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Administrative Law
University of Pennsylvania School of Law
Adler, Matthew D.

I. Introduction

1. What is Administrative Law, what is the APA

1. Agency = an authority of the gov’t of the US, created by Congress, that engages in rulemaking and/or adjudication
a. Relationship to other branches:
i Congress can bind the agencies through statute
ii President has appointment and removal power, and can influence through EO
iii Courts can subject agency decisions to judicial review
b. Powers
i Legislative, judicial, and executive functions
ii Can engage in Adjudication and Rulemaking
2. Organic Statute = the statute passed by Congress that creates a particular agency
3. Cross-Cutting Statute = a statute that affects multiple agencies, such as the APA
4. APA = an act of Congress passed in 1946 that subjects all federal administrators to a common set of minimum procedural standards and to assure those subject to regulation have an opportunity for court review of agency compliance.
a. APA & PDP emerged as the primary checks on agency power after the New Deal’s experiment with increasing agency action, and after many constitutional checks on agencies were struck down (non-delegatoin doctrine, SDP for economic issues is dead b/c an act of Congress is only subject to minimal rationality, Commerce Clause, etc)

1. Adjudication àresults in an “order” à specific legal directive addressed to a particular party that is backward looking
a. Formal Adjudication (FA – §554, 556, 557)
i Must be triggered by language in the agency’s organic statute to get to 554
ii 1st Cir Seacoast has a presumption in favor of FA w/ language of “hearing” and no more, in order to afford greater protections for the actor. Other circuits require “hearing on the record” to get to FA. SC hasn’t commented on this yet.
b. Informal Adjudication (IA)
2. Rulemaking àresults in a “rule” à general legal directive addressed to a class of parties with a future effect
a. Formal Rulemaking (FR – §553, 556, 557)
i Must be triggered by language in the agency’s organic statute to get to 553
ii SC’s Florida East Coast says that “hearing on the record” is required language in the statute to trigger FR.
b. Informal Rulemaking (IR – only §553)
c. Types of Rules:
i Legislative – affect legal rights
· Substantiveà subject to 553 * these are the bulk of what we look at.
o Defines the rights and limits of private parties
· Proceduralà not subject to 553
o Structures its own proceedings
ii Non-legislative –easier to issue these, weaker legal role, more like precedents
· Interpretiveà not subject to 553
· Policy statementsà not subject to 553

1. 706(2)(A) – arbitrary and capricious, abuse of discretion
a. proceedings require actual contemporaneous reasoned decisionmaking, supported by their organic statute and evidence at hand – State Farm
2. 706(2)(B) – contrary to a constitutional right
a. usually a violation of Procedural Due Process claim
i Irrelevant to rulemakings unless functionally equivalent to an adjudiction – Bi-Metallic
3. 706(2)(C) – in excess of statutory jx, authority, or limitations, or short of statutory right
a. this is an actual subtantive claim, alleging that the agency violated their organic statute
4. 706(2)(D) – without observance of procedure required by law
a. claiming that the proceeding was procedurally defective under 553, 554, 556, 557, etc
5. 706(2)(E) – unsupported by substantial evidence in a case subject to section 556, 557
a. this only applies to FA & FR, and the bar is really low
6. 706(2)(F) – unwarranted by the facts

2. The Non-Delegation Doctrine – dead letter doctrine
A. In creating the agency and assigning it a problem, Congress “delegates” powers to the agency for it to use in dealing with the problem. The constitutional limits on Congress’s authority to delegate certain types of power to agencies is called the nondelagation doctrine. The question is whether the statute granting the power is too broad.

B. Constitutional Test: Congress can delegate quasi-legislative power as long as it gives the agency (or official) an “intelligible principle” to follow in exercising that power. (J.W. Hampton & Co, 1928)
1. By the 1930s the doctrine was thought to become an empty formalism; but despite the apparent bredth of the intelligible principle test, the Court struck down two federal statutes on nondelegation grounds in 1935: Panama Refining Co. & Schecter. Ct’s backlash to New Deal.

· Congress passed NIRA (Nat’l Industrial Recovery Act) as a stimulus law to combat the great depression. §3 of NIRA authorizes the President to approve “codes of fair competition” and to impose conditions at his discretion as he deems necessary to effectuate the policy of the Act.
– Procedural limitations:
1) The industries can apply to the Pres themselves, or the Pres can create a code on his own.
2) There is a possibilitiy of a hearing to get the views of interested parties.
– Substantive limitations:
1) President must find that the group that adopts the code impose no “inequitable restrictions on admission to membership,
2) President must ensure that the codes do not promote monopolies, and
3) The codes must tend to effectuate the policy of the statute (fix Great Depression)
– Enforcement:
1) Violation of code approved under NIRA = misdemeanor crime punishable by $500/day fine.
· The Live Poultry Code was proposed to the Pres as a “code of fair competition” to regulate the live poultry industry of NY. Fixes employee hours, wages. Administered through an “industry advisory committee.”
– President approved the Live Poultry Code through an EO
· Schecter was an operator of a slaughterhouse and purchased poultry for slaughter and resale. 18 counts of indictment charging violations fo the Live Poultry Code:
– 2 counts for violating the minimum wage and maximum hour provisions
– 10 counts for violating the ban on “straight killing” (which meant allowing retail dealers to select individual chickens taken from particular coops)
– other counts for sale of an unfit chicken, lack of inspection, false reports about daily prices/volume
· Schecter raised constitutional defenses:
1) SOP/Non-Delegation doctrine challenge: the code was adopted due to unconstitutional delegation of legislative power by Congress
2) Federalism challenge: that Congress could not regulate intrastate commerce
3) SDP challenge: that the code was repugnant to SDP – it infringes on the rights to personal autonomy

HOLDING: The code provisions are INVALID and Schecter’s conviction must be reversed.

· A national crisis does not enlarge Constitutional power – Congress may not abdicate or transfer to others the essential legislative functions with which it is vested.
– §3 of NIRA sets up no standards aside from general aims – the codemaking authority conferred on the President is an unconstitutional delegation of legislative power
· The attempt through the provisions of the Code to fix the hours and wages of employees of D in their intrastate business was not a valid exercise of the Commerce Clause

· Adler seems to think that NIRA shouldn’t have been considered unconstitutional b/c there was some intelligible principle for the Pres to adher to.

2. Since 1936, the SC has interpreted the Intelligible Principle test to allow Congress to give very broad rulemaking powers to federal agencies. Dead letter docrine now – no action since Schecter.
a. Even indeterminate words such as imminent, necessary, “in the public interest,” and hazardous provide sufficient guidance to agencies

3. The HLA Hart Reading of Schecter
A. The statutory guidance was too open-ended such that the degree of indeterminacy rendered the standards useless. Even though there is still a core of settled meaning, the court won’t be satisfied unless that core is big enough such that the judges have some actual basis to make a decision.

B. Factors in favor of having a statute with more indeterminacy
1. Agencies have more expertise, experience
2. Presidential involvement is a good thing
a. Democratic leader, salient leader, majoritarian, decisive
3. Agency has the flexibility to respond to changed circumstances
4. Congress is subject to capture by interest groups
5. Case-by-case basis
6. Pragmatic/ Functional Rationale: For Congress to fulfill its legislative function effectively, it must be able to leave the details to the agencies (Mistretta)

C. Factors in favor of having a statute with more determinacy
1. Agencies are subject to capture by interest groups
2. Congressional democracy
3. Congressional expertise
4. Advantages of notice

· Before 1984, trial judges had vast discretion to decide sentancing for criminals. It was an indeterminate system – uniform criminal justice was not administered: serious disparities b/t sentances for similar offenders, no telling how long you would actually serve b/c parole officer had broad discretion.
– Federal sentancing is not Constitutionally assigned to the exclusive jx of any one of the three branches – under the indeterminate system Congress would set a statutory range, the judge would impose the sentence w/in the range, and the Exec branch’s parole official would decide whether to release prisoner early. No uniformity.
· In 1984, Congress passed sweeping reforms to the criminal sentencing system: The Sentencing Reform Act of 1984, which created an independent body (the US Sentencing Commission) within the Judicial Branch with power to promulgate binding Sentencing Guidelines
– Pres appoints and removes members of the Commission, Senate advises and consents, and at least 3 members must be federal judges.
· Mistretta had pled guilty to a drug charge and received an 18 month sentence under the Guidelines.
· Mistretta argues that the Guidelines were an unconstitutional delegation of powers.

HOLDING: The Act, the Commission, and the Guidelines are a constitutional delegation of powers.

· Functional argument:
– As society becomes more complex, Congress needs to delegate some power to do its job
· When Congress delegates power, it must lay down an “intelligible principle” for the delegated authority to conform to and for courts to use during judicial review.
– Congress must delineate the general policy behind the delegation, the public agency to apply

ld cause massive costs & delays in agencies administering gov’t entitlement programs. In Mathews, below, the court abandons the presumption in favor of judicial-type pre-termination hearings.

2. Roth – PDP not implicated. Court lays out definitions of liberty and property interests

ROTH (US 1972) – Property = LCE grounded in a non-constitutional source
· P was hired as a non-tenured asst prof for a 1 year contract, not rehired after the contract ran out.
· Procedure = wasn’t given statement of reasons, opp to challenge, or hearing (written or oral). Only given notice
· P challenged failure to rehire on violation of PDP and 1st Am
ISSUE: Is P’s interest w/in the PDP protection of liberty or property?

HOLDING: No, no additional procedure is required because P did not have a liberty or property interest at stake

· There is no liberty interest implicated.
– An individual’s liberty is not deprived by denial of a single job. Where there is some stigma or damage to reputation, there may be a liberty interest, but there is no such problem here. P is still free to seek another job. A liberty interest can be grounded directly in the Constitution.
· There is no property interest implicated.
– “Property” in a benefit is more than a need or desire for it, or a unilateral expectation to it. Property is a legitimate claim of entitlement (LCE) from some non-Constitutional source of law that is sufficiently clear and determinate to create reliance
– P’s contract made no reference to renewal of terms – P has no LCE to being rehired in the K b/c its so indeterminate and there is no objective reliance created by it. He had no tenure, had nothing but a unilateral expectation of being rehired.
– 1st Am right is not a sufficient property interst b/c the Constitution doesn’t create property interest. LCE must stem from an independent source such as state law, contract, judicial decision, etc.
· Nb, the 1st am argument can stand on its own, but it doesn’t give P a right to a hearing based on PDP.

· Hypothetical Roth*: Three examples of statutes, where licenses are denied after a brief written hearing. When do you get an oral hearing?
o “No person may teach w/in the state w/o a license, granted at the licensing board’s discretion”
§ property interest? No – too indeterminate, not clear enough to create an LCE
§ liberty interst? Yes – Roth* wouldn’t be able to teach anywhere in the state b/c reputation injured
o “ No person may teach w/in the state w/o a license, and the board will grant them to all teachers who score 80 on the exam”
§ property interst? YES – the statute is sufficiently clear and determinate to create reliance
§ liberty interest? Yes – Roth* wouldn’t be able to teach anywhere in the state b/c reputation injured
o “No person may be employed at Penn State, unless score of 80 on exam”
§ property interst? Yes– the statute is sufficiently clear and determinate to create reliance
§ liberty interest? NO – he can work anywhere else in the state

3. Sindermann – PDP implicated.

· P was a teacher in the TX state college system for 7 years, not rehired after the contract ran out.
· Procedure = wasn’t given statement of reasons, opp to challenge, or hearing (written or oral). Only given notice
· P challenged failure to rehire on violation of PDP and 1st Am
ISSUE: Is P’s interest w/in the PDP protection of liberty or property?

HOLDING: Yes, a pre-termination oral hearing may be due. Remand to lower court to determine if there is an LCE

· There is no liberty interest implicated.
– As in Roth,an individual’s liberty is not deprived by denial of a single job..
· There may be a property interest implicated if his allegations are true
– P claims that there was an unusual de-facto tenure program at the school in the official facutly handbook, and P claims that he was tenured under it. Unwritten custom can create sufficient reliance to constitute an LCE if the custom has engendered mutual reliance.
– so, the court remands this to the lower ct to determine if this is an LCE.
· The 1st am argument can stand on its own, but it doesn’t give P a right to a hearing based on PDP