ADMINISTRATIVE LAW OUTLINE
I. Administrative Law
A. Types of Agencies
1. Executive agency: supervised & appointed by President who has direct authority to supervise.
2. Independent regulatory agency: blend of executive & legislative authority to maintain neutrality
a. Ex: Interstate Commerce Commission; Federal Reserve System
B. Historical Developments of Administrative Government & Regulation
1. Early years: State actors were subject to common law rules & could be sued in tort.
2. 1850s: Regulation began (boilers on steamships)
3. 1880s: Interstate Commerce Commission established to set railroad rates in RR monopoly.
4. 1910-1920s: Lockner era; USSC resisted regulation under theory of freedom of contract.
5. 1930s: New Deal increased regulation & created new independent agencies.
6. Administrative Procedures Act (1946): Divided agency activity into informal & formal rules and adjudications and required certain procedures depending on activity.
7. 1960s: Criticism of unhindered agencies, corruption, not in the public interest, interest groups.
8. 1970s: Agencies expanded & courts used more judicial review.
9. 1980s to today: Market theme: Regulation costs more than it should, and benefits are too small.
C. Problems that Call for Regulation: What should regulation look like?
1. Classical economists’ view: Regulate only with market failures.
a. Public goods (inexhaustible & inexcludable) – ex: national defense, air quality
b. Correct externalities (pollution)
c. Control natural monopoly power: Aim at ‘allocative efficiency.’ (ex: RRs, electricity)
d. Need to compensate for inadequate info (consumer products)
2. Redistribution (social security, minimum wage law)
3. Promote social values (regulation of broadcasting)
4. Paternalistic regulation (motorcycle helmet laws)
D. Regulatory Tools: Cost of service ratemaking (electricity), allocation for public interest (tv), standard-setting (airbags), price setting, licensing, fees or taxes, provision of info (occupational safety), subsidies
E. Classic Republican Theory: Through deliberation & dialogue, government facilitates civic participation.
Public Choice Theory (Role of Administrative State in a Democracy)
Economic (Self-Interested) Theory of Regulation
Legitimacy (People vote for representatives based on their preferences. Voting legitimizes and makes accepted policy decisions.)
Voting Irrational (Voting is a good idea only if the benefits (vote counts) outweigh costs. (Problem w/ the legitimacy of modern democracy.)
Represent the public interest.
– Reelection (Congress is interested in private interest.)
– Special interests (Congress serves certain groups that have money & power to get him reelected.)
Facilitate participation of individuals. (Groups enter the legislative process, compete, and negotiate. Groups translate individuals’ concerns, mobilize voters, and provide money to favored candidates.)
Collective action problems: Special interest dominates over general interest. Participation in groups is costly, so all potential groups do not have the chance to form equally b/c requires collective action. Systematically, small groups with intensely held interests win. Factors = number of people and costs per person. (ex: groups in airline industry; airline are stronger than consumers)
Expertise exercised in the public interest. (Regulation is good & solves problems.)
Private interest. (Regulation gets captured & is designed to help the regulated parties themselves.)
Ideal Role of Administrative Law
(What courts do?)
– Protect rights. (Administrative law protects the public in the margins by adjudication.)
– Facilitate participation in government.
Police self-interested regulation. (Look at rationale, rules, & process by which regs are made to ensure they are in the public interest. Assumes courts can identify public interest, are isolated from special interest, and individuals can litigate.
1) Public interest might not identifiable or might not be a good thing.
2) People might not be rational.
3) Some large movements succeed. (civil rights)
4) Representation may be responsive locally.
5) No normative view proposed
II. Constitutional Positions of the Administrative Agency
A. Separation of Powers and Checks & Balances
1. Separation of powers: (Montesquieu) Government t
ties? Did agency act beyond the scope of its delegated power?
2) Considerations: Courts should look at standard, content of the act, background, and context.
3) Amalgamated Meat Cutters v. Connally: (1971) Upheld Economic Stabilization Act, which gave President power to freeze prices & wages to stop inflation in an emergency under the standard of ‘fairness & equity.’ (Different than Schechter b/c sufficient standard, not an excessive delegation or a blank check to President, limited time frame for emergency, & APA applies.)
c. Judicial Review of Agency Actions Outside of the Scope of Delegated Power: Agencies must quantify their research & policy decisions, but do not need to conduct a strict cost-benefit analysis. Courts make the final call on whether an agency’s evidence supports its regulation.
1) Industrial Union Dept v. American Petroleum (Benzene): (1980) Struck OCHA’s zero tolerance policy for benzene b/c Act requires OCHA to make standards ‘reasonably necessary’ to provide safe employment ‘to the extent feasible.’ OCHA didn’t provide an informal cost-benefit analysis to show regulation was necessary. Congress didn’t give OCHA unlimited power to impose costs.
i. Concurrence: (Rehnquist) Advocates nondelegation principle. Congress improperly delegated too much power to the agency. Test: (1) Congress must make important social policy decisions; (2) Congress must provide an intelligible principle when it delegates authority; & (3) Courts need adequate standards to determine if agency’s exercise of discretion was valid.
Construing Statutes Narrowly to Avoid Constitutional Questions: An agency cannot save an unconstitutional statute, but courts uphold legislative delegations even when they include vague standards, especially if agency articulates determinate standards.