Administrative Law Outline
Sargentich Fall 1998
Three Major Questions in Administrative Law:
1. Was the agency action within the scope of delegated power?
2. Did the agency employ fair procedures?
3. Was the agency action reasonable?
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I. The Constitutional Foundations of Administrative Power
"Agencies" are instrumentalities or authority of the government other than the legislature and the
courts. These agencies get most of their power from the legislature through statutes delegating
power to enforce the laws to the executive and its agencies.
Two types of agencies:
Executive branch agencies - where the head is appointed by the executive and may be removed at
anytime without cause.
Independent agencies - where agency heads may only be removed for good cause (making it harder
for the executive to boss the agency and its head around)
Roles of Agencies:
Regulatory - make legal persons comply with the law, with the power to sanction.
Benefactory - confer benefits (licenses, approvals, subsidies, etc.), including regulation of those
benefits.
A. Delegation of Authority to Agencies
1. Delegation of Legislative Power
• Congress is the only governmental body with the power to legislate, and so Art. 1 §1 (the vesting
clause) established the non-delegation doctrine - Congress is not supposed to give away its
legislative power to other branches.
• "Intelligible Principle" - (J.W. Hampton v. US, 1928, pg. 399) the delegation must have some sort of
intelligible principle to which the person or body regulating is directed to conform to.
Modern Interpretation:
• Formal Standards - there must be some specific standards in the authorizing statute (including
catch words like "unfair methods of trade" or other vague language), or some other intelligible
principles, that may guide courts upon judicial review.
• Accountability - there must be safeguards in the authorized rulemaking - what the agency is subject
to in its rulemaking; the statutory scheme must contemplate that standards must be applied to
check the agency's power (implemented in the (a) administrative procedures, (b) agency rules, and
(c) judicial review)
Debate:
• In favor of non-delegation doctrine:
• Accountability & checks/balances: most agency processes are "invisible" from public scrutiny,
while Congress is more directly accountable to the public. It's impossible to show how the agency
formulated its policy.
• Rule of Law: Congress makes the laws.
• Encouragement of private interest deals at the agency level - having broader delegations may give
agencies the means to cater to certain private interests without being directly accountable (BAD
THING)
• Encourage judicial activism
• Against non-delegation:
• Practicalities: flexibility and expert knowledge of agencies makes them better suited for broad
delegation; the dynamics of political compromise in Congress may be a bad thing.
• Safeguards accompany broad standards - rulemaking, admin. procedure, judicial review - providing
checks & balances. There is accountability.
• Special private interests deal more with narrow statutes - raising the generalities of issues reduces
the effects of special interests; broad standards allow agencies to be critiqued for adhering to public
processes; presidential oversight is greater due to wider range of discretion with broad delegation;
Cases:
• Field v. Clark (1892, pg. 398): Congress gave the President the power to raise tariffs & suspend
trade with those nations he saw fit. The Court held that although Congress may not delegate
legislative authority, the President wasn't really legislating. He was only applying the law when he
noticed a statutory contingency (when a nation acts in an unreasonable or unfair manner toward
the US).
• J.W. Hampton v. United States (1928, pg. 399): Established "intelligible principle" doctrine.
• Panama v. Ryan (1935, pg. 400): USSC struck down National Industrial Recovery Act (NIRA)
provision allowing President to ban the shipment of "hot oil" in interstate commerce due to lack of
standards or rules in the statute.
• Schechter Poultry v. United States (1935, pg. 400): Another NIRA provision struck down by USSC
allowing President to establish codes of fair conduct for any industry because it was too broad a
delegation.
• Yakus v. United States (1944, pg. 401): USSC upheld delegation in Emergency Price Control Act
(1942) to fix maximum prices on anything, because some maximum standards would be set, and
because the absence of standards made it impossible to determine the will of Congress.
• Amalgamated Meat Cutters v. Connally (D.D.C. 1971, pg. 403): The Economic Stabilization Act
of 1970 allowed President to issue orders/regulations as appropriate to stabilize prices, rents,
wages, and salaries. Nixon used this to freeze all of these for 90 days, and issued rules to the same
affect after the 90 days to restrain inflation during the Vietnam War. The USCADDC HELD that
Congress merely made the remedy available to the President to use if/when he deemed it
appropriate. It provided standards and limitations, which once set, limited the flexibility of future
executive action. Nixon's actions would still be subject to the APA. Panama & Schechter not
overruled.
• Industrial Union, AFL-CIO v. American Petroleum Institute (1980, pg. 404): [The Benzene
Case] The Occupational Safety and Health Act delegated authority to SecLabor to adopt safety and
health standards for the workplace. OSHA sets these standards. OSHA set benzene toxicity
standards at 1ppm, but didn't find health hazards existed below 10ppm. The plurality overturned
the benzene standard, holding that OSHA must first find that it is necessary and appropriate to
remedy a significant risk of material health impairment (in effect re-writing the statute by adding
this requirement). Justice Renquist's Concurrence argued that the authorizing statute failed on all
3 functions (a) leaving important choices of social policy to Congress; (b) provision of intelligible
principle; (c) provision of standards to which courts can measure agency action.
2. Narrowly Defining an Agency's Authority to aviod Constitutional issues
Striking down an agency's interpretation of a statute, rather than holding the statute itself
unconstitutional.
Cases:
Kent v. Dulles (1958, pg. 420): SECSTATE refused to issue a passport to Kent under State Department rule
prohibiting issuance of passports to Communists & its supporters, pursuant to statute granting
SECSTATE authority to issue passports under such rules as President designates. USSC held that
Congress did not delegate this authority to the State Department, and that the policy violated Kent's 1st
Amendment rights, and his fundamental right to exit the US as a liberty interest under 5th Amendment.
There must be a clear statement principle of statutory construction. Only striking down agency's
reading of the statute.
3. Delegation of Adjudicatory Power to Agencies
• Congress may not delegate essential Art. III functions to agencies. Private rights of review cannot be
taken away from the courts. All delegation must be tightly related to their public mission and
authority and cannot intrude too far on the work of Art. III courts (such that it would be an undue
burden). A private right is one that is independent of an authorizing agency statute.
• Any civil financial penalties specified in the authorizing statute may be levied by the authorized
agency.
Cases:
• Commodity Futures Trading Comm'n v. Schor (1986, pg. 429): Schor lost a lot of money in his
investment account, which became a debt to the CFTC. The CFTC adjudication ruled against Schor,
and he appealed claiming that the CFTC delegation of judicial power violated Article III. The USSC
held that Congress's delegation of adjudicatory functions was Constitutional, and set up a test,
looking at: (a) the extent to which the "essential attributes of judicial power" are reserved to Art. III
courts; (b) the extent to which the non-Art. III forum exercises the range of jurisdiction and powers
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normally vested in Art. III courts; (c) the origins & importance of the right to be adjudicated and (d)
the concerns driving Congress to depart from Art. III.
B. Checks & Balances and the Political Accountability of Agencies
1. Rationale for Legislative and Executive Review of Agency Action
• How do you control an agency's actions? Characteristics of bureacracy:
• Hierarchy of roles within the agency
• Rules binding on agency
• Specialization of tasks within an agency
• Lack of political influenceabilty - supposed to be experts in their field, and are motivated by
expertise and specialization rather than politics.
2. Legislative Controls:
• Congressional Oversight: committee chair can directly contact and meet with agency director & get
either a letter or hearing, etc. Because Congress writes and amends the laws, they have broad
power to investigate whether changes are needed.
• Change/amend the Law: amend the authorizing statute to no longer allow (or to specifically allow)
the agency to do something
• Appropriations: Constitutional power of the purse - appropriation of government spending. Congress
plays with the funding an agency gets to control what it does and how it does it. Appropriations are
in constant negotiations between the appropriations committee and the agency, based on policies
and issues of concern.
• Legislative Veto: Congress vetoing a rule, order or interpretive rule made by an agency by either a
one or two house vote. It reverses and adjudicatory decision of the executive branch, and thus have
legal effect. It's legally binding on the executive w/o his approval (no signature needed).
• Report and Wait Veto: where the rules are made, and then there's a waiting period during which
Congress may issue a joint resolution regarding the rule.
Cases:
• Legislative Veto - INS v. Chadha (1983, pg. 441): Chadha had overstayed his student visa. After
an on-the-record hearing, the immigration judge ruled that he was deportable, but suspended the
deportation because Chadha met the "extreme hardship" requirement of the Immigration and
Nationality Act (giving the Att'y Gen. the discretion to suspend deportation). According to the
statute, all suspensions of deportation were to be reported to Congress, and that if during that
session when the suspension is reported, either house passes a resolution that it does not favor the
suspension, the effect will be to "veto" the suspension. Chadha's suspension was reported to
Congress, and a year and a half later, the House voted to veto 6 suspensions, including his. The
USSC held the veto unconstitutional because the single-house action constituted legislation, for
which Article I requires passage in both houses and signature by the president. When the ultimate
power as to the outcome and control of the situation remains in Congress, it must use the
legislative process under Art. I.
• About 400 statutes since Chadha have included legislative vetoes, but as long as the executive
branch doesn't make a fuss, it's never dealt with. The agencies still have to deal with Congressional
control through appropriations.
• 12 states have struck down legislative vetoes, but they're also present in state legislation.
3. Executive Controls
• Appointments & Removal
• Types of appointments:
1. Officers of the US: nominated by President, confirmed by Senate; removable for cause (through
impeachment)
2. Inferior Officer: narrow and limited delegation (officially); appointed by President (no confirmation);
removable at will.
• Appointments Generally: Constitution Art. II § 2 para. 2 gives President authority, with advice and
consent of Senate, to appoint "all other officers of the United States." Congress may vest the power
to appoint inferior officers in the courts and heads of departments.
• Removal Generally: There's no removal clause in the Constitution (other than the impeachment of
"officers" clause). In impeachment, if the House votes to impeach, and Senate passes 2/3 vote to
convict. Removal power comes from the appointments clause, and would likely need approval of
some sort from the Senate (at least for Officers).
• Independent Agency: (1) often multi-headed; (2) staggered term of office from President; (3)
removable only for cause (i.e., neglect, malfeasance, etc.); (4) quasi-legislative and quasi-judicial in
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nature. Much more free of executive control due to requirement of removal for cause. At will
removable are more appropriately executive agencies.
Cases:
• Appointment - Buckley v. Valeo (1976, pg. 464): 6/8 members of the Federal Election
Commission were appointed by positions in Congress. Because Art. II § 2 only allows Congress to
vest appointment power to the President alone, the courts, and "heads of departments" - none of
which the congress positions fell into (especially heads of departments). The USSC struck down the
provision of the statute, holding that only the President could appoint these inferior officers when
they have the authority to conduct enforcement (through civil litigation) [otherwise, for investigative
and informative powers, the group was fine].
• Removal/Independent Agency - Humphrey's Executor v. United States (1935, pg. 475): FDR
discharged chairman of FTC, after asking for his resignation (which was refused), because he didn't
think they were of like mind. FTC Act made the chair only removable for "inefficiency, neglect of
duty, or malfeasance in office." USSC held that the President did not have the illimitable power of
removal that would conflict with the congressionally intended independence the FTC was to have.
An officer who serves at the will of the President cannot be expected "to maintain an attitude of
independence against the latter's will."
• Removal - Morrison v. Olson (1988, pg. 478): Independent Counsel statute provided that Att'y
Gen could only remove the independent counsel for "good cause." USSC upheld the statute in the
face of an appointments clause challenge, as well as a separation of powers challenge. The USSC
held that the statute did not impermissibly burden the executive in its functions. The removal for
cause authority gives the reflects the independence intended by Congress for the independent
counsel to have. Secondly, the Court found that this case did not reflect the danger of
"congressional usurpation of executive functions," "judicial usurpation of executive functions," nor
disrupts the "proper balance between the coordinate branches" by preventing the executive from
accomplishing its constitutional functions. The act gave the President sufficient control over the
independent counsel to maintain its independence, despite being an inferior officer. The whole point
is to provide a check for high level executive officers.
• Executive Oversight
• The President may only intervene in completed adjudication and pending rulemaking. Presidents
cannot order agencies to do something that they're not authorized to do. Presidents cannot vest in
agencies a function that is not specifically vested in the authorizing statute. Presidents may insist
on procedural requirements.
• See Executive Order No. 12,866 (1993, pg. 493) of an example of Clinton's requirements for
executive oversight.
• 1981 brought a shift to centralized agency regulation.
• Theme to have more cost-benefit analyses of the practices of agencies. Agencies have to provide a
cost-impact analysis of how it will improve and affect areas of society (including environment,
economy, etc.).
• The President is accountable to the people, and he's the only official elected nationally (as well as
VP), and thus should have more democratic power to make sure the agency is in line with his
policies.
• Inherent conflict between Presidential oversight and statutory delegation of authority. The President
has limits. The President may only "supervise and guide" agency action (Myers v. United States) when does this become Presidential decision-making?
II. The General Law of Agency Procedure - Procedural Due Process, Agency
Adjudication, and Agency Rulemaking
A. Procedural Due Process Right to a Hearing
1. Triggers of PDP Protection - Welfare and Property Interests, and How Much Procedure is "Due"
• The first question: Are property rights invoked?
• When the person is deprived of a protected entitlement, which the beneficiary relies upon for
subsistence, or other critical need or fundamental right, the deprivation must comport with Due
Process. Entitlements include:
• Access to education (since most of what people do is based on their education)
• Licenses (often businesses and individuals cannot carry on their vital activities w/o a
license)
• Gov't jobs and/or contracts (if there's something about your K or employment that makes
your dismissal conditional on some cause)
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Taxes - individual scrutiny for failure to pay (payer owes more than he thought and
disagrees)
• Institutional decisions (i.e., prisoner rights, liberty issues - Sandin v. Conner)
The second question: Has Due Process been violated (was there notice & opportunity to respond,
and impartiality of decision-maker, timing)? This only requires notice and opportunity to be
heard, as well as an impartial decision-maker. Timing becomes an issue when the deprivation has
a significant impact on the vital interests of the recipient. Use a balancing test, such that the
Government's interest in saving $ and reducing red tape is compared to the individual's interests in
losing their benefits.
Consider the procedural safeguards and the risk of erroneous deprivation, as well as the interest in
establishing/protecting dignity in the process (giving the people the opportunity to present their
case). Legitimacy is also another goal of DP, as is preventing arbitrariness. Also look at the
government's cost.
Cases:
• Goldberg v. Kelly (1970, pg. 22): Welfare recipients claimed that their welfare benefits were
terminated without prior notice and a hearing, denying them due process. What sort of process is
due when the recipient disagrees with the agency decision to terminate benefits? The USSC held
that the termination violated PDP rights. The recipient's interest in losing their benefits, which
would have a grave impact on their subsistence, was greater than the government's interest in
summary adjudication. If the beneficiary depends on the benefits for their subsistence, then the
benefits become protected property. Here pretermination hearings would have been the only proper
procedural process. The hearings need not be quasi-judicial, and only requires notice of the
determination and an opportunity to be heard (see Matthews below).
• Board of Regents v. Roth (1972, pg. 33): State University policy allowed non-tenured professors
to be "not-retained" at the end of their specified term, and specified that the professors be notified
regarding their retention by 2/1. No statement of reasons was required for non-retention. Petitioner
claimed that the lack of reasons was a violation of PDP. USSC held that he did not have a right to a
statement of reasons. The petitioner had not shown that a protected property interest had been
created that was protected under the 14th Amendment. The Court looked to the weight of the
nature of the interest at stake. Where a person's name, reputation, honor, or integrity are at stake,
notice & opportunity to be heard are essential. Here there was no evidence of stigma or other
disability that attached as a result of the non-retention.
• Cleveland Bd. of Education v. Loudermill (1985, pg. 42): Court established 2 inquiries: (1) is there a
substantive trigger (has a protected property/liberty interest been burdened?); (2) how much and
what kind of process is due.
• Mathews v. Eldridge (1976, pg. 52): Eldridge's disability benefits were terminated, which he
disputed through the provided processes (sending a letter disputing the findings). The agency still
ultimately terminated his benefits, with no hearing. The USSC held that there was no violation of
PDP, and an evidentiary hearing is not required prior to termination in this case. The Court used a
balancing test to determine how much process was due. The disability payments did not compare
to welfare benefits, because although they served the purpose of substitute income due to
disability, they were not based on financial need. Welfare's particular private interest was
subsistence. The Court also looked at safeguards and the risk of erroneous deprivation. 3 factors
to consider: (1) private interest affected by agency action; (2) risk of erroneous deprivation,
and value of additional safeguards; (3) government's interest, including the function involved
and fiscal/admin. burdens entailed.
• Ingraham v. Wright (1977, pg. 64): Paddling case - whether school students who get corporal
punishment are entitled to a hearing before being paddled. Held: paddling does implicate protected
liberty rights, but Due Process does not require notice & hearing prior to imposing corporal
punishment in public schools. Liberty interests are implicated when the action affects reputation
plus drastically affecting the rights or entitlements of the person, and there's a strong interest in
freedom from & judicial relief from unjust intrusions on personal security (Sandin v. Conner (pg. 47)
- prisoners' rights; and Paul v. Davis (pg. 50) - police poster labeling Davis as shoplifter - "Stigma +
test").
2. Adjudication vs. Rulemaking
• Adjudication - The purpose of a hearing for the individual to present their particular circumstances,
since the decision will be based on those specific circumstances. PDP only becomes important and
triggered when the particular circumstances around the individual's situation are at the heart of the
agency decision/action. Where there is an individualized inquiry
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Rulemaking - when the government is making rules or other policy that is not based on the
particular circumstances of an individual, PDP is not an issue.
When an agency takes action that is based on the particular circumstances of an individual's
situation, PDP safeguards apply. When an agency takes action at a general level where the decision
applies to everyone (even if they're all in a particular situation) and the specific circumstances of an
individual are not considered, PDP safeguards are not required. If there's evidence that the agency is
making policy ultimately aimed at a specific entity/individual, a hearing and other PDP requirements
may be warranted. See top of pg. 77 for a good discussion of the distinction (Rehnquist's
opinion).
Cases:
• Londoner v. Denver (1908, pg. 73): a city ordinance allowed certain areas of the city to be chosen
for paving, and the costs to be shared with the individual landowners based on the assessed value
of their particular property. Londoner complained arguing that his property had been arbitrarily
assessed and without any opportunity to object or dispute the assessment. The USSC held that he
had a protected interest which had been infringed upon due to the absence of a hearing for the
assessment. There was an individualization of the facts, as the assessment took special account of
Londoner's (and other owners') properties individually.
• Bi-Metallic Investment Co. v. State Bd. of Equalization (1915, pg. 75): The City of Denver
(again) decided to raise the property values of all taxable property in the city. The USSC held that
the increase was rulemaking, not requiring PDP protections because it did not use individual
circumstances of any property owner in arriving at its decision. Instead, the city's increase applied
to all property across the city.
• United States v. Florida East Coast Ry. (1973, pg. 76, 247): The Interstate Commerce Commission
(ICC) raised the daily charge a railroad must pay another to use the other's cars (there was a
shortage). Florida EC Ry's cars would sit longer, and thus they'd have to pay higher fees than any
other Ry's in the nation. USSC held that although the rulemaking directly affected Florida EC Ry.,
the ICC had made no particular effort to single out any particular company based on its own
circumstances. Thus no PDP requirements were invoked.
• Anaconda Cp. V. Ruckelhaus (10th Cir. 1973, pg. 81): EPA proposed rule concerning sulfur oxide
emissions in Deer Lodge County Montana was held to be a rule (not invoking PDP) despite
Anaconda being the only entity that generated sulfur oxide emissions in the area. The court found
the EPA's action to be general in nature, and not specifically aimed at Anaconda.
B. Principles of Administrative Procedure
See the Administrative Procedure Act - ppg. 710-27, or attached.
1. Administrative Adjudication
• Statutory Right to an Adjudicatory Hearing: Whether you get a trial-type hearing depends on the
workding of the statute. When Congressional intent in the authorizing statute requires a hearing or
process "on the record" of if the statute itself specifically requires it (by saying "on the record"), then
and only then is one entitled to a right to a trial-type hearing. Unless there's a specific showing of
congressional intent, the courts will not presume that Congress intended a trial-type hearing (this
presumption existed for rulemaking for the past 25 years, and had existed in adjudication for about
+/- 10 years.
Cases:
• City of W. Chicago v. NRC (7th Cir. 1983, pg. 85): Kerr-McGee (KM) obtained a license from NRC
to store radioactive waste in one of its plant sites in W. Chicago, and the City of W. Chicago
challenged the NRC order arguing lack of PDP since there was no hearing (where they could present
their challenge). The court found that because the statute granting the NRC authority to license did
not specify an "on the record" proceeding, there was no requirement for a trial-type hearing.
(Seacoast v. Costle ordered an adjudicative hearing, not necessarily a trial-type, but some sort of
opportunity for the other side to be heard).
• Limiting the Issues to which Hearing Rights Apply via Rulemaking: Rulemaking may supercede
adjudication - certain issues may be resolved through rulemaking as long as they apply generally
and are not based on specific circumstances surrounding an individual case. Rulemaking can be
used to displace an individual's statutory right to an evidentiary hearing on that issue. Even if the
statutory scheme requires individualized determinations, the decision-maker still has the authority
to rely on rulemaking to resolve certain issues of general applicability. (Sidebar: rulemaking only
takes effect 30 days after the rule is issued, and only applies to transactions after the rule takes
effect)
Cases:
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Heckler v. Campbell (1983, pg. 100): Campbell had applied for disability benefits, and was denied
upon a determination that she could not return to her job as a maid, but she was able to do light
work and was qualified for other jobs. This was affirmed by the SSAppeals council, the EDNY, but
reversed int he 2d Cir. on the grounds that medical-vocational guidelines did not provide the
specific evidence it had previously required. The SSA had adopted rules that no longer required
experts to be brought in and a finding made of the specific jobs available. The USSC held that the
SSA may use rulemaking to resolve certain classes of issues that do not necessarily need a case-bycase consideration.
• American Hospital Ass'n v. NLRB (1991, pg. 105): NLRB rule defined an employee unit
appropriate for collective bargaining in acute care hospitals. AHA challenged on the ground that the
NLR Act required the NLRB to make a separate bargaining unit determination for each case, and
thus prohibits the NLRB from using rulemaking to accomplish this. The USSC upheld the rule,
saying that even if a statutory scheme requires individualized determinations, the agency has the
authority to rely on rulemaking to resolve certain issues of general applicability unless Congress
clearly expresses an intent to withhold that authority.
• Conflict Between Institutional and Judcialized Decision-Making:
• Judicial: an adjudication is like a decision by a judge, and therefore the process should resemble
the judicial process as closely as possible. There should be evidence and argument, impartial trier
of fact, and only base the decision on evidence presented in the process on the record. The primary
focus should be fairness and acceptability to private litigants.
• Institutional: an agency should be viewed as a single unit with the mission of implementing a
specific regulatory scheme, and this the entire staff should be considered members of the decisionmaking team. The decision should be a consultative effort, including advisors, the parties involved,
outside interested persons, etc. to arrive at the decision without a formal hearing process.
Î AGENCIES ARE SOMEWHERE IN THE MIDDLE: They borrow from both.
• The Personal Responsibilty of the Decisionmakers to Decide: Although a judicial type hearing is
required, evidence may be appraised by lower staffers, but ultimately the decisionmaker must
appraise the evidence which justifies the decision. Unless there's a showing of bad faith, the parties
cannot get discovery of the decisionmaker because it is inappropriate. Today, agencies explain
themselves a little, and get review on their decision.
Cases:
• Morgan v. United Staes (Morgan I) (1936, pg. 110): The Morgan cases arose from a ratemaking
proceeding begun by the SecAg in 1930, fixing the maximum rates of commission which all
livestock agents working in a single Kansas City stockyard could charge. The USSC held in Morgan
I that there must be a full quasi-judicial type hearing, designed to safeguard the good conscience of
the decisionmaker. The one who decides must hear the evidence justifying the decision.
• Morgan IV (1941, pg. 115): The district court authorized the market agencies to take depositions
of the SecAg. There is a presumption that the decisionmaker has complied with legal requirements.
The decisionmaker should not be subjected to examination by the parties on appeal. This would be
destructive of judicial responsibility.
• Citizens to Preserve Overton Park v. Volpe (1971, pg. 115): Where SecTrans approved without
an explanation a highway project in violation of a statute precluding the building of roads through
parks, The Court remanded the case to district court to obtain an explanation for his decision. The
remand was for a substantive determination rather than a procedural one (i.e., not whether the
secretary was sufficiently familiar with the record). This only applies when an agency fails to
explain its decision, and the courts should only remand to the agency/district court for an
explanation rather than to conduct a trial.
• Separation of Functions and Internal Agency Communications: (APA § 554-557) Rooted in
prevention of bias and outside influence, depriving due process - fairness. PDP does not prohibit
the combination of functions in one agency, as long as there is a separation of these functions
within the agency. The APA requires:
• Separate prosecutorial and adjudicative functions
• No ex-parte contact with decisionmakers
• Cross examination and full disclosure of the facts
• Private party that wins entitled to att'y fees
• ALJ must follow strict standards
• Judges cannot be responsible to prosecutors
• Cannot speak to/consult with agency heads if you're in an adversarial position
Cases:
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Withrow v. Larkin (1975, pg. 119): The combination of investigative and adjudicatory functions
does not, without more, violate PDP. There must, however, be separate people conducting each
function. See Walker v. City of Berkeley (pg. 118) for an example of where this did not happen.
Bias: Personal Interest, Prejudgment, Personal Animus: The problems of decisionmaker impartiality:
a adjudicator is disqualified if tainted by persona animus (personal hostility toward a party),
prejudgment of issues, or a personal stake in the decision. The fundamental question is whether an
ALJ must be as impartial as a judge.
Personal Interest: usually financial interest is the kicker, but a professional pecuniary interest (i.e.,
if a group of optometrists sitting on a licensing board prevent others from being licensed because
they want to limit their own competition - Gibson v. Berryhill (1973)).
Prejudgment or Animus: actual bias may be (1) prejudgment of the individualized facts of a case, or
(2) prejudice against a particular litigant (or class which litigant is a member of). An ALJ that was
involved in the case is not disqualified from deciding it later - i.e., if it comes back on remand to the
same ALJ, he's not disqualified. There is a difference between an agency official making a public
statement relating to an issue of law, policy, or legislative facts, compared to the facts of the case
being adjudicated. The appearance of bias is not sufficient to disqualify an ALJ (although it is for
federal and state judges). Because agency officials play a multitude of roles in the regulatory
process, they may be exposed to certain facts of certain cases from various perspectives. Thus the
uncertainties of the appearance of bias is overcome by requiring actual evidence of bias (including
prejudicial statements).
Cases:
• Andrews v. Agricultural Labor Relations Bd. (ALRB) (Cal. 1981, pg. 123): The ALJ appointed to
adjudicate a case was a private attorney working for a pubic interest law firm that worked on
employment discrimination cases for migrant farm workers. He ruled against Andrews. The
California Supreme Court affirmed the decision not to disqualify the ALJ, rejecting the appearance
of bias standard. Everyone has predispositions, and such views alone would not be sufficient to
disqualify him. The moving party must show concrete proof of the existence of actual bias.
• Cinderella v. FTC (D.C. Cir. 1970, pg. 129): The FTC ordered the charm school to cease and
desist from various deceptive claims in its advertising, and an ALJ dismissed the charges. While the
Commission was considering whether to adopt the ALJ's decision, the FTC Chairman gave a speech
to newspaper publishers criticizing irresponsibility in advertising (he included "becoming an airline
hostess by attending a charm school" in his speech). The court found that his participation in the
decision violated DP because he had prejudged the facts in the case.
• Ex Parte Contacts: (APA § 557 (d)) Prevent/address oral or written communication not on the
record on the merits of the case being adjudicated. Ex parte deals specifically with contacts outside
the agency. The roles of an agency require it to be in completely apprised of the political situation
around it, which requires a constant flow of communication between agency personnel and the
regulated parties, the public, legislators, and executive officials. Ex parte contacts only become an
issue in adjudication.
Cases:
• Professional Air Traffic Controllers Org. (PATCO) v. FLRA (D.C. Cir. 1982, pg. 132): PATCO
initiated an illegal strike, and after a hearing an FLRA ALJ revoked PATCO's exclusive recognition
as a bargaining representative (Pres. Reagan subsequently fired all striking ATC's). The fact that the
SecTrans asked a member of the board to come to an expeditious resolution was glossed over by
the court because his actions weren't necessarily wrong. His request specifically dealt with progress
and timing, and did not deal with the merits of the case. Also, one of the judges on the panel had
dinner with an old buddy who had was on the executive council of the AFL-CIO which had
submitted an amici brief. The court found that although the judge had no idea that his buddy had
any connection to the case, 10-15 minutes of their conversation about the case was blatantly
improper. The court held, however that the judge's error was harmless because he voted opposite
his friend's inclinations.
• Portland Audubon Society v. Endangered Species Committee (9th Cir. 1993, pg. 140): White House
"God Squad" (ESC) decided to allow timber cutting that would jeopardize the Nothern Spotted Owl.
The court considered ex parte communication from Bush's White House Staff, and held that the
President and his staff were "outsiders" for the purposes of ex-parte contacts, and he's an
interested person. The off-record contact was improper.
• Agency Adjudication and Legislative Pressure: Congress should not conduct a searching
examination as to how and why a commissioner reached a decision in a case still pending before the
commission, and to criticize him for reaching the "wrong" decision.
8
Cases:
• Pillsbury v. FTC (5th Cir. 1966, pg. 142): FTC ordered Pillsbury to divest itself of the assets of
two companies it had acquired. The Senate subcommittee barraged the chairman of the FTC with
questions challenging his view of the statutory requirements used as the basis of the order. The
court found the Senate proceedings an improper intrusion into the adjudicatory processes of the
FTC and were so damaging as to have required at least some of the members of the Commission in
addition to the chairman to be disqualified. Such action by the Senate subcommittee sacrifices the
appearance of impartiality. The court remanded the case back to the FTC, because there had been
a passage of time and a change in the FTC leadership.
• The Effect of Decisions - Res Judicata and Collateral Estoppel:
• Res Judicata: when the plaintiff bringing a claim wins, the claim is extinguished. When the
defendant wins, the plaintiff is barred from reasserting the claim later.
• Collateral Estoppel: Issue Preclusion - when an issue of fact or law is litigated and determined by a
final judgement, and the determination is essential to the judgement, the determination is
conclusive in a subsequent action between the same parties, even on a different claim. Where A
loses a claim to B, C cannot bring the same claim against A. But if A wins, then C can bring
anything from the first case. Where the second claim is different but depends on a settled matter
from the first claim, litigation on the first claim is collaterally estopped. If you get a full opportunity
to present your defense, and get a judgement against you, preclusion applies to the fact finding.
Cases:
• University of Tennessee v. Elliott (1986, pg. 203): Elliott was charged with misconduct, and
requested a hearing. The hearing lasted 5 months, yielding over 5,000 pages of transcripts. The an
assistant to the University VP, sitting as an ALJ, ruled against him. The University VP affirmed the
decision, and instead of appealing to the state courts, Elliott went to federal court. Because the ALJ
found that his dismissal was not for racial reasons, the USSC ruled that the federal court was
estopped from deciding on a claim of racially based termination because it had been determined by
the ALJ. Elliott is stuck with the record, even if he ended up going to the EEOC, which would have
to make its own determination, it would still have to use the ALJ's findings as evidence (the EEOC
would not be precluded from reaching a contrary decision than the ALJ).
• United States v. Mendoza (1984, pg. 205): In an earlier case, the 9th Circuit ruled that certain
Philippine nationals were entitled to US citizenship, and a new group of nationals wanted to estop
the government from relitigating the issue in their case. The Court held that preclusion cannot be
used against the government - just because the government loses a claim doesn't mean that they
can't go after others for the same thing. This is different from non-acquiescence (where the
government cannot be precluded from litigating against parties in the same circuit where there is an
appellate judgement against the US) which the courts have rejected.
• Principles of Consistency in the Adjudicatory Context and Equitable Estoppel:
• Stare Decisis: Agencies are to follow their prior general decisions, and if the decide to do something
new, they must state the reasons why. UAW v. NLRB (7th Cir., 1986, pg. 208).
• Equitable Estoppel: If A's statement or conduct reasonably induces B's detrimental reliance, A will
not be allowed to act inconsistently with its statement or conduct. This also typically applies when
an agent of the entity has caused the 3rd parties to reasonably believe that the agency has
authority to act. Equitable estoppel only applies to state and federal agencies when there is "great
injustice." In the federal system, courts are more hesitant to apply EE to agencies than are states
for actions/statements of their agents. In an agent of the agency makes a mistake that conflicts
with a statutory requirement, the agent's mistake does not bind the agency against the statute.
Cases:
• Foote's Dixie Dandy v. McHenry (Arkansas 1990, pg. 211): Foote's CPA asked a field auditor for
the Employment Security Division about the corporation's employment tax status. The auditor was
someone who Foote's had always dealt with exclusively. A new auditor discovered that a particular
form requesting some transfer had never been filed. The state assessed $20,000 in additional taxes.
The court held that the state could be estopped when certain conditions existed: (1)the party to be
estopped (agency) must know the facts; (2) the entity (agency) must intend that its conduct will be
acted upon (expect reliance), or at least act in a manner that the relying party had a right to believe
that the entity so intended; (3) the relying party must be ignorant of the true facts; (4) the relying
party must actually rely on the entity's conduct to his detriment/injury. Estoppel will only protect
the citizen to the extent that he relied upon good faith actions or statements by an agent.
• Office of Personal Management (OPM) v. Richmond (1990, pg. 212): A Navy personnel officer
advised Richmond (orally and in writing) that he could safely take an extra job without jeopardizing
9
his Navy retirement benefits. Congress had changed the law, and the advice was thus erroneous.
Richmond's benefits were cut off for six months, and he sued to recover. The USSC rejected his
estoppel claim, implying that it is unlikely to apply estoppel against the government in any
circumstance, without actually closing the door altogether. Regardless of the facts, where the
estoppel would require the payment of money from the Treasury contrary to specific statutory
appropriation, the estoppel will not be granted.
2. Administrative Rulemaking
• Importance of Rulemaking: Advantages of Rulemaking include:
• Participation of all affected parties - anyone who wants to may participate in rulemaking. Notice is
given to all concerned, and anyone may submit comments.
• Appropriate Procedure - the procedures are superior to adjudication for addressing broad questions
of legislative fact and policy.
• Retroactivity - the agency may only apply a rule prospectively, while adjudications allow the agency
to apply the rule retroactively to the parties to the proceeding.
• Uniformity - agency law made by rule addresses classes of persons at the same time and in the
same manner.
• Political Input - rulemaking provides a regularized opportunity for politically active persons and
groups to participate in the process and mobilize political pressure.
• Agency Agenda Setting - Rulemaking gives the agency more control over its agenda allowing it to
prioritize. The particular facts of an individual case do not distract the agency consideration.
• Difficulty of Research - agency rules are easier to look up for affected persons than agency
adjudications, because rules are published.
• Oversight - it's easier for the executive and legislature to exercise oversight over the merits and
legality of agency-made rules than adjudications.
• Advantages to adjudication:
• Flexibility - rules are often over/under inclusive. Adjudication allows a tailored response to the special
facts of the case
• Abstraction - adjudication requires the agency to make its order on a step-by-step basis in concrete
situations in which it can observe the operation of the law. Rulemaking works more abstractly,
without demonstrable facts.
• The new & unexpected - case-by-case approach may actually be better where the agency is not in the
position to make a generally applicable rule just yet (due to a lack of sufficient expertise, etc.).
• Residual adjudication - no matter how many rules an agency makes, it can't dispose of adjudication.
There will always be ambiguities in rules that need to be answered.
• Definition of "Rule"
• APA § 551(4): "a whole or part of an agency statement of general or particular and future effect
designed to implement, interpret, or prescribe law or policy or describing the organization,
procedure, or practice requirements of the agency." The APA requires notice & comment.
• Rulemaking gets dramatically less procedural due process rights (no hearing). There may be
statutory provisions that give certain procedures.
• Primary vs. Secondary Retroactivity: Primary Retroactivity is where the interpretive rule changes the
legal consequences for past actions (i.e., the party may have to refile things they did under the
previous rule). What was once legal is no longer legal, and may be applicable to old transactions
already completed (this is generally disfavored). Secondary Retroactivity is where the interpretation
affects all future transactions but interprets old law "from this day forward" affecting past actions
(i.e., you can't do it that way anymore).
Cases:
• Bowen v. Georgetown University Hospital (1988, pg. 230): HHS adopted a rule that revised the
formula for calculating its reimbursement, thereby invalidating a 1981 rule, and it was retroactive
back to 1981, forcing hospitals to pay money they now owed. The majority held that the Secretary
had no authority to promulgate retroactive cost-limiting rules because the statute did not
specifically reflected in its language. Scalia's concurrence held that the APA defines a rule as having
prospective or future effect, and may only have legal consequences for the future. A rule may
legitimately affect past transactions, but it may not make what was once legal now illegal. Just
because Congress has the power to implement retroactive laws, we cannot assume that they meant
agencies to also have this power. Nothing prevents an agency from acting retroactively in
adjudication.
• Initiating Rulemaking Proceedings: Agencies must provide notice of proposed rules, and the opening
of the comment period, and open all specific issues that may arise under the proposed rule. They
10
must provide enough information as to their thinking, foundations, etc., and allow you to try and
convince them one way to another.
Cases:
• Chocolate Manufacturer's Ass'n v. Block (4th Cir. 1985, pg. 235): WIC program didn't include the
issue of chocolate milk or allow comment on the item when it proposed a rule regarding sugar and
cereal as part of approved diet plans. The final rule excluded chocolate milk, but n&c didn't include
any comment (nor was it allowed) regarding chocolate milk. CMA won, because the court felt that
WIC should have included the issue in its n&c period.
• Portland Cement Ass'n v. Ruckelshaus (D.C. Cir. 1973, pg. 242): The notice of rulemaking
should include scientific data or methodology upon which the agency relied in formulating its
proposed rule. Information should generally be disclosed as to the basis of a proposed rule at the
time of issuance.
• Public Participation
• Informal Rulemaking: rulemaking without special hearings and stuff, etc. It's an opportunity to
submit written comments and feedback, which culminates in a final rule. The rule's preamble
typically contains the agency's responses to the comments and suggestions, and must sufficiently
and rationally account for all alternatives. This is used by courts to determine whether the rule is
arbitrary and capricious or properly addresses all comments. No set record is necessarily
established, as long as the proper account is taken in the preamble, and no opportunity to present
and rebut evidence takes place. Only written comment is accepted.
• Formal Rulemaking: APA § 556-57 - use of trial-type proceedings, allowing cross examination,
presentation and rebutting of evidence, and development of an official record. This record may be
the only exclusive basis for the agency's action. Ex parte communications are prohibited, but
separation of functions is not.
Cases:
• United States v. Florida East Coast Railway Co. (1973, pg. 247): The ICC adopted rules that
increased the daily charge a RR must pay another for use of their freight cars. FECR challenged
ICC's rule, and ICC refused to give a formal hearing. The USSC held that if the statutory language
doesn't specifically require a hearing or other trial-type procedures, then the agency is under no
obligation to provide it. The Court required Congress to use the words "after... hearing" and "on the
record" together to demonstrate intent. "After... hearing" only requires an informal hearing, while
"on the record" requires a formal on the record hearing.
• Hybrid Rulemaking and the Limits on Judicial Supervision of Agency Procedures: More procedural
components than informal rulemaking, but less than formal rulemaking. Includes oral arguments,
or additional procedures. Usually applied when a statute instructs agencies to use somewhat more
elaborate procedures than the APA informal rulemaking.
• Courts cannot add to § 553 procedures when the authorizing statute doesn't specifically
provide for it. § 553 sets out minimum procedural requirements, and courts may not
mandate more. Second-guessing agencies causes unpredictability through common law,
resulting in the agency over-proceduralizing or doing nothing at all. Avoid unpredictability.
• If the parties are not afforded a meaningful opportunity to participate, then basic
procedures may be arguably required (including innovative interpretations of the APA - like
e-mail comment)
• 3 steps in doing a rulemaking procedure problem:
1. Can the courts undue the rule because the agency does not allow a certain type of
communication (i.e., not providing a meaningful opportunity to participate)? Remember that
courts may not mandate new procedures.
2. The courts may not do something that affects the substantive basis for the rule. Avoid
unpredictability as to the underpinnings of the rule.
3. Interpret the APA - Portland Cement, Connecticut Light & Power, and Chocolate Manufacturers
are still applicable, and may be used to look at the application and interpretation of the APA
without affecting Vermont Yankee (infra).
Cases:
• Vermont Yankee Nuclear Power Corp. v. NRDC (1978, pg. 254): The AEC (now NRC)
conducting rulemaking to determine how nuclear waste storage should be dealt with in
construction licensing, using Vermont Yankee's application to build a power plant as their
primary example. The AEC refused to allow cross-examination of an AEC expert, and the DC
Circuit rev'd, requiring the cross-examination. The USSC rev'd the DC Circuit, holding that
the § 553 sets the minimum requirements, and an agency is free to add to them, but it may
11
•
•
•
•
not be ordered to adopt certain additional procedures than what's required in 553 (unless
it's formal rulemaking). Congress intended that the discretion of agencies be exercised
rather than the discretion of the courts.
Procedural Regularity in Rulemaking
The Role of Agency Heads: APA § 553(c) provides that agency decisionmakers actually consider
written and oral submissions received in the course of the rulemaking proceeding. The agency head
does not necessarily need to personally preside at an oral proceeding or read every written
submission. Persons challenging a rule are not free to examine an agency head in court to ascertain
whether he understood the record assembled during the rulemaking proceeding.
Ex Parte Communications and Bias or Political Influence in Rulemaking: Agencies gather a huge
amount of material relating to a proposed rule to comprise the rulemaking record. The record aids
in public participation, provides helpful materials to the agency, and facilitates judicial review.
• In Formal rulemaking (APA §§ 556-57), ex parte communications are forbidden, and if they
occur, the agency must disclose their substance on the record.
• In Informal rulemaking, the APA does not ban ex parte communication, nor require they be
placed on the record.
• Disqualification: An agency member may be disqualified from rulemaking proceedings when
there is a clear and convincing showing that he has an unalterably closed mind on
matters critical to the disposition of the rulemaking. ANA v. FTC gives this test language
(Cinderella is the test for adjudication, ANA is the test for rulemaking).
Findings and Reasons in Rulemaking: Agencies must give a good explanation for an effective
statement of basis for a rule. This allows a court to determine whether a rule is made in an
arbitrary and capricious manner, or is reasonable. The statement must reflect factual, legal, and
policy foundations for the rule, explaining how and why the agency arrived at its decision. The
agency must demonstrate its reasoning to avoid being found arbitrary and capricious.
• An agency need not respond to every comment - only those that raise a particular problem
or issue with the proposed rule. The agency must show how it resolved any problems.
• Post hoc rationalizations, explanations made in court to explain the reasoning behind a rule,
are disfavored, although a lawyer or other agency official testifying in court may show some
legitimate reason or rational basis behind its decisions.
Cases:
• Sierra Club v. Costle (D.C. Cir. 1981, pg. 267): EPA adopted regulations governing sulfur
dioxide emissions by new generators. After the close of N&C but before the rule was finally
issued, agency officials met with private persons as well as government officials, which were
not put on the record. The court held that informal rulemaking did not have a ban on ex
parte communication, but that the Clean Air Act amendments required a "rulemaking
docket," which could be read to require oral communications be docketed in some fashion.
But the agency has incredible discretion. Because the President is the Article III Chief
executive, he has a right to oversee/supervise the executive branch. There may be instances
where the communications between the President and agency officers should be docketed to
ensure due process, or where a statute requires essential data be recorded. Absent those
requirements, the EPA need not docket them. If an agency relies on something, then it must
be recorded, in order for it to survive hard look review by the courts. If the ex parte contacts
directly concern the outcome of the quasi-judicial proceedings, then they should be on the
record.
• Ass'n of National Advertsiers (ANA) v. FTC (D.C. Cir. 1979, pg. 279): The FTC proposed
rulemaking that suggested restrictions regarding television advertising directed toward
children. The Chairman of the FTC had spoken extensively on the subject, always in a
negative perspective against advertisers. The ANA sued to prohibit him from taking part in
the proceedings. An agency may be disqualified from a rulemaking proceeding only when
there is a clear and convincing showing that he has an unalterably closed mind on matters
critical to the disposition of the rulemaking.
• State Law - California Hotel & Motel Ass'n (CHMA) v. Industrial Welfare Comm'n (Cal.
1979, pg. 286): The IWC adopted a rule raising the wages and fixing the hours and working
conditions in the public housekeeping industry (hotel employees). The Court held that an
effective statement of basis fulfilled 6 major functions: statutory satisfaction, meaningful
judicial review, informed oversight, inducement of reasonable agency action, predictability,
stimulation of public confidence. For agency action to be reasonable, it must reflect the
factual, legal, and policy bases for its action, explain how and why it took the specific action,
12
and explain how the agency resolved conflicts. The agency must ultimately explain its
reasoning.
• Regulatory Analysis: an intensive formal examination by an agency of the merits of a proposed rule.
The most common is the Cost-Benefit Analysis.
• Criticism: it might be beneficial to overall society, but CBA doesn't take into account the costs on
particular groups. It also cannot take account of the generational impact and the discount rate.
There's an arbitraryness in discounting future costs. These political decisions aren't necessarily for
the purpose of achieving the desired technical benefits
• Advantages: CBA forces you to do an analysis that may lead you to discover important issues and
new concerns.
• Generally, courts shouldn't get stuck in a CBA analysis.
• Negotiated Rulemaking: pre-notice negotiation with regulated parties or general public before
putting out the proposed rule. There's a convener who will bring all the parties together,
representing the key interests, and make them part of the negotiating team. This team negotiates in
a public meeting, allowing members of the audience to participate through oral comments. The
team and agency hammer out the negotiated rule, and there may be a lot of behind-the-scenes
action, but everything of substance is openly discussed.
• Benefits: This system allows for compromise, dicssion of rationale behind a particular view, get
instant feedback, free exchange of ideas, clarify an emphasize the most important issues to the
players, and keeps everyone from becoming too adversarial.
• Problems: brings social power of each entity to the table, allowing weaker parties to be eclipsed by
the stronger, more powerful social giants; long delays result from the negotiations; easily broken up
due to a single disagreement; forces the agency to agree to things it ordinarily wouldn't; lessens the
involvement of the agency.
• Exemptions to Standard Notice & Comment Procedures:
- Legislative Rules: rules issued by an agency pursuant to an express or implied grant of authority to
issue rules with the force of law. Legislative rules have a legal affect.
- Nonlegislative Rules: [Guidance Documents] rules that do not have the force of law, and are not based
on delegated authority to issue such rules.
• Legislative Rules - Good Cause: APA § 553 exempts rules from usual N&C procedures when it
would be "unnecessary, impracticable, or contrary to the public interest." There must be an
overriding need for the agency to take action.
• Unnecessary: if the rule is so minor or merely technical, where the public has little or no
interest, or a recodification of an agency's regulations, or where the agency has no
discretion, or if the agency is acting under a congressional deadline.
• Impracticable/Contrary to Public Interest: overriding need to take action; rules designed to
meet a serious need, problem, or other major risk.
• Interm-Final Rule: rules created under the good cause exception that will be reconsidered
and/or revised in light of comments received.
• Legislative Rules - Subject Matter: The APA's provide categorical exemptions for rules relating to
certain governmental functions. If a rule has a substantive impact on the regulated parties/industry,
or on an important class of the members or products of that industry, the exemption does not apply. It
also doesn't apply to procedural rules that have a substantive impact. A rule that modifies
substantive rights or interests may not fall under the exemption.
• Legislative Rules - Procedural Rules: 553(b)(A) "Rules of agency organization, procedure, or
practice" are exempted from usual N&C procedures. Rules that do not affect substantive rights, but
bind the agency (rather than those affected by agency action), are procedural rules. If the rule
leaves some discretion, and does not necessarily bind the agency, then it's an interpretive rule
(below). It cannot create a new legal obligation for those effected by the agency action. Rules meant
only to improve intra-agency efficiency are exempt.
• Substantial Impact Test: when a proposed regulation of general applicability has a substantial
impact on the regulated industry, N&C must be provided.
Cases:
• US Dep't of Labor v. Kast Metals Corp. (5th Cir. 1984, pg. 332): OSHA had always
chosen businesses to inspect at random. OSHA adopted a new rule to inspect those
businesses with the highest accident rates. Kast refused admittance to OSHA on the
grounds that the rule had been improperly adopted. The court found the rule to be
procedural on the surface, and any substantive effect to be purely derivative, and thus
exempt. The court found no substantial impact on Kast's rights or interests.
13
•
Nonlegislative Rules - Policy Statements: General guidance documents that (1) must act
prospectively (*this is a red herring - all rules act prospectively) and (2) must not establish a binding
norm or be finally determinative of the issues or rights they address, and leave the agency officials
some discretion to consider the individual facts of each case. They serve to educate and provide
direction to agency personnel in the field who are to implement the agency's discretionary power in
the field. The use of the word "may" as opposed to "shall" makes a big difference, the latter binding
the agency.
Cases:
• Mada-Luna v. Fitzpatrick (9th Cir. 1987, pg. 338): Mada-Luna was a Mexican national who had
been an undercover narcotics agent for the US, and was subject to deportation because of a
narcotics conviction. The INS in 1978 had adopted a policy w/o N&C that it would consider a
specific list of factors which supported Mada-Luna's request for deferred action. In 1981, however,
the INS, w/o N&C adopted a new version of the instruction, giving the district director total
discretion in determining deferred action, and provided a list of factors that may should be
considered. The court conducted a 2 part test, first to see if the rule acted prospectively, and
second to determine if the rule had a binding affect on the agency. The court found that it met both
portions, and held it to be a clarification of the 1978 policy, and was concerned the future exercise
of its discretionary power.
• Nonlegislative Rules - Interpretive Rules: announce tentative intentions without binding the
agencies in making a policy statement. They guide the agency staff. It's a proposal of how the
agency should act when the time comes - what it should or would be likely to do. Interpretive rules
may only be derived from earlier law. If it doesn't have a legal affect, then it's not legislative. SEE
LUBBERS, ppg. 50-70.
Cases:
• Hoctor v. USDA (7th Cir. 1996, pg. 347): USDA adopted a rule w/o N&C establishing 8 ft.
fences as the minimum for dangerous feline animals. The court found it to be a legislative
rule rather than interpretive, because it was arbitrary and didn't interpret the authorizing
statute. When the statute authorizes an agency to impose a duty without a formulation of the
duty, the agency's formulation of that duty becomes a legislative task entrusted to the agency.
• Required Rulemaking - Agency Freedom to Rulemake or Adjudicate as the mode of Policy Making:
Generally, if agencies have the authority to make legislative rules, then they may do so. If they don't
then they must make through adjudication that may be re-used as precedent for future
adjudications. See NLRB v. Wyman-Gordon (1969, pg. 358) (finding an adjudicatory decision as
precedent a analogous to an interpretive rule, exempt from N&C).
Cases:
• NLRB v. Bell Aerospace (1974, pg. 363): UAW petitioned the NLRB to determine whether it could
be certified as the bargaining rep for buyers in the purchasing/procurement dept. at Bell
Aerospace. Bell opposed on the ground that the buyers were "managerial employees." The USSC
held that where the agency has a statutory duty to decide the issue at hand in light of the proper
standards and that this duty remained regardless of whether those standards had been previously
spelled out in a general rule or regulation, the agency need not initiate rulemaking procedures [as
long as it follows those standards]. The Court suggested that the agency use adjudication in this
case. There were no new liabilities imposed for past actions, nor were fines or damages involved.
• Rulemaking Petitions and Agency Agenda Setting: When an agency refuses a petition for rulemaking,
it must give some explanation for its refusal. Courts should generally give deference to the
explanation, but the agencies still have to give some sort of explanation. [the agency should state
general principles; find the "poison" - facts that show the irrationality of the rule in light of the
statute.]
Cases:
• WWHT v. FCC (D.C. Cir. 1981, pg. 379): FCC was required to give some explanation for
refusing to grant WWHT's petition for rulemaking.
• Waivers of Rules: Agencies are required to give a brief explanation to justify refusal of granting of
waivers.
Cases:
• WAIT Radio v. FCC (D.C. Cir. 1969, pg. 386): the FCC must state its findings and bases for
it's decision to refuse a waiver with clarity and precision. Courts often give a hard look
review to situations where agencies refuse to grant a request (that includes a plea with
particularity the facts and circumstances which warrant its waiver), and an agency must
not be arbitrary in its decisions.
14
III. Judicial Review of Agency Decisionmaking
A. Scope or Standards of Judicial Review
The scope of review defines the court's checking power over the actions of agencies. Either a court has or
does not have the power to substitute its judgement for the rational judgement of agency decision makers.
In findings of fact, courts generally cannot substitute their judgement for that of the agency. With respect
to the legality of agency action, courts are more likely to substitute their judgement.
Issue
Facts
Law
Policy
Federal
Substantial Evidence
High Deference
Hard Look
State
Clearly Erroneous
Lower Deference
Hard Look
1. Judicial Review of Agency Findings of Fact
• An agency's finding of fact determines what happened and why, or who did what to whom, and with
what state of mind. The courts' scope of review may be listed as follows: (SEE Ppg. 535-36)
• Trial de novo: APA § 706(2)(F) - the court rehears the evidence and redecides the case as if the
agency proceeding never occurred. This scope of review gives courts the most judicial power.
• Independent Judgement on the Evidence: the court decides the case on the record created by the
agency, but needs not give any deference to the agency's finding of fact. (infrequent in federal
courts)
• Clearly Erroneous: if a mistake has been committed by the agency in its finding of fact, the court
will reverse the agency decision. Sometimes this test is referred to as the "manifest weight of the
evidence" test, and is used by federal CA in reviewing district court decisions when sitting w/o a
jury.
• Substantial Evidence: APA § 706(2)(E) - if a reasonable person could have reached the same
conclusion as the agency, the courts cannot reverse. This is the test used by federal CA in reviewing
jury decisions. Prominent standard in Ad Law. See Universal Camera (infra). 706(2)(E) is only
applicable for fact finding in formal adjudication/rulemaking under 556 and 557. Fact finding in
informal adjudication is reviewed under 706(2)(A) using the arbitrary and capricious standard or an
abuse of discretion. Asks whether there were sufficient facts on the record to reasonably support
the finding, taking into account all of the facts (including opposing/contrary findings).
• Scintilla of Evidence: courts cannot reverse if there is some evidence in support of the agency's
conclusion - even a scintilla of evidence.
• Facts not reviewable at all: a statute may preclude any judicial review of an agency's factual
determinations.
Cases:
• Universal Camera Corp. v. NLRB (1951, pg. 536): NLRB reversed a decision of its own ALJ,
finding that the fact didn't exist. The USCA barred the NLRB from reviewing the ALJ's finding of
fact. The USSC held that the substantial evidence test means that you look at all the facts,
including the ALJ's opposing findings, giving the ALJ the due respect and weight. The agency only
has substantial evidence if it looks at all the evidence.
2. Judicial Review of Issues of Legal Interpretation
Issues of legal authorization, statutory interpretation. The big question: How much deference should a
reviewing court give an agency's interpretation of the law? 2 views: light deference - give the agency
construction of the statute as much weight as it deserves • if it's a recent interpretation that changes from year to year, it gets little weight;
• if it's a well reasoned interpretation, leave it alone (more deference);
• if it's a long standing interpretation, then it gets even more deference.
• If the statute is ambiguous, the court should defer to the agency, as long as the interpretation
survives a minimal standard of consistency with the statute. Chevron. The court can determine
what is permissible under this minimal standard.
• Show that the agency's interpretation is either reasonable or improper in light of the statute and
legislative history. The more technical the statute, the less likely the courts are to interpret things
over which the agency is presumed to have expertise.
Cases:
• Connecticut St. Medical Society v. Connecticut Bd. of Examiners in Podietry (Conn. 1988,
pg. 558): CBEP issued a declaratory ruling that the ankle is part of the foot so that podiatrists
could treat ankle ailments. The CSMS sought judicial review, claiming that the ruling was contrary
to statutory construction. The trial court overturned the CBEP's ruling. The Ct. Supreme Court
found that because the interpretation was not a long standing interpretation (where the statute is
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ambiguous and the agency interpretation is reasonable), it would not give deference to the agency
construction.
• Chevron USA v. Natural Resources Defense Council (1984, pg. 560): An EPA legislative
regulation allowed states to treat an entire plant as a single "stationary source" of pollution. The
issue was whether the statutory terms "stationary source" could be interpreted to refer to an entire
plant (as in the EPA's "bubble" regulation). The Court held that the interpretation was reasonable in
light of the statute. Where the intent of congress is clear, the court must only ensure that the
agency gives effect to the unambiguous intent of Congress. If the statute is ambiguous, however,
the court must determine whether the agency's interpretation is based on a permissible
construction of the statute. If Congress has specifically left a gap in the statute for the agency to fill,
then the agency has an express delegation of authority to fill in that gap with regulation. Sometimes
such a delegation is more implicit. Either way, an agency's regulation is given controlling weight,
unless the reg. is arbitrary, capricious, or contrary to the statute. A court may not substitute its
own interpretation for a reasonable interpretation made by the agency. The key is whether
Congress intended the agency to use regulation to fill a gap in the application of a statute.
Secondly, the courts must look to whether the agency's interpretation is consistent with the statute
and its concerns. If the interpretation is both pursuant to a congressional delegation, and
reasonable in light of the statute, then it is given great deference. When a challenge to an agency
construction of a statutory provision centers on the wisdom of the agency's policy (rather than
whether it's a reasonable choice within a gap left open by Congress), it must fail.
3. Judicial Review of Agency Discretionary Determinations (Policy)
• Issues of Application of Law to Facts: The courts should refrain from making judgements as the
factual findings, and focus on the statutory application to the facts (assume the facts as agency
finds them and apply the statute). If the main determination is of a legal issue, then the courts need
not give deference to the agency's decision. If the main issue is still an issue of fact, give the agency
deference.
• Policy Decisions/Discretionary Determinations: the statutory standard sets the limit. The key is
whether the agency decision is arbitrary & capricious. An issue of policy does not raise an issue of
law, and is authorized action, leaving arbitrary & capricious as the remaining issue.
• Minimal view: minimal rationality is required in the policy - there must be a conceivable minimally
rational basis on which the decision can be justified.
• Hard Look Review: detailed look at agency's decision for arbitrariness and capriciousness. 6 factors
for abuse of discretion based on arbitrary and capriciousness:
1. The action rests upon a policy judgement that is so unacceptable as to render the action
arbitrary
2. The action rests upon reasoning that is so illogical as to render the action arbitrary
3. The asserted or necessary factual premises of the action do not withstand scrutiny under
the relevant standard of review
4. The action, is without good reason, inconsistent with prior agency policies or precedents
5. The agency arbitrarily failed to adopt an alternative solution to the problem addressed in the
action
6. The action fails in other respects to rest upon reasoned decisionmaking.
Cases:
• Adjudications - Salameda v. INS (7th Cir. 1995, pg. 579): The Salamedas' student visa expired in
1983, and they attempted to renew it. The INS instead, through proceedings that lasted 9 years,
ordered their deportation. The Court found that the opinions of both the immigration judge and the
Board of Immigration Appeals were incomprehensible on two key issues, therefore making the
decision arbitrary and not in a rational manner. The court found that the opinions were arbitrary
and capricious.
• Rulemaking - Motor Vehicle Manufacturer's Ass'n v. State Farm Mutual Automobile Insurance
Co. (1983, pg. 592): The National Highway Traffic Safety Admin. (NHTA) developed a safety
standard requiring passive restraints (seat belts and air bags), but later rescinded the order in
1981, claiming that it felt that there was not sufficient data showing that seat belts would have a
significant affect to justify the huge cost to manufacturers. The Court found the rescission arbitrary
& capricious, because the NHTA didn't explain why it completely ignored air bags as restraints,
instead only focusing on seat belts. Under rationality review, you can't just ignore an alternative
just because the industry says its too expensive, you really have to analyze it. The Court felt that
the NHTA also too quickly dismissed seat belts, and that there was insufficient justification for
dismissing the device. The fact that air bags were a technological alternative was literally omitted
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•
from the NHTA's explanation. The Court found that without an explanation for why all viable
alternatives were dismissed, the action becomes arbitrary. The agency's explanation of the
rescission was not sufficient, and failed to articulate a basis for not requiring non-detachable belts
altogether. Thus the action rescission couldn't pass the arbitrary and capricious test.
Rulemaking - Borden v. Commissioner of Public Health (Mass. 1983, pg. 599): [minimal
rationality] After N&C, the Commissioner banned urea-formaldehyde foamed-in-place insulation
(UFFI), finding that it emitted hazardous gases. Manufacturers challenged the regulation in trial
court, which invalidated the regulation. The court held that the regulation was not arbitrary or
capricious. The party challenging the regulation must prove the absence of any conceivable ground
upon which the rule may be upheld. A court must apply all rational presumptions in favor of the
validity of the action and not declare it void unless its provisions cannot by any reasonable
construction be interpreted in harmony with the legislative mandate. The ban would have been
justified if the commissioner could rationally find that UFFI could not be properly classified to
protect the public health and safety, or as an imminent danger to public health and safety. There
was evidence before the judge that UFFI would potentially emit formaldehyde into houses at levels
above which some people would suffer adverse effects. Thus the commissioner's decision could not
have been arbitrary or capricious.
B. Availability and Timing of Judicial Review
Two big questions exist when dealing with judicial review:
1. Is review available? Aside from personal and SMJ jurisdiction, some statute must give
guidance as to where to go in court (i.e., trial court or appellate). Where there's no statute,
look to major CivPro rules (FRCP 1331). Sovereign Immunity does not apply where the
person is not seeking money damages. Courts will not issue writs of mandamus (writ
ordering/commanding an agency to do something) unless there's a clear duty for the agency
to take action you're trying to compel. Statutory review provisions are almost always
exclusive (preventing review). If there's no statute, you to normal CivPro.
2. If review is available, is it available now? (i.e., standing, ripeness, etc.)
1. Reviewability of Issues: Preclusion and Issues Committed to Agency Discretion
There's a strong presumption of the reviewability of agency action because of the concept of accountability
and checks & balances. It may be overcome, however.
Reviewability is a threshold issue - if the issue is not reviewable, the courts will not touch it at all.
• Preclusion of Judicial Review - APA § 701(a)(1)-(2): exceptions from judicial review where statutes
specifically preclude review, or where the agency action is committed to the agency's discretion by
law. If Congress intended to prevent review, you have to make a constitutional argument - that
Congress couldn't have intended to preclude review of a constitutional issue. The other option narrow the scope of the preclusion (see Bowen, infra) - if an issue that has not been specifically
precluded and allowed elsewhere in the statute, the courts are not necessarily precluded from
reviewing it. Show that the preclusion itself had a very narrow scope.
Cases:
• Bowen v. Michigan Academy of Family Physicians (1986, pg. 632): Did the Medicare
Act preclude judicial review of a regulation providing for lower payment to allopathic family
physicians than other physicians? The regulation specifically allowed judicial review of the
eligibility determination, but specifically allowed judicial review of the amount determination
only under Part A of the Medicare Program. The DHHS read this to imply that courts could
not review amounts paid under Part B. The Court held that although the actual amount
determined could not be reviewed, the process of making the determination could be. The
failure of the statute to specifically allow review of a particular issue that had been
specifically allowed elsewhere did not preclude courts from reviewing the issue. The
preclusion itself had a very narrow scope, and thus could not apply generally.
• Issue Committed to Agency Discretion: The APA specifically precludes review of issues that are
committed to agency discretion. When there's a statute giving discretion to the agency, and there's
no way for the court to find standards to apply, the courts will have a hard time reviewing the
agency's exercise of its discretion (and won't hear it). If there are no standards for review, and the
agency is best suited to make its own determination, then the issue is not reviewable. Generally,
inaction or the failure to act is not reviewable. The best means to overcome this presumption is to
argue arbitrary and capriciousness, or to manipulate the statute to come up with standards that
could be used for review, looking for legislative history and past application - look for
inconsistencies. [the agency's best argument for not having to decide the issue would be one of
limited resources]
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Cases:
•
Heckler v. Chaney (1985, pg. 638): Death row inmates challenged the lack of FDA
regulation for safe and effective use of drugs for capital punishment (lethal injection). The
FDA's argument was that the statute gave them degree of discretion, and that because they
have limited resources, they know and have the discretion to use their resources where they
see them used best. The inmates argued that their lack of action, or implicit refusal to act
was arbitrary and capricious (you can always argue that the decision is a & c). The USSC
held that the issue was better left to the agency, and not the type of issue the courts should
decide. The agency knows best where and how to allocate its limited resources. This may be
the analog to the ConLaw Political Question Doctrine.
2. Plaintiff's Standing to Sue
The person seeking review is usually the object of agency action, requiring the person to have done or not
done something. Such a person's standing is not questioned. Standing is in issue when a person is harmed
indirectly by agency action that directly involves someone else. The test evolved from a "legal interest"
approach, looking to whether the 3rd party had a common law right to prevent the agency from
allowing/disallowing the other party to not/do something. Statutory standing was the exception to this
test. This applied when a statute specifically allowed others to seek review, or demonstrated the intent to
benefit the plaintiff's class. The "legal interest" test is no longer the requisite for Article III standing.
• Injury in Fact & Zone of Interest: Now there are 3 categories of parties in relation to standing:
1. Object of Government Regulation - where you actually feel the effect of agency action
2. Competitor of the Object - you must have an injury in fact, because otherwise there is no legal right,
deprivation, or contract claim. An injury in fact (even if it's a competitive injury) is sufficient for Art.
III standing. Standing may also exist for parties within the zone of interest - where the statute limits
the parameters of its applicability, and the party is within these parameters, then it may be within
the zone of interest (Derived from APA § 702). This seems similar to the legal interest principle.
3. Public Action - the party bringing the action is hurt because the values they're espousing have been
injured. Non-economic injury is still an injury, as long as it is particularized personal injury due to
government action. There must be a direct, personal, particular injury.
Cases:
• Association of Data Processing Service Orgs. v. Camp (1970, pg. 649): Comptroller ruled that
national banks could start offering data processing services. The question of standing was the issue
on appeal to the Court. The USSC addressed 3 questions: (1) whether the plaintiff alleges that the
agency action caused him injury in fact, economic or otherwise. (2) whether the interest sought to
be protected is arguably within the zone of interests to be protected by the statute or constitutional
guarantee. (3) whether judicial review has been precluded by statute (see §A above). The Court
found standing to sue.
• Air Courier Conference of America v. American Postal Workers Union (1991, pg. 653): The
USPS suspended a statutory restriction on overnight mail, allowing private courier services to
deliver overnight mail too. Postal employees challenged the legality of the decision. They met the
injury in fact test, but failed in the zone of interest test. The Court held that the Private Express
Statute, which gave the USPS a monopoly on carrying the mail (of which the restriction was lifted)
was enacted for the purpose of protecting the postal service from competition (as an entity), not to
protect the jobs of postal workers. The possibilities included whether the statute was mean to
protect the workers' interests or the interests of the postal service/other interest. The choices are
always between protecting the interest asserted, or the interest of another party or entity excluding
the plaintiffs.
• National Credit Union Adm'n (NCUA) v. First Nat'l Bank & Trust (FNBT) (1998, pg. 652): The
statute at issue provided that credit union membership shall be limited to groups having a common
bond of occupation or association. The issue was whether a credit union could sign up members
from several different employers, rather than those of a single employer. The Court held that the
banks had standing because the "common bond" provision was intended to limit the market that a
credit union could serve, and the banks had a protected interest in limiting credit unions from
entering additional markets. Thus the banks were within the zone of interest protected by the
statute.
• Imminent Injury, Causation, and Redressability:
1. A plaintiff must allege an injury in fact - an invasion of a protected interest which is (a) concrete
and particularized, and (b) actual or imminent (not conjectural or hypothetical). This requires the
party seeking review himself be among the injured.
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2. There must be a causal connection between the injury and the conduct (fairly traceable to the
challenged action), and not the result of some 3rd party not before the court.
3. It must be likely (i.e., not speculative) that the injury will be redressed by a favorable decision.
Cases:
• Lujan v. Defenders of Wildlife (1992, pg. 655): [plurality] DOW challenged a rule by the SecInt
providing that there is no obligation to consult with the Sec'y as to actions outside the US. The
Court first laid out the 3 part test above, and then found that there was no injury in fact, and that
the plaintiffs failed to demonstrate redressability. It was unclear whether the agencies would follow
the Sec'y's advice, and therefore a judgement against the US would not necessarily redress any
supposed injury (including potential harm to endangered species). A plaintiff raising only a
generally available grievance about government - claiming only harm to his and every citizens'
interest in proper adjudication of the Constitution and laws, seeking relief that no more benefits
him than anyone else in the public at large - does not state an Article III case or controversy. The
Court did not want to take on the role of "continuing monitors of the wisdom and soundness of
executive action."
• Steele Co. v. Citizens for a Better Environment (1998, pg. 664): Plaintiff's alleged injury in fact
concerned harm to its members occurring during the period when Steele failed to file certain
reports concerning its release of toxic chemicals, which it filed before CBE filed their suit under a
citizen statute. CBE sought to compel Steele to pay civil penalties to the US and open its records to
CBE. The Court first held that federal courts must always resolve the issue of standing before
reaching any other issues. Secondly, the Court held that the injuries claimed could not be
redressed by the payment of civil penalties to the Treasury, or any other relief sought by the
plaintiff, and so CBE lacked standing.
• Interests of 3rd Parties - Jus Tertii: a plaintiff may not assert the rights or interests of 3rd parties - it
may only assert its own. A plaintiff may, however, assert the rights of 3rd parties who are legally or
practically disabled from suing or when there is a protected relationship (doc-pt., vendor-purchaser,
etc.).
3. Timing of Judicial Review: Finality, Ripeness, Exhaustion
• Finality: Only a final judgement/order may be appealed to the courts. The courts will read an order
to be a final ruling. Make a record of the adjudication, and the decision of the ALJ. Then you appeal
to the agency head, and then you can appeal the final decision of the agency to the courts. The
purposes of the rule include to protect the agency's autonomy/authority, and to keep the courts
from dealing with issues prematurely. There are a few exceptions - i.e., when agency action would
cause irreparable harm to the plaintiff by not allowing the courts to hear the claim.
Cases:
• FTC v. Standard Oil of California (1980, pg. 669): FTC issued a complaint against a number of
major oil companies claiming that it had "reason to believe" that they were engaging in unfair trade
practices. SoCal moved to dismiss on the ground that no such "reason to believe" existed, which
was denied. The case was heard by an ALJ, and was still pending when SoCal filed a complaint in
federal court seeking review of whether the FTC had "reason to believe" it was in violation. The
Court found that the FTC's statement that it had "reason to believe" was not a definitive statement
of position, nor did its refusal to reconsider its issuance constitute a definitive action.
• Ripeness: if the agency hasn't hurt you yet, you can't bring any action. The injury must be
immediate for the issue to be ripe. If there are no more facts that would be necessary in the record
for a decision, then it's probably ripe. If there are still facts that are essential for a decision, it's not
ripe.
Cases:
• Abbott Labs v. Gardner (1967, pg. 675): The FDA required all Rx drug companies to place the
generic names of the medications on all labels of all drugs on the market. The companies brought a
class action suit, but the district court held that the issue was not ripe. The USSC rev'd, holding
that the impact of the regulations was sufficiently direct and immediate as to render the issue
appropriate for review. Compliance would impose a terrible burden (to re-label all their stock at
extreme expense), and non-compliance would open them up to criminal liability (for sale of
improperly labeled drugs). The injury was not speculative, and involved a legislative rule. This was
the first time the Court allowed pre-enforcement review.
• Toilet Goods Ass'n v. Gardner (1967, pg. 678): FDA rule requiring all makers of color additives to
allow FDA inspectors access to their facilities, and if they refuse, the FDA could immediately
suspend their certification (without which the additives could not be sold). The Court found that the
issue was not ripe for review, because there was no certainty that inspections would take place. It
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would be dependent on the facts. The Court also did not feel that the hardship faced would be
significant, because it was speculative that they'd have to suffer the hardship.
• Reno v. Catholic Social Services (1993, pg. 683): INS re-interpreted statutory rule requiring
aliens to be in continuous residence (except innocent absences) to not allow any absences at all
(any absence would make you ineligible for permanent residence). The Court found that the issue
was not ripe, because although aliens would be injured, the government is not burdening people it's declaring a benefit (amnesty), and placing restrictions on it.
• Thunder Basin Coal v. Reich (1994, pg. 683): A statutory regulation under the Mine Safety Act
allowed union officials to conduct safety inspections of non-union mines, or refuse to allow the
inspections and risk severe penalties. The statute had a specific pre-enforcement procedure which
could address the petitioner's claims of invalidity of the regulation. The Court found that Congress
specifically intended to preclude pre-enforcement review, and thus the issue was not ripe.
• Exhaustion: If there are still administrative procedures left to go through, courts generally will not
hear the appeal. The key is that if the individual's interest is so strong that the court actually cares
about it, and the issue is not one that would require the agency's expertise, the court may go ahead
and hear the appeal anyway. Generally, if it's a straight legal issue where the agency's expertise is
not necessarily useful or necessary, it'll be allowed. Exhaustion is subject to the courts' discretion.
If, on the other hand, the court want the agency to use its expertise in interpreting the legal issue (if
needed or useful at all), the it will send the case back down for the plaintiff to exhaust all available
remedies. Factors that courts may consider include: (see pg. 695 n. 2)
• Nature & severity of harm to plaintiff from delayed review
• Need for agency's expertise in resolving the issue
• The nature of the issue involved (legal issue, constitutional, jurisdictional, application of law, etc.)
• Adequacy of the remedy in light of the particular claim
• Extent to which claim is serious/legitimate (i.e., rather than a delay tactic)
• Clarity or doubt as to resolution of merits of the claim
• Extent to which exhaustion would be futile because and adverse decision is certain
• Extent to which petitioner had a valid excuse for its failure to exhaust
If you don't exhaust, you waive your remedy - so exhaust anyway. If you don't raise the issue in the
agency that you raise in court, then you might have waived it on remand. The reason you apply to the
agency at the same time is to preserve the issue. Also, a remand cannot cure any lapses of statutes of
limitation (i.e., if by the time the court remands it for exhaustion the time period for agency review has
expired, you're outta luck). Litigants are to raise all the issues you can/want before the agency to
preserve it.
Cases:
• McCarthy v. Madigan (1992, pg. 686): [Balancing Test] Federal inmate filed a complaint alleging
violation of his 8th Amendment rights. There was a whole administrative procedure for inmates to
seek formal review of a complaint relating to his imprisonment, which included a relatively quick
set of procedures. McCarthy did not employ these procedures. The Court found that the inmate did
not need to exhaust the available remedies. The Court held that congressional intent was of
paramount importance. It held found that hearing the case would not stifle the agency's
administrative authority. Exhaustion concerns apply when the issue being reviewed involves the
agency's discretionary power, or when the agency proceedings allow the agency to apply its
expertise. As for judicial economy, exhaustion allows the agency to correct its own errors, mooting
judicial controversies. Exhaustion also may produce a useful record for subsequent judicial review.
Administrative remedies need not be pursued if the litigant's interest in immediate judicial review
outweigh the government's interest in efficiency or administrative autonomy that the exhaustion
doctrine is designed to further. 3 broad sets of circumstances against exhaustion:
• Where resorting to agency remedy may pose an undue prejudice to subsequent court action
• Because of some doubt as to whether the agency was empowered to grant effective relief
• Where the admin body is shown to be biased or has otherwise predetermined the issue.
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