UNIVERSITY OF MISSOURI SCHOOL OF LAW
EXAM NUMBER ________________
Administrative Law -- Final Examination
May 8, 2013
Professor Wells
1. Fill out the examination number slips on your bluebook and write your number in the space provided
above.
2. This examination consists of 18 pages including this cover sheet. Please make sure that you have all
18 pages.
3. This examination consists of two parts. Part I consists of two essay questions. You should answer
these questions in the bluebook provided or by typing your answer on your laptop using the approved
examination software. If hand writing the exam, use a pen with blue or black ink if possible. Write on
only one side of the page. Do not tear pages out of the bluebook. Do not use pages of the bluebook
for scratch paper.
Part II contains 20 multiple choice questions which you should answer on the machine-gradable
answer sheet provided with this exam.
Parts I and II are not separately timed. If you are taking the exam on computer, you are strongly
encouraged to complete Part I before beginning Part II so that you minimize the risk of losing battery
power before completing Part I.
4. This is a closed book examination. The relevant portions of the Constitution, the Administrative
Procedure Act, and any other relevant statutes will be provided to you in a supplement to this exam.
Do not consult any other materials or persons (via electronic, written, oral or any other format) when
taking this exam. Consultation of any other materials or persons is an Honor Code violation.
Also, some students may take this exam outside of the assigned period. Anyone who has taken the
exam and communicates (directly or indirectly) about it with another person who will but has not yet
taken it will be in violation of the Honor Code.
5. You will have three hours to finish this examination.
a.
Each question has a suggested time limit that I believe is the amount of time necessary to answer
the question. The amount of time allotted for each question is roughly equivalent to the total
possible points for that question. In other words, the longer the question, the more weight to be
given it in the grading process. Use your time wisely.
b.
If you find in answering the essay questions, that an adequate answer requires information that
you have not been given, say so and explain the significance of the missing information (e.g., “if
X, then such-and-such is true; if Y, then such-and-such is true”). The point of your essay answers
is to ANALYZE, so if you need to clarify that an issue could go one of two ways depending on
additional information, that’s fine. But you have to support your answers on paper. I can’t read
your minds.
Questions 1 and 2 are based on the following fact scenario:
The Hazardous Materials Transportation Act of 1975 (“HMTA”) is the primary federal statute
regulating the transport and delivery of hazardous materials. Congress’s objective in enacting
HMTA was to “protect against the risks to life, property, and the environment that are inherent in
the transportation of hazardous material in intrastate, interstate, and foreign commerce.” See 49
USC ' 5101. Thus, the HMTA gives the Secretary of Transportation (“Secretary”) significant
authority to regulate in this area. Section 5103(a) of the law states that “[t]he Secretary shall
designate material (including any explosive, radioactive material, infectious substance, flammable
or combustible liquid, solid, or gas, toxic, oxidizing, or corrosive material, and compressed gas)
or a group or class of material as hazardous when the Secretary determines that transporting the
material in commerce in a particular amount and form may pose an unreasonable risk to health
and safety or property.” See 49 USC ' 5103(a). The Secretary is also empowered to issue
regulations pertaining to the safe transportation of hazardous materials. 49 USC ' 5103(b). The
Secretary was also given significant enforcement authority for people who violated the Department
of Transportation’s (DOT’s) regulations regarding transportation of hazardous materials.
The Secretary has indeed issued detailed regulations regarding the designation and
transportation of hazardous materials. Despite these efforts, the last few years saw several high
profile incidents involving rail cars, barges or semi-trailer trucks that spilled hazardous substances.
These substances included such things as oil (very bad for the environment), sodium hydroxide
(caustic and results in severe lung damage if inhaled), chlorine (potentially deadly in gaseous
form), and Isobutane (extremely flammable). Investigations revealed that many of these incidents
were caused by human error, especially by drivers who caused accidents leading to large spills of
hazardous materials. With this uptick in potentially deadly or harmful leaks and increasing
environmental awareness among citizens, a great deal of pressure has been exerted on the Secretary
to improve the safety record regarding the transportation of hazardous material.
The Secretary recently lobbied Congress for greater control in the area of licensing regarding
the transportation of hazardous materials. Currently, transporters of hazardous materials must
have licenses but authority to issue such licenses involves a variety of agencies (e.g., Nuclear
Regulatory Commission, Department of Homeland Security and even state agencies) with control
over the area. As the Secretary argued in hearings before Congress, consolidation of licensing
authority in one agency would bring greater oversight and increased accountability to those
transporting hazardous materials.
Unfortunately for the Secretary, his sworn enemy, Congressman Freyermuth, was head of the
House Transportation Committee responsible for overseeing this issue. Freyermuth agreed with
the need to consolidate licensing regarding the transport of hazardous materials in order to promote
public safety and protect the environment. But he refused to give the Secretary any more power to
“continue to mess things up.” As a result, Congressman Freyermuth convinced his colleagues in
Congress to enact the following law (hereinafter “the Act”):
Section 1. This Act creates an independent agency whose purpose is to authorize and oversee
licenses in a manner consistent with the purposes of the HMTA. The agency shall be known as
the Hazardous Materials Transportation Licensing Commission (“the Commission”) and shall be
headed by a chair and four other commissioners who shall be appointed either by the President or
by the Secretary of Transportation (“Secretary”). The commissioners shall serve for five years but
may be removed from the office by the President for inefficiency, neglect of duty or malfeasance
of office.
Section 2. The Commission is granted authority over all licensing related to the transportation of
hazardous materials. The Commission may enact rules and regulations pertaining to the issuance,
amendment, suspension or revocation of licenses related to the transportation of hazardous
materials. All rulemaking proceedings are subject to Title V, Section 553 (also known as APA '
553).
Section 3. The Commission may deny, amend, suspend, or revoke a license related to the
transportation of hazardous materials after notice and an opportunity for a hearing. The
Commission may enact rules pertaining to the procedures used at such hearings. Such rules are
subject to Title V, Section 553 (also known as APA ' 553).
Section 4. [This section contains penalties for violating the Act; the details of which are not
relevant for the exam other than for you to know that they can involve cease and desist orders and
cumulative fines in the tens of thousands of dollars.]
Section 5. Judicial review in the federal courts may be had by any person aggrieved or affected by
final agency action under this Act.
In September of last year, the Commissioners (who were appointed consistent with Sec. 1 of
the Act) started work and have already felt pressure to act from Congress. This issue will be
somewhat delicate since it involves consolidation of regulation regarding existing licenses and
licensing standards across various agencies while at the same time acting quickly and efficiently
to avoid further dangerous accidents or chemical spills.
In November 2012, the Commission published in the Federal Register a set of rules governing
the procedures to be used at all licensing hearings involving existing businesses related to
transportation of hazardous materials. Its goal was to get started quickly on the consolidation of
licensing process so as to ensure public safety. Eventually the Commission planned to adopt
another set of rules governing long-term licensing issues. The Commission did not use the Notice
and Comment procedures of APA Sec. 553 when adopting the rules. Those rules stated:
Procedures Governing Hazardous Materials Licenses for Existing Businesses - 78 Fed. Reg. 1
(Nov. 15, 2012)
(1) Application for Licenses
a. Current licensees. All individuals and entities currently operating a business related to the
transportation of hazardous materials that are currently licensed through another
federal/state agency must submit written proof of an existing license through that agency
to the Commission within 60 days of publication or receipt of notice of these rules.
b. New Licensees. All individuals and entities currently operating a business related to
transportation of hazardous materials that are not licensed but who will now require
licenses under the Act must apply to the Commission for such licenses within 120 days of
publication or receipt of notice of these rules.
c. Waiver of Hearing. Failure to apply for a license within the timeframe set forth herein will
be deemed a waiver of any right to a hearing in Subsection 2 below.
(2) Procedures for Grant or Denial of Licenses
a. Existing Licensee in Good Standing. If the Commission is satisfied that an existing
licensee is in good standing under its license from another state/federal agency, the
Commission will grant a new license under the Act without requiring a further hearing;
b. Existing Licensee Not in Good Standing or New Licensee. If the Commission is not
satisfied that an existing licensee is in good standing or if an applicant is attempting to
obtain an initial license under the Act, the Commission will hold a hearing at which
the regulated party may present any written arguments and/or evidence as to why they
should receive a new license under the Act. After receipt of written submissions the
Commission will issue a tentative ruling with reasons and evidence relied upon as to
the grant or denial of a license under the Act. The party seeking the license under the
Act will have 30 days to respond in writing to the tentative ruling. The Commission
will then issue a final determination as to the grant or denial of a license under the Act.
(3) Definitions
a. Hazardous Materials. The term “hazardous materials” has the same meaning as in 49
USC ' 5103(a) of the HMTA.
b. Related to Transportation. The phrase “related to transportation” means any
individual or business that transports, or causes to be transported or shipped, a
hazardous material; or which manufactures, fabricates, marks, maintains, reconditions,
repairs, or tests a package or container which is represented, marked, certified, or sold
by such person for use in the transportation in commerce of certain hazardous
materials.
On November 15, 2012, the Commission mailed these new procedures to all currently licensed
individuals and entities, informing them that they had 60 days to submit proof of good standing in
order to obtain a new license under the Act. Since potential new licensees were harder to identify,
the Commission published these rules not only in the Federal Register but in all trade publications
it could think of that would involve persons related to the transportation of hazardous material. It
also did this on November 15, 2012.
Paul Litton has a small family-owned barrel manufacturing plant. For the last 20 years, his
barrels have been a popular means of transporting hazardous materials because they are crafted
from a resin polymer that is durable and nearly impervious to most chemicals. Litton is not directly
involved in transport; he merely sells the barrels to chemical companies that do transport hazardous
materials. He is, however, aware of the use to which the barrels are put.
On April 15, 2013, Litton received a warning letter that he was in violation of the Act because
he was operating a business without a license under the Act. Apparently, the Commission
discovered Litton had no license when a trucker using Litton’s barrels had an accident spilling a
hazardous chemical. The Commission asserted that Litton was covered by the licensing
requirement because his business was “related to transportation of hazardous materials” as defined
in the rules. Since Litton did not have a license, the Commission notified him that he would be
subject to penalties if he did not cease immediately. These penalties would be assessed in
accordance with the Act.
Litton immediately wrote to the Commission asking for a hearing so that he could apply for a
license. He claimed, truthfully, that he was unaware of the licensing requirement. The Commission
wrote him a letter stating that because it had published the rules in the Federal Register and various
trade journals his ignorance was no excuse. Moreover, since he had missed the 120-day
application deadline he had no right to a hearing according to Section 1(c) of the rules.
Litton has come to you, an administrative law expert, for advice about his predicament. He is
extremely upset. His business is small and he cannot afford to absorb the penalties assessed for
operating without a license. Yet without a license, he will effectively be driven out of business and
this is the only livelihood he has ever known.
Question 1
(90 minutes)
Assuming Litton wants to pursue a challenge of the Commission’s action in federal court,
identify and evaluate the strength of the arguments Litton can advance challenging the
Commission’s application of the November 2013 rules to him.
Question 2
(30 minutes)
Discuss whether Litton can credibly challenge the Commission’s actions as invalid because
the Commission was unconstitutionally created. (Do not discuss constitutional issues that
were not covered in the Administrative Law class.)