NAHO 2013 Conference
St. Paul, Minnesota
What are Administrative Agencies1
 Constitutional structure
 Separation of powers; Checks and Balances
 Both federal and state constitutions divide governmental
power into three branches of government: Executive,
legislative, and Judicial.
 Both federal and state governments in the US have the
same type of structure.
 Each branch has a core function and also has powers to
check the other branches of government.
 Tyranny and abuse of power was feared more then
inefficiency.
(1) Legislative
Enacts
Statutory
Law
(2) Executive
Enforces
the Law
(3) Judicial
Case Law:
Interprets
Statutory Law
Case Law:
Creates
Common Law
(state)
Remedies –
usually $
Equity –
fairness
3
What are Administrative Agencies2
 Administrative agencies are located in the executive
branch [Article II of the U.S. constitution] (enforces
the laws).
 The legislative branch consists of the two houses of
Congress [Article I of the U.S. constitution] (enacts
statutory law).
 The judicial branch of the U.S. Government consists
of the Supreme court and lower federal courts [Article
III of the U.S. Constitution] (decides cases or
controversies and interprets the law)
What are Administrative Agencies3
 1. Most agencies carry out law enforcement functions
(speaking broadly of civil and administrative law
enforcement, such as inspections, subpoenas, and
record keeping requirements).
 2. Most agencies are subject to judicial review in the
federal (or a state) court system (checks and balances)
 3. Virtually all agencies are creatures of statutes, and
their agency enabling acts (organic statutes) are
enactments of congress (or a state legislature) that
create the agencies and give them powers and
responsibilities (delegation of powers).
What are Administrative Agencies4
 FAPA Section 551(1) definition
 Administrative Agencies are in the Executive Branch
 (1) “agency” means each authority of the Government of
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the United States, whether or not it is within or subject to
review by another agency, but does not include–
(A) the Congress;
(B) the courts of the United States;
(C) the governments of the territories or possessions of the
United States;
(D) the government of the District of Columbia;
What are Administrative Agencies5
 2010 Revised Model State APA Section 102(3)
 (3) “Agency” means a state board, authority,
commission, institution, department, division, office,
officer, or other state entity that is authorized by law of
this state to make rules or to adjudicate. The term
does not include the Governor, the [Legislature], or
the Judiciary.
 Professor Ogden was the reporter for the Revised
MSAPA from 2006-2010.
Appointment of Officers 1
 1. Presidents and governors exercise control over
executive branch agencies through the power to
appoint and remove the top officials of the agency. In
most agency settings, there will be some political
appointees, including the agency head, but most of
the employees of the agency will be selected through
civil service systems set up in that jurisdiction. Civil
service systems were established as a merit selection
reform to eliminate patronage appointments of
individuals who were beholden to the appointing
authority but who were also often not qualified for the
job they were asked to do.
Buckley v. Valeo 1
 Facts: The Federal Election Commission has eight
members, six of whom are voting members. Of the six, two
are appointed by the President pro tem of the senate, two
by the speaker of the house, and two by the President. This
lawsuit was brought to challenge the appointment
structure on separation of powers grounds, that the
appointment clause for officers of the US provided the
exclusive method for appointing Officers of the US and
inferior officers, and that Congress did not have
appointment powers under either category. The
commission members exercise significant authority related
to enforcement of the laws of the US. [Buckley v. Valeo 424
U.S. 1 (1976)
Buckley v. Valeo 2
 2.The US Supreme court held that the appointment
structure violated Art. II, S 2, cl. 2 because the
commission exercises law enforcement (executive)
power, operates like an independent regulatory agency,
and those powers can only be exercised by Officers of
the US who are appointed following the
constitutionally prescribed method.
 3. The US constitution was very specific about the
requirements for appointments. The supreme court
upheld a formalist or textualist approach to this issue.
Appointing officers in the states 1
 1. Marine Forests Society v. California Coastal Commission:
In this case, the California Supreme court upheld an
appointment structure that violated the principles of
Buckley v. Valeo. Buckley was not a controlling precedent
because the challenge was based upon the California
Constitution not the US constitution. There were 12
appointees on the commission 4 appointed by the
governor, 4 by the senate rules committee, and 4 by the
speaker of the assembly. The court upheld this structure
based upon the California constitution, which did not have
anything like the officers of the US language in the US
constitution. There are limits to legislative appointment of
executive branch agency officials, and legislators could not
retain the power to remove their appointees
Appointing officers in the states 2
 Selection of agency officials in the states is more
complex. Most agency employees are hired under civil
service system rules. The top agency officials may be
elected (California Attorney General), or they may be
selected by the state governor with or without
legislative confirmation. States have a mixture of
executive branch and independent regulatory
agencies. Most state public utility commissions are
independent regulatory agencies for both historic and
structural reasons.
Removal of Officers 1
 1. The Myers v. US decision invalidated a statute that
had required the consent of the senate before a
President could remove a presidential appointee. The
court held that this unduly interfered with the
President’s executive powers. In the later Humphrey’s
Executor case, the court upheld limits on the
presidential removal power for FTC Commissioners.
That structure is still used today. Most cabinet officials
serve at the pleasure of the president, and most
independent regulatory agency commissioners serve
fixed terms and can be removed only for good cause.
[Myers v. US, 272 U.S. 52 (1926)]
Removal of Officers 2
 Facts: In this case, President Roosevelt wanted to remove the
FTC chair, William Humphrey, who had been appointed by
President Hoover. Roosevelt fired Humphrey after he refused to
resign, but Roosevelt did not rely on good cause, but rather on
political considerations. After his death, the estate sued for
recovery of Humphrey’s salary. The Supreme court upheld
Humphrey’s claim and concluded that the good cause removal
standard did not violate separation of powers. This fueled the
rise of the modern independent regulatory agency. IRA’s are
structured to have greater independence from the president,
unlike executive branch agencies. They are meant to be
nonpartisan, impartial, and to regulate in the public interest.
[Humphrey’s Executor v. U.S. (1935) 295 U.S. 602]
Agency Characteristics 1
 I. What are administrative agencies
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 A. Executive branch: Administrative agencies are located in the executive
branch of federal and state government. Agency characteristics include:
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 1 Law enforcement responsibilities including inspections, searches, audit
powers, subpoena power, benefit granting powers, regulatory powers
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 (Example: Safety inspectors for OSHA or Mine Safety Agency inspect work
places, and cite employers for violations of workplace safety standards)
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 2 Appointment of agency heads by the President (federal) or Governor (state)
with advice and consent of the Senate or state legislature
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 (Example: Attorney General or EPA administrator)
Agency Characteristics 2
 3 Cabinet agencies: policy preferences consistent with the President or
Governor currently in office (single head cabinet agencies); serve at the
pleasure of the President or Governor
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 (Example: State Department or Environmental Protection Agency
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 4 Independent agencies: Policy independence for independent
regulatory agencies that have multi member boards (5 to 7 appointees)
serving fixed terms in office with good cause removal standards and
political balance in membership.
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 (Example: Federal Communications Commission or state public
utilities commissions)
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Agency Characteristics 3
 • Expertise in subject area of regulation: Agencies are
created to address specific public policy problems by
devoting full time attention to those problems as
structured by Congress or a state legislature in an
agency enabling act (organic statute). Agencies have a
permanent staff and budget which allows the
development of expertise in addressing the problems
that they are charged with regulating.
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 (Example: The Environmental Protection Agency
(EPA) or the California Air Resources Board).
Agency Types 1
 B. Types of Agencies: agencies have a variety of missions
to carry out depending upon the enabling act that creates
the agency and gives the agency powers.
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 • Industry specific regulation
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 Examples: public utilities (state public utilities
commissions); aviation (federal aviation administration)
telecommunications (federal communication commission)
securities industry (securities exchange commission)
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Agency Types 2
 • Subject specific regulation (cutting across all industries)
 Examples: federal trade commission (antitrust law and
unfair trade practices); environmental protection agency
(environmental law); national labor relations board (labor
relations law)
 • Benefit granting agencies
 Examples: social security administration (disability
benefits, and Medicare benefits); worker’s compensation
agencies (worker’s compensation benefits); unemployment
benefits (state employment agencies); welfare benefits
(TANF state and local agencies)
Agency Types 3
 • Licensing agencies
 Examples: nuclear regulatory commission (licensing
of nuclear power plants); professional and business
licensing agencies (e.g. State Bar of California licenses
attorneys)
 • Labor relations agencies
 Examples: national labor relations board (private
sector labor law); public employees relations board
(public sector labor relations)
Agency Powers 1
 C. Agency Powers
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 • Enforcement Powers: powers typically granted by agency
enabling act including inspections, searches, audit
powers, subpoena power; [Executive Powers]
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 • Rulemaking Powers: authority to adopt rules granted by
enabling act, but required procedures for rulemaking
governed by administrative procedure act applicable to the
agency [Legislative powers]
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Agency Powers 2
 • Adjudicative powers: authority to provide
adjudicative hearings to resolve disputes granted by
enabling act but procedures used for adjudication
governed by administrative procedure act applicable to
the agency. [Judicial Powers]
Executive Power 1
 Agencies conduct investigations
 1. Most administrative agencies have regulatory and law
enforcement powers. The agency mission is to enforce the
provisions of the enabling act that creates and empowers
the agency. This is why agencies fit into the executive
branch structure to carry out law enforcement functions.
 2. the term “law enforcement” in administrative law is
much broader than criminal law (though some
administrative law violations are punished criminally
through the regular criminal court systems) because it
includes civil and administrative enforcement systems
Executive Power 2
 3. To carry out the law enforcement responsibilities,
agencies need information from regulated parties. Four
methods are used to obtain relevant information.
 A. Record Keeping required by law (e.g., employers have to
keep records of wage payments to employees; people
subject to income tax liability have to keep records of
income and expenses).
 B. Report writing (and filing) (e.g., employers have to
prepare and file with the IRS employee income information
( W-2 reports) or independent contractor income (IRS 1099
form); Taxpayers have to file annual IRS 1040 forms.)
Executive Power 3
 C. Investigative subpoenas to compel testimony and
production of records ( e.g., employer in Craib v.
Bulmash case had to produce wage records for
caregivers for his sister to determine compliance with
state wage and hour laws).
 D. Administrative Searches for inspection of the non
public parts of homes and businesses to determine
compliance with health and safety standards (e.g.,
OSHA safety standards compliance in Marshall v.
Barlow’s note case),
Executive Power 4
 4. Another technique is compliance audits ( e.g., audit
of client trust accounts held by lawyers.). Some of the
investigative techniques are used to determine
whether or not possible violations of the law have
occurred. These techniques would precede any
adjudicatory enforcement action brought by the
agency.
 5. the first two methods (record keeping and report
writing)rely primarily on voluntary compliance by the
regulated parties, but lots of time and money can be
spent to comply with these methods.
Executive Power 5
 6. The 3rd and 4th techniques ( subpoenas and
administrative inspections) are not voluntary.
Disclosure of information is compelled, sometimes to
determine if the law has been violated, and sometimes
to gather evidence for an enforcement proceeding.
 7. Compelled disclosure of information raises
questions under the Fourth and Fifth Amendments to
the U. S. Constitution
Legislative Power 1
 Federal APA Rulemaking procedures: 5. U.S.C. Section 553
governs rulemaking procedures:
 A. Notice [Section 553(b)provides: “General notice of
proposed rule making shall be published in the Federal
Register, unless persons subject thereto are named and
either personally served or otherwise have actual notice
thereof in accordance with law…..”
 B. Comment [Section 553(c) provides “After notice
required by this section, the agency shall give interested
persons an opportunity to participate in the rule making
through submission of written data, views, or arguments
with or without opportunity for oral presentation
Legislative Power 2
 Federal APA Rulemaking procedures: 5. U.S.C. Section
553 governs rulemaking procedures:
 C. Statement [Section 553(c) provides: “After
consideration of the relevant matter presented, the
agency shall incorporate in the rules adopted a concise
general statement of their basis and purpose.”
 D. Publication [Section 553(d) provides: “(d) The
required publication or service of a substantive rule
shall be made not less than 30 days before its effective
date……
Legislative Power 3
 2010 Revised MSAPA rulemaking procedures:
 A. Notice [Section 304];
 B. Regulatory Analysis [Section 305];
 C. Comment [Section 306];
 D. Adoption and Publication [Section 307]
 E. Concise Explanatory Statement [Section 313]
Judicial Power 1
 The federal APA uses the external hearing rights
approach. 5 U.S.C. Section 554(a) provides: “(a) This
section applies, according to the provisions thereof, in
every case of adjudication required by statute to be
determined on the record after opportunity for an
agency hearing…”.
 To enforce this provision courts look for and seek to
find in statutes(other than the APA) language that
uses the underlined terms or their equivalent. We will
see how this issue is resolved in the Dominion case.
Judicial Power 2
 The 2010 Revised Model State APA (MSAPA) uses the
external hearing rights approach as well. Section 102(7)
provides: “(7) “Contested case” means an adjudication in
which an opportunity for an evidentiary hearing is required
by the federal constitution, a federal statute, or the
constitution or a statute of this state.”
 Section 102 (11) provides: “Evidentiary hearing” means a
hearing for the receipt of evidence on issues on which a
decision of the presiding officer may be made in a
contested case.
 With this approach, hearing rights are governed by law
other than the APA, but hearing procedures are governed
by the APA. This is the same as the Federal APA, except for
the constitutional language in Section 102(7).
Judicial Power 3
 Right to a trial type APA adjudicative hearing in state
administrative law:
 1. External Hearing rights: California [Ca. Gov. Code
Section 11410.10. This statute provides: “this chapter applies
to a decision by an agency if, under the federal or state
Constitution or a federal or state statute, an evidentiary
hearing for determination of facts is required for
formulation and issuance of the decision.”
 2. APA Hearing rights approach: This is a minority
approach under which the APA provides for an all inclusive
definition of adjudication and requires APA hearings for all
adjudications whether or not an external source of law
requires hearing rights
What is Administrative Law 1
 D. Administrative Law
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 Administrative law is the law governing executive branch
agencies like the environmental protection agency as well
as independent regulatory agencies like the Securities
Exchange commission. Administrative law provides the
legal principles and rules that those agencies have to follow
when they enforce their substantive governing law.
Administrative law is a good course for lawyers who want
to practice in public law or regulatory law fields like
environmental law, securities law, labor law, antitrust law,
and others.
What is Administrative Law 2
 Administrative law principles are applicable to both
federal and state administrative agencies.
Administrative law principles govern the procedures
used by agencies when they engage in rulemaking
(adopting administrative regulations) adjudication
(deciding administrative cases), and enforcing the law
(inspections, subpoenas). Administrative law is a
procedure course, but it has lots of constitutional
concepts like separation of powers.
What is Administrative Law 3
 Sources of law for administrative law:
 1. Federal and state constitutions (e.g., Due Process of
law)
 2. Statutes (federal and state administrative
procedures act; agency enabling acts)
 3. Common Law (federal and state appellate decisions)
 4. Regulations (agencies that have rulemaking
authority sometimes adopt procedural rules that
govern proceedings before the agency)
Administrative Procedures Acts 1
 E. Administrative Procedures Acts
 1945 California (state agencies in California) Revised
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and amended 1979 ( rulemaking chapters) and 1995
(new adjudication chapters)
1946 Federal APA (federal agencies)
1946 MSAPA (state agencies in adopting states)
1961 MSAPA (state agencies in adopting states)
1981 MSAPA (state agencies in adopting states)
2010 Final Revised MSAPA (same)
Administrative Procedures Acts 2
 1. Federal APA: 5 U.S.C. Sections 551 to 706
 2. 2010 Revised Model state APA ( adopted, July 2010,
Uniform Law Commission
 3. State APA’s (e.g., California APA; California
Government Code Sections 11340 -11529)
 Administrative Procedures Acts provides the
required procedures for agencies to follow when
enforcing the substantive law the agency is responsible
for (agency enabling act)
Administrative Procedures Acts 3
 2010 Revised MSAPA Seven articles
 Article One: Definitions
 Article Two: Public Access
 Article Three: Rulemaking
 Article Four: Contested Case
 Article Five: Judicial Review
 Article Six: Office of Administrative Hearings
 Article Seven: Rules Review
APA Topics (evolution of subjects)
 Definitions of key terms (1945-1946)
 Public access to agency law and policy (internet era,
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2000’s)
Freedom of Information Act (public records acts) (1970’s)
Government in the sunshine act (open meetings laws)
(1970’s)
Rulemaking procedures (1945-1946)
Adjudication procedures (1945-1946)
Judicial Review procedures (1945-1946)
Legislative review procedures (1980’s)
Central panel hearing procedures (1980’s to date; 25
states)
Brief History of Admin. Law 1
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III. History of American Administrative Agencies
(post civil war and post industrial revolution)
1. 1887 – 1890 Controlling Monopolies and Rates
Interstate Commerce Commission (ICC)
2. 1906 – 1915 Regulating Product Quality
Federal Trade Commission
Predecessor to FDA (USDA)
Brief History of Admin. Law 2
 3. 1930 – 1940 Extending Regulation for Socioeconomic
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Purposes and Technology Advancements
Food and Drug Administration
Social Security Administration
Federal Communications Commission
Federal Power Commission
National Labor Relations Board
Securities Exchange Commission
Civil Aeronautics Board
Federal Aviation Administration
Brief History of Admin. Law 3
 4. 1960 – 1979 Extending Regulation to Enhance Public
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Health and Safety and to Promote Fairness in the
Workplace and Community
Equal Employment Opportunity Commission
Environmental Protection Agency
Occupational Safety and Health Administration
Consumer Product Safety Commission
Civil Rights division of Justice Department
Occupational Safety and Health Commission
Brief History of Admin. Law 4
 5. 1978 to 2000 Deregulation Movement to Reduce
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Bureaucratic overexpansion
Office of Management and Budget (OMB)
Office of Information and regulatory affairs (OIRA)
Abolition of CAB (airline rates)
Deregulation of banking and savings and loan industry
Telecommunications partial deregulation (FCC)
Welfare Reform (TANF)
Brief History of Admin. Law 5
 6. 2001 to 2011 War on Terror, Globalization, and
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Economic Stability
Patriot Act
Department of Homeland Security
World Trade Organization
Health care legislation (HHS)
Dodd Frank legislation (new consumer finance agency)
Sarbanes Oxley (new powers for SEC) corporate
regulation
The future
 What pressing issues do we face today as a notion and
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how can administrative agencies respond to those
issues?
1. Global economic issues.
2. Global environmental issues.
3. aging populations in many advanced economies.
4. entitlements and debt.