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Professor Robert Butkin Administrative Law, Fall 2013

Administrative Law Paradigm

I. Is the Congressional delegation of powers to the administrative agency constitutional?

II. Has Congress unconstitutionally provided for the appointment and/or removal of officers of

the agency?

III. Did the agency follow the correct procedures when taking the action that it did?

IV. If the agency decision involved findings of fact, were the findings of fact supported by

substantial evidence?

V. If the agency decision involved an interpretation of a statute, will the agencys interpretation

be upheld if challenged?

VI. If the agency decision involved an interpretation of an agency rule, will the agencys

interpretation be upheld if challenged?

VII. If the agency decision involved agency discretion and policy making, will the agency decision be upheld if challenged?

VIII. Are there any issues relating to timing and availability of judicial review that would preclude a challenge to agency action by the parties seeking to challenge it? (Finality, standing, ripeness, exhaustion of remedies, etc.)

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Administrative Law Outline

1. Constitutional challenges to the delegation from Congress or to the structure of the agency

a. Article I: Has Congress unconstitutionally delegated its legislative power to an agency?

b. Article II: Has Congress unconstitutionally provided for the appointment of agency officers in violation of Article II, Sec. 2, Clause 2?

c. Article II: Has Congress unconstitutionally provided for the removal of agency officers in violation of the U.S. Constitution?

d. Article III: Has Congress unconstitutionally delegated the judicial power to agencies in violation of Article III?

2. Did agency follow correct procedures? 706 (2) (D)?

a. Check enabling statute to see if it prescribes procedures in addition to or in place of those prescribed by APA

b. Check agency procedural rules to see if they provide procedures in addition to those provided by enabling statute and APA.

c. Check 5th amendment procedural due process clause and case law precedent under the 5 th and 14 th amendments to see if agency failed to follow procedures mandated by the US Constitution.

i. PDP requirements only applies if government action has deprived a “person” of a “life, liberty, or property” interest. Need to consult case law in particular to see if agency action has deprived an individual of “life, liberty, or property.”

ii. Even if agency action has deprived a person of life, liberty, or property, agency action will survive challenge if agency provided procedural protections as required by the US Constitution.

iii. Remember that pdp clause typically does not apply to rulemaking , and applies only to adjudication. (Londoner, Bi-Metallic) An exception would be a case that is a statutory rule pursuant to APA, § 551 (4), but a constitutional order. This could be the situation if the agency is involved in a ratemaking proceeding (statutorily defined as a “rule”), which involves a fact specific inquiry targeting one or a small number of railroads or pipelines.

d. Remember that there is often a threshold issue of how agency action should be

classified (formal rulemaking, informal rulemaking, formal adjudication, informal adjudication?) which must be addressed before you can figure out if agency complied with the correct procedural requirements)

e. Formal RM (APA 556, 557)

i. Very heavy presumption that “magic words” are necessary to trigger requirements of formal rulemaking. See Florida East Coast Ry

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ii. Even if magic words necessary to trigger requirements for procedural

rulemaking are absent, need to determine what Congress meant when it specifies procedures in an enabling statute.

f. Formal Adjudication (APA 554, 556, 557)

i. There is no US Supreme Court case that has decided whether magic words

are necessary to trigger requirements of formal adjudication.

ii. Be familiar with the different approaches the US Courts of Appeals have taken to issue of whether the magic words are necessary to trigger formal ADJ.

iii. Even if words in enabling statute are not sufficient to trigger requirements of formal adjudication, need to determine what Congress meant if it specifies procedures in an enabling statute.

g. Informal rulemaking (APA 553)

i. APA 553 contains procedural requirements for notice, hearing, and concise general statement of basis and purpose.

ii. Keep in mind that courts have added to the “notice” requirement through judicial development of “expanded notice” and “logical outgrowth” doctrines. Familiarize yourself with purpose of these doctrines and how they apply.

iii. Courts have added to statutory requirements of “concise statement of basis and purpose” through court decisions requiring agencies to address, when adopting the rule, “important” comments made during the rulemaking proceedings or comments which, if true, would have led agency to change its approach.

iv. Remember VT Yankee: US Supreme court said federal courts can’t add additional procedural requirements to the statutory comment procedures

provided in 553 (c) that limit comments to written comments (agency always free to provide additional procedural rights; Congress also free to provide additional procedural rights in enabling statute, but courts not free to provide additional procedural rights.

v. If agency action is a rule, and agency did not follow APA 553 procedures for notice and comment, does rule fall within the statutory exception for interpretive rules, policy statements, procedural rules, or the “good cause” exception?

1. Be familiar with tests that courts have developed to determine

whether the rule falls within one of these exceptions

h. Informal adjudication (minimal statutory procedures of APA, 555)+ Overton Park: “some kind” of procedure + explanation on the record to demonstrate that

agency acted within its statutory authority and considered relevant statutory factors (706(2) (D) and 706 (2)(A) (arb/cap)

i. Did agency choose the right procedures when it made law or policy?

i. Under Chenery II, agencies generally have flexibility to make law by rulemaking or adjudication

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ii. Remember to consult enabling statute to see if it specifies type of procedures that agency is required to follow

iii. Chenery II suggested that new standard of law adopted for the first time in adjudication can be applied retroactively to the parties to that proceeding. Subsequent cases have limited that ruling and held that a new legal standard cannot be applied retroactively if it contradicts a previous, well- established standard. (Williams Natl Gas (D.C. Cir. 1993))

3. Are findings of fact involved?

a. What standards of review?

i. Substantial evidence, APA, 706 (2) (E), for formal proceedings ;

ii. Arb/CAP, APA 706(2) (A) for informal proceedings ( test the same as substantial evidence test for formal proceedings), with exception that:

Recordin formal proceedings is a closed, trial type record, whereas recordin informal proceedings is an open concept and refers to everything agency employees considered when making the decision.

4. Did agency action involve interpretation of law? If so, will agency interpretation be upheld? (APA, 706(2)(C))

a. Interpretation of a statute?

i. What test for deference?

1. Does Skidmore deference or Chevron deference apply?

a. Chevron does not apply to certain types of interpretive actions by agencies, e.g. interpretations of a judicial opinion, of a contract, of a generally administered statute

like the APA itself, of a statute that the agency does not administer, or of statutes when administration of the statute is shared among several agencies.

b. Under Mead, Chevron will apply when:

i. Congress authorizes agency to make law through formal RM, formal ADJ, or NCRM, and agency makes law through one of these safe harbors.

1. Note: Certain issues are apparently considered too important to infer Congressional authority to regulate without explicit language in the statute, even if statute confers broad regulatory authority on an agency and authorizes NCRM and formal adjudication in other contexts. E.g., Brown and Williamson and issue of FDA authority to regulate tobacco.

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agency process is designed to promote “fairness and deliberation.”

1. Note Scalia’s concern (in dissents) with this approach.

a. Unpredictable

b. “Ossification”

c. Scalia prefers two part test for Chevron to apply: 1) Did Congress authorize agency to administer statute AND 2) Is agency’s interpretation “authoritative,” i.e. interpretation by an “underling” would not suffice.

ii. Apply the test for deference correctly

1. Be familiar with two step Chevron approach.

a. How do you determine if Congress has spoken clearly?

i. Remember the various sources and ways that courts try to discern congressional intent

b. If statute is ambiguous, how do you determine if agency interpretation is reasonable?

i. Agency usually wins at this stage, BUT

ii. Some courts and judges think courts should link

Chevron #2 and hard look review and inquire as to whether agency has demonstrated why it has chosen one interpretation over another. (e.g., J. Silberman; see NARUC v. ICC (D.C. Cir. 1994)

2. Be familiar with factors that courts use when applying Skidmore

deference. Understand key differences between Chevron deference and Skidmore deference.

b. Agency interpretation of its own rule?

i. Does Seminole Rock/Auer deference apply?

1. Court limited application of this doctrine in Smithkline Beecham

ii. Does anti-parroting exception to Seminole Rock/Auer deference apply?

5. Does agency action involve policy making or exercise discretion? Examples include policy making, choice of procedures, changes in agency interpretations of statute or rule; changes in enforcement strategy, etc.

a. Court performs “hard look” review under 706(2) (A) (arb/cap) to determine if agency has adequately explained its reasoning.

b. Be familiar with “black letter” factors identified in the Motor Vehicle Manufacturers Assn case (1983) for hard look review

6. Remember that same fact pattern can give rise to multiple challenges:

a. Findings of fact /substantial evidence

b. Procedural infirmities

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c. Incorrect interpretation of statute

d. Flawed reasoning

7. Remember that ARB/CAP standard of review is a “catch all” that has different meanings depending on the context

a. Findings of fact in informal proceedings> ARB/CAP> substantial evidence review

b. Informal adjudication> ARB/CAP review focuses on whether agency had “some kind of procedure” to explain basis of its action for purposes of judicial review. Overton Park.

c. Change in agency interpretation of statute from one reasonable interpretation to another must be explained in the record under ARB/CAP standard

d. Agency policy making and reasoning reviewed under the ARB/CAP standard (“hard look” review)

8. Availability and Timing of Judicial Review- The “W” issues

a. Where? In what court may one seek judicial review of agency action?

i. Check E/S to see if it contains a special review procedure relevant to your cause of action (APA, § 703)

ii. Even in absence of special review section, there is a general cause of action for those who “suffer legal wrong” or are “affected or aggrieved w/in the meaning of a relevant statute.” (APA, § 702, 703, 704). The COA may be brought in any “court of competent jurisdiction.” (APA, §

703)

iii. Note that there is a jurisdictional requirement for “finality” whether or not the cause of action arises under E/S or APA. APA, 704

b. What? What are the possible grounds for challenging agency action?

i. See APA, 706 (2)

c. Whether? Under what circumstances is judicial review precluded?

i. Do statutes preclude judicial review (APA, § 701 (a) (1)?

1. Express preclusion

2. Implied preclusion (Block v. Community Nutrition Institute)

ii. Is agency action committed to agency discretion by law (APA, § 701 (a)

(2)? (Doe v. Webster) Examples: “No law to apply;” discretionary enforcement decisions; budgetary allocations under Congressional block appropriation; national security, political questions, others where there may be legal standards to apply, but courts have traditionally not reviewed.

d. When? Has the time arisen where agency action can be challenged? Three possible timing issues:

i. Exhaustion of administrative remedies. required? (See APA, § 704)

ii. “Finality”-(APA, § 704)

What does it mean and when is it

1. Absolute jurisdictional requirement for judicial review.

2. Two factors

a. Does agency action represent consummation of agency decision making process? and

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b. Do legal consequences result from agency action, as

opposed to litigation expense, embarrassment, inconvenience?

iii. Ripeness- Jurisdictional requirement for judicial review though not mentioned in the APA

1. Courts look at two issues to determine if issue is ripe for judicial review.

a. Fitness for review

b. Hardship on the parties if review is not provided at this

time.

2. Ripeness issues always arise when a party is trying to challenge an agency rule before the rule has been applied to that party in an enforcement proceeding.

a. Adjudicatory orders are always “ripe” for review because agency has made clear how rule is being applied in a particular fact situation.

b. On the fitness issue, court will ask whether it’s clear as a matter of law how the agency will apply the rule to particular fact situations.

c. On the hardship issue, court will ask if rule threatens immediate financial harm to the party, as is the case when the rule puts party in a position of making one of two choices, both of which are harmful. See Abbott Laboratories (Hardship element satisfied where drug company had choice between spending $$$ complying with regulation it believed was legally infirm, or not complying and facing costly enforcement action.

e. Who? Does the party that wants to challenge agency action have standing to sue?

i. Constitutional standing requirement must always be satisfied. (This requirement derives from limitations of federal government’s judicial power to “cases or controversies” arising under constitution or statutes of the U.S.) Three requirements for constitutional standing:

1. injury in fact (not generalized injury shared with

members of public at large)

2. plausible showing that injury was caused by government

action complained of; and

3. redressability: plausible showing that plaintiff’s success will result in avoidance or mitigation of the harm.

ii. In addition to constitutional standing, plaintiff challenging government agency action must satisfy standing requirement of APA, § 702, which requires either

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1. Plausible showing that plaintiff suffered “legal wrong” because of agency action, OR

2. Plausible showing that person was “adversely affected or aggrieved within the meaning of a relevant statute.”

What do these terms mean?

1. “Legal wrong” = type of injury for which courts traditionally

afforded relief

Examples: breach of contract, revocation or denial of license, deprivation of a property right. (Competitive harm at the hands of an individual that allegedly wrongfully received a license does not satisfy the definition of “legal wrong”)

2. “Persons adversely affected or aggrieved within the meaning of a

relevant statute.”

Original understanding required a special review statute that expressly provided standing to those impacted by government action (an example of such a statute would read “persons adversely affected or aggrieved by agency action may challenge agency action in court”). The purpose of such special review statutes was to confer standing on those who suffered competitive injury at the hands of a person who allegedly had unlawfully received a license or government benefit, and thus broaden standing to a class that would not have been able to successfully allege a “legal wrong.”

Current law: U.S. Supreme Court has adopted the “zone of interest” test as an additional way to satisfy the requirement that a person demonstrate he was adversely affected or aggrieved within the meaning of a relevant statute. For the zone of interest test, it is not necessary for a person to point to a special review statute that confers standing on that party. The test seems to require a plausible showing of 1) injury in fact, combined with a showing that 2) conferring standing on the party will advance the substantive policies of the statute, even if the plaintiff is not within the class of individuals that Congress specifically sought to protect in the legislation. (See Association of Data Processing Service Organizations v. Camp and Clarke v. Securities Industry Ass’n)