Administrative Law – Fall 2013
Outline
Siegel
TABLE OF CONTENTS
Who Controls Administrative Agencies? ...................................................................................... 1
Congress ............................................................................................................................................................... 1
Nondelegation Doctrine ............................................................................................................................................. 1
Non-aggrandizement Principle ............................................................................................................................... 3
Statutory Precision ....................................................................................................................................................... 3
Other Legislative Control Techniques .................................................................................................................. 4
The President ..................................................................................................................................................... 6
Appointment & Removal of Officers...................................................................................................................... 6
Policy Control ................................................................................................................................................................. 7
The Courts ........................................................................................................................................................ 10
What Do Administrative Agencies Do? ........................................................................................ 11
Adjudication .................................................................................................................................................... 11
Constitutional Constraints (Due Process) ........................................................................................................ 11
Statutory Constraints ................................................................................................................................................ 18
Bureaucracy .................................................................................................................................................................. 20
Rulemaking ...................................................................................................................................................... 22
Authority to Make Rules........................................................................................................................................... 22
Choice of Regulatory Techniques ......................................................................................................................... 23
Formal Rulemaking .................................................................................................................................................... 24
Informal Rulemaking ................................................................................................................................................. 24
Other Rulemaking Procedures .............................................................................................................................. 26
Politics, Ex Parte Contacts, & Bias ........................................................................................................................ 26
Can The Courts Review The Agency Action? .............................................................................. 27
Scope of Review .............................................................................................................................................. 27
Questions of Fact ......................................................................................................................................................... 27
Questions of Law ......................................................................................................................................................... 28
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Availability of Review................................................................................................................................... 31
Preclusion or Limitation of Review ..................................................................................................................... 31
Finality & Ripeness ..................................................................................................................................................... 34
Exhaustion ..................................................................................................................................................................... 35
Standing .......................................................................................................................................................................... 37
Attack Sheet .......................................................................................................................................... 40
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WHO CONTROLS ADMINISTRATIVE AGENCIES?
CONGRESS
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The existence of federal agencies is in tension with the idea of separation of powers because:
o Agencies combine legislative, executive, and judicial powers, and
o Some agencies are insulation from executive control (independent agencies).
Congress has authority to delegate its legislative powers by way of the:
o The necessary and proper clause, and
o The system of checks and balances that prove that some overlap of the branches is
necessary.
The functional approach to separation of powers emphasizes that the Constitution was designed to
create a workable government.
o Here, the relevant inquiry is whether an administrative scheme undermines the proper
functions of any of the three branches of government.
The formalistic approach to separation of powers emphasizes the sharp separation of the three
branches.
NONDELEGATION DOCTRINE
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The nondelegation doctrine says that there are constitutional limits on Congress’s authority to
delegate certain types of power to administrative agencies.
The main issue here is whether the agency’s statutory grant of rulemaking power is granted by a
stature that is too broad.
The test to use for delegation of quasi-legislature power to an executive branch is called the
intelligible principle test.
o Congress can delegate quasi-legislative power as long as Congress gives the agency an
intelligible principle to follow in exercising that power.
 This test is generally interpreted by the Supreme Court as allowing Congress to give
very broad rulemaking power to federal agencies.
 The basic rationale is that the agency’s rules must serve a purpose that is stated by
Congress (i.e. an organic statute that says that the agency can make rules “for any
and all purpose” does not contain an intelligible principle for the agency to follow).
o J.W. Hampton: Contains the first articulation of the intelligible principle test.
o FCC v. Storer: The Court upheld delegation where the intelligible principle was that issuance
of licenses to telecommunications companies had to be “in the public interest.”
o Panama Refining Co. v. Ryan: The President was given power to ban interstate shipments of
oil produced in violation of state law. There was no intelligible principle for the President to
follow because there was no criteria provided on which the President was to base his
actions. The court was unable to look to the guiding principles of the Act in question because
the act listed competing objectives with no preference.
o Schechter Poultry: The Act (NIRA) authorized the President to approve codes of “fair
competition” but did not prescribe adequate procedures for approval of the codes. There
was no criteria on which the President could base his actions of excluding certain old
products from commerce. The Act also did not set up sufficient administrative procedures.
Therefore, there was no intelligible principle for the President to follow.
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The Court has not struck down a statute based on the nondelegation doctrine since 1936.
Yakus: The Court upheld a wartime statute that authorized a federal price administrator to
set up “generally fair and equitable prices.” This statute was allowed because the prices are
clearly supposed to be fixed to effectuate the Act’s policy to stabilize commodity process so
as to prevent wartime inflation.
 Declared Purpose Test: Are there standards for the administrator to follow so that it
would be possible in a proceeding to determine that the will of Congress (the
declared purpose of the act) has been obeyed?
 This appears to say that good process is a substitute for nondelegation. The broader
the authority, the more important it is that there be a good process in place.
o Amalgamated Meat Cutters v. Connally: The statute at issue gave the President power to
stabilize prices, wages, and salaries by issuing orders and regulations. This was a very broad
power. The President ordered that prices and wages be frozen, and that this freeze was to be
implemented by a council the President established. The issue is whether the President’s
freeze order was unconstitutional because Congress was not allowed to delegate that
authority to him.
 The Court says that the President’s order is allowed because Congress was allowed
to delegate this authority to him.
 There is an implicit duty of consistency by the executive branch.
o Once the executive established the required guidelines, it would be
bound by them.
o The guiding principle can come from the executive once the
authority is delegation.
 There is also an implied duty of fairness, but Siegel thinks this is a stretch.
 The most important factor might be that the duration of the President’s
power here is limited.
o Whitman v. American Trucking: Congress delegated authority to the EPA to set up air quality
standards. The statute requires the EPA to promulgate the standards to protect public
health. The trucking company says that this is too broad of a delegation. The Court rejects
one of the statements in Connally that said that the agency is allowed to set its own guiding
principle after delegation. However, this statute at issue has a sufficient intelligible principle
of setting standards at a level “requisite to protect the public health” with an “adequate
margin of safety.” The Court notes that it has upheld statutes with broader authority.
 The degree of agency discretion that is acceptable varies according to the scope of
power that is congressionally conferred on the agency.
 Where the agency power is extremely limited, the Act need not provide an
intelligible principle.
 Where the agency regulation may affect the entire national economy,
substantial legislative guidance may be necessary.
The primary rationale for the Court’s decisions upholding broad delegations is a functional one – not
formalistic.
o Scalia disagrees with the functional approach.
Summary of the current state of the law:
o Congress may delegate rulemaking authority to administrative agencies.
o Delegation is constitutional as long as Congress articulates an intelligible principle for the
agency to follow, which may be as general as “in the public interest.”
o However, very broad delegation should be accompanied by good procedural safeguards.
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Often, these procedural safeguards may be supplied by the APA.
In general, it will be hard for a party contesting the validity of congressional delegation to
win.
NON-AGGRANDIZEMENT P RINCIPLE
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The non-aggrandize principle states that Congress cannot, in passing laws, reserve for itself power
that it never had in the first place by virtue of the Constitution.
In order for Congress to exercise legislative power, it must go through the Constitutional procedures
of bicameralism and presentment. When it aggrandizes its power, it tries to allow itself to exercise
legislative power without bicameralism and presentment.
o Bicameralism: A law cannot be passed without both houses jointly making the decision.
o Presentment: Legislation has to be presented to the President.
There are two unconstitutional situations in which Congress uses aggrandizement most commonly:
o When Congress tries to give itself power that it never had.
o When Congress makes its power easier to exercise by bypassing constitutional procedures.
The main question is: Has Congress retained power over the agency that it should not have retained?
The general rule is that Congress may never retain control over an agency by means of a legislative
veto.
Chadha: Anything that alters the legal rights, duties, and relations of person outside of the legislative
branch is an exercise of legislative power and therefore requires bicameralism and presentment.
This one-house legislative veto affected Chadha because he now has to be deported. This was
legislative power. The court also says that all legislative vetoes are exercises of legislative power.
o Concurrence: While not all legislative vetoes are unconstitutional, this one is because
Congress is exercising a judicial function in violation of separation of powers.
o Dissent: The majority’s definition of legislative action is too broad. This legislative veto
technically satisfies the bicameralism and presentment requirements, so it is constitutional.
o What is clear is that it is impossible sometimes to distinguish between legislative, judicial,
and executive action.
Bowsher v. Synar: By placing the responsibility for execution of an Act in the hands of an officer who
is subject to removal (by a method other than impeachment) only by Congress, Congress has retained
a power (to remove an executive official) that it never had.
o The definition of legislative power in Chadha only describes how we know when Congress is
exercising legislative power, not other branches.
o When Congress exercises its legislative power, it must do so using the processes set out in
the Constitution. In Chadha, those processes were bicameralism and presentment. Here, they
are impeachment proceedings.
Delegation and aggrandizement can seem similar:
o When congress delegates authority to an agency over which it retains little control, it is
transferring power away from its.
o When Congress delegates authority to an agent of Congress, it is keeping power for itself.
STATUTORY PRECISION
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Congress can retain control over agencies by making the statute so precise as to eliminate agency
discretion.
A key example of this is the Delaney clause
o A statute says that the FDA cannot approve an additive that is not safe.
o The Delaney Clause says that if a food additive is found to induce caner in humans or
animals, it is not safe.
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Some additives were found to induce cancer, but the risk was so low that it was trivial. The
benefits outweighed the risks.
o When saccharin (a sweetener in diet soda) was found to cause cancer, the FDA attempted to
get around the Delaney Clause by:
 Saying that the tests used to determine that the additive induced cancer were not
“appropriate” as required by the statute. The lab studies that show that in order to
get cancer from saccharin, a person would have to drive 800 cans of diet soda per
day.
 Saying that the additives did not actually “induce” the cancer. Maybe impurities in
the additive caused the cancer.
 Saying that the substance itself was not an “additive.” It could be a naturally
occurring item.
o Public Citizen v. Young: The agency tried to argue that there was a de minimis exception to
the Delaney clause. However, the court said that there was no such exception. To rule
otherwise would give the agency discretion to weigh risks and benefits. There was clearly
congressional intent to have the clause read strictly because:
 Other sections of the Act direct the FDA to balance factors while this one does not,
 The de minimis doctrine cannot be used to thwart statutory command, and
 Legislative history supports a rigid reading.
Statutory precision reflects Congress’s lack of trust in the agency.
Congress, not the agency, must correct legislative rigidity.
There are policy considerations that must be taken into account when decided to allow the agency to
take a more flexible versus micromanaged approach:
o Flexible:
 The agency might sometimes make the wrong decision. This would also give
agencies a lot of power.
 But this allows the executive to act freely. Meanings in the statute could evolve with
time as well.
o Detailed/micromanaged:
 This approach makes the agency’s expertise useless. It also might contradict a broad
goal. It doesn’t allow for laws to be adapted to time. It is also more complicated.
 But it’s an easier and clearer approach to review.
Statutory precision usually does not implicate the Constitution.
o
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OTHER L EGISLATIVE CONTROL TECHNIQUES
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Congress can control executive agencies by:
o Passing general statutes instead of organic statutes, and
o Using requirements of casework, oversight, and influence.
The most important general federal statutes for agencies is the Administrative Procedure Act (APA).
o The APA is an attempt to codify the best practices of efficient administrative agencies.
o The most important provisions of the APA are:
 Definitions – 551
 Informal Rulemaking/Exceptions – 553
 Formal Rulemaking – 556, 557
 Formal Adjudication – 554, 556, 557 (and 555 a little, for informal adjudication).
 Judicial Review – 702, 703, 704, 706
Other important general federal statutes include:
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The Federal Register Act: Requires that agencies publish their rules and provisions for
codification in the CFR
o The Freedom of Information Act: Requires an agency, when requested by any member of the
public for any (or no) reason, to make available for examination any agency record. There
are ten exceptions.
o The Government in the Sunshine Act: Obligates some agencies to provide the public with
advance notice of meetings and to meet in public. There are ten exceptions.
o The Federal Advisory Committee Act: Facilitates public awareness of the advice agencies
receive and inhibits preferential access by favored private individuals or entities; also
discourages agency reliance on outside experts by making it more difficult to create advisory
committees.
o The Privacy Act: Intended to provide individuals access to personal information in the
government’s possession and to improve the management and security of such records.
Some general procedural statutes also have substantive goals:
o The National Environmental Policy Act: Sets forth procedural requirements to assure agency
consideration of environmental values in the formulation and implementation of policy.
o The Regulatory Flexibility Act: Compels agencies to gather information about and making
findings concerning the impact of regulatory requirements on small businesses.
o The Paperwork Reduction Act: Requires that an agency that desires to impose on the private
sector any new demand for information must first convince OMB that the information sought
is necessary for the proper performance of the functions of the agency.
o The Unfunded Mandates Act: Imposes procedural requirements on Congress that are
supposed to make it more difficult to enact legislation that imposes costly new regulations
on government bodies without providing additional funding.
o The Contract with America Advancement Act: Allows congressional review of major (great
than $1 million) agency decisions.
Instead of using its power to regulate, Congress can use oversight, casework, and influence to control
administrative agencies.
o Congressional oversight refers to the review, monitoring, and supervision of federal
agencies, programs, activities, and policy implementation.
 Oversight work is dull in general.
 It seldom influences agency action.
 Agencies have to expend resources in responding to oversight activities.
 Oversight is sporadic and sometimes doesn’t even happen.
o Casework involves responding to personal complaints of constituents.
 This rarely stimulates an investigation of the underlying problem in the complaint
however.
 Most of the time, congressional workers look for a quick fix.
o Congressional influence often occurs after casework.
 Pillsbury: When a congressional investigation focuses directly and substantially on
the decision-making processes of a commission (in a case that is pending before it)
Congress is not longer intervening in the agency’s legislative function but rather in
its judicial function. This is impermissible.
 If the procedure at issue here was a rulemaking procedure as opposed to an
adjudicatory procedure, Congress could have sent a comment.
 D.C. Fed. Of Civic. Assoc.: Where Congress influenced an agency to make a decision
based on some factor that was not statutorily relevant (in this case, Metro funding)
and succeeded, it exercise too much influence.
o
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However, it is very rare for an agency proceeding or action to get overturned for
undue congressional influence.
THE PRESIDENT
APPOINTMENT & REMOVAL OF OFFICERS
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Of the two powers (appointment and removal), the power of removal seems to be the most
important.
o But there is an appointments clause in the Constitution – no removal clause.
o The only method of removal prescribed in the constitution is impeachment.
Principal officers are appointed by the President, with the advice and consent of the Senate.
o Congress can vest the appointment of inferior officers: in the President alone, in the Courts
of law, or in the Heads of the Departments.
 Morrison v. Olson: The independent counsel is an inferior officer, not a principal
officer requiring appointment by the President, because:
 He can be removed for good cause by the Attorney General,
 He has limited duties,
 He has limited jurisdiction, and
 He has limited tenure.
 Free Enterprise Fund: An inferior officer is closely supervised by a principal officer.
o Buckley v. Valeo: Congress may not reserve for itself the power to appoint inferior officers
unless that power conforms to the Appointments Clause. Because the appointment of the
officers in question did not, the officers may only exercise legislative power.
 There are three types of people who work for the executive: officers, inferior
officers, and employees.
 People who exercise significant authority pursuant to the laws of the United States
are, at the very least, inferior officers.
 Because the officers were not appointed properly, they cannot use their power to
enforce and conduct litigation because that is significant authority reserved for the
executive (but they don’t call it “executive power”).
 However, the officers can still perform their record keeping duties because that is a
legislative activity.
 Even if this case wasn’t decided on the issue of appointment, it could be decided
using the non-aggrandizement principle. Under Bowsher v. Synar, Congress cannot
take the appointment power away from the executive and give it to the legislature.
Removal power is an important means of control, so it is odd that it is not mentioned in the
Constitution.
o The old test to determine whether Congress could limit the President’s removal power
focused on the distinction between purely executive and quasi-judicial or quasi-legislative
powers.
 Myers: Congress may not limit the President’s power to remove a purely executive
officer.
 Humphrey’s Executor: Congress can limit the President’s power to remove a quasijudicial or quasi-legislative officer.
o The Court throws out this old test in Morrison v. Olson.
 The new test is that Congress can limit the President’s removal power so long as the
limit does not impermissibly interfere with the President’s exercise of his Article II
functions.
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This is a functional approach, as opposed to formalistic approach of separation of
powers.
The relevant inquiry in analyzing the constitutionality of a limit on removal power:
 Has Congress actually tried to limit the President’s removal power?
 Does the statute list reasons for which the President may remove the
officer:
o Explicitly (i.e. “may only be removed for…”)? If so, then Congress
has actually attempted to limit removal power.
o Not explicitly (listed potential reasons for removal)? Then look to
other factors in the text of the statute to determine intent of
Congress.
 Is there any removal clause at all?
 Is there a term of years (tenure)?
 What is the character of the office? Is it meant to be
independent from the executive?
 If the statute is silent on removal, is the officer removable at will?
o If the office is executive in function, assume plenary removal power
(i.e. Attorney General). The power of removal is incidental to the
power of appointment.
o If the office is not executive in function, Congress probably
intended to limit the President’s removal power.
 If Congress has tried to limit removal power of the President, then apply the
Morrison v. Olson test to determine if the limitation is constitutional. But if there
was no attempt to limit removal, then there is no need to determine the
constitutionality of it.
The dissent argues that the officer here is purely executive. In addition, this is an interbranch appointment (where Congress has appointed an executive officer). This shouldn’t be
allowed. Scalia believes in the unitary executive there (where all executive power is vested
with the president), but the majority believes that the Constitution does not embody this
theory because Congress is given considerable power to control the executive.
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POLICY CONTROL
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While there are some statutes that specifically say that the agency’s duty is to take orders from the
President (i.e. the military), most statutes are silent.
The question is in two parts:
o Does the President have authority to order agency officials?
o If the President orders an agency official to do something, do they have to do it?
Youngstown Steel: The President ordered the Secretary of Commerce to seize steel mills in the face of
a workers’ strike. This was during the Korean War, and there was a steel shortage. No statute
explicitly gives the President the power to seize steel mills, but the President ordered the Secretary
of Commerce to do so. This case resulted in several opinions.
o Black/Douglas: The President can only do this with either explicit or fairly implied
authorization by statute. And there was no such authorization here by statute, nor was such
authorization found in the constitution, so it is unconstitutional.
o Clark/Burton: While the president may have authority to act in the public interest in
emergencies, Congress had contemplated this situation. Congress’s failure to act was the
same as Congress saying that the President did not have this power. So his actions were
unconstitutional.
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Jackson: There are three types of authority that the government may have:
 When the President acts by express or implied statutory authority, his power to act
is at its greatest, but it is not absolute (Schecter Poultry),
 When the President acts by his inherent authority, he is relying on his individual
Article II powers. This is a “middle ground” where Congress has remained silent.
 When the President acts in contradiction of statute, his power is at its lowest
because it is against the will of Congress.
 Here, Jackson says that the President has acted in contradiction of statute because
Congress rejected giving the President this power. Congress’s silence is the same as
action. Therefore, the Morrison v. Olson test applies.
 Under Morrison v. Olson, what the President did (ordering the Secretary to
seize the steel mills) will only be constitutional if Congress impermissibly
restricted the President’s powers in violation of separation of powers.
o Frankfurter: Congress’s failure to grant authority could be seen as a direct ban on this action,
but there could also be an emergency situation in which he could act without approval from
Congress.
o Dissent: There was no express prohibition against the seizure in the statute.
In re Neagle: A U.S. Marshall was ordered by the President to protect a Supreme Court Justice. The
Marshall shot a civilian. The Marshall argued that he only did what he was ordered to do by the
President. He said he could not be prosecuted for doing something that he was legally obligated to do.
Thus, the question became whether the President had the authority to order the U.S. Marshall to
protect the Justice. The Court ruled, unsurprisingly, that the President has inherent authority to
order a U.S. Marshall to protect a Supreme Court justice.
o It is unclear how this is different from the Youngstown Steel case.
Dames & Moore v. Regan: The President negotiated with Iran during the hostage crisis. There was a
stipulation that all claims between the two counties would be sent to a claim tribunal. The President
has inherent authority to handle foreign relations.
o However, overall it is very challenging to determine what the inherent power of the
President are, especially if there is no longstanding or historic expectation that the President
will handle a certain issue.
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Type of Authority
Statutory Authority
Inherent Authority
Statutory Prohibition
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Summary of Separation of Powers Tests
President’s Power
Congress’s Power
Where Congress gives the
Where Congress gives itself power
President power through a statute, through statute, use the
use the nondelegation doctrine
aggrandizement principle
(Schecter Poultry).
(Bowsher v. Synar).
Where the President acts by virtue Where Congress acts by virtue of
of his Article II powers. (In re
its Article I powers.
Neagle; Regan).
Where Congress has limited the
President’s power either by
express prohibition (Buckley v.
Valeo) or by silence (Youngstown
Steel), use the Morrison v. Olsen
test.
However, there are some things that a President cannot order an executive official to do:
o He cannot order the official to do something unlawful.
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o He cannot order the official to fail to fulfill a legal obligation.
If the federal official serves at the pleasure of the President (i.e. if the President can remove the
official at any time), the President may give the federal official orders with regard to his discretion
duties, but not ministerial duties, because ultimately the official reports to the President.
o There is generally no statutory duty to obey the President, but the President has removal
power over executive officials.
Jewels of the Princess Orange: Though the Constitution doesn’t specifically give the President the
power to order the district attorney to dismiss a forfeiture proceeding, the President may do so
because:
o The district attorney serves at the pleasure of the President, and
o The district attorney has the discretion to dismiss this suit on his own, so the act is lawful in
itself.
However, if the official does not obey the President’s order, the President’s only recourse is removal.
He cannot stand in the shoes of the official.
The President’s order to do something neither adds to nor detracts from its lawfulness. If the
President orders an agency to do something, the agency complies, and then that decision is
challenged, the first question should always ben whether the decision itself was lawful.
The President may not direct the outcome of judicial proceedings performed by agencies because of
due process requirements.
Executive Order 12,291 requires that agencies conduct a cost/benefit analysis of any proposed new
rule. The proposed rule could not be implemented unless benefits outweighed costs.
o OMB then reviews the analysis and can either approve or deny the proposal.
o This executive order effectively gives the OMB the power to block agency rules from being
implemented.
o The reasoning for this order is that the President cannot micromanage every agency.
 Also, Reagan wanted to cut down on regulations that were burdensome on business.
o This order was a lawful exercise of the President’s power because:
 It only applied to directors of non-independent agencies (i.e. those who served at
the pleasure of the President), and
 It said that agencies had to consider costs and benefits to the extent permitted by
law, so the President did not order agencies that were forbidden from considering
costs to do something unlawful.
 And the OMB can order agencies because the OMB serves at the pleasure of the
President.
o Clinton made some changes:
 He said that benefits only needed to justify costs as opposed to outweigh them.
 But agencies still must do the analysis.
o There are some criticisms to these orders:
 They dwarf “soft” variables.
 Costs are usually clear, but often benefits are hard to value.
 Also, costs and benefits are not always born by the same people.
However, directors of independent agencies can usually only be removed “for cause” so the above
analysis regarding when the President can order an agency doesn’t apply.
o Typically, statutes are silent in this regard.
o Congress has never made a statute that specifically says that a director of an independent
agency does not have to object the President. If they did make such a statute, the test of
Morrison v. Olson would apply because it is a statutory prohibition.
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Therefore, the question is: would this statute impermissibly interfere with the
President’s Article II powers?
 No – because if we didn’t allow this, there would be no point to having
independent agencies.
 Yes – because independent executive agencies are still executive agencies,
and if they are not accountable to the President, they are no accountable to
anyone.
Another theory is that the non-aggrandizement principle would apply to Congress making a
statute that states that a director of an independent agency can ignore the President.
 Technically, this does not violate the non-aggrandizement principle because
Congress is taking power away from the President, not giving it to itself.
 However, this is a practical violation of non-aggrandizement because Congress now
has more power of this agency due to the President’s decreased power.
There is no case where the President orders an independent agency official because this just
doesn’t happen.
 The few times he does do this, there is no reason to challenge him.
 Even if the President issues an order, the agency can always ignore it.

o
o
THE COURTS
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This section does not address Judicial Review of Agency Action.
Agency courts are often called Article I courts.
Agencies often do things that are adjudicatory in nature.
Northern Pipeline v. Marathon Pipeline: The bankruptcy court cannot adjudicate a contract claim
because it is not an Article III court.
o Bankruptcy courts are not Article III courts because the judges do not have guaranteed
salary protection and lifetime tenure as required by the Constitution
o When can a non-Article III court exercise judicial power?
 Territorial courts, because there is no state court, so Congress can regulate,
 Courts martial, because the military has always used an Article I court (also, the
military is under the control of the President, so it makes sense to use an executive
agency),
 Public rights issues (those issues that are between the government and a private
party), and
 Adjunct theory, which says that Article III courts can refer fact finding duties to an
administrative agency as long as the “essential attributes” of the Article III court
were there and as long as there is judicial review.
o Here, the bankruptcy court used a standard of review that was too deferential, so the court
had too much power.
o Also, the court could enforce its own orders.
o Congress didn’t create this particular right of action at issue – it is a state law contract claim
– so Congress cannot decide how it should be adjudicated.
o However, the dissent argues that the court should use a balancing test: balance Article III
values versus the values that Congress wants to promote by adjudicating in an Article I
court.
 The Article III values are: integrity, impartiality, fairness, and separation of powers.
 The Article I values are: expertise, efficiency, cost savings, and flexibility.
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There are some instances where is it acceptable to have a right adjudicated by an Article I court
without judicial review from an Article III court.
o Where Congress has created the right, and
o Where the government has sovereign immunity – because you cannot sue the government
without its consent.
CFTC v. Schor: Using the new balancing test, the CFTC – an Article I court – can hear this particular
state law contract claim. It can most definitely hear the CEA claim under the adjunct theory.
o The balancing test uses three non-exclusive factors:
 The origin and importance of the right to be adjudicated.
 The extent to which the essential attributes of judicial power are preserved in the
Article I court, and to what extend the Article I court exercises this judicial power,
and
 The initial concerns of Congress that made it depart from the Article III court.
o In applying the balancing test, the court determines that:
 This is a state contract claim, not a congressionally created right, but it is very
closely tied up in a public regulatory scheme.
 Unlike the bankruptcy court in Pipeline, which could hear any case, this court can
only heart CEA claims and related counterclaims. Also, this court cannot enforce its
own orders – that must be done in district court. The standard of review on appeal
to the Article III court is de novo, so there is no deference.
 The CFTC was meant to be immune to political pressure. And to decide the CEA
claim here is to decide the related counter claim.
o Brennan says that sending a state law claim to an Article I court will eventually diminish the
need for Article III courts.
o Siegel: The most important factor here is that both parties consented to have the claim heard
at the CFTC. The defendant brought his counterclaim there and only argued that the CFTC
couldn’t hear that counterclaim after he lost.
 Note: Capron v. Van Norton (parties cannot consent to having their case heard in
federal court without subjust matter jurisdiction) does not apply because the issue
here isn’t waiving into federal court but rather waiving out of federal court (which is
allowed).
Schor appeared to overrule Pipeline’s categorical test. However, the Pipeline categorical test has
since been used in more recent bankruptcy cases.
o The result of Pipeline is still correct – Bankruptcy courts cannot hear contract claims.
o The categorical test of Pipeline has really only be used in bankruptcy cases.
o When in doubt, analyze under both tests, just in case, but state that Schor is probably the test
for whether an Article I court can hear a certain case whereas Pipeline might only apply to
bankruptcy cases. That is unclear.
WHAT DO ADMINISTRATIVE AGENCIES DO?
ADJUDICATION
CONSTITUTIONAL CONSTRAINTS (DUE PROCESS)
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There are two main due process questions regarding agency adjudication:
o When is process due?
o What kind of process is due?
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W HEN I S P ROCESS D UE ?
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Process is due whenever the government is taking away a person’s life, liberty, or property.
o These three different categories have been defined historically – what has always been
considered life, liberty, or property?
o This can also be seen as a general phrase that encompasses all things that we believe are
important. But this is not the definition that the due process clause contemplates.
Process is due in individual situations – not when the government affects rights of multiple people.
Londoner v. Denver: The statute allowed the Board of Denver to order the paving of a street. The
Board could assess the costs onto the people that lived on the street. The costs were assessed
individual as opposed to equally. There was no petition for paving, and there was no hearing. One
person who lived on the street thought that he was assessed too much for the paving. The court
found that the city had the right to pave the road without a hearing, but it could not assess the costs
to the citizens without a hearing because that was essentially an adjudication.
Bi-Metallic Investment v. State Board of Equalization: For tax purposes, the Board applied a general
increase in property value for all properties in Denver, CO. There was no hearing. The citizens
claimed that due process required that there be a hearing. However, the court determined that no
individual oral hearing was required because all of the properties were assessed by the same
percentage and because the increase affected the population generally, not individually.
The Londoner/Bi-Metallic distinction is based on the number of people involved.
o Where a rule applies to more than a few people, it would be impracticable to have a hearing
for everyone. The legislative process can remedy this – more people collectively have more
political power.
o If the government makes a rule that affects everyone equally, as in Bi-Metallic, there is no
right to due process.
o If the government instead does something that affects people individually on a relatively
small scale, such that it is an adjudication as in Londoner, there is a right to due process.
In order for the due process clause to be implicated, the state must be depriving someone of life,
liberty, or property.
o Board of Regents v. Roth: A professor was hiring for a one-year contract at a state university
and then fire for no reason. He believed that he was fired for criticizing the administrators of
the university. He argued that he could not be fired for expressing his first amendment
rights. The previously established rule was that that he had no “right” to be a professor –
being a government employee was a privilege.
 The court abolished the privilege-right distinction. Now, the court says that we need
to look at the nature of the interest at stake – is it property? To answer that, we need
to know if the professor had something taken away to which he was entitled.
 There was no denying here that the professor has an important and significant
concern in keeping his job, but that doesn’t mean he is entitled to keep his job.
 You are entitled to something by virtue of state law. The Constitution does not
entitle you to anything. It only protects the entitlement once you have it.
 In Goldberg, the plaintiff was given an entitlement benefit by the government that
was then taken away. You were entitled to the benefits as long as you are still
eligible. This was an entitlement, so the benefits were Goldberg’s property.
 Here, however, the professor was in a job position where he could be granted tenure
after four years. There was no expectation of being rehired before that time. This
was not enough to create an entitlement such that his job was his property.
 Marshall, in his opinion, says that every citizen applying to a government job is
entitled to it. This seems a little extreme… Maybe a better explanation of his opinion
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o
o
o
o
is that if the government is doing something important, like employing people, it
should do so fairly.
Perry v Sinderman: The plaintiff worked for several years in the local school district. The
school did not have a formal tenure policy but did have “de facto” tenure. Basically, the
school said that they wanted teachers to feel like they had tenure. The plaintiff alleged that
he was fired for exercising his freedom of speech. If the school did fire him because he was
exercising his first amendment rights, this is a wrongful termination – but his remedy would
be suit in federal court after he was fired. The plaintiff said that he should have been given a
pre-termination hearing. The school argued that his job wasn’t property (under Roth), so no
process was due. The court held that here the plaintiff had a legitimate claim of entitlement
because, even though he was not tenured, the school, by way of their de facto tenure policy,
had given the teachers the expectation that they would not be fired. The plaintiff therefore
has a legitimate claim of entitlement because there was an expectation of rehiring.
Therefore, the right/privilege distinction is gone. It was becoming obsolete anyways. There
are things that used to be privileges – like entitlement benefits – that courts now recognize
as too important to not be property.
Some argue that Roth might give states a perverse incentive not to create property – for
example, states might abolish tenure.
 But state universities still have tenure.
States create property, and the Constitution protects it. If there is no property created, there
is no process due. States could change the nature of property by changing the law.
 But states have not, for example, written laws that say that a person has no property
interest in any new real property.
 They might be able to do this in theory. But the political process would
quickly remedy it.
 But would it be constitutional? Real property is one of those things that has
always historically been seen as property.
 Generally, we view property in several different “circles”:
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Not property at all. The
state can do pretty much
whatever it wants.
"New property" that the
state has created. The state
can regulate more, and can
take away more easily.
Traditional "property." The
state can regulate a little, but
not a lot.
You. The state cannot do
anything about this group
of property.
We’ve been moving our view of what property is towards this idea of “new
property” as opposed to just the traditional property. This means that while
traditional property used to be the only kind of protected property, this is not the
case any more.
o Note that the definition of property in the due process clause is not the same as the
definition of property in the takings clause. If that were not true, then any time the
government had to downsize, it would have to pay the fired workers the fair market value of
all of the benefits that have been taken away from them.
If we compare Roth and Sinderman it looks like the state can choose if it wants to give you a property
interest in your job simply by giving tenure/de facto tenure or not.
o Arnett v. Kennedy: The plaintiff was fire from a government job in which he had tenure
protection that said that he could only be removed for cause. The statute that gave him the
tenure also provided that the only procedural right that a fired employee had was a posttermination hearing. The plaintiff alleged that since he had a property interest, more process
should be due (i.e. a pre-termination hearing as opposed to a post-termination hearing.
 However, the court ultimately held (in a plurality opinion) that if the statute grants
you property, you have to take the protections afforded in that statute.
 Given that federal statutes can also create a property right, I’m not sure if this would
be the same rule. I think instead that the Eldridge test (outlined below) would apply.
Note that all of the cases that concern the question of how much process is due deal
with the adequacy of the process provided for by the statute.
 Eldridge was decided two years after this case. So I think the court agrees.
o Cleveland Board of Education v. Loudermill: The plaintiff was a security guard in a
government position. As a civil servant, security guards could only be fired for cause.
However, the plaintiff lied on his application about his criminal history. The Board sent him a
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notice of dismissal, but he was not given a chance to respond. The Board then approved the
plaintiff’s dismissal. After his firing, he was entitled to an administrative review. The
reviewing commission upheld the dismissal. After that, he was entitled to judicial review in
state court. Instead, the plaintiff brought the case in federal court, alleging that the statute
itself is unconstitutional because it doesn’t give adequate due process.
 The court agreed that process is due here because the state statute created a
property interest by saying that civil servants could only be fired for cause.
 But the court rejected the holding in Arnett v. Kennedy that merely following the
procedure set out in the statute that grants the interest is sufficient due process. Due
process is granted by the Constitution and not by the grace of the state legislature.
Therefore, the court holds that once the property is conferred, it is subject to
constitutional requirements.
 The court follows the Eldridge balancing test, detailed below in the following
subsection, to determine that a hearing is necessary.
Since process is due when the government tries to take away life, liberty, and property (and it’s
pretty clear what “life” is), what about liberty interest?
o The common definition of liberty is the freedom from restraint on movement – such as
putting someone in jail.
o But according to Roth, the definition should be much broader – such as the right of
individuals to contract, to have family, to acquire useful knowledge, to marry, to establish a
home, to worship, and to generally enjoy those privileges recognized as essential to the
orderly pursuit of happiness.
 For example, taking away a license to practice almost always is a deprivation of
liberty (and property) because it means that you cannot practice in your chosen
field anywhere – even though you could do something else.
o While property comes from the state, liberty is more universal. It is generally the same for
everyone everywhere and exists by virtue of the Constitution – not by virtue of state law.
o For example, in Roth, the government had not taken away the plaintiff’s liberty interest
because it did not prohibit him from being a professor anywhere (just there).
 But if the government had done anything to taint his reputation such that no one
else would hire him, it might have been taking away a liberty interest.
H OW M UCH P ROCESS IS D UE ?
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For determining the second step (what process is due), we use the balancing test of Mathews v.
Eldridge:
o Here, the statute said that a person is entitled to receive disability benefits when he is so
disabled that he is unable to engage in any substantial gainful activity anywhere in the
economy.
o The process for determining when to terminate disability benefits:
 First a medical and vocational team investigated the claim.
 Then that team would recommend or propose that benefits be terminated and sends
the recipient a notice of termination.
 The recipient can respond to the termination proposal in writing.
 The agency then considers the recipient’s response and makes a final decision.
 After benefits are terminated, the recipient can get de novo agency review with a
hearing before an administrative law judge.
 The recipient can appeal the result of that hearing within the agency.
 After that, the recipient gets judicial review.
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Eldridge brought suit because his social security disability benefits were terminated without
a hearing. He thought this was a violation of due process. The agency sent him a notice of
termination after determining from his medical records that he was no longer disabled.
However, this had happened to Eldridge twice before, and his benefits were always
reinstated after a hearing. Instead of go through the process again, he brought suit.
o There is no issue of if process is due here because the government has conceded that
Eldridge’s social security disability benefits were his property.
o The test set out in this case to determine what kind of process or how much process is due is
a balancing test of the following three factors:
 The private interest at stake for the individual.
 The public interest at stake for the state/government
 Any mitigating procedural safeguards that might minimize the risk of error.
o The court applies this balancing test to social security disability benefits in general (not just
as it would apply to Eldridge) and determines that a pre-termination hearing was not
required. It is clear that process was due, but the agency gave recipients sufficient process.
 Private interest: Though most disability beneficiaries are poor, they do not have the
same urgent financial need that the welfare recipients in Goldberg had. Welfare
recipients often can starve without their benefits, whereas here the recipients can
get money from other sources. With due process concerns, the private interest is all
about timing.
 Public interest: This is mainly cost related. There are non-administrative costs of
simply paying money to people who are ineligible. There are administrative costs in
general. This is a legitimate concern for the government.
 Mitigating procedural safeguards: Here, the test for eligibility is medical. With
medical examinations, there is less risk of inaccuracy and less need for oral
presentations. If doctors say that a patient is disabled and can prove it using medical
records, there’s not much that a person can do to add to the evidence. In Goldberg,
the evidence that a person needed to present was not medical or scientific. It was all
about personal circumstances. Credibility was a serious issue, so oral testimony was
more important. (So does this mean that doctors are inherently credible, while welfare
recipients are not? Not necessarily – just that doctors have less of an incentive to lie
because they do not stand to gain.)
 The rate of error here is unknown. There are statistics that show how many
terminations are overruled, but they do not necessarily represent errors in
termination because it could just be that a person updated their file with
information that wasn’t available when benefits were terminated.
 Here, it is clear that Eldridge is disabled, but for some reason, on paper he
appears fine, but in person he appears disabled. However, due process laws
must be tailored to what most cases of this type are like – not this specific
case.
Brock v Roadway Express: A statute said that employers of truck drivers could not fire the drivers for
refusing to drive an unsafe truck or for reporting a safety issue. If the driver is fired for an illegitimate
reason, the agency could order that the driver be reinstated. The procedure in place was that if the
agency makes a preliminary finding that the driver was wrongfully discharged, it would order
reinstatement. After reinstatement, the employer could get a full evidentiary hearing. The employer
here thought that it was entitled to an oral hearing with cross-examination before as opposed to after
reinstatement. It also wanted to hear the evidence against it before the hearing. Using the Eldridge
balancing test, the court determines that the pre-reinstatement hearing is not required by due
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process, but other process is – namely that the agency must tell the company what evidence there is
against it and the company must have a chance to respond.
o Private interest: The company has a legitimate interest in not having to employ and pay
someone who they do not want working for their. Their property is being taken because they
are being forced to pay money. But there is also a private interest of the employee of
avoiding a wrongful discharge.
 Mainly the private interest of the company is considered; but the court can also
consider the interest of the private parties that are implicated by the decision – not
just the private parties to the suit.
o Public interest: The government has an interest in protecting the safety of the roads. Public
interest is usually, but not always, money-related. Here, it is clear that having the hearing
before or after reinstatement doesn’t really change its cost to the agency.
o Mitigating procedural safeguards/risk of error: The procedure used by the labor department
is an ex part investigation (i.e. the agency could tell the company that it had illegally fired
someone but not state who the employee was). There is a greater risk of error where the
company doesn’t even get a change to respond to the allegation. In order to respond, it has to
know the evidence against it.
Cleveland Board of Education v. Loudermill (continued from above): The court determines that a pretermination hearing is necessary. It does not have to be as elaborate or as extension in Goldberg.
o Private interest: A person has a strong interest in their employment.
o Public interest: The government has a legitimate interest in removing unsatisfactory
employees from jobs. It also has an interest in lessening the burdens on administrative
systems. But neither of these factors outweigh the private interest. In general, it is probably
preferable to keep a qualified employee than it is to train a new one. This is especially true
where the employer can suspend an unsatisfactory employee without pay until the hearing
is finished. So the monetary cost of having to pay an unsatisfactory employee is mitigated.
o Mitigating factors/risk of error: Because dismissals for cause often involve factual disputes, a
hearing is very important to mitigate the risk of error. This statute has no other mitigating
procedural safeguard to ensure that there is no error.
o Dissent: The process given should be enough (i.e. the holding in Arnett).
General rule: tenured public employees have a right to “minimal due process” prior to termination
defined as:
o Oral or written notice of the charges against them,
o An explanation of the employer’s evidence, and
o An opportunity to respond.
Is there some way that the state could set up a “de facto” tenure that is purely procedural – not
substantive – to get around this requirement? “You do not have tenure, but if you are fired, you can
appeal, and the state must show that you are fired for cause – otherwise you would have to be
reinstated.” The state has never tried this, but the court might see through it and apply
Sinderman/minimum due process requirement.
The Eldridge balancing test has been criticized:
o The problem with a balancing test for determining how much process is due is that it is hard
to measure these factors, even if we can put a numerical value on them.
 In close cases, the court has the discretion to take into account the good-faith efforts
of the individuals charged by Congress with the administration of welfare programs.
(This suggestion is almost never brought up, but it exists.)
o Some say that costs should not be a consideration when determining due process.
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Public interest is heavily weighted (in practical application of the test) as opposed to private
interest.
But is there an alternative to the balancing test?
o Scalia takes a traditional view – we should look at history and tradition to determine what
process is due. Is there an analogous situation? Then follow the process that we use in that
situation because it’s always been used.
 This has the benefit of not requiring a consideration of costs.
 But it does not allow for evolution of rights. For example, welfare benefits are
relatively new in history. In addition, sometimes tradition doesn’t reflect modern
values.
o In Brock, Stevens advocated for the natural rights or fundamental fairness approach, where
costs are not considered.
 The basic idea is that we should go with whatever best protects the rights of the
individual.
 This is a liberal and flexible political theory, but there are practical problems of
actually applying it.
 In addition, there is the question of if we are really ignoring costs using this method.
There will always been some point where we say that the cost is too high. Therefore,
a better explanation isn’t that costs should be ignored but rather that they should be
given very little weight when compared to private interest.
One thing is certain: how much process is due is not a fixed idea. Due process is different for different
things that the government tries to take away.
o
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The Constitution provides minimum requirements of due process. But the government is free to give
people more due process than that.
Where would we look to find if the government has given more due process than the constitution
says is needed?
o First – the APA. For example, it provides that if the agency’s organic statute says that there is
a right to a hearing, it must be provided.
 Note: the APA itself never requires a hearing. It just tells agencies what to do once a
hearing is required.
 When the organic statute requires a hearing, the APA says that the hearing itself is a
right.
 The important language is that Section 554 applies “in every case of adjudication
required by statute.”
o Second – the organic statute.
US v. Florida East Coast Rail Road: The agency, pursuant to its statute, initiated rule making
proceeding to set standard rates for the use of railroad cars. (There was a shortage of rail road cars at
this time, so rail road companies often charged other companies for using their vacant cards._ The
rail road companies said that they should have been given a hearing. The procedure used was: the
agency held a conference for the companies to voice their concerns (apparently the companies were
left with the impression that there would be a hearing); the agency tentatively promulgated the rule
for the rates and gave the railroad companies 60 days to respond in writing; the companies could
request an oral hearing, but they had to set forth reasons for the hearing as well as evidence.
o The companies thought that they were entitled to a hearing because the organic statute
triggered the APA (Sections 556 and 557 require an oral hearing. Also, the organic statute
said that the rule could be promulgated “after hearing.”
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The court says that Sections 556 and 557 are only triggered if the organic statute says “on
the record after opportunity for an agency hearing.” (Magic words.)
 The language in the agency’s organic statute here said “on the record after hearing”
but that doesn’t necessarily mean “on the record” as required by the APA. (Not really
sure how the two are different.)
 The language, “Commission shall give consideration . . . and on the basis of such
consideration . . .” plus the “after hearing” language does not trigger the APA
requirements.
 “Consideration” does not require an oral hearing. This part of the law is
substantive (i.e. what the law requires the agency to consider) as opposed
to procedural (i.e. how to consider it).
 Also, this is a rulemaking procedure, not an adjudicatory proceeding. There is a
different between the two: Londoner/Bi-Metallic. Less process is due in a
rulemaking context as opposed to an individual adjudication. Technically, no
process is due where the rights of people are affected en masse as opposed to
individually, but Congress has prescribed certain process for agency rulemaking in
the APA that is not required by the Constitution.
 In general, when making a legislative as opposed to adjudicatory decision, there is
no strict requirement that a hearing be held unless the statute requires it.
 Generally, more people are affected by rulemaking than adjudication.
 Rulemaking tends to be prospective while adjudication tends to be
retrospective.
 Legislative facts required for rulemaking tend to deal with issues of law,
while adjudicatory facts tend to require oral testimony because they deal
with individualized facts.
Califano v. Yamasaki: The Social Security Act says that if someone is overpaid disability benefits, the
overpayments will be recouped from future payments except where the secretary finds that the
recipient is without fault and the adjustments would either defeat the purpose of the act (i.e. would
deprive the person of income required to live) or be against equity and good conscience. The
Secretary makes a decision and then notifies the recipient, who can then either seek reconsideration
or ask for the Secretary to forgive the debt. If either of those two things is done, the recoupment is
deferred. It then goes to a regional office who will decide. If they decide against the recipient,
recoupment begins. If the recipient continues to object, he can get an oral hearing where the decision
is reviewed de novo. A recipient had a decision against him – he argued that he was entitled to a
hearing prior to recoupment.
o While lower courts looked to whether this process was constitutionally acceptable, the court
noted that, before they get to the Constitution, they should first check to see what the statute
requires. Did the statute require a hearing prior to recoupment? If so, then it doesn’t matter
that the Constitution doesn’t require that.
o The court says that, even though there is no language in the statute that says that a hearing is
required, the statutory language (i.e. that the Secretary must assess fault and whether
recouping would be against equity and good conscience) indicates that there must be a
hearing before recoupment.
 These are not things that can be ascertained through reading a written submission.
 Remember the difference between Goldberg and Eldridge.
 The most critical consideration here appears to be the nature of the proceeding.
This is more adjudicatory, whereas East Cost Rail Road was a rulemaking procedure.
This explains the different results of this case and East Coast Rail Road.
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Richardson v. Perales: The statute said that a person was eligible for disability benefits if he was
unable to engaged in meaningful, gainful activity. The plaintiff’s claim for benefits was denied. He
appeals to the agency to have the decision reviewed by a hearing examiner. Only one doctor found
that there was something wrong with him (Dr. Morales – the plaintiff’s own doctor – testified that the
plaintiff had a sprained back). Three other doctors said that there was nothing wrong with the
plaintiff. A few other doctors consulted on the case. The hearing examiner decided that the plaintiff
was not disabled. This decision was affirmed within the agency. The plaintiff sought judicial review
because he did not believe that the hearing examiner should have considered the written evidence of
doctors who did not personally examine him on the grounds that there was no cross-examination
(hearsay). However, the court found that the federal rules of evidence do not govern administrative
hearings. The evidence rules instead come from the APA, the agency’s organic statute, and any
applicable agency regulations.
o The APA has a “relevance” rule similar to FRE 402 and FRE 403 – relevant evidence is
admissible.
o The organic statute here specifically said that relevant evidence is admissible even if it
would be inadmissible under the federal rules of evidence.
o Some agencies have specific statutes that tell the agency to follow the federal rules of
evidence, but this is rare.
o The federal rules of evidence were designed for jury trials – to protect jurors from their own
inability to ignore prejudicial evidence.
o Here, all of the evidence was medical. The issue was entirely medical. The examiner was
perfectly within his right to consider the in-person testimony of one doctor to be less reliable
than the written reports of three other doctors because:
 This type of evidence is particularly reliable, and
 The plaintiff had the opportunity to subpoena the doctors but chose not to do so.
 Note: But what if both of these things were not present? Maybe a due process
violation?
Seacoast: In a somewhat doubtful decision (according to Siegel), the court ruled that an expert can
comment on evidence in an administrative hearing, but he cannot add anything to the evidence ex
parte. Part of this case has since been overruled, so it is unclear whether this is still good law.
Summary of evidence required in administrative hearings:
o Usually very informal,
o Almost always no adherence to the federal rules of evidence unless required to by statute,
o Hearsay can come in and be the sole basis of the decision,
o But consider the factors in Perales – the evidence must be reliable and the plaintiff should
have the chance to subpoena the doctors that wrote the hearsay evidence.
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The agency is covered by section 556 and section 557 when the statute says “on the record” and
“after a hearing.”
The follow people can preside over an administrative adjudication (Section 556):
o The head of the agency (though this is rare),
o Some agency decision maker, such as an administrative law judge, in formal decision
making.
o Administrative judge.
A person presiding over an administrative adjudication can:
o Only gather facts and make no decision at all (though this is rate),
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Issue an initial decision, which is binding unless appealed – typically subject to internal
agency appeal), or
o Issue a recommendation.
Typically, the agency is the prosecutor and decisions the question of when to bring a case against
someone who has violated a provision of the organic statute.
o There are no issues regarding separation of powers because the administrative law judge is
answerable only to the head of the agency.
o If the initial decision maker is an administrative judge, there are rules against ex parte
communications, and the people hearing the case cannot also have worked on investigation
and prosecution.
There is no particular provision in the APA regarding discovery.
o Usually, claimants use FOIA to gather the information.
o Anyone is permitted to ask any government agency for any document that is within its
records. You don’t even have to give a reason.
o Of course, there are exceptions. Generally, if you couldn’t get it through civil discovery, you
can’t get it through FOIA either.
The proponent of the rule or order has the burden of proof.
o This is usually the claimant.
o The Court expressly rejected the true doubt rule (where the evidence is perfectly equal, the
claimant wins). But agencies have rewritten statutes to get around this. This hasn’t been
litigation.
ALJs are part of the agency, as opposed to have a pool of ALJs that aren’t attached to any agency.
The goals of the agency head are: accuracy, efficiency, fairness, consistency, and uniformity.
o We want ALJs to have guidance and instruction, but we want them to have independence as
well.
Nash v. Califano: The plaintiff here is an administrative law judge who was challenging reforms to the
Social Security Agency’s adjudication system. Some of the changes, he said, infringed on the
independence of the administrative law judges. For example, staff members would review what the
ALJs did and tell them how to decide whether people were disabled. ALJs who didn’t meet quotas for
deciding cases would have incompetency charges brought against them. ALJs had to maintain a 50%
or less reversal rate. And the system now vested the ALJs judicial responsibilities with clerical
personnel. The court ultimately decides that these changes infringe on the independence of the ALJs.
o Under section 557, the ALJ is the one who makes the initial decision. Then the head of the
agency makes a decision on appeal
o We don’t want the ALJs making decisions based on external factors. They should feel free to
rule against the agency without suffering adverse consequences.
Heckler v. Campbell: The plaintiff here challenged the process of the SSA disability program for
determining whether the person can engage in substantial, gainful activity. A claimant who
establishes that he suffers impairment so severe that he is prevented from pursuing any gainful work
will be considered disabled without further inquiry. If a claimant suffers from a less severe
impairment, the Secretary of Health and Human Services must determine whether the claimant
retains the ability to perform either his former work or some less demanding employment. If a
claimant can pursue his former occupation, he is not entitled to disability benefits.
o One part of the rather detailed process was to decide whether the claimant could do other
types of work. The agency used a matrix to decide this (a chart considering physical ability,
age, education, and work experience), as opposed to relying on experts.
o
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The statute at issue said that the Secretary should make findings of fact, and that if someone
asks for a hearing, the Secretary shall, on the basis of evidence introduced at the hearing,
make a determination.
o The court says that the Secretary is allowed to exercise control over the ALJs in this way. The
Secretary has promulgated guidelines but has not told the ALJs how to rule on certain issues.
o The court cites Storer and Texaco for the proposition that the agency can promulgate a rule
to circumvent something in its organic statute regarding hearing process.
o The agency can circumvent hearing procedures in its organic statute only if it concerns
generalized inquiries (something that will be litigated over and over) and not individualized
inquiries.
 For example, if a statute says that you can give food stamps to poor people, the
Secretary can promulgate a rule that establishes that someone that makes a salary
equal to or greater than four times poverty level is not needy.
 If someone believes that they are the exception to the rule, the agency will listen.
Air Line Pilots v. Quesada: The FAA promulgated a rule saying that pilots cannot fly after they turn 60
years old. The court finds that this is within the agency’s statutory rulemaking power. In Heckler, the
agency had a rule that prevented people from getting hearings, but it was flexible. Here, this rule is
absolute – the agency says that people can apply for waivers to this rule but that the agency will
never grant a waiver. The court decides that it is acceptable to promulgate this rule even without
exceptions.
o In Heckler, you can determine by looking at a person and their medical chart if they have the
normal kind of disabilities that are covered by the matrix. Here, there’s no way to tell if
someone is in better shape than the average 60 year old.
Weinberger v. Hynson: The FDA was allowed to deny a drug company a hearing based on evidence it
provided, just as a judge can use summary judgment to dismiss a case before trial, even though the
statute said that a drug could only be pulled off the market after a hearing.
Generally, agencies can limit access to a hearing (Heckler), cut off access to hearings entirely (Air
Line Pilots), and use evidentiary rules to limit access to a hearing (Weinberger).
o
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RULEMAKING
AUTHORITY TO MAKE RULES
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The court made a policy determination that agencies had authority to make both procedural and
substantive rules.
National Petroleum Refiners Association v. FTC: the FTC passed a rule that said that it was an unfair
method of competition not to post the octane levels on gasoline. This was the first time the FTC
resolved an issue like this using rulemaking as opposed to adjudication. The NPRA complained,
saying that the FTC does not have authority to make substantive rules. The court finds that there is
nothing in the text of the statute that limits the FTC’s rulemaking power to procedural rules. In
addition, it is mostly a policy judgment. Allowing agencies to make their own substantive rules is a
good idea because:
o It is more efficient than having multiple adjudications on the same issue when the ALJs will
always rule the same way.
o It allows for agency innovation and greater participation of the private parties – anyone can
comment on a rule while only the parties at issue can comment in an adjudication.
o It is more fair.
o It gives companies notice rather than using a retrospective adjudication.
o Rules reward those who comply and give corporations less incentive to litigation.
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Just like in Storer and Texaco, a general issue should only be decided once.
After this case, Congress amended the FTC’s organic statute to say that the FTC must use trial-like
proceedings to make substantive rules.
CHOICE OF REGULATORY TECHNIQUES
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SEC v. Chenery (Chenery II): A company sought permission from the SEC to reorganize. SEC’s
statutory role is to determine whether the reorganization would be fair and equitable, and not
detrimental to the public interest or the interest of investors or consumers. During the time that the
case was pending, management bought preferred stock so that they would not lose control of the
company (preferred stock would later become common stock after the reorganization). The
management had no reason to believe that this was not allowed. Ultimately, the SEC disapproved of
the reorganization request, saying that management had violated its fiduciary duty to the stock
holders.
o The first time around, the court reviewed the decision and decided that the SEC’s analysis of
fiduciary duty was incorrect. The agency must clearly provide the basis for its decision – the
court cannot supply a basis after the fact.
o The second time around, the SEC looked at the case again and decided that this type of
behavior should not be allowed. It therefore announced a rule in its adjudication. The
company appealed, saying that in order to state a rule, the agency had to follow its rule
making procedures. Additionally, the company said that the SEC shouldn’t be allowed to
announce a rule and then apply it retrospectively.
o The court holds that agencies have the discretion to use either adjudication or rulemaking
procedures to announce a rule regarding whether something is fair and equitable. The rule
can be applied retrospectively.
 Ultimately, every case of first impression has a retrospective effect.
NLRB v. Wyman-Gordon: In a prior adjudicatory proceeding (Excelsior), the NLRB held that once
30% of a company’s employees had signed union cards, this would trigger a duty for the employer to
provide the union with the names of all employers. That rule was then applied to Wyman, who
protested because the rule was established via adjudication as opposed to in a rulemaking
proceeding. The court holds that the rule can be applied here because a principle developed in the
course of an adjudication can be subsequently applied.
NLRB v. Bell Aerospace: While the NLRB is allowed to depart from its own prior rulings, this
particular decision regarding the right of managers and supervisors to unionize is substantively not
allowed by the NLRA.
o However, there might be some instance where the company’s substantial good faith reliance
on previous Board decisions could be so substantial that the Board would be precluded from
reconsidering rules during adjudication.
For a long time, agencies used adjudication to make rules as opposed to formal rulemaking because
adjudication is easy to undo (just break with precedent).
An agency can give previous decisions precedential effect, but only such effect as is appropriate.
The general rule is that an agency can pick between rulemaking or adjudication to promulgate a rule.
However, there are some instances where the agency doesn’t have authority to pick:
o Morton v. Ruiz: The Secretary stated a rule in an internal manual that was not available to
the public. The court found that while the substance of the rule was acceptable, the
procedure by which it was promulgated was not. The agency’s own manual said that
eligibility requirements had to be published in the Federal Register. Where an agency has a
rule that dictates how a rule must be promulgated, it must follow its own rules. Additionally,
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the plaintiffs had no notice of the rule – it wasn’t anywhere public – so allowing the rule to
apply would be inequitable.
o Allison v. Block: The Secretary of Agriculture was order by Congress to allow farmers to
defer payments owed to the government when not deferring would cause financial hardship.
The Secretary promulgated no rules regarding what exactly “financial hardship” meant – he
wanted to decide via adjudication. The court held that rulemaking here was obligatory
because this was a dire circumstance that Congress intended to be relieved immediately.
o Public Citizens v. NRC: Agencies can issue policy guidance where Congress has not
specifically required rulemaking. However, the court interpreted an arguably ambiguous
statute to require rulemaking. Therefore, the agency could not just publish policy
statements.
Courts will almost always approve of setting a rule via rulemaking procedures where the issue is
general in nature.
o There isn’t a case where the court has held that adjudication as opposed to rulemaking is
required – even where a statute requires it.
FORMAL RULEMAKING
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Under the APA, formal rulemaking procedures are governed by sections 556 and 557.
o 556(d): The proponent of a rule or order has the burden of proof.
o 556(e): The transcript of testimony and exhibits constitutes the exclusive record for
decision.
o 557(b): The agency has the power of de novo review after initial decision.
Often an agency can choose between formal and informal rulemaking.
o In Florida East Cost Rail Road, the court allowed the agency to conduct rulemaking in the
least burdensome and costly way possible even if the organic statute implies otherwise.
o We’ve also learned that courts have broad rulemaking power (substantive and procedural)
and that their rules can have a powerful effect in agency adjudication.
o Formal rulemaking is costly and takes a lot of time (for example, an FDA rule on peanut
butter took 12 years to make).
o Wirtz v. Baldor Electric Co.: The agency’s statute used the magic words (“on the record” and
“after a hearing”) that trigger formal rulemaking requirements. The result is that the agency
chose to adjudicate as opposed to make rules.
 Generally, if the agency is required to use formal rulemaking, they won’t do it.
INFORMAL RULEMAKING
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US v. Nova Scotia Food Products: The FDA issued a rule regarding the proper way to cook smoked
whitefish. The fish processors objected because the rule was so specific that following it would
render whitefish completely unmarketable. (When they smoke the whitefish at the temperature and
time required by the agency, it’s disgusting.) The processors suggested individualized standards. But
the agency ignored their comments and brought actions against the processors for violating the rule.
The agency also withheld the scientific evidence that it used to come to its conclusions.
o The court held that the agency is required to show the processors its evidence so that they
can comment.
 The requirement that the agency must give notice of scientific students on which it
intends to rely can’t exactly be found in the APA 553 (section on informal
rulemaking).
 But the section on judicial review (706) requires the agency to have enough in the
record so that a court can tell what has happened.
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And there is a requirement that interested parties be allowed to participate with
comments. And parties will be unable to participate if they can’t see the evidence.
 So this isn’t really a requirement – it’s read in by the court.
o The court also holds that the agency cannot ignore comments.
 The court can set agency action aside if it is arbitrary or capricious (706).
 The court thinks that not responding to comments is arbitrary and capricious.
 Section 553 requires agencies to give interested parties a chance to participate.
After consideration of the relevant matter presented, the agency can make the rule.
 The court says that the agency must respond where someone raises a vital
question of cogent materiality.
Where the court in Florida East Coast Rail Road found that there was no requirement for a hearing
when a statute said “after hearing,” here the court seems to now be reading requirements into the
statute that are not there.
o The agency must give notice of scientific evidence on which it intends to rely, and
o The agency must respond to all comments that raise a vital question of cogent materiality.
Plaintiffs tend to attack agency rules on procedural as opposed to substantive grounds because
courts are reluctant to say that a given rule is substantively arbitrary or capricious.
After comments are considered, the agency is allowed to promulgate the rule incorporating
comments without an additional round of comments as long as the final rule is a logical outgrowth of
the original rule in light of the comments.
Pacific States Box & Basket v. White: A state agency promulgated a rule regarding the dimensions of
berry boxes. Pacific made round boxes, which was not allowed by the rule. The company therefore
claimed that the rule was arbitrary and capricious because there was no purpose to requiring berry
boxes to be rectangular. However, the state had not compiled a record to show what it relied on. The
court held that the rule could possibly serve a purpose even though the state didn’t show evidence.
The court found that there was a presumption that the state regulation was valid and if any valid
facts could be reasonably conceived, it is presumed that those facts are true.
o Note: This is a case that does NOT implicate the APA. If the APA applied, the holding would
be different because of the requirements that have since been read into the APA.
o But for cases in which the APA does not apply (state agencies), as long as rational facts could
be conceived to support the rule, the court won’t check the record. The burden is on the
challenger to prove that the facts are wrong.
Motor Vehicle v. State Farm: The agency was going back and forth between regulations. The first
Secretary got rid of the mandatory requirement for passive restraints in cars (airbags and automatic
seatbelts) in favor of a public campaign. The next Secretary got rid of the campaign idea and went
back to mandatory requirements. And the one after that got rid of the mandatory requirement again,
saying that there was no benefit because cars were just installing automatic seatbelts instead of
airbags – and people just detached the automatic seatbelts.
o The court reviews the rule under the arbitrary and capricious standard. However, this is
arbitrary. The agency did not considered alternatives – specifically whether modifying the
standard to require the airbag technology would meet the desired safety results. The court
also found that the agency was too quick to dismiss the benefit of automatic seatbelts.
Summary of an agency’s duty in carrying out informal rulemaking procedures:
o The agency has to give notice as to what evidence they intend to rely on,
o The agency has to respond to comments that raise a vital question of cogent materiality,
o The agency has to give a rational connection between the facts found and the choice made
and confront contrary evidence,
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o
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The agency has to consider alternative options that are within the ambit of the standard and
those that are cogent and salient alternatives suggested in the comments, and
If the agency is changing its mind, it has to give a reasoned analysis for the new policy and
should acknowledge the old policy (but it doesn’t have to say which its changing its mind).
OTHER RULEMAKING PROCEDURES
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The Vermont Yankee rule is that procedural challenged to informal rulemaking will not be successful
because the standard in APA 553 sets the maximum procedural requirements.
o In those extraordinary circumstances in which the APA does not apply, discretion is usually
left to the agencies.
o But this rule was decided before State Farm. So clearly it isn’t that influential.
o Courts are just more cautious about adding procedural requirements to informal
rulemaking. If they do, they are more likely to tie new requirements to an express
interpretation of APA 553.
o The practical rule of this case is that trial type procedures with cross-examination are not
required in informal rulemaking.
Agencies do not have to use even informal rulemaking procedures for “interpretative” as opposed to
legislative rules.
American Mining Congress: Legislative rules have legal effect while interpretative rules do not.
Therefore, an agency cannot initiate a proceeding against someone who violates only an
interpretative rule.
o But how do we know if a rule is legislative or interpretative?
 Did the agency invoke rulemaking authority (i.e. by putting the rule through notice
and comment)? If so, it is likely a legislative rule. If not, it is probably an
interpretative rule.
o There are few cases that say that an agency must use legislative rulemaking and cannot use
interpretative rulemaking:
 Where, without a rule, there is nothing to enforce.
 Where the rule amends a prior legislative rule (because agencies are bound by their
own rules).
o A rule cannot be interpretative unless it is rationally an interpretation of something else.
POLITICS, EX P ARTE CONTACTS, & BIAS
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Ex parte comments are just a reality of administrative policy making.
Rulemaking is more like legislation than judicial action, so it is not fair to hold it to judicial standards.
Sierra Club v. Costle: Even though the EPA received comments after the close of the comment period
and there was no chance to respond, this is acceptable as long as a record of the comments of central
relevance is in the docket (unless the organic statute says otherwise). If the ex parte comments are
not in the docket, the agency cannot rely on them. Therefore, the agency has a duty to create
documentation regarding meetings of central relevance.
o Additionally, the political pressure from congress and the white house is acceptable because
here the agency is conducting quasi-legislative procedures, not quasi-judicial. This can be
seen as affirming the broad holding of Vermont Yankee – that we do not want to “judicialize”
the rulemaking process. There is no need to summarize a meeting with the President in the
docket.
o As always, the agency can only do what it is lawfully allowed to do in rulemaking procedures
(State Farm) so the political pressure cannot cause the agency to do something it is not
allowed to do.
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Association of National Advertisers: The FTC Chairman does not need to recuse himself from
rulemaking regarding children in advertising, even though he has clearly expressed his adverse view
on the issue, unless there is clear and convincing evidence that he is so biased (with regard to the
parties) that he has an unalterable closed mind.
o Again, this was a rule-making procedure, not an adjudication.
CAN THE COURTS REVIEW THE AGENCY ACTION?
SCOPE OF REVIEW
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The main questions of judicial review are:
o What is appealable? This is mostly a question of timing.
o What is reviewable?
o What is the standard of review?
Camp v. Pitts: Neither the APA nor the organic statute required the Comptroller to hold a hearing or
make formal findings on the record. The Comptroller made findings in short letters. The court holds
that this is agency action that is presumptively reviewable under APA 701, but review is limited. The
limitation of review is that the standard is the arbitrary and capricious standard under APA 706.
o De novo review is not appropriate here because that type of review is only appropriate
where we have either:
 Inadequate fact-finding procedures in an adjudicatory proceeding, or
 Judicial proceedings brought to enforce certain administrative actions.
o The record is everything that the agency had before it when it made its decision.
 The court does not make a new record, even where the record is inadequate for
judicial review.
 If the record is inadequate, the court remands back to the agency for creation of a
better record.
o Arbitrary and capricious is a very deferential standard.
QUESTIONS OF FACT
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Questions of fact are reviewed with deference.
Universal Camera Corp. v. NLRB: On judicial review, the only issues for the court to review were
factual determinations by the Board and the ALJ.
o The organic statute says that decisions shall be conclusive if supported by evidence. The APA
says that either the arbitrary and capricious standard applies or the substantial evidence
test.
 Substantial evidence: evidence as a reasonable mind might accept to support a
conclusion; more than a mere scintilla.
 Evidence must be substantial when viewed in light of the entire record.
o The court determines that here, the standard must be deferential. Therefore, even if the
court disagrees with the agency’s findings of fact, as long as they are reasonable, the court
must rule in favor of the agency.
When the court is reviewing factual findings that turn almost exclusively on credibility:
o If the Board upholds the ALJ, it will be very difficult for the court to then overturn both the
Board and the ALJ.
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Even if the ALJ believes one witness and does not believe seven witnesses, if the Board
upholds, the court should also uphold because it is unlikely that two separate fact finders
would not have substantial evidence.
 Though sometimes a court does overturn a decision based on these facts.
o Note that the Board is not required to defer to the ALJ on credibility, but the court may set
the Board’s decision aside if it does not defer to the ALJ.
In the context of rulemaking, APA 706(2)(a) – the arbitrary and capricious standard – and not APA
706(2)(e) – the substantial evidence standard – applies.
o ADAPSO: The Federal Reserve Board promulgated a rule that allowed banks to engage in
data processing activities. [Note: this case concerns finding of fact in the rulemaking context,
not the adjudicatory process.] The organic statute called for the substantial evidence
standard while the APA called for the arbitrary and capricious standard. The court holds that
they are basically the same thing. It is arbitrary and capricious to adopt a rule when it is
based on factual findings that are not support by substantial evidence.
 This is a bit questionable, because Congress would not have included the substantial
evidence test in the agency’s organic statute if the two were difference.
 But Congress cannot depart from the APA in an organic statute unless such
departure is expressly stated.
 It also doesn’t make sense to apply one standard for findings of fact in rulemaking
and another for findings of fact in adjudication.
 Both adjudicative facts and legislative facts need deference, just for different
reasons.
 Adjudication should be treated deferentially because they are related to
credibility and to topics of agency expertise.
 Legislative facts should be treated deferentially because rulemaking is not
the court’s job.
o Note that the agency’s rulemaking can still be overruled under State Farm if the agency does
not draw a rational connection between the facts found and the choice made.
o Whether or not a court believes that these two tests are the same, the bottom line is this:
there is always a deferential standard regarding an agency’s finding of fact. The question is
ask is whether a reasonable person would come to this conclusion.
o
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Questions of law are also reviewed with deference.
This is unlike judicial review of questions of law in civil procedure, which are reviewed de novo.
o In civil procedure, the court of appeals is in a better position to decide the law – this is its
area of expertise.
o There is also a need for uniformity.
Chevron v. NRDC: The Congress amended the Clean Air Act to state that if a state has any nonattainment areas (where levels of pollution are two high), the state must have a plan that provides
that any new or modified stationary source of pollution must get a permit. A modified stationary
source of pollution was defined as one that, when changed, produces more, not less, pollution. In
order to get a permit, the equipment used for the stationary source of pollution must have the lowest
possible emissions rate.
o The EPA decided to establish the concept of a bubble. This concept meant that the entire
construction site or plant that emitted pollution was one stationary source, even where
there are several sources of pollution within that plant.
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The question for the court is simply is this bubble concept lawful. Can the EPA adopt a static
definition of what a stationary source is?
o The court applies the arbitrary and capricious standard of review of APA 706(2)(a). To
determine if this interpretation of law is arbitrary and capricious, the court adopts a two
step test:
 First, has congress spoken on this issue? If so, the review ends here. The agency has
to do what congress says.
 However, if congress is silent or ambiguous on the issue, is the agency’s decision
based on a permissible construction of the statute? This construction just has to be
reasonable – it does not have to be the best answer.
Deference to agencies on issues of law is acceptable because:
o Expertise: The agency is the one with the expertise in this statute and this area, not the court.
o Uniformity: There is no need for uniformity in administrative law because each agency has
its own statute.
 Of course, this does not apply to agency interpretation of the APA or the
constitution.
o Delegation: Congress has delegated power to the agencies to determine what the
statute means. Sometimes, delegation is implicit – by use of broad and general terms.
 For example, the FCC organic statute says that the FCC must issue license in
the “public interest, convenience, and necessity.” It is obviously up to the FCC
to figure out what this means.
 Every time that the court uses ambiguous language, it is an implicit delegation
of authority to the agency.
 It doesn’t matter why the statute is ambiguous – just that it is.
o Accountability: Agencies are part of the legislative branch and are eventually accountable to
the president and to congress, not the courts.
o Policy balancing: These are policy questions made by congress that require deference.
o Process: we give the agency deference because we like the process by which the agency
makes its decision.
Even though APA 706 says that the reviewing court shall decide all relevant questions of law, this
apparently means that the reviewing court decides these questions deferentially.
Chevron deference only applies to questions of law that the agency makes regarding its own organic
statute.
There are some other exceptions to Chevron deference:
o Where the agency has no rulemaking authority.
 EEOC v. Arabian American Oil: The EEOC was never given rulemaking authority by
Congress. But this is unusual.
o Where stare decisis applies to a contrary interpretation of the organic statute.
 Lechmere v. NLRB: The NLRB statute that there was a three part balancing test to
determine if a company is required to allow union people onto its property. The
board ruled against an employer for failing to allow union people onto its property.
The court held that since one of its prior decisions held that companies do not have
to allow employees onto their property absent extraordinary circumstances, the
issue was decided. Stare decisis prevented the agency from applying a new rule.
 However, the case that the court relied on for stare decisis was decided before
Chevron.
 But, see below, Lechmere may be overruled by Brand X.
o
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Where the agency has changed its own interpretation, it still gets Chevron deference. It used to be
one factor in assessing the weight that the agency’s position is due. But now inconsistency is not a
factor.
o Good Samaritan v. Shalala: The agency here had one interpretation of the Medicare statute,
and then later changed their minds. The agency is still entitled to Chevron deference, but
inconsistency is relevant and weighs against the agency’s interpretation.
 Overruled in Brand X. See below.
 This is both consistent and inconsistent with Chevron.
 On the one hand, a change in position undermines the agency’s expertise.
 But in Chevron itself, deference was given to a change in agency policy.
 However, in some statute, we think that the agency is in the best position to know
what Congress is trying to say, so if they change their minds, maybe they don’t know
what’s best.
 In other statutes, Congress clearly left it to the agency to interpret (i.e. in the FCC
statute). So it is likely that the agency will change its mind.
o National Cable & Tele v. Brand X: The agency here changed its mind and was inconsistent
with past court decisions regarding the statute. Here, the court expressly overrules Good
Samaritan and says that Chevron deference still applies and it applies in the same way
regardless of the agency’s inconsistency. Consistency may have some other kind of impact –
for example it may support a finding that the agency’s new interpretation is unreasonable
(second prong of the Chevron test).
 The court also holds that a court’s prior construction of an organic statute trumps
the agency construction otherwise entitled to Chevron deference only if the prior
court decision holds that its construction follows from ambiguity and thus leaves no
room for agency discretion.
 But does this overrule Lechmere? Maybe the court meant to say “a Supreme
Court decision” not “a court decision.”
 This is unclear. Steven’s concurrence says that only a Supreme Court
decision, not any court decision, should overrule the agency’s interpretation
of an ambiguous statute.
Sometimes, however, Chevron does not apply, even where the statute is ambiguous.
o This is rare.
o FDA v. Tobacco: The FDA had control over drugs and said that it considered tobacco to be a
drug. FDA had rulemaking authority and adopted this new rule, saying that tobacco met the
statutory definition of a drug. The FDA said that it is entitled to Chevron deference regarding
its interpretation of its own organic statute.
 The court held that rulemaking authority for tobacco was not delegated to the FDA
but instead to another agency. If tobacco was a drug, then the FDA would be
obligated to ban it completely. If congress had intended to delegate such power to
the FDA, they would have done so explicitly.
 The basis for Chevron deference is delegation by Congress, which doesn’t exist here.
 This might also just be a political/money issue – it’s just too big of a deal.
Chevron step zero – when can we get to step one of Chevron?
o An agency interpretation qualifies for Chevron deference when it appears that Congress has
delegated authority to the agency generally to make rules, and that the agency interpretation
claiming deference was promulgated in the exercise of that authority.
o US v. Mead: A tariff statute distinguished between a “bound diary” and an “other register or
account book.” The former were taxed, the later were not. Customs services at a local office
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issued a ruling that Mead’s notebooks were bound diaries, so they must be taxed. By the time
this issue got to court, the national office agreed with this interpretation. When challenged,
customs argued that it was entitled to Chevron deference. There appears to be an ambiguity
in the statute. But instead of going to the second step, the courts question if there was
delegation of authority on this issue (like the Tobacco case).
 While in Chevron, the court held that an ambiguity was an indication of delegation,
here the court holds that there was no explicit congressional delegation of
rulemaking to the agency on this issue.
 Therefore, the court looks to the process that the agency used in coming to its
interpretation.
 Did the agency have rulemaking authority? Yes, it could engaged in
rulemaking and adjudication.
 Did it engage in rulemaking or adjudication to come up with this
interpretation?
o No. The letters did not have the force and effect of law. The letters
did not bind third parties. The letters were issued by a local, not
national, customs office.
 The court finds that the agency is not entitled to Chevron deference but might be
entitled to Skidmore deference.
 But Skidmore deference isn’t really deference at all. It just means that the
agency’s argument has to be more persuasive than the other party’s
argument
Mead leaves the Chevron doctrine a little confusing.
 Apply the Chevron test to rules developed during formal adjudication.
 Apply the Chevron test to rules developed during formal/informal rulemaking –
probably, but must be delegated such rulemaking authority (Mead test for Chevron
step zero).
 Opinion letters, policy statements, interpretative rules, and other rulings that do not
have force and effect of law do not get Chevron deference but instead get Skidmore
deference.
 But note that the court has given Chevron deference to an agency even to
informal statements of interpretation – but there were three separate
statements of interpretation and all were consistent.
 Ultimately, how you apply Chevron will depend on why you think Chevron
deference is important. I intend to use the delegation theory.
AVAILABILITY OF REVIEW
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The basic rule for the ability to appeal agency action is that agency action is presumed to be subject
to judicial review. APA 702.
APA 703 tells us how to get review.
But the action may not be reviewable where:
o The organic statute precludes review (APA 701(a)(1)), or
o The agency action is committed to agency discretion by law (APA 701(a)(2).
PRECLUSION OR LIMITATION OF REVIEW
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A court will try to interpret a statute in a way that does not preclude judicial review, particularly
where there are constitutional issues.
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The preclusion of review is generally disfavored.
Johnson v. Robinson: Robinson applied for veteran’s benefits, but he was ineligible because he was a
conscientious objector. Robinson sued, arguing that this was a violation of equal protection.
However, the statute said that the administrator’s determinations with regard to law or fact
concerning a claim for benefits are final. Congress probably thought that this statement should be
beneficial to veterans because the court then will review the contemporaneous written explanation
of the denial of benefits.
o The court held that there is no preclusion of judicial review because here, this case does not
arise under the act. Robinson is raising a constitutional challenge to the statute itself – that
conscientious objectors are ineligible for benefits – not to the administrator’s findings.
Sometimes, a statute does not preclude review but just channels it in a certain way.
o Weinburger v. Salfi: The Social Security Act allows widows and widowers to get social
security benefits as long as the couple had been married for a minimum amount of time.
Section 405(h) of the act expressly barred suits under federal question jurisdiction – saying
that the Secretary’s actions are reviewable, but there is a specific process that a person must
follow.
 This case is distinguishable from Johnson v. Robinson because in that case, Robinson
was precluded from bringing a case anywhere to review the administrator’s findings
of fact and law. Here, the plaintiff just has to follow a specific procedure.
 The court finds that Congress can channel judicial review by setting out specific
procedures.
o Note that today the statute in Johnson v. Robinson is different. You can now appeal findings
of Veteran’s Court to an Article III Court, but you have to jump through hoops to get there.
This is almost more restrictive than before.
There is no judicial review available where the agency action is committed to agency discretion by
law.
o To determine in the action is committed to agency discretion, the court looks to whether
there is any law to apply.
 If there is no law to apply, then there is no meaningful standard by which to judge
the agency action.
o Webster v. Doe: Doe was fired from the CIA. The reasoning official given for his firing was
that he posed a national security threat because he was a homosexual. Under the statute, the
Director of the CIA has discretion to terminate any officer where he deems it necessary or
advisable in the interests of the US. Doe sues, claiming that the decision and procedures used
were arbitrary and capricious and that his constitutional rights were violated.
 The statute itself does not preclude review.
 However, the court finds that this decision was committed to the Director’s
discretion by law.
 There was no law to apply because the Director only has to find that it was
“deemed necessary” for national security. Therefore, the only reason the
firing would be against the statute would be if the Director didn’t actually
deem it necessary for national security.
 The court emphasizes the special position of the CIA. Maybe the CIA is special in this
regard?
 Note that this presents an issue with the nondelegation doctrine. The statute is so
broad that there is no law to apply, which indicates that there is no intelligible
principle to apply.
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
o
However, the Director’s power here is very narrow when compared to the
issue in American Trucking.
 Note that the constitutional claims are reviewable, just as in Johnson v. Robinson.
Congress must be incredibly explicit in forbidding the review of constitutional
claims.
 Scalia, in his dissent, argues that the arbitrary and capricious standard applies here.
An agency’s decision to not act (i.e. to fail to bring an enforcement action) is presumptively
unreviewable because inaction is something that is committed to agency discretion
 Heckler v. Chaney: Prisoners on death row brought an action against the FDA for
failing to act regarding the use of drugs for execution. The prisoners argued that the
FDA can only approve drugs that are safe – drugs used to kill people cannot be
considered safe. The FDA’s reasoning for failing to take action is that they do not
normally police off label drug uses, and this is not a public health risk.
 The court first looks to the FDA statute, which provides no guidance on FDA
inaction.
 The court next looks to reasons why judicial review of agency action would
be inappropriate:
o There is no law to apply and no process for review.
o This would involve a complicated balancing of factors dealing with
agency expertise (i.e. prioritization).
o The agency is not using its power coercively.
o Inaction is similar to prosecutorial discretion to not bring a case.
 The court holds that there is a presumption of non-reviewability of agency
inaction.
o But Congress could put something in the organic statute to take
this presumption away.
o This presumption could be rebutted. It is unclear how.
 Marshall, concurring: APA defines agency action as failure to act, which
would suggest that the authors of the APA thought that failure to act was
“action.” He thinks that agency inaction should be presumptively
reviewable. But ultimately he concurs in judgment because if the agency
does not act, it is usually because it has decided that taking action is not
worth the cost.
o But what about if the agency fails to take action because of bribery?
This should be reviewable. Under the majority’s opinion, this
would not be reviewable. But the court probably won’t read it that
strictly.
 Massachusetts v. EPA: Agency failure to act is reviewable in this case because agency
had declined to take a rulemaking action as opposed to an enforcement action.
Failure to initiate a rulemaking procedure is reviewable because (1) rulemaking
occurs less frequently, so it isn’t as much of a burden, and (2) rulemaking actions
are more likely to turn on an issue of law (in this case, it was whether the agency
had the legal authority to issue the rule).
 Agency’s second argument, once it was determined that the agency had the
authority to issue the rule, was that it made the discretionary decision not
to issue the rule. The court said that the agency had considered factors that
were not statutorily relevant.
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
o
Note: Supreme Court never mentions Chevron… Sometimes the Court just
ignores it for no apparent reason. This was plainly a Chevron question…
 Norton v. Southern Utah Wilderness Alliance: An agency cannot be compelled to act
unless there is some non-discretionary discrete (separate/distinct) act. Court
cannot tell an agency how to comply with some grand programmatic instruction
(here: preserve the wilderness). The statutory obligation is to maintain the
wilderness, not to ban off road vehicles. So the Court cannot order them to ban off
road vehicles on the grounds that by not doing so, they are not “maintaining the
wilderness.”
 Bad side to this: It’s not up to the agency, not congress, as to how they will
comply with their broad statutory mandate assigned to them by congress.
The court seems to say that if an agency’s reason for not taking action is that they have
prioritized this as a low issue, that is unreviewable.
FINALITY & RIPENESS
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The ripeness question must be decided using a two step test:
o First, is this issue fit for review (the fitness prong)?
 This has to be a purely legal issue. A purely legal issue does not need further
particularized factual development.
 This must be a final decision. In order to be final, the agency must either be done
with the rulemaking or adjudication process. Being accused of something is not
final, nor is a request for comments.
 This must be an immediate decision. A decision is immediate if the parties are
required to do something the day the rule becomes effective.
o Second, what is the hardship to the private parties if the court withholds review (the
hardship prong)?
Abbott Labs. v. Gardner: FDCA requires manufacturers to print generic (“Established”) name of drugs
along with brand name of drugs on bottle, but statute didn’t settle how often this needed to be done.
FDA issued rule saying that “every time” the brand name appeared, the generic name needs to appear
as well. Drug manufacturers brought suit before this had been enforced against anyone. The
government argued that (1) the statute precludes review, and that (2) the issue was not ripe for
review.
o First the court holds that the statute does not preclude review because negative implication
is not enough. Statutes listed specific instances in which regulations could be reviewed in the
pre-enforcement context, so government thought that this was a negative implication that
there couldn’t be pre-enforcement review outside of these situations.
 There is a presumption of reviewability of agency action. If the statute expressly
prohibited pre-enforcement review, then the inquiry would end here.
 Pre-enforcement review is more costly for the government and less favorable to the
government. But it is better for the private parties.
o The court analyzes the ripeness of this case using the two part test:
 The issue is fit for review.
 This is a purely legal issue because we do not need individualized facts.
 This is a final decision because the rulemaking process is over.
 This is an immediate decision because the companies are required to take
action immediately or otherwise be in noncompliance with the law.
 There is a great hardship to the pharmaceutical companies.
 It is expensive reprint labels.
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
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These companies depend on the trust of the public, so waiting for an
enforcement proceeding would damage that trust.
Toilet Goods v. Gardner: The FDA issued a regulation requiring that color-additive manufacturers
allow FDA officials to inspect plants where color-additives were manufactured. Without free access
to inspect, the FDA would suspend the license to make color additives. The court applies the two
prong test and determines that this issue is not ripe for review.
o This issue is not fit for review:
 This is possibly a purely legal issue, but that will depend on how the plaintiffs frame
the issue.
 This is a final decision because the rulemaking process is complete.
 There is no immediacy however, because on the day the regulation goes into effect,
the manufacturers do not have to change any practice or do anything.
o There is also less hardship here than in Abbott Labs.
 Here, the worst that could happen is that their license gets suspended pending the
outcome of the litigation. (I’m not sure if I agree with this – this seems like a
hardship.)
o The court appears to put more weight on the immediacy factor.
o The manufacturers can always try to get a preliminary injunction.
o Dissent: He is concerned that impact will be that anytime the agency issues an important
rule, it will take years for it to go into effect, because those regulated can get preliminary
injunction against enforcement of the rule while the legislation was pending, and the rule
might be necessary for the protection of the public. (But public interest is a factor in getting a
preliminary injunction.)
EXHAUSTION
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The general rule is that no one is entitled to judicial relief for supposed or threatened injury before
the prescribed remedies are exhausted.
o This requirement comes from APA 704.
o But the court can grant an exception.
Myers v. Bethlehem Shipbuilding: NLRB said that Bethlehem was committing unfair labor practices.
Bethlehem tried to enjoin the administrative proceedings against it on the grounds that the NLRB did
not have jurisdiction over it (it only has jurisdiction over companies engaged in interstate
commerce). The district court holds that it does not have the power to enjoin the proceedings
because Bethlehem has to exhaust all of its administrative remedies.
o Note: this happens all the time in civil procedure. The court where you are sued decides if
they have jurisdiction, and then you have to wait for the final decision to appeal.
McKart v. US: McKart was originally exempt from selective service because he was classified as a 4-A.
He was later reclassified as I-A and subject to the draft. With the issuance of the new classification, he
could have appealed to the agency, but instead he did nothing. When he didn’t show up for his
inspection, they ordered him to, and then when he didn’t again they pressed criminal charges. His
defense was that he should have been exempt, so he didn’t have to show up.
o When he was prosecuted, there was no longer an administrative procedure he could have
taken advantage of (at this point it is final – time limit on his ability to appeal) (“You should
have raised it then. You are barred from raising it now.”)
o The Court notes that there are two kinds of exhaustion cases:
 Those brought prior to enforcement proceedings being finished. First you exhaust
your administrative remedies, and then you get judicial review.
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Those brought after you no longer have an administrative remedy. If you had a
remedy available in the past and it wasn’t exhausted, even though it’s now barred,
the exhaustion rule applies.
o Reasons for exhaustion remedies: Efficiency, Expertise, Respects agency autonomy, Might
avoid judicial review altogether, Avoids weakening of the agency process, Allows agency to
develop the facts and record, Lets the agency correct its own errors.
o Reasons for excepting the rule in this case: Exhaustion rule is very harsh, No expertise
involved in interpreting the statute (but this is a pre-Chevron case). People will probably go
to the agency first, even despite this ruling, because then they get a second bite at the apple
(agency then judicial review) and because they don’t want to risk the criminal punishment
o This case shows that exhaustion is not a strict doctrine like finality. It is more mushy. It is up
to the court to balance the factors.
In cases where the APA applies, there is no exhaustion rule, only the finality rule.
o Darby v. Cisneros: The Department of Housing and Urban Affairs can sanction persons who
misuse its benefit programs by barring them from further participation in the programs. An
ALJ found a person to have violated certain eligibility requirements for mortgage insurance
and issued an initial decision and order barring the person from further participation in the
program for 18 months. HUD’s regulations stated that “[t]he hearing officer’s determination
shall be final unless the Secretary or the Secretary’s designee, within 30 days of receipt of a
request, decides as a matter of discretion to review the finding of the hearing officer. . . . Any
party may request such a review in writing within 15 days of receipt of the hearing officer’s
determination.” The person did not seek a review by the Secretary or his designee within 15
days; instead, he filed suit in district court seeking judicial review of the ALJ’s decision under
the APA.
 If the APA applies, the issue is whether the decision is final.
 An otherwise final ALJ decision is actually not final if both of the following are
present:
 The regulation requires appeal, and
 The agency says that while the appeal is pending, the rule is inoperative.
 Applying APA 704’s language, the Court noted that there was no express statutory
requirement for the person to administratively appeal the ALJ’s decision.
 First, the regulation did not require appeal. The agency’s regulation may
have required the losing party to ask for an appeal, but the decision
whether there would be an appeal rested in the discretion of the Secretary
(or his designee).
 Second, the regulation did not automatically stay the agency action pending
decision of the appeal. The bar on the person’s participation in the program
would have remained in effect while the person sought appeal.
o US v. Menendez: The agency was going to fine Menendez for shrimping without using a turtle
excluder device. He hired a lawyer to represent him in the administrative proceeding.
Menendez alleges that the ALJ did not like his lawyer, so he refused to receive papers from
the lawyer. This led to a default judgment against Menendez. Menendez didn’t appeal this.
The government then brings an enforcement action against him in court to recover the fine.
Menendez claims that the government violated his due process rights. The government says
that he should have exhausted his administrative remedies, that he did not, and thus that
this claim is barred.
 The court holds here that these claims are not barred by the exhaustion doctrine.

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Looking at APA 703 and 704 court notes that a person has the option of skipping
administrative appeal and instead going to judicial review under the APA “unless
otherwise required by [the organic] statute.”
Questions to look at for exhaustion:
o Is this an APA case? If so, look to Cisneros.
o If not, use the exhaustion rule.
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STANDING
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If you are a party to an agency adjudication and lose, you have standing to challenge that.
If you are directly regulated by a rule that the agency has made, you have standing to challenge the
rule.
But regulations often affect people who are not the regulated parties (others have interest in the
matter).
TVA Test (old law): whether there was a “legal right” being invaded.
o Being subjected to competition by the federal government is not in contravention of a legal
right
o There is no legal right to be free of competition.
o Tennessee Power Company not a proper party, so Court won’t decide the issue on the merits.
o Criticism of the Legal Rights test: it’s all intertwined with the merits of the case, so the Court
had to look at the merits without deciding them.
ADPSO v. Camp: The new test is the injury in fact and zone of interest test.
o Injury in fact: Not asking whether there’s a right to be protected from competition; any
actual injury; different from a legal right
 Loss of money is an injury in fact.
 Injury in fact could be economic, recreational, environmental, conservational,
aesthetic, spiritual
 Must change your life in some detrimental way
 More of a societal, rather than legal, question
 This goes beyond common law concepts
o Zone of interest: Are you one of the people the statute was concerned with?
 This is not a constitutional requirement.
 The zone of interest test can kind of be found in APA 702, where it states that an
aggrieved person” is a person suffering legal wrong because of agency action, or
aggrieved within the meaning of the relevant statute.
 Note: Congress could eliminate this requirement if they wanted to.
 The court apparently thinks that it was at least arguable that a law concerned with
banking was passed to protect other entities from competition
Under the injury in fact prong (Article III standing):
o Sierra Club v. Morton: US Forest Service contracted out Walt Disney to use Mineral King
Valley, build ski resorts, hotels, etc. But they’d have to build a road so people could get there.
Sierra Club brings suit: claimed that it violated a statute forbidding putting a road through a
national park just so that people could get to the other side. There is an aesthetic or
environmental injury in fact here but the plaintiffs are not the ones who suffer from it.
 Need to show that someone had actually used the facilities, and they themselves
must be injured – Sierra Club didn’t name anyone in particular who would suffer
 Court said they could have alleged individual interest just to get standing, and then
could have alleged a public interest once the case is on the merits for remedies
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Schlesinger v. Reservists Comm. To Stop the War: Committee found that congressmen held
position in the Army reserves – thought this violated separation of powers. The court holds
that the committee does not have standing. This is a generalized grievance (suffered in the
same way by everyone). But basically this means that no one has standing. If everyone is
suffering, that’s a signal that the political process can be trusted to take care of it. In practice,
this might or might not work.
Under the zone of interest prong (prudential standing):
o Air Courier Conference of America v. American Postal Workers Union: Postal Service
permitted by statute to make an exception to the postal monopoly where the public interest
so requires. Made an exception for extremely urgent letters, and private carriers used this
exception to engage in international remailing. AMWU was upset by this exception, because
they don’t think the public interest requires this in this case – thought it was arbitrary and
capricious to conclude that the public interest requires it in this case.
 There is an economic injury in fact here, as some jobs were lost.
 Zone of interest: Postal workers are not within the zone of interest because at the
time the statute was passed, there were no federal postal workers. The goal of the
statute was to protect postal revenues (otherwise private carriers would take over
only the profitable routes and the public service would be stuck with the
unprofitable routes, which would put them out of business) – monopoly was good in
this case
o In order to be within the zone of interest, you must be an intended, not an incidental,
beneficiary of the statute.
 For this reason employees have generally been denied standing to enforce
competition laws, even where businesses may have standing.
o National Credit Union Adm’n v. First National Bank & Trust Co.: FCU Act requires FCUs get
charter from NCUA. Membership shall be limited to groups having a common bond of
occupation or association (same employer, church, etc.). FCUA said “everything’s getting
bigger, so to ensure safety of credit unions, they must be big enough.” “Groups” used in
statute – meaning you must join a Credit union as a group (not as an individual) but you can
have multiple groups within a credit union. ATT&T credit union allowed many other groups
to join their credit union. Banks sued – said this was an incorrect interpretation of the FCUA.
 There is Article III standing because people left the bank for the credit union
(economic injury in fact).
 There is a two part test to determine prudential standing under the zone of interest
test:
 First, the court must discern interests intended to be protected by the
statute, and
 Second, the court must then inquire whether plaintiff’s interests are among
these intended.
 Under this test:
 Interests protected by the statute: Common bond requirement was meant
to protect the unions, not to prevent competition or protect the banks.
Meant to limit the market of the credit unions.
 Bank’s interest: banks are also sharing interest in limiting the markets of
the credit unions (as competitors of credit unions, it protects their
business) – so they do have standing
o
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Dissent: Thinks this destroys the zone of interest requirement. Their only interest is
enforcing the statute, so anyone who has Art. III standing will automatically have
Zone standing.
 Court’s response: has to be the “right” relationship to the injury in fact
o This is just semantics. Respondents (banks) here are more than
mere incidental beneficiaries of §109’s effects on competition
o Intended beneficiaries are sufficient to confer standing (they’re
definitely within Zone), but it’s not necessary
o “Mere incidental” beneficiaries aren’t enough (but you can’t be so
far removed that there couldn’t possibly be intention to sue)
o Think that Banks are in between this range, so they count as within
the Zone
 There is tension between this case and last case, though Court denies it has
obliterated Zone test.
Associational standing:
o Washington Apple: When does an association have prudential standing?
 (1) When members would otherwise have standing
 (2) Interests it seeks to protect are germane to the organization’s purpose
 (3) Where relief requested doesn’t require participation of the individual member
o (2) and (3) rarely are contested
 (2): Org wouldn’t contest something that wasn’t germane to its interest
 (3): Can’t seek monetary relief anyway under the APA
o Also, an organization may sometimes have standing in its own right.
 Havens Realty v. Coleman: Racial steering case. HOME, nonprofit org, wanted
standing. Granted standing on its own right – its purpose was to ensure fair housing,
so with these practices it has to spend more money and time
 Tester even had standing: Still had injury to his legal rights
 Haven’t thrown out legal rights test for injury in fact – both are still around
 Under this reasoning, shouldn’t Sierra Club have had standing?
o What’s the actual rule?
 If you’re a business, and your claim is “my competitors are being regulated
insufficiently strictly” – invariably there’s standing
 Business don’t always win standing cases though
 If you’re an employee, environmental group, animal rights group, etc – those are
required to show that Congress intended to benefit them.

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ATTACK SHEET
1.
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Is judicial review available?
a. Is review precluded?
i. Does the statute itself preclude or limit review?
1. A court will try to interpret a statute in a way that does not preclude judicial
review, particularly where there are constitutional issues. Johnson v.
Robinson.
2. The preclusion of review is generally disfavored.
3. Sometimes, a statute does not preclude review but just channels it in a
certain way. This is usually OK.
ii. There is no judicial review available where the agency action is committed to agency
discretion by law.
iii. An agency’s decision to not act (i.e. to fail to bring an enforcement action) is
presumptively unreviewable because inaction is something that is committed to
agency discretion.
b. Is this issue ripe for review?
i. The ripeness question must be decided using a two step test:
1. First, is this issue fit for review (the fitness prong)?
a. This has to be a purely legal issue. A purely legal issue does not
need further particularized factual development.
b. This must be a final decision. In order to be final, the agency must
either be done with the rulemaking or adjudication process. Being
accused of something is not final, nor is a request for comments.
c. This must be an immediate decision. A decision is immediate if the
parties are required to do something the day the rule becomes
effective.
2. Second, what is the hardship to the private parties if the court withholds
review (the hardship prong)?
ii. The court appears to put more weight on the immediacy factor.
c. Is there an exhaustion (or finality for APA cases) issue?
i. The general rule is that no one is entitled to judicial relief for supposed or
threatened injury before the prescribed remedies are exhausted.
ii. But courts can grant an exception.
iii. In cases where the APA applies, there is no exhaustion rule, only the finality rule.
1. Is the decision final? If it is, you need to go through administrative appeals
before getting to judicial review.
2. An otherwise final ALJ decision is actually not final if both of the following
are present (thus you can get judicial review immediately):
a. The regulation requires appeal, and
b. The agency says that while the appeal is pending, the rule is
inoperative.
d. Does the plaintiff have standing?
i. Article III standing (injury in fact test).
1. Not asking whether there’s a right to be protected from competition; any
actual injury; different from a legal right
2. Loss of money is an injury in fact.
3. Injury in fact could be economic, recreational, environmental,
conservational, aesthetic, spiritual
a. Must change your life in some detrimental way
b. More of a societal, rather than legal, question
4. This goes beyond common law concepts.
ii. Prudential standing (zone of interest test)
1. There is a two part test to determine prudential standing under the zone of
interest test:
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a.
2.
First, the court must discern interests intended to be protected by
the statute, and
b. Second, the court must then inquire whether plaintiff’s interests
are among these intended.
iii. Associational standing
1. Remember that an organization may sometimes have standing in its own
right.
2. Washington Apple: When does an association have prudential standing?
a. (1) When members would otherwise have standing
b. (2) Interests it seeks to protect are germane to the organization’s
purpose
c. (3) Where relief requested doesn’t require participation of the
individual member
3. If you’re a business, and your claim is “my competitors are being regulated
insufficiently strictly” – invariably there’s standing
a. Business don’t always win standing cases though
4. If you’re an employee, environmental group, animal rights group, etc –
those are required to show that Congress intended to benefit them.
What is the scope of the judicial review?
a. Does this review concern issues of fact?
i. Questions of fact are reviewed with deference.
ii. In the context of rulemaking, APA 706(2)(a) – the arbitrary and capricious standard
– and not APA 706(2)(e) – the substantial evidence standard – applies.
1. But those tests are basically the same thing.
2. Note that the agency’s rulemaking can still be overruled under State Farm if
the agency does not draw a rational connection between the facts found and
the choice made.
3. Whether or not a court believes that these two tests are the same, the
bottom line is this: there is always a deferential standard regarding an
agency’s finding of fact. The question is ask is whether a reasonable person
would come to this conclusion.
iii. When the court is reviewing factual findings that turn almost exclusively on
credibility:
1. If the Board upholds the ALJ, it will be very difficult for the court to then
overturn both the Board and the ALJ.
2. Even if the ALJ believes one witness and does not believe seven witnesses, if
the Board upholds, the court should also uphold because it is unlikely that
two separate fact finders would not have substantial evidence.
a. Though sometimes a court does overturn a decision based on these
facts.
3. Note that the Board is not required to defer to the ALJ on credibility, but the
court may set the Board’s decision aside if it does not defer to the ALJ.
b. Does this review concern issues of law?
i. Questions of law are also reviewed with deference.
ii. Chevron deference test:
1. Step Zero: An agency interpretation qualifies for Chevron deference when it
appears that Congress has delegated authority to the agency generally to
make rules, and that the agency interpretation claiming deference was
promulgated in the exercise of that authority. (Mead)
a. Apply the Chevron test to rules developed during formal
adjudication.
b. Apply the Chevron test to rules developed during formal/informal
rulemaking – probably, but must be delegated such rulemaking
authority (Mead test for Chevron step zero).
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c.
3.
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Opinion letters, policy statements, interpretative rules, and other
rulings that do not have force and effect of law do not get Chevron
deference but instead get Skidmore deference.
i. But note that the court has given Chevron deference to an
agency even to informal statements of interpretation – but
there were three separate statements of interpretation and
all were consistent.
d. Ultimately, how you apply Chevron will depend on why you think
Chevron deference is important. I intend to use the delegation
theory.
2. Step One: First, has congress spoken on this issue? If so, the review ends
here. The agency has to do what congress says.
3. Step Two: However, if congress is silent or ambiguous on the issue, is the
agency’s decision based on a permissible construction of the statute? This
construction just has to be reasonable – it does not have to be the best
answer.
iii. When does Chevron not apply?
1. Where the agency has no rulemaking authority.
2. Where stare decisis applies to a contrary interpretation of the organic
statute.
a. Note: May be overruled!
3. Where the agency has changed its own interpretation, it still gets Chevron
deference. It used to be one factor in assessing the weight that the agency’s
position is due. But now inconsistency is not a factor.
iv. If Chevon doesn’t apply, Skidmore applies.
Assuming the courts get to review the agency action, what kind of action are we reviewing?
a. Rulemaking
i. Agencies have the power to make both procedural and substantive rules. (National
Petroleum Refiners Association v. FTC)
ii. The general rule is that an agency can pick between rulemaking or adjudication to
promulgate a rule. However, there are some instances where the agency doesn’t
have authority to pick:
1. Where an agency has a rule that dictates how a rule must be promulgated, it
must follow its own rules.
2. The court held that rulemaking in Allison v. Block was obligatory because
this was a dire circumstance that Congress intended to be relieved
immediately.
3. Agencies can issue policy guidance where Congress has not specifically
required rulemaking. However, the court interpreted an arguably
ambiguous statute to require rulemaking. Therefore, the agency could not
just publish policy statements.
iii. Courts will almost always approve of setting a rule via rulemaking procedures
where the issue is general in nature.
1. There isn’t a case where the court has held that adjudication as opposed to
rulemaking is required – even where a statute requires it.
iv. Often an agency can choose between formal and informal rulemaking.
1. Plaintiffs tend to attack agency rules on procedural as opposed to
substantive grounds because courts are reluctant to say that a given rule is
substantively arbitrary or capricious.
2. After comments are considered, the agency is allowed to promulgate the
rule incorporating comments without an additional round of comments as
long as the final rule is a logical outgrowth of the original rule in light of the
comments.
v. Summary of an agency’s duty in carrying out informal rulemaking procedures:
1. The agency has to give notice as to what evidence they intend to rely on,
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2.
b.
The agency has to respond to comments that raise a vital question of cogent
materiality,
3. The agency has to give a rational connection between the facts found and
the choice made and confront contrary evidence,
4. The agency has to consider alternative options that are within the ambit of
the standard and those that are cogent and salient alternatives suggested in
the comments, and
5. If the agency is changing its mind, it has to give a reasoned analysis for the
new policy and should acknowledge the old policy (but it doesn’t have to
say which its changing its mind).
vi. Agencies do not have to use even informal rulemaking procedures for
“interpretative” as opposed to legislative rules.
Adjudication
i. Is process due?
1. Process is due whenever the government is taking away a person’s life,
liberty, or property.
2. Process is due in individual situations – not when the government affects
rights of multiple people.
3. Property:
a. States create property, and the Constitution protects it. If there is
no property created, there is no process due. States could change
the nature of property by changing the law.
b. If we compare Roth and Sinderman it looks like the state can
choose if it wants to give you a property interest in your job simply
by giving tenure/de facto tenure or not.
4. The common definition of liberty is the freedom from restraint on
movement – such as putting someone in jail.
a. But according to Roth, the definition should be much broader –
such as the right of individuals to contract, to have family, to
acquire useful knowledge, to marry, to establish a home, to
worship, and to generally enjoy those privileges recognized as
essential to the orderly pursuit of happiness.
ii. What kind/how much process is due?
1. Eldridge balancing test:
a. Private interest
b. Public Interest
c. Risk of error
2. General rule: tenured public employees have a right to “minimal due
process” prior to termination defined as:
a. Oral or written notice of the charges against them,
b. An explanation of the employer’s evidence, and
c. An opportunity to respond.
3. Alternatives to balancing test:
a. Traditional view
b. Fundamental fairness/natural rights
4. One thing is certain: how much process is due is not a fixed idea. Due
process is different for different things that the government tries to take
away.
5. The Constitution provides minimum requirements of due process. But the
government is free to give people more due process than that. Look to:
a. First – the APA. For example, it provides that if the agency’s organic
statute says that there is a right to a hearing, it must be provided.
i. Note: the APA itself never requires a hearing. It just tells
agencies what to do once a hearing is required.
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c.
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ii. When the organic statute requires a hearing, the APA says
that the hearing itself is a right.
iii. The important language is that Section 554 applies “in
every case of adjudication required by statute.”
b. Second – the organic statute.
i. Sections 556 and 557 are only triggered if the organic
statute says “on the record after opportunity for an agency
hearing.” (Magic words.)
iii. Summary of evidence in administrative hearings:
1. Usually very informal,
2. Almost always no adherence to the federal rules of evidence unless
required to by statute,
3. Hearsay can come in and be the sole basis of the decision,
4. But consider the factors in Perales – the evidence must be reliable and the
plaintiff should have the chance to subpoena the doctors that wrote the
hearsay evidence.
Are there bureaucracy issues?
i. Generally, agencies can limit access to a hearing (Heckler), cut off access to hearings
entirely (Air Line Pilots), and use evidentiary rules to limit access to a hearing
(Weinberger).
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