Administrative Law Outline

Administrative Law

Levin

Fall 2011

I) Introduction

A) POLICY

1) Why have agencies at all?

(a) Positive Attributes

(i) Efficiency

(ii) Expertise

(iii) Chain of command creates delegation à efficiency

(iv) Takes tough decisions out of the political process à Prevents politicized deadlocks

(b) Critiques

(i) Lack of legitimacy

· Not subject to the democratic process

· There needs to be some kind of oversight mechanism to ensure accountability or responsiveness

⁃ Court ensuring responsiveness to complaints

(ii) Costly (as a bureaucracy)

· Concerns of other departments that are losing resources will have issues

(iii) Regulated entities have an interest & try to lobby

· Might “capture the agency” so that it is in effect run by the regulated entity

(iv) Lack of transparency

B) Basic Structure

1) Departments are highest level agencies

(a) “Executive Agencies” are agencies that fall within a department

2) “Independent Agencies” are agencies that not part of a department (e.g. EPA)

C) Certain Issues

1) Spill-over effects: costs or effects that caused by the agency’s regulation

(a) Secondary effects (ex: taking budget for the school lunches will take budget money away from art programs)

(b) Could impose costs beyond what it is meant to do

2) Capture: those being regulated may try to become the puppeteers

D) Why should we regulate private conduct at all?

1) Market failure

(a) Externalities or spillover costs

(i) People will impose costs on others because they are not internalized in the regular free marketplace

(b) Tragedy of the commons: without limits, people will overuse the commons

(i) People will not self-regulate (because the benefits of overuse will seem to outweigh the costs to the whole will not be internalized by an individual)

(ii) They gain more than they lose

(iii) Limited supply will not replenish as quickly as its used

(c) Information asymmetries

(i) The inequity of information may cause buyers to be ill-informed about the cost of what they are buying

(ii) Expertise in the market (sophistication) will close the information gap (to bid down prices)

· Examples of regulations: requiring disclosures, ethical regulations on lawyers

(d) Monopolies or Cartels

(i) When a small number of companies control the market they can create costs or barriers to entry for competitors

(ii) When you dominate the market you can control pricing to ratchet up costs

· Exert market power to exclude competitors, which prevents the free market for working properly

(e) The desired amount of regulation can depend on one’s belief in the fragility/robustness of the market and rationality of people

2) Values

(a) Some things the market can do really efficiently, but we don’t value based on our social norms

II) Administrative Law Practice (Page 1)

A) What is Administrative law, and why do we study it?

1) Administrative Law

(a) Two Different Factors

(i) Law that governs agencies

(ii) Law that agencies make

2) What Is an Agency?

(a) APA § 551 (1): agency means each authority of the Government of the United States, whether or not it is within or subject to review by another agency, but does not include – (A) Congress; (B) the courts of the United States; (C) the governments of the territories or possession of the United States; (D) the government of the District of Columbia (or except as to the requirements of §552); (E) agencies composed of representatives of the parties or of representatives of organizations of the parties to the disputes determined by them; (F) courts martial and military commissions; (G) military authority exercised in the field in time of war or in occupies territory; or (H) functions conferred by certain statutes

(b) “Departments” are agencies, and they have the highest status and are headed by cabinet members

3) What Do Agencies Do?

(a) Regulate Private Conduct

(i) Certain agencies are focused on regulating private conduct

(ii) Justifications

· Private markets are subject to imperfections that government can fix or mitigate

· Operation of an unregulated economy can result in conditions that citizens find unacceptable even if they are economically efficient

· Government can try to overcome inadequacies of information

· Government can prevent monopolies (which drive up prices for consumers)

(iii)

(b) Administer Entitlements Programs

(i) Agencies dispense federal and state funds for specified purposes to specified

(c) Everything Else

(i) Including revenue collection, dealing with immigration, running parks, administering space program, etc.

4) Types of Agency Action

(a) Rulemaking

(i) Corresponds to legislative action

(ii) Agency rulemaking has the same force of law as if it had been passed by Congress

(iii) Most (but not all agencies) have the power to engage in rulemaking

(b) Adjudications

(i) Corresponds to the judicial function of the courts

(ii) When an agency engages in adjudication, it applies an existing rule or statute to a set of facts to determine what outcome is required by the rule or statute

(iii) Types of adjudication in agencies

· Did a regulated entity violate a regulation or statute the agency is meant to enforce

· Does a person qualify for some government permit, benefit or entitlement

(c) Investigations

(i) Executive branch has the duty of law enforcement

(ii) Investigations allow agencies to determine when one is violating laws/regulations

(d) Separation of Powers

(i) There is a constitutional tension where agencies are technically a part of the executive branch but also adjudicatory and rulemaking powers

(ii) Agencies are collectively referred to as the “Headless Fourth Branch” of the government

· Because they are not directly accountable to the electorate

B) Basics of the APA

1) Definition of Adjudication and Rulemaking

(a) Adjudication is the agency process for the formulation of an order

(i) An order is the whole or part of a final disposition

(b) Rulemaking is the agency process for formulating, amending or repealing a rule

(i) Rule is an agency statement of future effect designed to implement, interpret or prescribe law or policy

(c) Key Distinction

(i) Rule is future looking while an adjudication deals with past events and the law’s application thereto

(ii) APA § 551: Definitions

· (4) “Rule” means the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure or practice requirements of an agency and includes the approval or prescription for the future of rates, wages, corporate or financial structures or reorganizations thereof, prices, facilities, appliances, services or allowances therefore or of valuations, costs, or accounting or practices bearing on any of the foregoing

· (6) “Order” means the whole or a part of a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than rulemaking…

2) Rulemaking

(a) § 553 lays out rulemaking procedures

(b) Informal Rulemaking

(i) Three Step Process

· (A) An agency is required to publish a notice of the proposed rule in the Federal Register

⁃ Exceptions: (1) no need to publish “interpretive rules, general statements of policy of rules of agency organization, procedure and practice & (2) when agency has “good cause”

· (B) The agency must give “interested persons an opportunity to participate in the rule making through submission of written data, views or arguments with or without opportunity for oral presentation”

· (C) The agency must incorporate in the rules adopted a concise general statement of their basis and purpose (to appear in the federal register along with final version)

(c) Formal Rulemaking

(i) Outlined in §§ 556-557

· Replace prongs (B) and (C) above

(d) Hybrid Rulemaking

(i) The APA only establishes Formal and Informal procedures, but Congress can include heightened requirements in statutes that give agencies the power to make rules

3) Adjudication

(a) There are also two types of adjudication: informal and formal (§ 554(a) determines when agency must formal adjudication)

(b) General Requirements

(i) The agency must give notice to the parties of its hearing

(ii) Agency must offer an opportunity to reach a settlement

(iii) The person who presides at the hearing is prohibited from ex parte contacts, or communications from the parties including employees of the agency

(iv) The agency must conduct the hearing in accordance with §§ 556 & 557

(c) Formal Adjudication (§556)

(i) Allows for the use of an ALJ

· ALJs are agency employees who are appointed to serve as judges in agency adjudications

· Two features of the appointment process give ALJs independence from the agency where they work

⁃ The ALJ’s pay is determined by a separate agency (OPM)

⁃ ALJs may not be subjected to removal, suspension or have their pay reduced, except after a hearing before a separa