MARIANNE M. JENNINGS
7th Ed.
Its Legal, Ethical, and
Global Environment
Chapter 6
Administrative Law
Copyright ©2006 by West Legal Studies in Business
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What are Administrative Agencies?
• Non-legislative/Non-judicial Body.
– Exist at every level of government.
– They make, interpret, and enforce
regulations.
– Legislatures pass enabling acts.
• Sets up basic law, purpose, penalties.
• Sets up administrative agencies to handle
the enforcement.
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What are Administrative Agencies?
• Examples of federal administrative
agencies.
– Department of Agriculture.
– Department of the Interior.
– Federal Maritime Commission.
– Veterans Administration.
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Role of Administrative Agencies
• Protect Small Interests and Small Business
– Examples: Corrective advertising, consumer
complaints.
• Provide for More Rapid Enforcement and
Relief.
– Do not have to use court system for enforcement.
– Licensing and permits can be done quickly.
• Achieve Social Goals.
– Examples: Environmental Protection Agency;
Federal Home Loan Bank Board; Resolution
Trust Corporation
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Role of Administrative Agencies
• Specialization.
– Needed to deal with complexities of
legislation.
– Agencies can hire the necessary
expertise.
• Examples: Environmental, occupational
safety, nuclear, securities—regulation in
these areas requires special expertise.
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Laws Governing Administrative
Agencies
• Administrative Procedures Act (APA).
– Established uniform procedures for
agencies to follow in promulgating rules.
– Other acts have separate names but are
amendments to the APA.
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Laws Governing Administrative
Agencies
• Freedom of Information Act (FOIA).
– APA amendment passed in 1966.
– Purpose was to allow public access to agency
records.
– Types of information required to be published.
•
•
•
•
•
Location of offices.
Names of responsible individuals.
Rules and regulations.
Reports.
Policy statements.
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Laws Governing Administrative
Agencies
• Freedom of Information Act (FOIA).
– Types of information not published.
• Hearing orders.
• Non-published interpretations.
• Personnel policies and procedures.
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Laws Governing Administrative
Agencies
• Freedom of Information Act (FOIA).
– Unpublished information can be
obtained through an FOIA request.
• Must be written.
• Must describe the information and/or
documents sought.
• Agency can charge for time and copy costs.
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Laws Governing Administrative
Agencies
• Freedom of Information Act (FOIA).
– Wrongful refusal to supply information
allows requester to bring suit and obtain
court order for release as well as
recovering cost.
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Laws Governing Administrative
Agencies
• Freedom of Information Act (FOIA).
– Exemptions from disclosure:
 National defense or foreign
policy matter
 Internal personnel rules of
the agency
 Statutorily protected
information
 Trade secrets
 Inter- and intra-agency
memos
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 Personnel and medical
files
 Records of
investigations
 Banking audits
 Geological
information on well
sites
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Laws Governing Administrative
Agencies
• Federal Privacy Act.
– Passed in 1974 as an APA amendment .
– Intended to cut down on the pervasive
and casual exchange of information
about individuals between and among
agencies.
– Agencies cannot obtain individuals’
records from other agencies without the
consent of that person.
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Laws Governing Administrative
Agencies
• Government in Sunshine Act.
– Open meeting law passed in 1976.
• Federal Register Act.
– Authorizes a formal record of agency actions
called the Federal Register.
• Regulatory Flexibility Act.
– Requires publication of proposed rulemaking
in trade publications.
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Functions of Administrative
Agencies
• Promulgating Regulations—
Business Input:
– Formal rulemaking.
• Congress passes Enabling Act.
• Agency researches a problem.
• Proposed regulations.
• Public comment period.
• Action on rules is taken.
• Challenges to adopted agency rules.
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Functions of Administrative
Agencies
• Case 6.1 U.S. v. Sun Diamond
Growers of California (1999).
– Defendant charged with making illegal
gifts to then Secretary of Agriculture
Mike Espy.
– Defendant was convicted and appealed.
– Held: Reversed. There must be a link
between the gift and some official act.
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Functions of Administrative
Agencies
• Proactive Business Strategies in
Regulation:
– Sunset laws.
• Agency created for a limited time.
• Must justify its existence within that time.
– Zero-base budgeting.
• Ongoing budget for agency is not assumed.
• Must justify its budget each year.
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Functions of Administrative
Agencies
• Case 6.2 Motor Vehicles Manufacturers
Association v. State Farm Mutual
Insurance Co. (1983).
– What was done with the regulation to result in
this Judicial decision?
• Case 6.3 Corn Products v. Dept. of
H.E.W. and F.D.A. (1970)
– What are federal standards for peanut butter?
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Functions of Administrative
Agencies
• Case 6.4 San Diego Air Sports Center,
Inc. v. Federal Aviation Administration
(1989).
• Was the letter an attempt to promulgate
regulation?
• Case 6.5 Rubin v. Coors Brewing
Company (1995).
• To survive a First Amendment challenge, what
must a regulation of commercial speech
accomplish?
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Enforcement Actions
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Enforcement Actions
• Licensing and Inspection.
– Enforcement and Inspection.
• Up-front approval.
• Some checks imposed.
– Enforcement by inspection.
• Health Code violation, Occupational Safety
and Health Administration (OSHA) safety
inspections.
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Enforcement Actions
• Prosecution of Business.
– Enforcement by prosecution.
• Complaint is filed.
• Injunction can be obtained for this period.
– Consent decree.
• Like a plea bargain in a criminal case.
• Like a nolo contendere plea in a criminal
case.
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Enforcement Actions
• Prosecution of Business.
– Penalties:
• Fines.
• Injunctions.
• Repayment to buyers.
• Corrective advertising.
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Enforcement Actions
• Prosecution of Business.
– Can go to hearing without an agreements.
•
•
•
•
•
•
Administrative law judge (ALJ) hears the case.
ALJ is like a judge at trial.
Intervenors can appear in the case.
Rules of evidence are relaxed.
Must allow for due process
.
Exhaust administrative authority before appeal.
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Enforcement Actions
• Prosecution and Business.
– Go to court of appeals.
• Appeals of decisions go to agency heads
exhausting administrative authority (unless
it would be futile) before court or appeals
will consider.
• State court appeals also go to court of
appeals; however, some states require new
trail in state trial court.
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Administrative Agencies in the
International Market
• The United States is Heavily
Regulated.
– Some businesses have argued that
regulations hinders them in the
international marketplace.
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