

how does Congress exercise authority over agency powers through legislation?

Congress…

gives power to an agency through enabling legislation and can take power away

can revise the time and monetary limits on the funding of particular programs set through enabling legislation

has the authority to investigate the implementation of its laws and the agencies it has created

has the power to “freeze” the enforcement of most federal regulations before the regulations take effect

how does the judicial branch exercise control over agency powers?

through the courts’ review of agency actions

what does the Administrative Procedure Act do?

provides for judicial review of most agency decisions

when can agency actions be subject to judicial review?

the party seeking court review must first exhaust all administrative remedies before seeking court review

what is exhaustion doctrine?

the principle that a complaining party normally must have exhausted all available administrative remedies before seeking judicial review

when does the Administrative Procedure Act (APA) apply?

in the absence of any directives from Congress concerning a particular agency procedure

what is fair notice with the APA?

an agency that is planning to carry out a change must give fair notice of what conduct will be expected in the future with those who will be affected

what is the arbitrary and capricious test?

the APA provides that courts should “hold unlawful and set aside” agency actions found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law”

what are the standards that are followed that make a rule “arbitrary and capricious”?

1. failed to provide a rational explanation for its decision

2. changed its prior policy without justification

3. considered legally inappropriate factors

4. entirely failed to consider a relevant factor

5. rendered a decision plainly contrary to the evidence

what is administrative process?

the procedure used by administrative agencies in fulfilling their three basic functions: rulemaking, enforcement, and adjudication

why is the APA an integral part of the administrative process?

it imposes requirements that all federal agencies must follow in the absence of contrary provisions in the enabling legislation

what is rulemaking?

the process by which an administrative agency formally adopts a new regulation or amends a new one

how does the APA define a rule?

“an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law and policy”

why are regulations sometimes said to be legislative?

because, like statutes, they have a binding effect

what did the APA establish because agency rules have such a significant legal force?

procedures for agencies to follow in creating (amending, or removing) rules

what is notice-and-comment rulemaking?

an administrative rulemaking procedure that involves the publication of a notice of a proposed rulemaking in the Federal Register

a comment period for interested parties to express their views on the proposed rule, and the publication of the agency’s final rule in the Federal Register

the impetus (motivation, incentive) for rulemaking may come from various sources, including:

Congress and the agency itself (as well as private parties)

what happens when a federal agency decides to create a new rule?

the agency publishes a notice of the proposed rulemaking proceedings in the Federal Register

what is the Federal Register?

a daily publication of the executive branch that prints government orders, rules, and regulations

what does the notice that agencies publish when creating a new rule state?

where and when the proceedings will be held

the agency’s legal authority for making the rule (usually it's enabling legislation)

the terms or subject matter of the rule

what follows the publication of the notice of the proposed rulemaking proceedings?

agencies must allow ample time for persons to comment in writing on the proposed rule

what is the purpose of the comment period?

to give interested parties the opportunity to express their views on the proposed rule in an effort to influence agency policy

T or F: the agency must respond to all comments made during the comment period

FALSE

but the agency must respond to any significant comments that bear directly on the proposed rule

how does an agency respond to a comment made during the comment period?

by modifying its final rule

by explaining, in a statement accompanying the final rule, why it did not make any changes

what happens after the agency reviews the comments in rulemaking?

it drafts the final rule and publishes it in the Federal Register

are final rules binding or nonbinding?

they have a binding legal effect, unless the courts later overturn them

what are some ways that agencies have been using more informal methods of policymaking?

issuing interpretive rules and guidance documents

what are guidance documents?

they advise the public on the agencies’ legal and policy positions

why are informal agency actions exempt from the APA’s requirements?

because they do not establish legal rights

(a party cannot be directly prosecuted for violating an interpretive rule or a guidance document)

what happens after a final rule is issued?

agencies conduct investigations to monitor compliance with the rule or the terms of the enabling statute

how do agencies gather information when conducting investigations?

through on-site inspections

asking a firm or individual to submit certain documents or records

what are the two basic types of subpoenas?

the subpoena ad testificandum

the subpoena duces tecum

what is the ad testificandum?

“to testify”

a writ, or order, compelling a witness to appear at an agency hearing

what is the subpoena duces tecum?

“bring it with you”

compels an individual or organization to hand over books, papers, records, or documents to the agency

what may a court consider when determining if an agency is abusing its discretion in pursing information as part of an investigation?

1. the purpose of the investigation

2. the relevance of the information being sought

3. the specificity of the demand for testimony or documents

4. the burden of the demand on the party from whom the information is sought

when can agencies conduct warrantless searches?

warrants are not required in highly regulated industries (like firearms of liquor)

when searching certain types of hazardous operations (sometimes permitted by a statute)

in an emergency situation

what happens after conducting an investigation of a suspected rule violation?

an agency may initiate an administrative action against an individual or organization

how are most administrative actions resolved?

through negotiated settlements at their initial stages

sometimes in formal adjudication

what is adjudication?

the process of resolving a dispute by presenting evidence and arguments before a neutral third party decision maker in a court or an administrative law proceeding

why is a negotiated settlement an appealing option to firms?

1. avoid appearing uncooperative

2. avoid the expense involved in formal adjudication proceedings and in possible later appeals

what happens when a settlement cannot be reached?

the agency may issue a formal complaint against the suspected violator?

the administrative procedure act (APA) requires that before the hearing takes place, the agency must issue a notice that includes:

1. the facts and law on which the complaint is based

2. the legal authority

3. its time and place

what is the formal administrative agency adjudication process?

1. complaint

2. answer

3. hearing before Administrative Law Judge (ALJ)

4. order of ALJ

5. appeal to governing board of agency

6. final agency order

7. court review of agency decision

8. court order

what does the ALJ have the power to do?

administer oaths

rule on questions of evidence

make determinations of fact

how can disputes be resolved?

through informal adjudication proceedings or through a formal adjudicatory hearing

what is a significant difference between trials and administrative agency hearings?

normally much more information, including hearsay (secondhand information), can be introduced as evidence during an administrative hearing

what follows a hearing?

the ALJ renders an initial order, or decision, on the case

what is an initial order?

an agency’s disposition in a matter other than a rulemaking

what happens if no appeal is taken, or the case is not reviewed or considered anew by the agency commission?

the ALJ’s initial order becomes the final order of the agency

what is the final order?

the final decision of an administrative agency on an issue

what have courts done historically when asked to review agency decisions?

granted deference to the agency’s judgement

(in other words, the courts tended to accept the agency’s judgement, often citing the agency’s great expertise in the subject area of the regulation)

what was the overall outcome of the Chevron U.S.A., Inc v. Natural Resources Defense Council, Inc. case?

the court’s decision created a new standard for courts to use when reviewing agency interpretations of law

1. did Congress directly address the issue in dispute in the statute?

2. if the statute is silent or ambiguous, is the agency’s interpretation “reasonable”?

under the holding of the Chevron case, what must happen when the meaning of a particular statute’s language is unclear and an agency interprets it?

the court must follow the agency’s interpretation of the statute as long as it is reasonable

what does the Freedom of Information Act (FOIA) require?

the federal government to disclose certain records to any person or entity on written request, even if no reason is given for the request

all federal government agencies to make their records available electronically on the Internet and in other electronic formats

what does the Government in the Sunshine Act, or open meeting law, require?

that “every portion of every meeting of an agency” be open to “public observation”

the public be provided with adequate advance notice of scheduled meetings and agendas