Administrative Law Outline

Lonegan Administrative Law Fall 2011

Chapter 1 – The Nature and Functions of Administrative Agencies

A. Introduction

I. What is Administrative Law

A. Governs the organization, functions and exercise of authority by executive officials in administrative agencies, including independent agency officials, and how their actions are reviewed by courts

B. Derived from 4 key sources

i. The Constitution-implied by Article I

1. “delegation doctrine”

2. Congress may delegate the task of implementing its laws to government agencies subject to certain limitations and requirements that leave only the detailed implementation of the statute to the agency.

ii. Administrative Procedure Act

1. laws that specifies how the agencies carry out basic function such as rulemaking, adjudication, and how citizens can petition the agencies

iii. Enabling acts of agencies-determines the scope of the agency’s power

iv. Administrative common law

II. Agencies Establishment by Legislatures

A. The agency’s enabling statute established the agency’s

i. Power and duties-

1. the nature of the specific business or industry to be regulated

2. the manner that the regulation should be carried out

a. registration and reporting-minimal control

b. professional licensing

c. command and control regulation

ii. Organization-Sole director or panel; under the executive or independent

iii. Procedures-Citizen can contest a ruling

iv. Funding

v. Standards for judicial review of agency action

B. Delegation of power to the agency can be

i. General grant power-broad powers with little specific direction, allows flexibility

ii. Specific grants of power-very specific direction, limits flexibility

iii. Contingent grants of power-triggered by specific events (FEMA)

III. Structure of Admin Agencies

A. Most are within the department of the executive branch

i. A head who serves at the pleasure of president subject to senate confirmation (OSHA, FDA)

B. Some are “independent”

i. Multiple member agencies; appointed by president but serve fixed, staggered terms and cannot be removed without just cause (SEC, FTC)

C. Agencies simulate all three branches of government

i. Legislature: enact administrative rules and regulations

ii. Judicial: engage in adjudication

iii. Executive: engage in investigations and other executive actions

IV. Functions of Admin Agencies

A. Regulate personal behavior of individuals and conduct of business, distribute subsidies and benefits, provide services, collect revenues, manage and develop resources, issue licenses, promultate rules, conduct inspections, seize goods and people, prosecute offenders, adjudicate claims.

V. Theories of Administrative Agencies

A. Public interest theory: explains administrative policymaking and structure of agencies based on the traditional notion that agencies act to further the public good and are structured to maximize their ability to further the public good. (response to a social problem/market failure)

i. Objective values and ends for human action

ii. Natural monopoly- supra-competitive prices or wasteful competition

1. Public utilities and antitrust law

iii. Public goods-market will under produce for services whose enjoyment cannot easily be restricted to those who pay for them

1. Police protection, parks, communications (limited the number of frequencies)

iv. External effects- public bads like air pollutions

v. Asymmetric information-consumers will find it too costly to acquire or evaluate information (quality of the goods or services) (ex. Calorie list for fast food)

1. Unfair or unethical business practices or license certain occupations and trades that affect health and safety

B. Public choice/economic theory: explains regulation and the structure of agencies as products of the political process where parties with political power enlist government coercion to achieve individual preferences and goals that they could not achieve in a free market. Agency structure as maximizing ability of parties with power to influence government action. (outcome of a struggle among self serving legislator and the factions, interest groups, and powerful individuals who compete for legislative prizes)

i. All substantive values or ends are regarded as strictly private and subjective

ii. Legislative intercourse is self interested (no public or social interest)

VI. A Case Study: OSHA

A. Applies to every private employer “engaged in a business affecting commerce” in the U.S. or its territories.

B. Established the Occupational Health & Safety Administration within the Department of Labor.

C. “Command and control” legislation

i. Can contract with state agencies to enforce the act

ii. Can conduct regulation inspections of workplaces

iii. Secretary of Labor can seek civil or criminal penalties; OSHRC adjudicates claims for penalties initiated by the Labor Dept.

1. Split rulemaking and adjudicatory powers

B. 4 Legislative Controls on Administrative Agencies

Legislative Control

1. Creation/ Delegation

a. Enabling Act

b. Sunset provisions (expiration or limited for specific purpose)

2. Revision of statute

a. Legislative veto (how Congress is supposed to operate when they use the legislative veto)

b. Sunset provisions

3. Funding/ Appropriations

a. Money directed to agencies

b. Can be very general or can be linked to specific purposes

c. Embryonic stem research: none of the money can be used for destruction of embryo

4. Oversight

a. Standing committees

b. Task forces

c. Investigation

1. Authorization-The delegation issue

I. Congress creates and empowers administrative agencies through legislative authorization. Statute that confers upon an agency a particular set of powers and responsibilities is called an “authorizing act” or enabling act”

II. Legislature creates agencies to implement public policy in particular area where they cannot predict or agree what that policy should be

III. The Concept of Delegation

A. Article I, §1: “[a]ll legislative power herein granted shall be vested in a Congress”

B. Article I, §8: Congress has the power “[t]o make all laws which shall be necessary and proper for carrying into execution”

i. Exclusively to Congress

ii. Allows a busy Congress to authorize other governmental entities to act on its behalf

IV. Key Qs:

A. Delegation to whom?

B. What is the scope of deligation?

V. Delegation Doctrine:

A. Early Cases

i. Field v. Clark (1892): 1st case that looked at delegation. Ct sustained McKinley Tariff Act of 1890, in which the president was given power to suspend favorable tariffs on goods of counties that unreasonably discriminated against American agricultural products.

1. SC ruled that this was a delegation of discretion as to the facts, not the law, and was not, therefore, an unconstitutional delegation of power.

ii. U.S. v. Grimaud (1911): “filling in details” SC upheld statute authorizing president to revise certain tariff duties when he determined revision to be necessary to “equalize costs of production in US and principal competing country”

1. For the 1st time SC held that Congress could delegate policymaking authority, so long as statute furnished an “INTELLIGIBLE PRINCIPLE” (= standards, direction) to guide the delegate’s discretion.

Ø Limits of intelligible principle were tested by hot oil and sick chicken cases involving NIRA.

B. New Deal & Unconstitutional Delegation

i. National Industrial Recovery Act (NIRA)

1. §9(c) gave the President the authority to exclude from interstate commerce petroleum products produced or withdrawn from storage in excess of the amount permitted…by any state law or valid regulation.

a. Panama Refining Co. v. Ryan (“Hot Oil” case) – SC held statute unconstitutional delegation of legislative powers bc it failed to guide president’s decision whether and when to use this power. Congress declared no policy, has established no standard, has laid down no rule. There is no requirement, no definition, no circumstances and conditions in which transportation is to be allowed or prohibited.

i. Delegation to president

ii. Scope to broad: no intelligible principle

2. §3 authorized the President to approve “codes of fair competition” for trades and industries that could be approved by President upon application by industry if no inequitable restrictions were placed on admission to membership and are truly representative and if codes not designed to promote monopolies or oppress small enterprises and will not operate to discriminate against them…

a. Schechter Poultry Corp. v. U.S. (“Sick chicken” case) – SC held statute unconstitutional delegation of legislative powers bc president’s discretion in approving or prescribing codes is virtually unfettered (unrestrained)

i. No intelligible principle

ii. Trade associations as 3rd part