NATURE AND FUNCTIONS OF ADMINISTRATIVE AGENCIES HERBST FALL 2012
1. Legislative Control
a. Generally: Congress can create offices and agencies, and can vest in them the authority to promulgate rules and regulations, to enforce those rules and to adjudicate cases that arise under those rules. Congress delegates its power to executive branch agencies to interpret the enabling statute, and to develop both policy and their own regulations.
a. Agency rulemaking costs less (in terms of time and money) than Congressional; agencies can specialize internally to increase efficiency.
a. Agencies specialize in particular areas, so have more specialized knowledge than Congress.
1. Agencies are better served to deflect political accountability.
2. Delegation enhances the influence of interest groups.
3. Creates potential for agencies to neglect duties.
i. Formalism vs. Functionalism:
1. Formalism – any delegation of legislative power to an executive branch agency outright violates separation of powers.
2. Functionalism – instead of assuming there a violation of SOP, asks whether a particular exercise of power by an agency would interfere with a core function of Congress (delegation is permissible, but Congress cannot delegate away its core functions).
ii. Nondelegation: Idea that vesting legislative power in Congress, as an agent of the people, precludes the delegation of legislative power to any other body.
1. This doctrine is specific to the delegation of legislative power, not executive power.
iii. Intelligible Principle Test: If Congress, via legislative act, provides an intelligible principle to which the person or body authorized to act is directed to conform, such legislative action by that person or body (such as an agency) is NOT a forbidden delegation of legislative power.
1. Congress CAN delegate, but must give the agency guidance and constraints as to how it may act/engage in rulemaking.
2. Basically asking whether the delegation is of such a nature that any agency action would be usurping the role of the legislature (if so, would violate SOP).
1. A.L.A Schecter Poultry Group Corp. v. United States
a. Summary: Court struck down on delegation grounds a statute authorizing President to approve “codes of fair competition” for the poultry and other industries. Court was particularly concerned with administrative procedures for approval of the codes.
b. Why was it a problem for the association to set up the Code?
i. Legislative power is vested in Congress, and the problem with them handing it off to the executive branch is that the executive branch doesn’t represent individuals as closely as congress does. President is elected, however the close representation of Congress is why congress makes the law.
2. Whitman v. American Trucking Assns., Inc.
a. Facts: A provision in the Clean Water Act authorized the EPA to establish “national ambient air quality standards” (NAAQS) for certain air pollutants. The Act said that each standard should be set at a level “requisite to protect the public health,” with an “adequate margin of safety.”
b. Issue: Whether the act violated the nondelegation doctrine?
c. Holding and Reasoning: No. The court said that when congress gives a very limited power to an agency no intelligible principle is needed. However, when congress gives an agency great power then the legislature may have to give more guidance. Here, the words in the statute provided enough guidance to agencies. Congress doesn’t have to give exact terms (how safe or necessary something has to be). There is no bright line test, and there never will be.
i. The necessary and proper clause is what gives congress power to delegate to some extent for standard setting.
d. Scalia Dissent:
i. Does the Constitution allow delegation? Scalia says absolutely no in American Trucking, however he said in that case it was ok because there was an intelligible principle.
e. Effect: The court will almost never use the non-delegation doctrine to invalidate a statute delegating an agency power. However, courts have used the delegation doctrine to narrowly interpret statutes.
i. Statutory Overrides:
1. The most straightforward way for Congress to control agency discretion is for Congress to, when an agency makes a decision with which Congress disagrees, pass a statute overriding the agency decision
2. In extreme cases of an agency acting out, Congress can even amend the enabling statute to eliminate agency discretion.
ii. Legislative Vetoes:
1. Definition: when Congress gives an agency discretion to make decisions, but such decisions are conditional on subsequent approval (or lack of disapproval) from Congress as a whole, the House or Senate alone, or even legislative committees.
a. Usually used when agency will be engaging in rulemaking
b. Expedient way for Congress to keep tabs on agency by quickly and on the front end vetoing an agency rule; generally would be used when agency exceeds authority or if Congress disagrees with how agency acts.
iii. INS v. Chadha:
1. Facts: The statute at issue permitted the AG to use discretion in making deportation decisions. Pursuant to the statute, AG decisions could be vetoed by only one house of Congress.
2. Issue: is this one-house legislative veto permissible under the Constitution?
3. Holding and Reasoning:
a. NO, it is not – this VIOLATED Separation of Powers
b. The Constitution requires bicameralism and presentment.
i. The constitution allows 4 (limited) exceptions:
1. Impeachment – Only for “High crimes and Misdemeanors.”
2. Trial following impeachment.
3. Approval of Presidential appointments.
4. Ratify treaties.
ii. Effect of this case – legislative veto scaled WAY back (almost eliminated); cannot be exercised without bicameral approval and surviving presentation to the President
iii. Invalidated over 200 federal statutes that provided for a legislative veto that did not satisfy bicameralism and presentment; SCOTUS exhibiting Formalist tendencies – would rather preserve separation of powers at expense of efficiency
c. White dissent: Congress is allowed to delegate authority to independent and executive agencies therefore there are instances when Congress is allowed to delegate authority. Here, house/senate/president are all part of the process: President approves the Attorney General to suspend deportation, and the House and Senate indicate their approval of the President by not passing a resolution of disapproval. This is the same as if a private bill were introduces but failed to receive the necessary approval. (Functionalist argument)
a. There is a mechanism in place that the legislative branch can pass a joint resolution of disapproval then passes it to the President to sign (Contract with America Advancement Act).
d. Appropriations (Line Item Veto):
1. Three dimensions of appropriations (power of the purse):
a. Size of the appropriation;
b. The general or specific nature of the appropriation; and
c. “Riders” – Take the appearance of a special bill.
ii. Clinton v. City of New York:
1. The Line Item Veto Act violated the Constitution by allowing laws to be made without following these bicameralism and presentment procedures.
2. In finding this violation, the Court emphasized that it was not addressing “the scope of Congress' power to delegate law-making authority, or its functional equivalent, to the President.” The Court explained that statutes delegating lawmaking authority differ from the Line Item Veto Act. When Congress delegates lawmaking authority to the President, Congress must prescribe a policy (an intelligible principle) for the President to follow. In contrast, the Line Item Veto Act allowed the President to reject congressional policy decisions on spending matters. Thus, the Court seemed to go out of its way to avoid casting doubt on statutes in which Congress delegates broad rulemaking authority to federal agencies.
e. Legislative Oversight:
i. Congress charges the GAO (Government Accounting Office) on how a statute is actually being enforced, and reports it back to congress.
ii. Can Obama combine agencies without congressional approval?
1. No. The agency can sue in the judicial system, or anybody affected by the actions of the agency.
2. Executive Control
a. Appointment Power:
1. President’s appointment is dependent on the “advice and consent of Senate.”
2. Power of appointment only extends to superior officers.
3. Congress must first establish the office to which the president may make an appointment.
ii. Buckley v. Valeo:
1. Facts: The Federal Election Campaign Act of 1971 (FECA), as amended in 1974, limited the amount of individual and group political contributions. Contributions and expenditures above certain threshold levels had to be reported and publicly disclosed. A system for public funding of Presidential campaign activities was established, and a Federal Election Commission (FEC) was established to administer and enforce the legislation. FEC consisted of 6 members appointed by the President pro tempore of the Senate, Speaker of the House, and the President each getting two appointments.
2. Issue: Whether the composition of the FEC violates the appointments clause?
3. Holding and Reasoning: The court ruled that any appointee exercising significant authority pursuant to the laws of the United States is an “officer of the United States” and must be appointed with respect to the Appointments Clause. The Commission’s primary responsibility for conducting civil litigation constituted significant authority and therefore the appointees were officers. Therefore neither the President pro tempore of the Senate nor the speaker of the house could appoint them.
b. Removal Power:
1. House shall have the sole Power of impeachment.
2. Senate shall have the sole Power to try all impeachments.
3. President, Vice President shall be removed from office on impeachments for, and conviction of, Treason, Bribery, or other high crimes and misdemeanors.
ii. Myers v. United States
1. Facts: Myers was appointed as postmaster first class in Portland, OR for a period of 4 years. The postmaster general by order of the president subsequently fired Myers.
2. Holding and Reasoning: OK for President to fire. President must be able to remove officials for efficiency reasons. The power to remove is incidental to the power to appoint.
iii. Humphrey’s Executor v. United States:
1. Facts: President Hoover appointed Humphrey’s to a second 6-year term on the FTC. President Hoover fired him.
2. Issue: Whether the president can unilaterally fire an officer for any reason?
3. Holding and Reasoning: No. The court upheld the FTC statute that required “inefficiency, neglect of duty, or malfeasance in office.” Humphrey, as a federal trade commissioner, exercised legislative rulemaking and adjudicatory powers that were appropriately shielded from presidential influence, while the postmaster in Myers exercised purely executive functions.
iv. Bowsher v. Synar:
1. Facts: Gramm-Rudman Act gave authority to the Comptroller General to report and calculate amounts which executive agencies could reduce spending. The calculation then could be binding on the agencies.
2. Issue: Whether the budget cutting responsibilities could be delegated to the Comptroller who was subject to the control of congress?
3. Holding and Reasoning: No. The court says that if Congress could retain all power to remove an officer it essentially gives congress power over the execution of the laws. Congress could only remove the officer for impeachment or “inefficiency, neglect of duty, or malfeasance.”
4. Dissent (White): Congress already has the ability to control officer’s by cutting their salary, cutting funds available to the department, changing his duties, or abolishing the position altogether.
c. Appointment and Removal Reconsidered:
i. Morrison v. Olsen:
1. Facts: Ethics in Government Act authorized “independent counsels” to investigate and prosecute crimes by high-level federal officials. Under the Act, the Attorney General could initiate proceedings to investigate and prosecute official wrongdoing. The AG would apply to a “Special Division” to appoint Independent Counsel which consisted of a three federal judge panel. The case arose when Morrison held Olsen in contempt for refusing to produce evidence pertaining to an investigation.
2. Issue: Whether IC is an inferior or principal officer, and whether the appointment of the IC violated the appointments clause?
3. Holding and Reasoning:
a. Congress can limit the President’s power to remove so long as he/she is able to perform Constitutional functions.
ii. Free Enterprise Fund v. PCAOB:
1. Facts: Under the Act, the members of PAOB could be removed only by the SEC and only for cause. The President can remove members of the SEC only for “inefficiency, neglect of duty, or malfeasance in office.”
2. Rule: Two lawyers of for cause removal is unconstitutional.
a. 1 layer: If there was only one layer then the Commission could remove a member of the Board at anytime, and therefore is fully accountable for what the Board does.
b. 2 Layers: The second level means that the President is not able to hold the Commission accountable for
c. Agency Decisions Not to Act:
i. Massachusetts v. Environmental Protection Agency
1. Type of agency action:
a. Denying a petition.
2. Description of Arbitrary Capricious Standard:
a. Sufficient information exists/reasoned explanation.
3. Factors agency needed to consider:
a. Look at statutory limits, look at your own findings.
4. Where did the court find these factors?
a. “Cause or contributes” – and strictly limited to enabling legislation.
5. What documents, reports, testimony, or other work product did the court look for or at in its analysis?
a. Agency reports, NCR report, written response to petition.
3. Judicial Review of Questions of Law
a. Early Years:
i. Skidmore v. Swift & Co.:
1. Facts: Seven persons employed by private firefighters in Swift’s meatpacking plant sued to recover payment for overtime worked. They claimed that time spent in the “fire hall” at nigh, while on call to respond to alarms was working. But the Administrator of the Wage and Hour Division of the Department of Labor as to whether the time firemen spent sleeping at the firehouse constituted time on the job for purposes of overtime pay.
2. Issue: Whether the “waiting time” constituted work for overtime?
3. Holding and Reasoning: Yes. Supreme Court held the district court should have given at least a modest degree of deference to the administrator’s decision.
a. We consider that the rulings, interpretations and opinions of the 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 a judgment in a particular case will depend upon the 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.
b. The Chevron Doctrine:
i. Chevron U.S.A., Inc. v. NRDC, Inc.
1. Facts: Under the Clean Air Act, nonattainment States were required to permit “new or modified major stationary sources.” Prior to 1981, EPA defined the word 'source' as any device in a plan that produced pollution. In 1981, EPA changed this definition to allow an existing plant to modify or install equipment that did not meet standards, as long as the total pollution of the entire plant did not increase. (aka the 'bubble concept.')
2. Issue: Whether the Court should defer to the EPA’s interpretation?
3. Holding and Reasoning: Yes. The The US Supreme Court found that the courts must defer to the opinion of an Executive Agency (like EPA) in certain cases. In order to determine how much deference the courts are to give to an Agency decision, the court must review: Whether the Statute is ambiguous or there is a gap that Congress intended the Agency to fill.
4. TWO STEP TEST:
a. Specifically, “has Congress directly spoken, and is the intent clear?” If so, then the Courts must defer to Congressional intent.
b. If Congress' intent is not clear, is the Agency's interpretation of a Statute is reasonable or permissible? If an Agency's interpretation is reasonable, then the Court will defer to the agency's reading of the Statute.
i. “Reasonable” doesn't mean the way that the court would decide the issue. Even if the court disagrees with the decision, as long as the Agency can point to a reasonable reason why they made the decision, even if it isn't completely persuasive, the court has to affirm the Agency's judgment.
5. Basically, this case said the courts need to defer to Administrative Agencies when interpreting regulations. The reasoning is that the Agency understands the technical specifics and possible implications much better than the courts ever could, so their interpretation is going to be more informed.
a. This was a shift from the Court's position in Skidmore v. Swift, which had said that an Agency's position is a good reference point, but should not be considered controlling.
6. This case basically said that if Congress didn't explicitly decide an issue by Statute, they implicitly meant that the Agency should decide it for them.
ii. Food and Drug Administration v. Brown & Williamson Tobacco Corp.
1. Facts: The FDA determined that it had authority to regulate tobacco products because nicotine was a drug and cigarettes were “drug delivery devices.” The tobacco industry challenged the rules based on the grounds that the structure and history precluded an interpretation that it authorized the FDA to regulate tobacco products.
2. Issue: Did the FDA have authority under the Act to regulate tobacco products as customarily marketed?
3. Holding and Reasoning: No. The FDA did not have the authority to regulate tobacco products as customarily marketed.
a. The analysis is governed by Chevron. The Court says they must look at the overall statutory scheme, the meaning of the statute may be affected by other Acts, and “common sense.”
4. FDA clearly showed that tobacco products are unsafe and dangerous, however, they must show that tobacco products were devices under the FDCA.
a. Congress clearly precluded the FDA from asserting jurisdiction over tobacco products under 7 U.S.C. §1311(a).
b. Six times Congress has addressed Tobacco:
i. The statutes, among other things, address the packaging of tobacco products and advertisements.
ii. During this period, Congress specifically considered and rejected bills giving FDA jurisdiction over tobacco.