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Administrative Law
University of Iowa School of Law
Reitz, John C.

Administrative Law, Spring 2015

Professor John C. Reitz

1) What type of agency action is it?

a) Adjudication or Rulemaking?

i) APA Definitions (§551)

(1) Rulemaking – generally applies prospectively to all

(a) Rule – “an agency statement of general or particular applicability and future effect designated to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency”

(b) Ratemaking is always rulemaking

(c) Unlike Londoner, the APA says rules can be of particular applicability

(2) Adjudication – generally applies retroactively to few

(a) Order – “a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency”

(b) Licensing is always adjudication

(c) Anything that is not a rule is an adjudication

ii) Test

Rulemaking: (Bi-Metallic)

Adjudication: (Londoner)

1. General (many people) (Note: number is not a great way to measure, since there is no bright-line

2. Applies to everyone equally

3. Question of policy

4. Forward-looking (prospective): Doesn’t matter who you were, apply 40% going forward

5. Announcing the rule

6. Affected party could have legislative recourse (doesn’t need protection of courts)

7. No right to be heard orally

8. Ratemaking is rulemaking

1. Particular (few people)

2. Singling out on individual grounds

3. Question of fact

4. Past (retrospective): Look at how much pavement you have now

5. Applying the rule

6. Affected party doesn’t have legislative recourse, and needs protection of the court process

7. Right to be heard orally

8. Licenses are adjudication

iii) Cases

(1) Adjudication: In Londoner v. Denver (1908) Pg 35, a commission for the city of Denver paved a road and taxed landowners whose land abutted the street proportionally to the amount of abutting land; the landowners were given a right to comment orally before assessment of the taxes, but were not given an oral hearing; the court said that a hearing was appropriate

(a) The court held that when a small number of people are affected unequally, a hearing is required; the court noted that people are typically affected unequally when there are factual disputes (in this case, over the proper apportionment of taxes)

(b) The court also noted that hearings are necessary when an agency applies an order retroactively

(2) Rulemaking: In BiMettalic v. State Bd. Of Equalization (1915) Pg 39, a state agency raised the value of all property in Denver 40%; property owners said they had a right to be heard before such action was imposed, but the court held that there was no need for a hearing

(a) The court held that when a large number of people is affected equally by a rule, no hearing is required

(b) The court also noted that hearings are not necessary when the agency announces a rule prospectively

(c) In justifying its decision, the court noted that government would “grind to a halt” if everyone could voice their opinions on every issue; instead, people are given the right to be heard for issues affecting everyone through the vote, and given the right to be heard through oral hearings only when the issue affects them particularly (this logic is relied on heavily today)

iv) 3 Main Tenets for BiMetallic Test: If following tenets satisfied, then adjudication required:

(1) Small Number of people

(2) Exceptionally affected

(3) On Individual Grounds (MOST important)

v) Note on Londoner/BiMetallic Distinction: The “individual grounds” distinction in Londoner holds most of the weight of the factors. Often there are a small numbers of people who are exceptionally affected but if the rule applies equally to all of them, then it is deemed a proper rule-making with no need for an oral hearing. However, if people are affected differently, then oral hearing required.

b) Neither an Adjudication nor Rulemaking?

i) Actions that may not fall into any category

(1) Decision to public information

(2) Decision to award a contract or issue an RFP

(3) Administrative Searches

(4) Agency Subpoenas

(5) Freedom of Information (FOIA) Requests

c) Formal or Informal Adjudication?

i) Summary: Courts must interpret whether Congress intended to require formal or informal adjudication by the words of the statute. Courts disagree on whether formal or informal adjudication is the default.

(1) §554(a) (adjudication) requires in every “adjudication required by statute to be determined on the record…”

(2) Difference between rulemaking and adjudication: The default for rulemaking is informal because §553 doesn’t require it to be on the record (unless the organic statute requires it)

ii) Support for default requirement of it being on record

(1) Attorney General’s Manual on the APA: Thought that the default is formal rulemaking

(2) US v. Florida East Coast RR (1973)

(a) Rule: The presumption is against formal procedures for rulemaking, and the organic statute must have language requiring it to be “on the record and after an opportunity for an agency hearing” (or similar language that showed clear congressional intent).

(3) Seacoast Anti-Pollution League v. Castle (1st Cir. 1978) (Pre-Chevron)

(a) Rule: The default for adjudications is that they must be formal (on the record), unless the statute says otherwise

(b) Reason: The default of the APA is to follow the process outlined in the APA. Also, the APA was created to protect individual rights in adjudication, this is what happened her.

(c) Facts

(i) FWPCA (organic statute) required EPA to provide public hearings, but didn’t specifically require the hearing to be “on the record” if regulated companies apply for an exemption

(ii) The EPA allowed parties to submit written information, stating that it would later hold a hearing if needed. EPA did not hold a hearing, and approved the exemption (ᴨ was trying to keep the company from getting the permit).

(d) Regulated argues that the words “on the record” must be used in the organic statute to require hearing on the record

iii) Support for giving Agencies discretion in whether hearing is formal/informal

(1) Dominion Energy Brayton Point v. Johnson (1st Cir. 2006) (Post-Chevron)

(a) Rule: Agencies are able to decide if “hearing” in an organic statute requires formal or informal process (note: this is NOT interpreting the APA, it is interpreting the organic statute)

(i) Reason: Under Chevron, agencies are able to interpret vague statutes. The APA is vague on what “trigger language” requires formal adjudication. AS a result, agency has discretion to choose if it is formal or informal adjudication.

(ii) In practice, most agencies will choose to implement informal adjudications because they are cheaper

(b) Facts: the EPA dealt with the same issue as that in Seacoast involving the issuance of permits for discharging heated water without a hearing; however, at this point the EPA had passed a rule eliminating formal hearings from the permit process; the court deferred to this interpretation of the st

may impose extra procedures, in which case the court can simply enforce the statute

(3) Agency Lock-In – Courts may be able to correct “unjustified departure from well-settled agency procedures of long standing” (although this might be dead-letter)

(4) “Extremely compelling circumstances”: although, apparently in this case, safety of a nuclear plant isn’t “extremely compelling”

(5) Courts must enforce the APA, which requires them to interpret the APA

iii) The court justified its decision as follows:

(1) Agency Expertise – agencies know best how much procedure to allow

(2) Preference for Informality – see Florida East Coast Railway

(3) Congressional Intent – Congress wanted agency discretion; the court also views the APA like a deal (see Greenwich Collieries), meaning the text is all there is to go on

(4) Unpredictability – if courts were allowed to second-guess agencies constantly, they would always opt for formal rulemaking

(5) Monday-Morning Quarterbacking – the post hoc ability to check agency decisions pushes them toward formality

f) Critiques of the administrative state

i) US-based Critiques

(1) Nondelegation Doctrine has been killed by the administrative state

(a) Why the nondelegation doctrine is important

(i) Upholds Separation of Powers (Constitutional principle based on the “Vestment Clauses”)

(b) How it died

(i) American Trucking’s “Intelligible principle” test is very loose

(ii) Congress doesn’t have the capacity to delegate now, delegating a lot of power of limiting the agencies to the courts

(2) Unitary Executive is under attack

(a) Many agencies are no longer under the control of the President

(3) Death of the independent judiciary

(a) Executive agencies are taking over much of the work of the courts (creating an SoP problem)

(4) Death of Separation of Powers

(a) SoP was created to stop tyranny, and yet we have created agencies that can carry out all three governmental functions (judicial, executive, and legislative powers)

(b) Now, many of the functions of different branches have been combined into agencies

ii) Germany v. US

(1) Germany is a “corporatist” state

(a) Private organizations tend to get a lot of deference from the government when drafting rules

(b) However, unlike the US, parliamentary governments (like Germany) have more minority parties, so it is easier for them to influence the political system than in the US

(2) Differences between the US and Germany

(a) German has a enforcement of the nondelegation principle, and the courts will overturn a rule if the agency doesn’t use the correct process.

(b) Agencies are generally apolitical in German (not simply seeking to implement the policies of the party in power)

(c) Agencies in the US are generally more accountable because they have more freedom, and can’t blame policies on the government in power. This might be why the nondelegation principle is less enforced in the US.