Administrative Law Outline

Siegel, Spring 2007

a.

Introduction and Overview

A.

Background

Art. I, 1: All legislative powers shall be vested in Congress, consisting of Senate and House
Art II: All executive power shall be vested in President
Art III: All judiciary power shall be vested in one Supreme Court, and any inferior courts as Congress
shall deem necessary
B.

What are administrative agencies?

Morrison v. Olson
Facts: HoR wanted information from EPA; Pres advised to exercise executive privilege to stop
the info from being given. Records eventually turned over, but HoR wanted investigation into
attorney who advised the privilege to be asserted (Asst. AG Olson), thought he had committed
perjury. Independent counsel Morrison appointed by a special court (exercises an executive
power: investigating people.) AG serves at the pleasure of the President, but IC can only be fired
for good cause and only by the AG.
o Ethics in Government Act: applies to government officials
Must bring cause to AG, who has 90 days to investigate, if it seems likely
somethings wrong, he appoints IC, who has full power to investigate and
prosecute within a narrow JD
This is normally done through the DOJ (someone directly answerable to
the AG, and therefore the President)
o Balance of powers concern
o Goes up to S. Ct., which holds this was not a violation of the separation of powers
Court: Congress has not taken for themselves power from the president rather, it has given it to
someone else
o The real test: Do the removal restrictions impede the Presidents ability to execute?
Earlier case: Humphreys Executor (Congress can protect an official from the
Press removal authority, provided the official is not purely executive must be
quasi-legislative or quasi-judicial)
Footnote 28: too hard to tell, previous cases couldnt define quasi categories
o Here: Its not like the President has no power of removal (can do so for good cause)
IC has limited JD, can only perform certain duties under job description
Scalias dissent: Very focused on the separation of powers
o Court concedes that this is an executive function (SHALL be vested in Pres of the USA)
o This is an executive power. Even if applying new test, still takes away the Press power
o Very absolutist approach; no balancing
Notes:
AG & Pres arent reliable to investigate themselves; this IC is necessary to investigate the Pres
This statute was allowed to expire because the cure was worse than the disease
2 other checks here: balance of powers check; political check (people can vote legislators out)

1.

What do administrative agencies do?

Notes:
Mostly, they act to fulfill their function
o Ex: Transportation Security Administration
In charge of security at airports, etc.
Doesnt seem to be mostly rulemaking or adjudication - seems more like
enforcement
Why do we study rulemaking & adjudication then?
o APA: definitions
(4) Rule
(5) Rule-making
(6) Order
(7) Adjudication
Anything thats not rule-making under the APA is considered adjudication (defined so broadly
that it does cover most of what agencies do)
2.

Rulemaking

APA 551 defines a "rule" as "an agency statementdesigned to implement, interpret, or

prescribe law or policy.
APA 553 includes notice and comment requirements. Agencies must provide notice of their
rulemaking, and allow a period of public comment on them.
Benefits of agency rules
o Implements statutory directives, gives content to statutory standards that are often vague.
o Streamlines agency business.

US v. Storer Broadcasting Co.(US 1956)

Statute: FCC regulates broadcast licenses for TV or radio. Shall grant the license where the FCC
finds that the license would serve the public interest, convenience and necessity. If it cant find
that this interest is satisfied, FCC sends it back to applicant, saying why they couldnt find it was
in the publics interest, and applicant gets the chance to respond.
o If FCC still doesnt find a reason, it formally designates application for a full hearing,
notifying applicant
Facts: Storer already owned the max number of stations, FCC changes rule to multiple ownership
rule (Commission will consider that owning more than 5 stations would be against the public
interest... (doesnt explicitly limit to 5))
o Storer claims that an application cannot be rejected without a full hearing
They want a chance to argue that this was in the public interest or convenience,
because if the Commission should so find, they must grant the application
Supreme Court: Full hearings are an entitlement, but only in cases where the application
conforms to the rules, and only where application sets out reasons why the rules should be waived
or amended.
o There are times where the FCC can get away without granting a hearing (wouldnt seem
this way just from reading the statute)
o These hearings are to determine factual bases; if there is only a question of law or
policy, a hearing is not required (like summary judgment)

Shall hold a hearing means you must hold a hearing but only when its appropriate

Notes:
Hypo: what if the FCC held a hearing every time, but whenever it came out that someone had 5
TV stations, they denied the application?
o This would be within the statutes limits, but it would be a big waste of time
Agencies in General:
o Agencies that promulgate rules have the authority to do so
o Rules allow ultimate goals of the agency to be carried out through the act
Many agencies operate under very broad, vague mandates (what does public
interest or safe mean?) Agency has to particularize and interpret these broad
mandates
More efficient than for them to have to reinterpret the statute every time
Allows agency to streamline its business (dont need a hearing this way)
o There is an opposite situation where Congress gives very specific, detailed mandates
Agency Rulemaking:
o Allows giving content to vague mandates
o Allows streamlining
Administrative agency has the power to make laws b/c Congress has control over agencies and
has delegated lawmaking power to the agencies
o Congress doesnt have expertise in these areas
FPC v. Texaco
Statute: Under 7 of the Natural Gas Act, producers who submit application of public
convenience and necessity are entitled to a "fair and public hearing."
Facts: FPC regulations dictated whether certain pricing provisions were "permissible" or else
"inoperative and of no effect in the law." Texaco sent application of public convenience and
necessity, but because the FPC deemed the pricing provisions to be "impermissible," it rejected
Texaco without a hearing. Texaco sued.
Court, citing Storer: statutory requirement for a hearing under 7 need not be followed because
the Commission can particularize standards through the rulemaking process and "bar at the
threshold those who neither measure up nor show reasons why in the public interest the rule
should be waived."
3.

Adjudication

Notes:
Everything except rulemaking (execution, enforcement, etc)
Normal adjudication process: Impartial judge, right to counsel (presents your case [argues,
discovery, witnesses, evidence, cross-exam])
o Henry Friendly, Some Kind of Hearing. We have an image of whats going to happen
in adjudication, with characteristics like: Tribunal, Notice, Opportunity to be heard, Right
to call witness, present evidence, public proceedings, statement of reasons, right to
appeal, etc.
Good part: These promote fairness, promote consistency, promote resolution in a
peaceful way, leads to a just/correct result)
Bad part: Not efficient, expensive

Hypo: Congress creates new DMV (federal, not local), charges head to design procedures to test
for new licenses. What procedures to use?
o Application, evaluate against rules, take a driving test, etc.
Not really a judicial process (not presenting other evidence, etc)
This isnt a dispute - cases involved here are much more simple
Way too many people almost everyone applies for drivers license
Drivers test: would likely give specific standards as to what constitutes being
able to drive
o This is a bureaucratic model
Judicial model gives judge a significant amount of autonomy in deciding how
to administer certain procedures
We think differently about bureaucratic procedures: Someone at the top of the
agency have figured out exactly what to do, and they tell the testers (just
functionaries, not highly respected like judges)
Revoking would likely follow a different procedure (not as easily ascertainable
as passing the test)
Lawyers tend to be familiar and fond of judicial methods of resolution, but there are other
methods that work better for other things
o Agencies tend to have enormous dockets
o Agency dockets have cases that are relatively simple
To what degree should we require that agency processes be judicially run?
o Ex: voting process. Problems need to be resolved in one day
See supplement: very detailed checklist about what to do if theres a problem
Since the people administering the polls are not highly-educated, highlyrespected people to whom we trust with important decision making, we give
them these detailed checklists
o What would constrain you?
D.P. of the Constitution
Federal statutes (esp. organic statute which created the agency at which youre
working)

Goldberg v. Kelly (US 1970)

Facts: NY residents sue state for taking away their welfare benefits (AFDC) w/o giving them the
opportunity to be heard in person (DP claim). States administer the program, but created by
federal statute and federal government puts up some or all of the programs money. Program
must comply with the detailed requirements of the statute
Process: Caseworker discusses ineligibility with applicants, then talks with unit supervisor.
Sends letter to recipient, and within 7 days, recipient may request higher review and can send in
written support of his case. If reviewing officer affirms ineligibility, aid is stopped and recipient
is notified. After termination, recipient can request a fair hearing, a judicial process
o If he prevails, he is reimbursed for funds he should have received
o If he fails, he can get judicial review
Only able to express themselves in writing want to be able to discuss orally in
person before their aid is terminated.
Court: Considers welfare benefits as property now, cannot be taken without DP
o 2 DP Questions: Is process due at all? If so, then:
Court sees benefits as property because the families are so dependent on
them so this is taking away property, and process is due

o
o
C.

What process is due?

Essence of AFDC is that youre eligible b/c you dont have enough $ for food
this is important because the fair trial period could take months
Only requirement is that there must be a hearing that determines the validity of
the welfare departments grounds for termination
Must get:
o Timely notice detailing the reason for proposed termination
o Hearing, at a meaningful time
o Confrontation of adverse witnesses
o Presenting own arguments and evidence orally
Problem with this process:
Costs temporal and monetary
Will be more fair hearings if people know theyll get \ benefits at least until the
hearing is through
The added costs to the system will take away from the current or future recipients
Benefits of the process:
Those who need the money will have the chance to continue eating throughout
the process
Recognize that procedure has costs. The people who pay those costs may be those you
are trying to help.
Judicial Review of Administrative Action

Notes:
Process by which the decision of an administrative agency can be considered by a court
3 things to ask:
(1) What is appealable?
o In civil litigation, technical term that refers to the question of timing (when can you get
something before a court of appeals?). Civilly, a final decision is appealable.
(2) What is reviewable?
o What kind of issues can court of appeals consider, assuming they are appealable. Civilly,
pretty much everything is reviewable
(3) What is the standard of review?
o Appeals courts are very deferential on facts, but review DCs decisions of law de novo
Has to do with comparative expertise of the district judge
Little deference for questions of law because all judges should be equally capable
In administrative law, we go over these same 3 questions to determine which agency decisions
can be appealed/reviewed
Citizens to Preserve Overton Park v. Volpe (US 1971)
Facts: State building a highway, fed government allotted funds to help pay. Petitioners: groups of
citizens who felt that the secretary was wrong in his authorization through this park - claimed he
didnt make any formal findings; thought he was wrong in saying that there were no feasible
alternatives. Ps wanted secretary to make a formal finding (his finding had only been implicit),
wanted DC to decide if there was a feasible alternative after evaluating evidence (ultimately
wanted a trial, put secretary on the stand)
Statute: Had to show there were no feasible alternatives to building the highway through a park

APA provides for judicial review in this circumstance : 702: CL is disregarded; if agency
does something that you dont like or you are aggrieved, can seek judicial review
Sets up a check on the delegation of authority to these agencies
What are comparative advantages of agency versus the court?
Agency: advantage of expertise in the area of regulation; better at
statutory interpretation of their own statute
Court: expertise in the constitutionality of the enactments; better at
statutory interpretation in general; lifetime tenure gives them ability to be
impartial and resist political pressure
Administrative decisions are presumptively reviewable
Court: Looked at APA, determined that there were some threshold questions once judicial review
appropriate:
o 3 questions to ask:
(1) Whether agency action is within legal scope of its authority
(2) Whether agency followed necessary procedural requirements
Procedural errors checked
Typically, reviewing court does not make a record, only takes the record
2 possibilities: Have agency make findings again (submit affidavit), or
Put officials on the stand (last resort)
(3) Whether action was arbitrary or capricious (706)
If they fail to make findings explaining why it did what it did, then they
might go on the stand, though that is still typically discharged
Deferential standard
Court: This isnt so far off that it could be considered capricious (like
clear error standard in civil litigation)
o Standard of review the court then applies to the agency record?
De novo review occurs only when:
Action is adjudicatory in nature and the agency fact-finding procedures
are inadequate, or
Issues that were not before the agency are raised in a proceeding to
enforce nonadjudicatory agency action.
o

Notes:
On one hand, agency action is presumptively reviewable, BUT limited in 2 ways:
o Procedurally, b/c the reviewing court does not make a new record. It just takes the record
made in the agency and reviews that record.
o Substantively b/c the court reviews with deference. The court will not require what it
would have done; it will only ask if a reasonable administrative officer could have come
to the agencys conclusion
What if there is a question about the meaning of the applicable law?
o To the Court, feasible means possible from an engineering perspective
To the agency, what was feasible should have included costs, social factors, etc.
o Court:of course more costly and socially disruptive to build a road where people and
businesses are established, so by that standard it would always be more feasible to build a
road through a public park, but feasible means any physically possible alternative,
regardless of costs
Where there is a debate over what a word in the statute means, the review is de novo. The court
is in a better position than the agency to determine what the laws mean. This is an important
exception of the standard of review to remember!

b.

What are Administrative Agencies?

Notes:
Why have agencies?
o Congress not technical expert; even if they used experts for advice, still would not have
the time to be burdened with enacting all of the rules that agencies deal with
o The N&P Clause says Congress can make laws that are necessary and proper to do its
job, so, perhaps creating agencies to execute details of laws is necessary and proper
A.

Congress and Administrative Agencies

1.

Nondelegation

The Policy
Why might it be wrong to have agencies?
o Structural/political argument: Agency decision makers are removed from voters, much
less accountable than Congress
o Textual argument: Article I, 1 of the Constitution clearly says ALL legislative powers
shall be vested in a Congress not in agency administrators
o The common law of Agency: In a corp, s/h are the principals and they delegate certain
duties to their agents the board of directors and CEO, BUT powers delegated cannot be
re-delegated
o John Locke said the power to legislate is NOT the power to pick legislators they
cannot re-delegate that power to others
Why would Congress want to delegate?
o Want to handle hot issues, not little details like radio frequencies
o Want to avoid responsibility and accountability; delegate tough decisions then blame the
bureaucracy
o Increases Congress capacity; can take credit for good things an agency has done and
show their constituents all they have worked on
o Important to empower the executive w/ sufficient flexibility to get the job done
Some flexibility in executive discretion is inevitable anyway; every detail of the
most mundane things cannot be specified in an act by Congress
o Congress may feel it doesnt have the expertise to make certain decisions, so it hires
people that understand medicine, human health, industry, etc.
The History:
JW Hampton v. US C.J. Taft said, if Congress lays down in an Act an intelligible principle to
which the person or body authorized to fix rates is directed to conform, such legislative action is
not a forbidden delegation of legislative power.
In the early years, Court never invalidated any delegation Congress saw fit to make. By early
1930s, nondelegation doctrine was thought to be an empty formalism.
o FCC v. Storer: Court upheld principle that stations had to be in the public interest.
Hardly an intelligible, but Court said it was clear enough not to violate non-delegation
In 1935, Court struck down delegations for the first and last time. Only two ever struck down: 1)
Panama Refining Co v. Ryan; 2) Schechter Poultry
A.L.A. Schechter Poultry Corporation v. United States (US 1935)

Facts: NIRA did not give the President any criteria on which to base his action of excluding for
commerce certain oil products.
Court: strikes down act. NIRA does not set up sufficient administrative procedures. Important
contrast to Federal Trade Commission Act, which required agency to establish very clear
procedures.
o Lacked procedural safeguards such as notice, hearing, and findings based on evidence
w/r/t the adoption of industry codes of fair competition.

Notes:
Since Schechter, Court has not invalidated a single statute on the basis of excessive delegation!
o 1944: upheld Congress delegation of authority to control prices b/c the Court deemed the
standards prescribed by the Act, along w/ the statement of considerations required to be
made by the Administrator, sufficiently definite and precise to enable Congress, the
courts and the public to ascertain whether the Administrator, in fixing the designated
prices, has conformed to those standards.
Yakus
Court upheld Congress's WWII delegation of authority to control prices, which was implemented
by the Office of Price Administration (OPA)
Standard of review: "The only concern of courts is to ascertain whether the will of Congress has
been obeyed."
o What about the intelligible principle principle?
Agency should be using fair and appropriate procedures to make the decisions that it has been
delegated
o But is this really relevant?
Amalgamated Meat Cutters v. Connally (DC 1971)
Statute: Economic Stabilization Act of 1970 gave Pres power to stabilize prices, wages and
salaries by issuing such orders and regulations as he may deem appropriate (broad power)
o The act didnt require president to do anything
o Not merely a ministerial power; this gives the President the power to control the
otherwise free market
Facts: Nixon passed a wage and price freeze for 90 days, to be implemented by Cost of Living
Council (created by Nixon); Connally was the head of this council. Meat Cutters as a union had
decided that they would be getting a 25 cent raise which ended up being during this 90 day freeze
Court: Upheld as against a nondelegation doctrine. Why?
o (1) Historical precedent - 1942 legislation (wartime)
o (2) Legislative History - Same purpose as behind the 1942 legislation, which was upheld
L.H: committee reports, debates before the law was adopted
o (3) Nature of the problem demands broader authority - just timing was left to President
Congress might not be in session when action is required
o (4) Related to international trade (international link) - usually the Presidents authority
o (5) Statute is limited in duration
o (6) Implicit duty of consistency; the executive had to make up rules
Guiding principle can come from the executive once the authority is delegated
Might be contrary to the goals of nondelegation even after the duration of his
power has expired, the guidance and precedent will continue
o (7) Judicial review is available - Ind. Cases, APA, of rules themselves
o (8) No singling out specific industries

o (9) Floor on wages (cant set below 1970 wages or prices)

o (10) Implicit duty of fairness
This has been held to be an intelligible principle, and the court finds it implicitly here

Notes:
Which of these are most related to goals of nondelegation doctrine?
o Floor gives President a very discernable limit (but, no maximum set - vast, unregulated
discretion in the other direction)
o No singling out
o International link? Pres has duty to execute laws, but ALSO has powers of his own that
relate to the intl sphere (just letting him exercise powers he already has)
Might be a tenuous argument
o Limited duration - Provides time for Congressional review (Congress after 6 months has
to re-authorize his authority, so if they do, thats approval of his actions)
Siegel: Perhaps this is the most related of all of them
o Implicit duty of fairness? Bit of a stretch, but still a check on the President
This case shows just how far courts will go to avoid striking something down under the
nondelegation doctrine
Whitman v. American Trucking Assoc.
Statute: EPA delegated authority under the Clean Air Act to set national ambient air quality
standards (NAAQS). Requires them to promulgate NAAQS, at requisite levels (with safety
margin) to protect public health
Facts: Trucking Association claims this violates the nondelegation doctrine to only give this much
guidance
o DC Court: EPA didnt have a standard to pick their levels. Any level over 0 is dangerous
to some extent, and yet no one expects the EPA to set it at 0, so there must be some other
standard (besides pure public health)
o Thought the EPA could adopt a constrictive construction, remanded it to the EPA to set its
own numerical standard, and then act in accordance
Supreme Court: Cost is a forbidden consideration for the EPA for determining a certain NAAQS
level. EPA cannot set their own standard and then follow it that would defeat the purpose of
Congress setting limits. Disapproves the reasoning set out in Amalgamated Meat Cutters (where
theyre bound by future executive action)
o Always remember what the point of the nondelegation doctrine is - must look at the
statute itself
o But, this statute is ok: Acting in public interest is specific enough even more
specific than other statutes theyve upheld
Inverse relationship with specificity and the breadth of authority that Congress is
granting
Stevens: Takes issue with tiptoeing around the fact that this is legislative power
Scalia wont call it legislation, and refers only to permissible discretion
Thomas: Not convinced that the intelligible principle doctrine restricts delegations of
legislative power. Thinks they should go back to the meaning in 1790.
No doctrine at all is basically what weve got in practice
2.

Non-Aggrandizement Principle

Congress keeping to much control for itself.

INS v. Chadha (US 1983)
Statute: 244(c) of the Act gave AG authority to suspend deportations made by INS, with a onehouse veto
o AG was allowed to suspend where the P could show:
Lived here for 7 years
Was of good moral character
Would have extreme hardship
Facts: P was to be deported (he overstayed his visa), AG suspended, House vetoes the suspension,
P was to be deported, appealed
Court: Legislative one-house veto was unconstitutional -violates the Bicameralism clause and
Presentment Clause
o Do these clauses apply?
Presentment: legislation has to be presented to the Pres (applies to bills passed by
both House and Senate)
Bicameralism: law cant be passed without both houses jointly making the
decision (doesnt seem to apply here either)
o Courts syllogism:
Exercises of legislative power must satisfy the B and P clauses
Anything that alters the legal rights, duties, and relations of person outside
the legislative branch = an exercise of legislative power
Anything that alters legal rights, duties, etc. requires B and P
This alters the legal rights and duties of Chadha (status as a legal alien
was changed) so should have gone through bicameralism and
presentment
Justice Powell: Case could be decided on narrow ground, shouldnt have outlawed legislative
vetoes all together
o Agency here was doing adjudication; was esp. concerned about this one thing for
legislative veto over rule-making function, but very bad for it to be involved in
adjudicatory function
Justice Whites dissent: Veto is central means by which Congress ensures the accountability
of executive and independent agencies.
o Hobsons choice: Congress either has to delegate a lot of power to the agencies, trusting
them with their own regulation, or keep the power for themselves and have to deal with
all the issues that arise on their own, which Congress doesnt have time to do
o Veto historically has not been Congress sword, but rather has been a defense
o Central concern of B and P clauses: When a departure from the legal status quo is
undertaken it is done with both Houses and consent of President
Because Chadhas status is a deportable alien, the veto maintains the status quo,
so it doesnt need to go through all 3.
If he stays deportable: AG had excused, thats the execs approval
By neither house canceling the suspension, it means that both houses of
congress implicitly approved the change in status
Notes:
Why wouldnt this law be unconstitutional?
o 200 different laws included constitutional vetoes

10

o Degree to which bicameralism clauses can limit this argument

o Congress already passed this law, president agreed to it thats why
o Got it from the same place that AG gets his power to suspend
Status Quo Argument: AGs suspension changes Chadhas status to non-deportable and then
the Congress can change his status quo without Presentment
o Constitution requires positive action
Not passing a veto isnt the same thing as approving the suspension
Its not just as good, but even if it was doesnt mean its the constitution
o But legislative agencies are altering rights all the time, without B or P
At least veto went through one house of Congress many other decisions dont
go through any of the houses
Court tried to respond to this: only when Congress acts is B and P required
But how could they distinguish btw what legislative and executive
branches did? see Bowsher v. Synar
Whites dissent:
o Practical arguments: this is just a defense to getting too much executive power
This is putting Congress in difficult positions
o Formalistic argument: We found this unpersuasive
o Argument that Exec branch does this all the time: Courts response (footnote 16):
AGs activity cannot reach beyond the limits of that statute (not persuasive
distinction)
B & P require this (not persuasive because literally they dont require it)

Bowsher v. Synar (US 1986)

Facts: Balanced Budget and Emergency Deficit Control Act fixed maximum deficit amount to
eliminate deficit. If deficit exceeded max, automatic procedure went into effect:
o Head of OMB (exec) and CBO (Cong. Budget Office legislative) make reports, say
what the deficit will be in the upcoming year, and if it exceeds max, must propose
program to solve the problem
o These go to CG, who reconciles any difference; report then goes to President
o Pres must issue sequestration order
Congress may during a period legislate to reduce spending, in order to avoid a
sequestration. If not enacted, sequestration becomes effective
o Fallback Provision: Congress reserved for itself the power to remove the Comptroller
General through a joint resolution rather than only through an impeachment process
Court: Role of CG: appointed by President; removable by Congress for 5 reasons. If they decide
to, they submit joint resolution to President, but can override a Presidential veto
o CG executes laws, but is really a member of the legislative branch, and member of the
legislative branch cant perform an executive function
Notes:
How to reconcile with Chadha? Here, Congress gives themselves another way of removing CG
o Constitutionally, should only be able to remove executive officials by impeachment
o Court thinks Impeachment Clause has a negative implication - the only way to remove an
executive official
Impeachment process: Simple majority of House essentially indicts, then 2/3 of
Senate to impeach. Requires for high crimes or misdemeanors.

11

Here, to remove CG requires 2/3 of House and Senate. Even more rigorous than
the impeachment process, but can be removed for (basically) any reason.
Procedurally, higher standard, but substantively, more lax standard
How does court know hes a member of the legislative branch?
o Look at removal provisions: vague language, too much room for Congress to remove
(inefficiency, neglect of duty, malfeasance.)
o Joint Resolution is really a law (must go through B&P like any other law) Concurrent
Resolution not presented to President
How does the court know this is executive power?
o Interpreting a law executed by Congress to implement the legislative mandate is the very
essence of executing the law
This is not simple math on the CGs part, there is room for discretion for him
o Under Chadha test, this seems legislative: CGs actions change the legal rights and duties
of people outside the legislative branch
But court holds that it is executive not entirely clear why. See Stevens opinion:
Convinced CG is an agent of Congress: makes policy that binds a nation;
Removal provision points to legislature; Statutorily, historically, hes
legislative
o Powers exercised by CG have a chameleon-like quality: wherever you assign these
exact same powers, they tend to look more like that branchs powers
This isnt the important aspect of the case:
o If the Court accepted it as legislative, would be subject to B&P: Still invalid because
theres no bicameralism or presentment (CG acts alone, and Pres has to obey)
Either way, there is a power being exercised here thats illegal:
o If legislative, not OK because needs to go through B&P
o If executive, not OK because hes legislative

How does this help explain Chadha?

B&P applies to people under the control of Congress
Non-aggrandizement principle: Congress has certain powers which are specified in the
Constitution, and thats it cant give itself more powers
Chadha: Congress tried to give itself a legislative veto power (not allowed w/o B&P)
Bowsher: Congress purporting to act through B&P, but its going to give itself some power it
didnt already have (removing an exec official through means other than impeachment)
Were worried about Congress giving power to itself; it can give power to Pres or Court because
theres a natural check
o Constitutional perspective: Framers were especially worried about Congress
One clear rule: Congress cant give itself more power in excess of the Constitution
What could Congress do instead?
Pass new laws
Ex, Chadha: if Congress thought AG was being too generous with deciding what constitutes
hardship, then they could:
o Make language more intense or clear
o Make language more detailed (give examples, etc)
3.

Statutory Precision

12

Public Citizen v. Young (DC, 1987)

Facts: Saccharin ban FDA was about to take it off the market for being a carcinogen, so they
tried to do a media strategy (did have health benefits)
o FDA points to lab studies - amount of saccharin would be equal to drinking 800 cans of
diet soda a day was subjected to ridicule
o FDA tries to use de minimis rule to color additives to say that Congress couldnt have
meant that they should ban something with such small side effects
Statute: Color Additive Amendments, general statutory standard: FDA can approve where the
additive is safe
o FDA gets to decide what safe is (balances costs and benefits)
o Delaney Clause: If chemical is found to cause or induce cancer in humans or animals
(carcinogens), the FDA must disapprove the chemical
No balancing is permitted; cant decide somethings ok just because the
carcinogen is very small. Stringent language, but FDA had a little wiggle room
Could play around with the definition of additive in peanuts they
found carcinogens to be naturally occurring
Could say studies arent appropriate
Could move slowly
Could say additive implies full additive (impurities in additives that are
carcinogens dont count)
Court: The statute is so absolute, theres no place for the de minimis here. If there were, it would
definitely be appropriate here (this is obviously de minimis)
Notes:
Why would Congress maintain the Delaney Clause?
o Congress and public very concerned at the time about carcinogens
o Congress may have perceived food colorings as having very little value
o Congress may not trust the FDA with making this decision
Concern with manufacturers and their political clout
May not trust the executive b/c it may be controlled by the other political party
What else could they do?
o Have it go through 2 agencies
o Factors test
o Specific quantity limit
o Go to Congress on case-by-case basis (essentially what ended up happening here)
Delaney Clause still there, having same effects
o Constitution not really implicated b/c theyre not delegating more control to the agency
Rather, its a policy issue:
2 approaches: Pros and Cons:
Flexible Approach

Detailed Approach (micromanagement)

(-) Agency will sometimes make bad decisions

(+) Allows executive to act
(-) But too much power to the agencies?
(+) Meaning can be easily updated over time

(-) Doesnt use agencys expertise

(-) May contradict broad goal
(-) Obsolescence doesnt allow for adaptation
(+) But this may lead to revision (?)
(+) Easier, clearer
(-) Too complicated

13

Under flexible standard, could the meaning of the Delaney Clause change over time?
Meaning of cause could change
o In 1950s, something that caused cancer was extremely potent
o Now, something causes cancer when it causes 1 case in 19 billion
4.

Other Legislative Control Techniques

Pervasive Techniques of Legislative Control

(1) Passing general statutes (instead of organic ones)
(2) Use of casework, oversight, influence
a.

Passing general statutes

Main statute: Administrative Procedure Act (APA) p. 1311

Congress attempt to control general policies of agencies
o AG Jackson looked at best practices of existing administrative agencies, and APA was an
attempt to codify these
Problem: when you pass a statute like this, courts tend to ignore the statute, and instead read cases
about the statute (especially where statute just embodies things people are doing anyway)
Important provisions:
o Definitions, 551
Agency: Any authority of the federal government not including Congress
(legislative branch), or Courts of US (judicial branch) - covers executive branch
Rule making: rules for the future
Adjudication: anything else
o Rulemaking, 553
(b): Most basic procedure for making rules:
General notice of proposed rulemaking to be published in federal register
Reference to legal authority
Description of subjects and issues involved
EXCEPT (less stringent) TO:
o Interpretative rule, general statements of policy, etc.
o When agency for good cause finds that notice and public
procedure are impracticable
(c) Requirement for comment period
Then publish final rule
EXCEPT (more stringent) TO:
o Rules required by statute to be made on the record after
opportunity for an agency hearing, 556, 557 apply (like trial)
Generally: (1) Give notice; (2) Receive comments; (3) Publish rule

Rulemaking
Adjudication

Formal

Informal

556, 557
554, 556, 557 (like a
trial)

553
None (555 says a little)

Even less than

informal
553 exceptions

14

Why isnt there informal adjudication?

o Scope of the things that agencies do under informal adjudication is incredibly
broad and varied
Everything from deciding to close road due to snow to processing IRS forms
o Judicial Review, Ch. 7
702: right of review
703: How to get judicial review (Form is special statutory review proceeding
specified by the agencys organic statute. Sometimes it says nothing, in which
case you use any applicable form of legal action (civil sue the agency))
704: which actions are reviewable
706: Scope of review (2): court should set aside agency actions that are
arbitrary/ capricious or unconstitutional, or illegal
Other statutes:
Federal Register Act
FOIA
Government in the Sunshine Act (collegial agencies required to hold meetings in public)
FACA Federal Advisory Committee Act
Privacy Act (disclosure)
o Must be aware of all these other statutes, in addition to the organic statute
Procedural statutes with Substantive Goals:
NEPA: has procedural requisites to assure agencies consider envl impacts of their actions
Difference between this and APA:
o Goal of APA is to have good, fair administrative procedures
o NEPA is a paperwork requirement, yet it has a substantive goal protecting the
environment
All it requires is consideration of the impact. Doesnt prohibit any action
because of environmental impact
How does this help?
Encourages discourse, makes certain people participate in conversation
Forces agency to focus on what its doing, forces info to be gathered
Unfunded Mandates Act (UMA):think about impact of what youre doing on state/local govt
o UMs are federal government mandates that the state do something without funding it
o Provisions:
Agencies have to evaluate the impact of their actions on the state, private sector
Before proposing an action that will cost more than $100 million, agencies have
to prepare a written statement
1535: Must show all alternatives, must select the least costly, least
burdensome alternative (more commanding than NEPA), except where:
o Dont choose it and tell us why (not as commanding as it seems)
1571: Judicial review : Court can compel 1532 report, but cant invalidate a rule
just because a report wasnt compared
No substantive right that a person could really enforce in court
FRA: impact on small business
Paperwork Reduction Act: think about how much paper youre using
Contract with America Advancement Act: Congressional review of agency rulemaking

15

o
o
o

o
o

Distinguishes between major and minor rules. If major (>$1 million) must submit to
Congress, which can disapprove the rule by joint resolution
Gives Congress a check on agency control and rulemaking
Is this statute constitutional?
Seems like Chadha, but this is constitutional because its a legislative, not
adjudicatory function (Justice Powell said this in Chadha, but the majority
seemed to think all legislative vetoes are unconstitutional)
Satisfies B&P: Joint Resolution =passed by both houses and goes to the
President (as opposed to concurrent resolution which doesnt)
This doesnt give Congress any powers that it didnt already have theyre Congress,
they created the agency in the first place. Why pass statute they already have power for?
Statute puts Congressional disapproval bills on a different congressional track (doesnt
have to go through committees first, which would have the chance to kill it)
c.

Oversight, Casework, Influence

Notes:
Oversight doesnt usually happen
Casework: individual constituents complain about problems with a particular agency
o Congress has always devoted a large part of its budget to this kind of practice
o Usually straightforward: member of Congress sends letter to agency about particular
problem, and asks agency to let them know whatd going on (usually spurs action)
Influence: spills over after casework
Pillsbury Co. v. FTC (5th Cir. 1966)
Facts: FTC held that Pillsbury acquisition of competitors was not a per se violation of the Clayton
Act. Reversed trial court's finding that there was no prima facie case of monopolization and
remanded for further hearings. Ultimately, it resolves the issue against Pillsbury. Commissioner
called to testify before Senate committee, where he received hostile questioning concerning the
commission's initial rejection of the per se theory.
Court: Persistent questioning during the congressional hearings had intruded too far into
commission's decision processes. Was especially bad because the agency was performing a
judicial function
o If it had been a RM procedure Congress could send in a comment
o Congress is no longer intervening in the agency's legislative function, but rather, in its
judicial function
DC Federation of Civic Associations v. Volpe (DC Cir. 1979)
Facts: Proposal for Georgetown Bridge. Statute mandated that the bridge be built (wasnt trying
to get the agency to use its discretion in a certain way, but rather get it to do something it was
already required to do). Congress: No funds to metro unless you build the bridge.
Court: Rule: When Congressional influence reaches point where Congress is trying to get agency
to make a decision based on something other than statutory factors, that is tainted, and agency
action must be overturned.
o Agency wasnt supposed to consider Metro factors in determining whether to build
bridge. Even though it wasnt supposed to have discretion, apparently the decision is still
tainted.
Notes:

16

On remand, Secretary could delegate to another person in the agency (recuse self and get
someone senior who wasnt involved in previous decision)
Very rare for any agency proceeding to get overturned for undue Congressional influence
B.

The President and Administrative Agencies

Originally, Pres was supposed to be a general political leader

Start with Art. II:
Particular Powers
Others
Commander in Chief
Appoint Office
The Executive Power
Request Opinions
Makes Treaties
Takes care
Receives Ambassadors
Recommends legislation (power?)
Gives Congress State of Union (power?)
Pardon Power
Convene Congress when not in session
Veto Power

Which of these powers have something to do with running the government?

o Opinions clause?: Might be negative implication that President doesnt have power to
order agency officials around
Presidents role is comes from 200 years of history

Buckley v. Valeo (US 1978)

Facts: Federal Election Commission (FEC) appointments comprised of: Secretary of Senate (ex
officio no vote); Clerk of the House (ex officio); 2 appointed by the President Pro Tempore of
Senate; 2 by Speaker of the House; 2 by President. 6 voting members (even number is unusual nothing can happen unless one member of one side goes to the other set up to be deadlock)
o Commissions powers:
Record-keeping, investigatory (Political campaigns required to make publicly
available their funding)
Enforcement powers (Institute civil actions for injunctions, declaratory relief,
imposing fines)
Court: Administrative functions like this can only be exercised by people who are considered
officers of the US, which must be appointed via the process required by the Appointments
Clause.
o If officers: President nominates, and with advice of Senate appoints officers of the US
How did Court know these people were officers?
3 categories of people who work for the Exec: Officers, Inferior officers,
Employees
People who exercise significant authority pursuant to laws of US are at
least inferior officers
o Record-keeping: To extent that commn does record-keeping (legislative activities),
doesnt matter how these people are appointed
o Power to enforce and conduct litigation: this is significant authority
Doesnt call this exec power but says its something legislature cant do here
Anybody whos exercising significant power is an officer

17

Notes:
Speaker of the House not appointed this way b/c of Apps Clause: President appoints officers
whose appointment is not otherwise provided for (House and Senate can appoint its own officers)
If there wasnt an Appts clause still Separation of powers; Non-aggrandizement principle:
o Bowsher v. Synar: Congress cant take powers from executive and give to officers
Congress tried to fix this by providing for House and Senate appointment of nonvoting members
o No appointment clause problem
o DC Court still struck down because this is still undue Congressional influence in the
administrative process (violation of the non-aggrandizement principle)
1.

Appointment and Removal of Officers

Which power is more important appointing or removing?

Removal seems more important... its always the final word
Strange how theres an appointment clause, but not removal (aside from impeachment, which is
fairly uncommon)
Humphreys Executor v. US (US 1935)
Facts: Hoover appoints Humphrey as Federal Trade Commissioner; later asks him to resign,
refuses, so FDR fires him (doesnt give a reason).
FTC statute: can be removed for inefficiency, neglect of duty, or malfeasance in office
Court: Court of Appeals certifies 2 questions to the Court:
o (1) How do we know whether statute restrains Presidents power?
Textual arg: Legislative intent clear that there was a restraint on Press power
Why else would they list specific reasons for removal?
Character of the commission: Supposed to be nonpartisan, Duties were quasilegislative and quasi-judicial
Tenure of officers:
AG serves at the pleasure of the President. Starting assumption: where
statute says nothing, the Pres can remove at any time (power of
removal is incident to the power of appointment)
Weiner: War Claims Commissioners: statute says nothing about removal.
They had adjudicatory functions; not so simple as the assumption of Pres
removal power
Shurtleff General Appraiser of Merchandise: same removal provision
of Humphreys (inefficiency, neglect of duty, or malfeasance in office)
o No restriction here - no fixed term of office in this case (if they
didnt interpret it this way, Shurtleff would have had life tenure,
based on good behavior)
Look to Congressional intent regarding the office, as well as
statutory language. If Congress meant for independence, Court will
read it into the statute, even if its not written
o (2) Is this restriction an unconstitutional infringement on the Pres power? No
Meyers (Pres could remove postmaster Pres has plenary removal power)
Court admits they got carried away there, limits that holding to
executive-function officers only
Here, officers are quasi-legislative and quasi-judicial:

18

Look to given powers, and the nature of those powers

Must look at the character of the office
Certain amount of regulation inherent even in judicial process of enforcement
(court seems to be disregarding this)

Notes:
Always difficult to distinguish between the 3 powers
Though things were different at the time this case was decided. Congress didnt have staff, so the
FTC would perform legislative functions for Congress
Morrison v. Olson (US 1988)
Facts: see above.
Court: Gets rid of quasi-judicial and quasi-legislative test. Test is whether the statute impedes
the Presidents ability to perform his functions
o Also Appointments Clause: IC appointed by special division (court) - group of judges on
DC Circuit Court
Though constitution gives this power to Pres, court can do it because Clause
says, BUT Congress can vest the appointment power of such inferior officers in
President, courts of law or heads of departments
Employees not covered by the constitution
How does court know that independent counsel is inferior? Look to factors:
Removal provisions, Certain limited functions, Limited JD, Limited
tenure
o Inter-branch appointment issue: Wanted this to be independent; if Congress wasnt going
to appoint him, then next obvious branch would be the judicial
No textual prohibition on this
Argument against inter-branch appointments where incongruity between the
function provided by the official and the function of the branch
But here the person being appointed is a prosecutor, and thats not
incongruous with the courts function
Scalias dissent:
o Shes not subordinate to any official, so shes completely executive
o This is an inter-branch appointment (thinks that different branches can be vested with
power to appoint only officers of their own branch)
Notes:
Unclear that this test is easier to apply than the previous one - what about removing AG only for
good cause?
o Many think that on a national level, its essential that the Pres and the AG do agree, but in
states it can happen that governor and AG are from different parties, and the government
continues to function
Unitary executive theory: Constitution gives the executive power to the President ALL of the
power is vested in him. Implication is he must have plenary power to remove, otherwise he
wouldnt have all the power
o This case suggests that the Constitution does not embody this theory - gives Congress
considerable power to structure the executive
There is a different way of thinking of these issues:
o Some say that all of this has to do with politics.

19

Ex: Clinton didnt like Reno, but didnt remove her because if he did, hed have
to appoint someone new, and to do that hed have to get it through the Senate,
who was Republican at the time
Siegel: thinks Pierce puts too much emphasis on this, but it is another way of looking at

2.

Policy Control
a.

Presidential Authority, generally

If president orders an agency official to do something, is it the law that they have to do it?
Depends on the statute: For some agency officials, their statute says it is their legal duty to take
orders from the Pres (military agencies)
o Not true for others (Sec. Of Treasury, Post Office, Interior Department, etc most agency
officials)
Youngstown Sheet & Tube Co. v. Sawyer (The Steel Seizure Case) (US 1952)
Facts: Truman ordered Sec of Commerce to seize steel mills in the face of a workers strike to
ensure continued production during the Korean War. No statute that gives Pres this power.
Court:
o Black and Douglas: Pres could only do this with explicit or fairly implied authorization
by statute, and there was no authorization by statute or constitution
o Clark and Burton: Pres could have authority to act in publics interest in emergencies,
but Congress had contemplated this and had enacted several statutes, none of which gave
Pres this authority
Congress had therefore preempted the field, leaving the Pres no authority to act
o Jackson: President can act:
With express or implied authority (power is greatest)
But power not absolute see Schechter Poultry (nondelegation doctrine)
Middle ground, inherent authority (can only rely on his individual powers)
Twilight zone where Congress and President could both have powers
In contradiction of statute (power is lowest)
o President had acted against Congress will - had explicitly rejected this sort of power
Tests for Granting/Removing Power and Separation of Powers:
President
Congress
Statutory Authority
Schechter Poultry
Chadha, Bowsher,
Buckley
Inherent Authority
Statutory Prohibition
Morrison v. Olson
o

o
o

Courts

Jackson: this case is in the 3rd box (prohibition) because they rejected this action
Though fact that they did not do X doesnt mean that they voted for Y
Inherent authority box is much harder
Frankfurter: Failure of Congress to grant explicit authority could = direct ban on this act
There also could be emergency situations where he could act without approval
Dissent: CJ Vinson, Reed, Minton: There was no express prohibition
Initiative was reasonable for securing Congress objectives

20

History of prior presidential seizures supported argument that he had the power

In re Neagle (US 1890)

Facts: President had Neagle (US Marshall) protect Justice Field. Neagle shot someone he thought
was attacking Field; argued that he couldnt be prosecuted for something that he was legal
obligated to do. There was no statute authorizing this, BUT
Court: Found that President had inherent authority to have a US Marshall protect the Justice
How is this different from taking private property in Youngstown? Not clear any distinction holds up
with:
Dames & Moore v. Regan (US 1981)
Facts: During Iranian hostage crisis, Carter negotiated with Iran, with stipulation that all claims
between 2 countries would be sent to Iran-US claims tribunal
Court: There was a longstanding expectation that President would handle foreign relations
o Drew on historical practice
o Thought these people were likely better off in the tribunal anyway
o Its very challenging to determine what the inherent powers of the President are
Notes:
President cant order a federal official to do something unlawful
President cant order a federal official not to do a legal obligation
o Have to look at the history, etc. to determine if its lawful or not
Hypo: If exec official serves at the pleasure of the President, and has a statutory duty to make a
certain decision, and there are different decisions he could make, all of which would be upheld by
a court as law. If President calls him up and says, I want you to choose A can he do this?
o Certainly could make the call - President can give orders to federal officials, in their
discretionary duties, but not their ministerial duties, because they eventually report to him
o If the person serves at the pleasure of the President then the President can make orders
w/r/t their discretionary duties
This is why those cases about the Pres removal power are so important
o No statutory duty for officials to obey the Press order, but there IS the Removal Power
Jewels of the Princess of Orange (Op. AG 1831)
Facts: Jewels of Princess were stolen, brought into US. AG instituted forfeiture procedure, but
Pres wanted it to cease. Pres asked AG whether he could order the district AG to cease
AG: Though the constitution doesnt specifically grant this power, he could do this
o In this case, it was in the public interest
o District attorney serves at the pleasure of the President, so makes sense that Pres could
direct the actions of the attorney. BUT, cant ask him to do something that he couldnt do
anyway (has to be lawful.)
Conclusion:
o (1) Here, district attorney has the power on his own to dismiss the case (this is lawful)
o (2) Attorney serves at the pleasure of the Pres
o (3) If congress has vested the power in this official, the power is with him, and not with
the Pres (he cant just stand in the shoes of that official)
Until he fires them, they can do what they want
Notes:

21

Hypo: If FCC served at pleasure, gives someone a license, and someone else who wanted the
license brings case for judicial review. FCC says they gave the license to applicant A instead of
B because the President told us to. Is this is a sufficient answer?
o Still need to investigate whether its independently lawful - by itself it is not sufficient,
because he can only tell them to do things that are lawful
See Sierra Club v. Costle, page 264 notes case: Presidents order neither adds to nor detracts from
the lawfulness
o Even if choosing either one would have been a lawful decision, and they only chose A
because of Presidents command, its fine
Would this ever not be ok?
o Where agency performing a judicial-type function (due process-type problem with
President being involved)
b.

Executive Orders 12,291 & 12,866

Executive Order 12291 (2-17-81)

Defines requirements for agencies
Procedural:
o Paperwork requirements cost/benefit analysis of any proposed new rule
o Consult with OMB, considers the Regulatory Impact Analysis, must approve the proposal
Effectively, gave him the power to block any rule that any agency was
considering
o Why? Makes agencies think about what theyre going to do
Pres is like CEO, cant effectively control everything everyone under him is
doing - Needs one guy to be his pointman on regulatory impact
Substantive:
o Regulatory actions was not to be chosen unless the benefits outweighed the costs
o Why? Regan wanted to cut down the burden on businesses
Notes:
Was this order lawful?
o Applied to directors of non-independent agencies (those that serve at the pleasure of the
President)
o Cost-benefit analysis: Some agencies are forbidden from conducting cost-benefit
analyses (see American Trucking and NAAQS)
Agency wasnt allowed to consider costs
o Here, the agency shall do this to the extent permitted by law
So if their organic statute forbids it, then its not required by this act
OMB: serving at the Pres pleasure means that he can tell you what to do
o Some people might not like this Order, but it seems perfectly lawful
Clintons changes: Exec Order 12866
Part A:
o Has to be compelling reason to go forward with action
o Different role for the central person: only can review significant regulatory actions
Must act quickly
12866: benefits have to justify the costs, as opposed to outweighing the costs
o Doesnt really make a huge change

22

Kept in place by the Bush administration

Bushs Order 13422:

Applies to guidance documents in addition to the new rules
Each agency now needs a regulatory policy officer
Notes:
What about independent agencies?
o Someone who can only be removed for cause can Pres order them to do something?
o Typically, statutes dont say anything about this
For cause: coded way of saying that this person is to be independent, doesnt
have to take orders from the President
Can Congress protect officers tenure; say this person doesnt have to obey the Press orders?
o Congress is imposing a statutory prohibition on the powers of the President, so we want
to make sure is satisfies the Morrison test that it doesnt impair the ability of the
President to ensure that the laws are faithfully executed
Could it impair Presidents ability to ensure that the laws are faithfully executed?
No: Could undermine whole point of having independent agencies if yes
Yes: If not accountable to Pres, then theyre not accountable to anyone
o Is this a violation of non-aggrandizement?
Taking power away from Pres is not the same as the legislature giving more
power to themselves
But if agency official is less answerable to the President, seems Legislatures
power over them is still increased - could be a practical aggrandizement principle
o Why isnt there a case like this? President doesnt do things like this.
If we knew the answer, each side would use their powers to their fullest extent
Ex: Clintons 12866: Applied to independent agencies 4(b) and 4(c)
Every agency is required to participate in Unified Regulatory Agenda
Dont usually want to fight this
B.

The Courts and Administrative Agencies

Northern Pipeline Construction Co. v. Marathon Pipe Line Co. (US 1982 - later overruled)
Facts: NPL had a claim against M for breach of duty, etc., which went to Bankruptcy court when
M declared bankruptcy. Ms objection: Bankruptcy court is an unconstitutional court. Its taking
care of claims that would be dealt with by Art. III courts, and these are not Art. III courts
(sometimes referred to as an Art. I court, which is really an administrated agency)
o Bankruptcy overview: bankrupt when you cant pay your liabilities when due. Declaring
bankruptcy makes all creditors stop trying to get money, goes to court, who then divides
assets by liability
Bankruptcy Act of 1978 created bankruptcy courts to resolve disputes
Features of the bankruptcy court:
Judges appointed for 14 years terms by Pres/senate, removed for various
factors. Salaries by statute, subject to reduction by Congress.
Court: Not an Art. III court, because constitution guarantees salary protection and lifetime tenure
Important for separation of powers that the courts are independent
Want courts to issue justice fearlessly
Something special about the fact that this case involved state law claims

23

This case just seemed too easy - historically, state law contract claim has always been
part of the judicial power
Brennan: Exceptions to where Art. III judges exercise the power:
o Territorial Courts (Am. Ins. Co. v. Canter, DC Courts [Palmore v. US])
Congress can regulate here b/c no state government in the territories and DC
o Courts-Martial (Pynes v. Hoover)
Always been extraordinary control over military via Art. I (make rules & regs)
Exigent circumstances usually the case in the military context
Why not just a specialized Art. III court?
o Is this such a different subject matter from bankruptcy?
o Public Rights issues (Murrays Lessee)
(1) Matters that arise between government actor and another, and
(2) Has to be kind of thing that could be determined exclusively by exec or
legislative branch
Whites dissent: This should be more of a balancing test
o Majority takes unrealistic view of bankruptcy proceedings. Congress is not delegating
power to themselves (no violation of non-aggrandizement principle)
Precedent: specialized courts are OK
o Art. III seeks to promote certain values, and Congress is looking to promote other values
We just need to balance these different values
What values promoted by Bankruptcy courts (how are they like admin agencies)?
All subject matter-specific, certain expertise
1.5 million bankruptcy cases/year (all federal courts put together have
400,000/ year)
o Any one case is pretty simple
Bankruptcies are cyclical, so if all bankruptcy judges had life tenure, we
wouldnt be matching supply and demand
What are Art. III values?
Integrity of judges, Separation of powers
o

Notes:
When can Congress say that there is no judicial review?
o No explicit right this is only a privilege granted by Congress
o Government has sovereign immunity cant sue unless the govt consents
Just a historical understanding of what could exclusively be determined by non-judicial officers
o Ex: Murrays Lesee (collector of customs stole $, law permitted Treasury to issue
distress warrant for missing money, and US Marshall could immediately seize his
property to satisfy the judgment without court action)
Court: must be consistent with DP, but this is the process historically
Hypo: If you have 2 cases: (1) Dispute with IRS for not paying taxes; (2) Dispute with neighbor
about property lines - One of these cases going to Art. III, and the other to special Art. I court,
which do you think is more important for going to each court?
o Art III: taxes: Concerned about political element
If judge rules against you in tax dispute, hes technically an employee of the
government, going to be forced in some cases to rule against his own employer
If he could be removed at will, wed be worried about a fair ruling we want him
to have life tenure
o Art I: property: Dispute between 2 private parties, judge should be neutral

24

BUT, this is not how it works: Public rights cases where government is a party is OK to
go to an Art. I court
Brennan: this might make more sense, but were looking to history, and not
political theory, as our guide in this case
How does Bankruptcy case work under these exceptions?
o Not territorial; Not court-martial; Not public rights (govt is not a party)
o 4th exception? Part IV of opinion: Adjunct exception:
Court can refer fact-finding duties to special magistrates, clerks, etc.
Crowell v. Benson: federal workers comp scheme. Ok for initial decision
to be in administrative body, as long as essential attributes of judicial
decision remain with the court. MUST be judicial review.
Why couldnt Bankruptcy Act be upheld under this exception?
Bankruptcy Court given far too much power - was allowed to hold a jury
trial, issue writs of habeas corpus
o Standard of review was too deferential (only for clear error)
o Congress didnt create the right (Contract claim), so they dont
have discretion as to how theyll be adjudicated
Flexible balancing v. Doctrinal rules approach: always more expedient to send a matter through
an Art. III court, but we are sacrificing expediency for Art. III courts
o

CFTC v. Schor (US 1986)

Facts: S was investor in commodities. Account with broker (Conti) showed debit balance. S
claimed debit balance b/c C violated the Commodities Exchange Act, brings claim for violation in
the CFTC.
o Constitutional for the CFTC to hear claims under CEA b/c of adjunct exception
Congress creates right, it can send it to adjunct, provided theres judicial review
in Art. III court
This is state-law claim, and adjunct theory only works for Congressionallycreated claims
o C claimed debt in federal district court. S counterclaimed in CFTC; DC dismissed
C then brought his claim to the CFTC, won. S then said that the claim should not
have been brought there
Court: Uses balancing approach (not inflexible doctrinal approach)
o The test (not exclusive) Factors:
(1) Origins and importance of the right to be adjudicated
(2) Extent to which essential attributes of judicial power are preserved in Art
II, and to what extent non- Art. III courts exercises this power
(3) Initial concerns of Congress that made them depart from Art. III courts
o Pipeline is overruled: All categorical boundaries of Northern Pipeline now become
factors
How does it apply in this case?
o (1) This is a state contract claim, not a congressionally given right
This factor cuts the other way, but its just one factor among many
Thomas v. Union Carbide: (we didnt read this): matter between 2 private parties,
but matter was very closely tied up in a public regulatory scheme
o (2) Distinguished from bankruptcy courts here, specialized agency
Decisions are enforceable only by order of the district court (CFTC decisions not
enforceable)

25

Standard of review less deferential (de novo; gives more power to Art. III courts)
(3) CFTC is supposed to be immune from political pressures. Makes sense for them to
hear this counterclaim because theres really just one claim here.
But, To decide one claim is to decide the other. When CFTC is presented with
the main claim, it should simultaneously decide the counter claim

Notes:
These are among the factors that the court considers also:
o D got to choose his own forum brought the claim in the CFTC voluntarily
Parties cannot consent to having their case heard in federal court without SMJ
Consent legitimate here b/c can waive certain constitutional rights (can waive
case into federal court, but not out of federal court)
Can agree not to take case to federal court (i.e., arbitration clauses)
Siegel: if I were deciding this case, the only factor I would consider is consent
Brennan: Any one case doesnt seem like a big deal for the courts, but as we send these cases one
by one over to the administrative forums, the need for Art. III courts will eventually diminish
o Categorical v. Balancing:
Categorical: Chipping away at courts interest is doing the same to individual
interests
Balancing: Not firm about what is required for not stepping over the line
IN SUM: One clear test: Non-aggrandizement principle
o Everything else is a mushy, balancing test
Balancing approach has generally won out

d.
1.

What do Administrative Agencies Do?

Adjudication
2.

Constitutional Constraints
a.

What Process Is Due?

Mathews v. Eldridge (US 1976)

Statute: Receive benefits when disabled (cant engage in any substantial gainful activity
anywhere in the economy) Process:
o State team (medical and vocational) investigate; State team proposes termination;
Claimant can respond in writing; Agency considers response, makes final decision;
Opportunity for federal review; Termination; Claimant can get de novo agency review
w/ hearing before an admin law judge; Administrative appeal; Judicial review
Facts: E brings suit for termination of SS disability benefits before he got chance for a hearing,
thought this violated rule of Goldberg. State agency sent him a notice of termination, after
determining from medical records that he was no longer disabled. E had been through this
process twice before, was always given benefits after the oral evidentiary hearing. In 1972,
brought this suit instead of going through whole process again
Court:
o DP always contains 2 questions:
o (1) How do we know that deprivation of Es benefits are property?
Govt agreed that this was property conceded here and in Goldberg

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(2) What process is due? NEW test:

(1) Private interest
Not as great as welfare recipients. No financial need, can still get money
from other sources (With DP, this is all about timing)
o But, this P is on the fringe of existence
In practice, most people who need SSD benefits are poor
(2) Public interest
Non-administrative: paying out more money to those who are
undeserving
Administrative use of resources
This is a legitimate thing for the government to do
(3) Mitigating procedural safeguards (risk of deprivation)
Test for eligibility medical
o Less risk of inaccuracy
o Oral representation doesnt add much to this
Goldberg: Was not scientific, medical issue. Oral testimony, personal
circumstances, credibility, etc. were at issue, and oral testimony would
help out more here
o BUT here, test is medical and also partly vocational
o Though oral argument was valuable here, the Court says that the
DP laws must apply to the generality of cases
B/c it was a medical issue, credibility not really at issue
o Implicitly saying that doctors are credible, welfare recipients not
Gauging risk of error by seeing how many get reversed
o Court: bare statistics not satisfactory measure of fairness
o Decisions based on open file P can continually update his or
her file, so info is always changing (overturning can be based on
new info, and doesnt show that the first decision was wrong)
Amici overstate the reversal rate
o Well never know precisely what the rate of error is, because we
dont always know which decisions are right or wrong

Notes:
Process is not fixed can be one thing for SS and another for welfare
o Good? Bad?
Doesnt protect from inefficiency
Balancing taking and process
Problem with measuring these factors how to put a number on them?
o Even putting a $ figure on them doesnt necessarily capture the true private benefit
o No precise methodology for measuring these factors
Another mushy balancing fact
In every Powell opinion, lists a bunch of factors, then just decides
No quantification of any of these 3 factors
o Courts tie-breaker in a close case: Take into account the good-faith efforts of the
individuals charged by Congress with the administration of the welfare programs
This suggestion was not in Goldberg
Brock v. Roadway Express (US 1987, notes case)

27

Facts: If you employ truck drivers, you cant fire them for refusing to drive an unsafe truck, or for
reporting an unsafe truck. Agency can order reinstatement of driver if fired for illegitimate
reason. This was all about timing opportunity for all the procedure you could want, but that
didnt happen until after the preliminary order.
Court: Must tell company what evidence they have, must have opportunity to respond; but oral
hearing with cross not necessary before reinstatement
o Test:
Private interests: Companys interest in not having to employ someone who
they dont want to
Their property is being taken (forcing them to pay out $ to employee)
Private interest of employee interest in avoiding wrongful discharge
o Although mainly companys interest is being considered, court
says you can consider other private interests being implicated
Public interests: Protecting safety of the roads (not always cost)
Risk of error: Procedure was for Labor Dept. to engage in ex parte investigation
(could claim illegal firing without telling company who they fired illegally)
RE wanted to have evidence presented to them - Great risk of error when
the company doesnt even get the chance to tell their side of the story
o RE needs chance to respond, but no need for cross-examination

Notes:
Criticisms:
o Balancing all these costs is hard to measure (comparing apples to oranges)
o Might have some sense that its wrong to make costs part of what DP requires
Think there should be a way of measuring independent of cost
o If were weighing the public interest factor, might suggest that it could justify anything
o Too mushy
Whats the alternative?
o Traditional process (Scalias view)
Advantage: Doesnt require us to consider costs
Disadvantage: Doesnt allow for evolution of rights
I.e., there didnt used to be disability benefits (not always traditional
methods for things because those things didnt used to exist)
Sometimes the tradition is bad. In old days, everyone just wanted to be
left alone by the government. Today, were more connected.
o Natural Rights
Fundamental fairness whatever protects the rights of the individual,
autonomy (Stevens in Brock)
Advantages: Liberal political theory
Disadvantages: Problems of application
Can we really say were just disregarding costs?
o Hypo: Blood test: 70% accurate, $100. HLA test: 99%, $1000. Can state take away
fathers money on the ground that the blood test says hes the father?
Depends on how you balance the factors:
Weigh cost of accuracy to the father v. cost of test to state likely weighs in
favor of the father
Individual rights definitely HLA test
o But hypo: 100% accurate, $1 million: We obviously wouldnt choose this

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Saying were ignoring costs is really saying that costs are given too much weight
Lots of criticism of the Eldrige test, but theres really not anything better
b.

When Is Process Due?

Londoner v. City and County of Denver (US 1908)

Facts: CO laws provided that board of Denver could order paving of street, and could assess the
costs onto the people that lived on the street. Petitioner: there was no petition for paving, and
there was no hearing.
Court: Ruled for owner. Can do paving without a hearing, but for actual assessment, there must
be a hearing
Bi-Metallic Investment Co. v. State Board of Equalization (US 1915)
Facts: General increase in property value for all properties in Denver. Under Londoner, Ps
claimed that they deserved a hearing
Court: Where all assessments are increased by the same percentage, and it affects the population
generally, there is no hearing required
Notes:
Distinction between these cases: Based on number of people involved
o Where a rule applies to more than a few people, it would be impracticable for there to be
a hearing for everyone
Legislative process can also change this (more political power when more people
are involved with a mass assessment)
o When your mass rights are involved, you have a political participation right
o When rights infringed on are en masse, then you have the right to a hearing
Paving the street affects a lot of people; whereas figuring out each persons
assessment is individualized
These 2 cases constitutionalize the concepts and categories of adjudication and rulemaking
First, ask: Is something happening that is individualized?
o If yes, right to individualized
When is DP due?
When life, liberty, or property is being taken
o Two understandings:
(1) 3 different categories that have historically been defined
(2) General phrase encompassing all things important to us
I.e., taking away right of foreign spouse to immigrate to the US
This is NOT the definition of the DP clause
So what is life, liberty or property? See:
Board of Regents of State Colleges v. Roth (US 1972)
Facts: Prof hired for 1 year K at Univ. of WI, fired for no reason. Thought he was fired for
criticizing administrators, thought this was retaliation for his 1st AM freedoms
o In the 1950s, losing ones job wasnt a right, it was a privilege (no right to be a
professor government employment is a privilege (McAuliffe v. Mayor of NY,1892)
Bailey v. Richardson (DC 1950) privilege v. rights

29

Court: Right-privilege distinction is abolished. Roth is not entitled to process.

o Now, look to the nature of the interest at stake (not the weight, no balancing):
Compared to Goldberg: G entitled to pre-termination hearing, Roth no; G lost
benefits, Roth lost job; No denying that Roth has important and significant
concern; its just not the right time
o Roths interest in his job was not property
Wrong type of interest wasnt enough of an expectation to create an entitlement
Can only say something has been taken away if you have a sense of entitlement
This entitlement comes from state law (NOT the Constitution - protects it
once you have it, but it doesnt give the right to the property to you)
Tenure after 4 years, and there was no right to be rehired until after that time
Marshall: Would go further in defining liberty and property thinks every citizen applying to
a government job is entitled to it. Really, hes saying if the govt is doing something important
(handing out jobs), it should do it fairly.

Perry v. Sinderman (US 1972)

Facts: Similar to Roth (companion case), P had worked for several years in the district. School
had de facto tenure, not formal tenure
o 1st AM free speech issue: illegal to fire for free speech reasons, even if untenured
Court: Legitimate claim of entitlement, because he had de facto tenure expectation of rehire
Notes:
Criticism of Roth: gives states a perverse incentive to not create any property
o University could abolish tenure then just fire whomever, whenever (save $ on hearings)
Constitution does not protect property
State is the one that creates it if they havent created it, theres no process due
(States have power to change the nature of your property by changing their law)
o But universities dont abolish tenure because there are countervailing incentives:
Want to attract good faculty want happy employees
Tenure promotes good scholarship
Hypo: w/r/t real property could states take away property interest in all new real property?
o In theory, likely could but legislative process would likely take care of this
o Supreme Court would likely find issue with this as well
Difference between real property and others: traditionally recognized property
Our views of property:
Inner circle: you
Around that: traditional property
Around that: New Property
Outside, floating around all of this not property at all
o Weve been moving our views outward toward new property not likely states could
move it back in toward traditional property as the only protected property
o Property doesnt mean the same thing in the DP clause and the Takings clause:
Would mean that the govt could never downsize (would have to compensate at
fair market value for retirement, getting benefits taken away etc.)
Hypo: If position was unionized, and K with state holds that you can only be fired for reason?
o Now entitled to some sort of process

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If state gives you substantive right (not to be fired without reason) triggers procedural
rights under DP
o Criticism: Now 2 almost identical employees are fired, one without hearing and one with,
it seems that non-unionized employee is more in need of a hearing
Procedural protection disappears precisely where its needed
Liberty Interests:
o Common definition: Freedom from restraint on movement (putting in jail)
o According to Roth, liberty is much broader: Right of individuals to K, have family,
acquire useful knowledge, marry, establish a home, worship God, generally to enjoy
those privileges recognized as essential to the orderly pursuit of happiness
Taking away license to practice almost always deprivation of liberty and property
o Where does liberty come from?
Property comes from the state
Liberty is more universal should be the same everywhere (exists by virtue of
the constitution itself)
o Roth wasnt taking away his liberty b/c idnt prohibit him from engaging in the
occupation of being a professor (just lost one particular job)
Didnt do anything that would taint his reputation (no practical impediment)
By not giving him a reason, they didnt impose a stigma
If they had said, for reasons of sexual harassment, they would be taking away
his liberty and therefore he would be due DP
Back to Property: Between Roth and Sinderman, state can choose if it wants to give a property
interest in your job
o But can the state go halfway? See:
o

Arnett v. Kennedy (US 1974)

Facts: K fired from govt job, had tenured protection, could only be removed for cause. Statute
said the procedural right was a post-termination hearing
Court: You must take the bitter with the sweet (Rehnquist). If the statute grants you the
property, you have to take the protection afforded in it
o Federal statutes can also create property rights
o This view only got 3 votes
Cleveland Bd. of Education v. Loudermill (US 1985)
Facts: L lied about previous convictions on his application for being a security guard. Board sent
notice of dismissal, L not given chance to respond; Board adopted resolution approving the
dismissal. As civil servant, L could only be fired for cause:
o Was entitled to admin review, and reviewing commission upheld dismissal
o L was entitled to state court review, but brought it in fed court instead
o Alleges statute is unconstitutional because it doesnt afford chance to respond
o State: under Roth and Sinderman, L got exactly what the statute gives
Court: (Question 1): Is DP due? Yes: OH statute creates property interest
o Rejected notion that following procedures set out in statute granting the interests is
sufficient DP. DP is granted by constitution, not by legislative grace:
Once property is conferred, subject to constitutional requirements
o Categories of substance and procedure are distinct. Otherwise, the clause would
be reduced to a mere tautology
Siegel: But, at least state would be required to follow its own procedures

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(Question 2): What DP is due? Eldridge Balancing Test:

Private interest in employment = Very important
Public interest in expeditious removal of unsatisfactory employees, avoidance of
administrative burdens = Does not outweigh these interests
Preferable to keep qualified employee than train new one, can suspend
with pay, etc
Risk of erroneous termination = Dismissals for cause often involve factual
disputes important!
Hearing is necessary: Need not be elaborate, not as extensive as Goldberg in public
employment cases

Tenured Public Employees have right to minimal DP:

o Oral or written notice of charges against him
o Explanation of the employers evidence
o Opportunity to respond
Rehnquists dissent: Ls process should be enough
o Plurality of justices in Arnett thought it was
o Ignores duty under Roth to look to state law for property interests
o Balancing depends on Courts subjective viewpoints of the underlying interests
Lack of principled standards

Notes:
Hypo: What if state said, No tenure, but if youre fired, you can appeal, and itll only be upheld
if govt can show that you were fired for cause?
o Upshot: you basically have tenure
o Down: if set up in this purely procedural way, you might not have been granted a right
Never been used, but might be a game the state could try
In both Roth and Sinderman, P said real reason for firing was for exercise of 1st AM freedoms
o Still cant be fired for prohibited reason
o If Roth was fired for 1st amendment freedoms, what could file a lawsuit
Even with civil suit available, its much more favorable to the employee to have a
hearing before termination (so they could keep their job)
L illustrates the flexible nature of DP: Not always entitled to traditional definition of a hearing
sometimes process is much more minimal
Also, Goss v. Lopez used this minimal DP
3.

Statutory Constraints

Notes:
Constitution provides the DP minimum, but government can give you more than that
2 places to look:
o APA (provides the right to a hearing (in 554 adjudications) when the organic statute
requires them)
Itself, never requires them (tells you what to do once theyre required)
Applies in every case of adjudication required by statute
o Organic statute for agency involved
US v. Florida East Coast RR Co. (US 1973)

32

Facts: RRs want rates established by ICC set aside. ICC, pursuant to ICA, initiated rulemaking
procedure here challenged:
o Procedure:
ICC held conference for RRs to voice concerns, RRs left with impression that
there would be hearings in the future
ICC tentatively promulgated the rule, gave RRs 60 days to reply in written form
Anyone requesting oral hearing had to set forth reasons and evidence
o Informal rulemaking/ Notice and comment proceeding
o RRs thought they were entitled to a hearing based on 2 theories:
(1) Organic statute triggers the APA - 556 & 557 (require an oral hearing)
(2) Organic statute as amended since the case started
o DC: ICC failed to comply w/ APA ICA requires ICC to act in accordance w/ APA, and
so only providing for written submissions f/ RRs was a violation (RRs were prejudiced)
Court: Trigger theory: ICC is required to have a hearing, but
o APA says that 556 & 557 are only triggered if organic statute says on the record
after opportunity for an agency hearing
After hearing (ICA) does not = on the record (APA)
RRs say that statute doesnt just say after a hearing, it also says Commn shall
give consideration to... and on the basis of such consideration... + hearing
should trigger APA
o Rejects RRs argument that since statute also says, Commn shall give consideration to...
and on the basis of such consideration... + hearing should trigger APA
Dont have to have an oral trial to take these things into account goes to the
substance of the law
BUT these are not magic words, - others could work. But there are statutes
that use these exact words, so Congress knows how to use them if they want to
Reference to APA is appropriate for determining meaning of hearing - on the
record after hearing can be satisfied by written submissions
Doesnt have to mean oral, evidentiary hearing
Parties were given:
Fair notice of ICCs intent
Opportunity to comment or object -- DP
o Hearing depends on what kind of proceeding is at stake: Understanding of DP is different
between adjudicatory and RMing contexts
Other forums for resolving issues in RMing, oral hearings not practical
Facts to be determined differ in each:
o Londoner/ Bi-Metallic distinction: difference between:
Proceedings for purpose of promulgating policy-type rules/standards (less formal
hearing required), and:
Proceedings designed to adjudicate disputed facts in particular cases
This case is like Bi-Metallic: Carried out across board, didnt single out anyone
This was a RMing function doesnt entail DP rights (though Congress
may prescribe them for legislative-type decisions)
In legislative decisions, no strict hearing requirement presumed

Notes:
Until 1950s, agencies made rules formally (hearings looked like a judicial trial)
o Personal safety vs. personal freedom is a policy issue, its not a factual question

33

o Case seems to adopt Prof. Davis theory on adjudicative v. legislative facts (see below)
How to distinguish adjudicatory from legislative functions?
o Numbers affected (not dispositive)
o Prospectivity
o Factual bases (Professor Davis)
Legislative facts: more issues of law trial is not necessary for this
Adjudicatory facts: who, what, where, when, why
Oral testimony is necessary because the parties are more knowledgeable,
theyre the experts about the issues of concern

Califano v. Yamasaki (US 1979)

Facts: SS Act recoups overpayments of disability benefits from future payment (204(a)), except
where Sec finds (204(b)) Recipient is without fault, and adjustments would either:
Defeat purpose of the Act (deprive person of income required to live), or
Be against equity and good conscience (recipient would relinquish valuable right
or worsen his position)
o Secretary: Makes decision, notifies recipient, who can (1) Seek reconsideration or (2) Ask
Secretary to forgive debt. IF either is filed, recoupment is deferred
Goes to regional office, if they decide against recipient, recoupment begins
If recipient continues to object, gets oral hearing (de novo), can get back pay if
decision in his favor
o DC: hearing before recoupment required
o Court of Appeals: found this to be unconstitutional
Court: Before getting to the constitution, should check first if the statute requires it
o Neither 204(a) of statute nor Constitution requires a pre-recoupment oral hearing
Requests for reconsideration are straightforward, written review is adequate
o 204(b) does require an oral hearing (doesnt say anything explicitly)
Secretary must assess fault and whether there would be anything against
equity and good conscience (not readily submissible in written form)
Critical consideration is the nature of the function/proceeding
Knowing if this is in good conscience requires knowing the recipients
particular circumstance (credibility may be at stake)
Notes:
Paradox here: Both cases concern considering facts, but come out other ways
o In East Coast RR, statute required a hearing, but the Court didnt require oral hearing,
whereas here, the statute doesnt require a hearing and the Court finds one
o Critical consideration is not language its background understanding of when there
should be a hearing (more important in adjudicatory procedures than in RMing)
Yamasaki entitled to hearing before benefits are reduced, while Eldrige said you didnt have to
have one before your benefits are terminated
o E: evidence was going to be medical, could be determined in writing
o Y: more murky, good conscience evidence not objective, best understood by oral
testimony
Richardson v. Perales (US 1971)
Facts: Issue was whether P was eligible for disability benefits - whether he was able to engage in
meaningful, gainful activity. Ps claim was denied, appeals to agency, gets it up to stage of
hearing examiner (today: Admin Law Judge (ALJ))

34

P had gone to 2 doctors who didnt find anything wrong with him
Dr. Morales (his doctor) found he had a sprained back -- testified
Dr. Langston found there was nothing wrong (didnt testify)
Dr. Bailey found he wasnt sick (didnt testify)
Dr. Matson found that there wasnt a problem (didnt testify)
Dr. Lampert consulted without examining P
Dr. Munslow examined P
Dr. Leavitt didnt see P, but explained procedures testified
o Hearing examiner found that he was not disabled. Affirmed within the agency, and then P
sought review b/c he didnt think the written evidence of people who didnt examine him
should be allowed in this case (hearsay) didnt get the chance to cross-examine
Court: Evidence rules come from APA and from statute itself, as well as agencys regulations
o APA 556(d): Essentially where relevant, evidence is admissible (like FRE 402,403)
o Organic statute: APA was modeled on the SS statute (Evidence may be received even if
inadmissible under the FRE) - Take in anything so long as its relevant
Admin hearings should be more informal lay people should theoretically be
able to do this on their own without the help of a lawyer
Cost is a major consideration - 800 have to be resolved every day
FREs tend to slow things down, and might be unnecessary
Findings of fact:
Admin: ALJs can sift out on their own what is relevant or not
Civil: judge or jury
o Type of evidence doctor testimony. Not only can this evidence come in, but it can
provide the entire basis of the decision
o Rejects the residuum rule, (had to be enough to support decision w/o hearsay)
Court: All the non-hearsay evidence was in favor of Ps disability, so obviously
the court is no longer following this rule. Why?
(1) Evidence is (must be) particularly reliable
(2) P had the chance to subpoena the officers and he didnt
o But, prior to and since, agency had never once subpoenaed one
of its members (generally wont unless ordered to by a court)
Inefficient, not that useful
Fear that if doctors keep being subpoenaed, theyll raise
their prices
o Leavitts testimony wasnt evidence at all - Never saw P, only gave opinion on his
condition based on others findings (like expert testimony)
Needed in this proceeding because there were so many doctors involved, and
ALJ is not technically competent to know medical topics
Good to have an advisor to help the understand the evidence
o

Notes:
Seacoast: can have an expert comment on the evidence, but cant have them adding anything to
the evidence ex parte
o Here, Leavitt could have added to the evidence because it wasnt ex parte (he was there
for the hearing)
o In Seacoast, judges relied on published scientific evidence, but court said that this was
essentially covering for the other side (didnt carry their burden of proof)
o Siegel: this is a doubtful case
o Part of it has since been overruled; unclear whether this aspect of Seacoast is still the law

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4.

Adjudication and Bureaucracy

Notes: Administrative Adjudication:

Who can preside?
o Agency itself (head of the agency) - Not typical
o Some agency decision maker (Administrative Law Judge)
Tenure to a certain degree, somewhat higher on hierarchy
o Administrative Judge - Whoever agency decides to appoint to hear the case
No tenure protection, etc.
What do they do?
o (1) No decision made at all, only gathers facts -- rare
o (2) Issue initial decision (binding unless appealed, typically subject to internal agency
appeal)
o (3) Issue recommendation
How do they do it?
o Typically, agency is prosecutor and decides the question (brings case against someone
who has violated organic statute)
Not separation of powers issue b/c ALJ is answerable only to head of agency
(certain degree of protection, somewhat independent)
If the initial decision maker is an AJ:
Rule against ex parte communications
People hearing the case cannot also have worked on investigating and
prosecuting
Discovery:
o No particular provision in APA on discovery, so FOIA used by claimants to get info on
the agencies
o Anyone permitted to ask any govt agency for any document in its records, without
having to offer a reason
o Series of exceptions: If its something that you couldnt get through civil discovery, you
cant get it through FOIA either
Burden of proof: Proponent of the rule or order has the burden
o Seems to usually be the claimant
o DOL: true doubt rule: Where evidence is perfectly equitable, claimant gets the benefit
Supreme Court: burden of proof must always lie with proponent of the order
After this case, agency said, Applicant has burden of persuasion, but in order to
win that its likely that he deserves the benefits (essentially like true doubt
rule, but this hasnt been litigated)
Nash v. Califano (2nd Cir. 1980)
Facts: Nash was ALJ, Califano was Secretary of SSA; Goal of the hearing was to determine
whether claimant was truly disabled. Nash challenges reforms to the ALJ system of the SSA as
infringing on independence of the judges
o Peer Review Program: Bureau staff reviews what ALJs do (outside of the system)
Telling them how to decide whether people were disabled
o Quotas on monthly production: Bureau threatens to file incompetency charges against
ALJs who dont meet quotas

36

Quality Assurance Program: 50% reversal rate was an acceptable one (reversal of the
judgments)
Mandates assurance rates, national average could never change
o Employee Pool System: ALJs judicial responsibilities vested in clerical and managerial
personnel
Court: This doesnt allow them enough independence
o Under section 557 (APA), ALJ renders an initial decision; Final administrative decision
is made by head of agency on appeal
557(b): essentially de novo review, except agency may choose to give deference
Suggests that ALJs have little prestige (no deference to decisions required)
Fact that they just render an initial decision (just sort people into 2 piles)
means they are just functionaries
o Dont like to think of themselves as functionaries
o

Notes:
Why do we have ALJs at all?
o Efficiency: Separates the prosecuting function from the decision function (want them to
have some degree of independence should feel free to rule against the agency as it
were)
Not really against agency its goal isnt to not give benefits its to give them to
those who deserve them
What if there were an ALJ pool (centralized, not part of any agency):
o Good: Would establish independency
o Bad: Could establish an adversarial relationship between the agency and the ALJs
What are the goals of the agency head?
o Accuracy, Efficiency, Appearance of fairness (social acceptance of being accurate),
Consistency of substance, Uniformity of process (appearance of constancy)
Tension between independence of ALJs and need to give them some instruction if
things are going to be uniform
Usually ends up being some deference to ALJs, so independence is still important
Uniformity: Randomness shouldnt ever be a part of a legal determination
o Good and bad points on both sides
Bureaucratic model: must have people sift the cases, but theyre functionaries
Judicial model: have to have degree of independence
Heckler v. Campbell (US 1983)
Facts: SSA disability program - what does the hearing have to be like? Must decide whether
claimant can engage in substantial, gainful activity.
o 5-step analysis (detailed process) for ALJ:
1) Claimant engaged in SGA?
2) Severe impairment?
3) Impairment >+ disabling impairment?
4) Can claimant do past work?
5) Can claimant do other work?
o P has issue with #5: Instead of relying on vocational experts, Secretary has a chart
considering physical ability, age, education, and work experience. P wanted listing of
specific jobs (not just youre not disabled)
o Statute: Secretary should make findings of fact, anyone can ask for a hearing where
Secretary shall, on the basis of evidence adduced at the hearing, make a determination

37

Right in statute, should be a hearing; decision should come f/ this evidence

o Generalized inquiry: are there jobs out there which fit a certain pattern
o Individualized inquiry: individuals history to determine disability (adjudicative facts)
Court: No problem for Secretary to exercise control over ALJ this way
o Guidelines, but doesnt interfere with independence
o Doesnt have to be ultimate decision based on evidence introduced at the hearing
doesnt bar the secretary from relying on rulemaking to resolve certain issues
Storer Broadcasting, FCC v. Texaco cited: even though statute says one thing
about hearings, adoption of a rule can circumvent this
Only have to have a hearing IF theres something to hold a hearing about
(not necessary where claimant violates a rule)
o Limitations of this principle:
Can only circumvent this in generalized inquiries (something that could be
litigated over and over)
Cant do it in individualized inquiries (where it would be unique to the claimant)
o Agency had a rule that cut off an issue at the hearing, but want absolute, its flexible
If someone thought their case was an exception to the rule, agency would listen
o Like Bi-Metallic: to the extent that the Court is dealing with individual facts, theres the
right to participate individually
To the extent theyre promulgating rule that affects the general population, can
participate in the rule-making, but thats it

Cutting out a hearing entirely:

Air Line Pilots Association v. Quesada (2nd Cir. 1960)
Facts: FAA passed rule saying pilots cant fly commercial planes after they turn 60
Administrators statutory power under FAA: May issue order affecting, revoking licenses, but
under (c) has to notify holder with reasons, and except in emergency must provide the holder the
chance to be heard and say why it shouldnt be revoked
Court: Rule makes an age-based cutoff, and its within the power of administrator to make rules
o Also like Bi-Metallic; this is so generalized, so theres not right to a hearing
o This goes a step beyond Heckler rule can actually cut off the hearing
In Heckler, one of the things that made it ok was the permission of exceptions:
FAA says a claimant could apply for exceptions, but theyve never
granted one and have said that they dont ever intend to
Notes:
Under what circumstances is it appropriate to not have exceptions?
o No way to tell (factual problem) that someone is healthier than the average 60 year old
In Heckler, can look at a person and determine if they have to normal kind of
disabilities covered by the tables or not
Limiting Hearings through Evidentiary Rules:
o FDA was required to only allow drugs that are safe. Later, was required to only allow
drugs that were safe and effective, had to go back and take out drugs that werent
effective, but only could pull drug after a hearing
o Issued notice saying 1,000 drug companies had to come forward with evidence that their
drug is effective; only acceptable evidence would be a double-blind study (placebo to one
group and drug to another group)
o Weinberger v. Hynson, Wescott and Dunning, Inc. (US 1973 notes case 4 on 469)

38

Drug co asked for hearing, but first was required to show what evidence they
would offer. FAA considered the evidence, decided not enough to get a trial
Court this makes just as much sense as SJ in the civil litigation context
Effects on hearings:
o Limit hearings
o Cut out hearings
o Normally entitled to hearing, but by rule can limit evidence

5.

Rulemaking
6.

Authority to Make Rules

National Petroleum Refiners Assn v. FTC (DC 1973)

Facts: FTC passed rule that uniformly held it was an unfair method of competition to not post the
octane-level ratings on gasoline (this kept it within their JD, defining what unfair methods of
competition are.) Prior to 1970, FTC used adjudication to resolve disputes.
o Objection: FTC doesnt have the authority to make substantive rules (only procedural):
History FDA believed it only had power to pass procedural rules.
5(b) clearly tells agency how to carry out mission; focuses on adjudicatory
powers, procedural guidelines. No mention of rulemaking authority
Statute was enacted in 1914, when agencies acted through individualized
adjudications. Congress intended agency to act only in an adjudicatory capacity.
Congress passed acts granting RMing power in very specific areas. Negative
implication that the agencies did not have general rulemaking authority.
Court: The FTC does have the authority to rule make:
o Textual argument: 6(g) allows for procedural and substantive rulemaking because it
furthers the purpose of the statutory plan and 5. Nothing in the text of 6(g) that limits
the agency's rulemaking power to procedural rules.
o Development of agency power (more expeditious to let the agency make rules)
o Agency didnt think it had power, but construction is a judicial function; theyre wrong
Court doesnt have to defer to their interpretation of their own statute
o 1914 issue: Maybe Congress was uncertain about agencies' rulemaking authorities and
was hedging its bets.
o Rulemaking is good:
Rules are just good because they improve efficiency.
Rules allow for agency innovation and greater participation by more involved
parties. Individualized adjudication allows for only piecemeal participation
Rules may be fairer than case-by-case adjudication.
General rules provide better notice to corporations than particular adjudications.
Rules reward those who comply and give corps less incentive to litigate disputes.
Notes:
Seems to just be the court making a policy determination
o Courts understanding of how admin law ought to work has heavy influence on how it
actually works (text is not everything)
o Case shows just how far courts will go to find rule-making authority
This case asks: Are we going to have one proceeding to decide whether not labeling is unfair, or
are we going have to make this decision again and again?

39

This looks like Storer, Texaco, etc. all these cases again (generalized issue can be
decided once)
Rulemaking comes from Statutory authority
o FTC thought they got this power from 6(g): Commission shall also have power to
make rules and regulations for the purposes of carrying out the provisions...
o Refiners thought these were limited to procedure (how hearing would take place)
Statutory arguments for this:
IF it were such a big power, would Congress really have listed it as the
7th power among 8?? (Wouldnt it have come first?)
5(b): seems to spell out pretty clearly what the commn is meant to do
(it shall serve upon such person a complaint)
o Doesnt say shall issue a rule
Having to fight for this power in front of Congress suggests that they
never believed they had this power (relatively recent thing)
Courts have also encouraged rule making by giving the rule important effect (I.e., hearings:
Heckler v. Campbell, Storer, Texaco)
Court could have one adjudication to decide the question (adjudication and rule making are
separate, but could be a sign to let other regulated entities know how its likely to come out serves the notice function)
o

7.

Choice of Regulatory Techniques

SEC v. Chenery Corp. (US 1947)

Facts: Federal Water Service Corp (private corp) sought permission from SEC to reorganize
(capital deficit prevented them from paying dividends.) SECs statutory role is to determine
whether it is fair and equitable, not detrimental to the public interest or interests of investors or
consumers
o Management was buying preferred stock so as to not lose control of the company (had no
reason to know that it was illegal, no fraud or special treatment) - SEC disapproved the
request based on the law of fiduciary duty
Court: In admin law, agency must clearly provide the correct basis for their
decision. If not done sufficiently, court cant provide a basis (insufficient respect
for the agency)
o Second time, SEC took all info into consideration (not limited to CL), again found it was
not fair/equitable. FWSC claimed SEC announced rule (w/o complying with RMing
procedures), then applied it retroactively - should be only applied prospectively
Court: This rule can be applied retroactively
o Agencies have discretion whether to use adjudication or RMing process to decide
whether this is fair and equitable (must be flexible)
This may be a problem that only comes up on case-by-case basis
May not have foreseen this problem ahead of time
May need to gain experience on a case-by-case basis before articulating a
general rule
Dont want to be limited to specific categories of rules
This might not be the kind of thing thats amenable to a general rule
Jacksons dissent: This is unfair, goes against traditional philosophy
o Administrative authoritarianism

40

Notes:
What about unfair surprise to directors?
o Too bad for the directors this is a problem with decisional law in general
o Every case of first impression has a retroactive effect, by a court or admin agency
Some agencies have procedures for asking for an opinion letter beforehand
Adjudication is another method of adding more specificity to the general outlines of the organic
statute
NLRB v. Wyman-Gordon (US 1969, notes case)
Facts: Labor law history:
o NLR Act gives employees option to form union, hold a vote to see if they want to form a
union. Union wants to talk to employees, but needs list of them from the employer, who
hates unions. NLRB says theyll hold election if 30% of employees sign union cards
saying theyd be interested in a union
Excelsior Underwear (previous case)
NLRB found in this case that once 30% signed union cards, that also
triggers duty for employer to provide union with names of employees
It was decided then, though not applied to Excelsior, only prospectively
It was a particularized adjudication, but invited amicus briefs, etc., but
didnt apply it in this particular case -- a weird proceeding
o In Wyman, the NRLB wanted to apply this to the employer
Court: NLRB can use this holding as a rule (because of Chenery)
o Principle developed in course of adjudication can be subsequently applied
NLRB v. Bell Aerospace (US 1974, notes case Procedure OK, Substance NOT)
Facts: NLRB departed from prior law regarding right of collective bargaining to
managers/supervisor (which said it doesnt apply to them). In adjudication, found that some
employees who were thought to be managerial could unionize if not against public interest
Court: Congress intended something else this is a wrong interpretation of the NRLA
o But NRLB could come up with this in the course of adjudication procedure is fine
o (Hinting, not holding:) Its possible that reliance on previous Board decisions could be so
substantial that it would be precluded from reconsidering rules during adjudication
Notes:
For many years, agencies never used formal rule-making (harder to undo) everything was done
by adjudication
How does precedent work here?
o Presumably, opinions laid down in adjudicatory proceedings have precedential force
o Otherwise, theyd have to reuse same principles all over again to support each new case
Can give previous decisions precedential effect, but only such effect as is appropriate
Morton v. Ruiz (US 1974 Substance OK, Procedure NOT)
Facts: Papagos Indians denied Indian general assistance benefits by BIA solely for the reason that
they didnt live on a reservation. Snyder Act held that BIA shall expend moneys for benefit, care
of Indians living throughout the US (BIA could give benefits to Indians living anywhere.)
o Secretary interpreted this to mean only those living on the reservation, and embodied it in
an internal manual which was not available to the public

41

Court: Congress intended this to extend to Indians living on or near the reservations
o BIA had authority to flesh out this mandate, create reasonable classifications
Might be valid to hold that benefits could go only to those on reservation, but
must follow required procedures in arriving at and enforcing this requirement
o If the secretary had promulgated this rule, this would have been effective
(1) Deference granted only when decisions were in accordance with
Congressional intent
(2) Cant deny eligibility on the basis of ad hoc decisions (arbitrary, fact-specific,
not carried out consistently from case to case)
Here, no suggestion that the Sec was applying this policy inconsistently
(seems like a strange argument)
Think back to Bell Aerospace: This is different because:
o Here, obligation toward Indians - might be the difference
o Here this wasnt published in NLRB, they use case reporters,
give precedential force to their own decisions
(3) Agency has to follow its own rules
Agency had own rule that eligibility requirements had to be published in
the manual (not required by Congress to do this, but they did, so they are
bound)
(4) Decision was not published
Didnt give notice to Ps - Inequitable

Allison v. Block (8th Cir. 1983, notes case)

Facts: Congress told Sec. Of Agriculture that whenever farmer owes govt money, must tell
farmer that he can defer payment when it would cause him financial hardship. Sec didnt adopt
any rules about when he would defer the payment just wanted to decide ad hoc
Court: Unacceptable there was a dire need that Congress intended to relieve
o Something compelling about farmers circumstances made RMing obligatory (fear that
deferral power wouldnt happen otherwise)
Notes:
Courts will almost always approve of setting a rule ahead of time where it is a generalized thing
There arent really cases where adjudication is required even where statute requires it,
courts dont always require it
Public Citizens v. Nuclear Regulatory Commission (DC 1990)
Facts: Statute was ambiguous re: whether agency has to promulgate rules. Agency just wanted to
publish policy statement that encouraged but did not compel licensees to create training
programs that meet criteria identified in the Policy Statement (precatory).
Court: Interprets the statute, finds that it was required to promulgate rules
o Agencies can issue precatory guidance where Congress hasnt specifically required
RMing here, no discretion was left to the agency
Notes:
Why would the agency expect that this would work?
o It had the power it needed to issue a regulation, so if the regulated entities didnt follow
them, they could go ahead and regulate

42

Different in the agency context people know that they had better keep the agency happy
8.

Formal Rulemaking

Under the APA, formal rulemaking procedures are governed by 556, 557
Most important sections:
o 556(d): "The proponent of a rule or order has the burden of proof. Any oral or
documentary evidence may be received, but the agency as a matter of policy shall
provide for the exclusion of irrelevant, immaterial, or unduly repetitious evidence. A
party is entitled to present his case or defense by oral or documentary evidence, to submit
rebuttal evidence, and to conduct such cross-examination as may be required for a full
and true disclosure of the facts.[A]n agency may, when a party will not be prejudiced
thereby, adopt procedures for the submission of all or part of the evidence in written
form."
o 556(e): "The transcript of testimony and exhibits, etc. constitutes the exclusive record
for decision.'
o 557(b): The agency has the power of de novo review after the initial decision (usually
made by an administrative law judge)
Informal v. Formal Rulemaking:
Wirtz v. Baldor Electric Co. (1963): Statute used formal magic words that trigger formal
rulemaking requirements
Whats wrong with formal rulemaking?
o More elaborate process, takes too much time and resources
o Common result: agencies dont make rules
Agencies adjudicate they have the right to choose, and if the only rulemaking option is
formal, then they wont use rulemaking at all
9.

Informal Rulemaking

US v. Nova Scotia Food Products Corp. (2nd Cir. 1977)

Facts: FDA issues rule regarding proper way to cook smoked whitefish. Processors objected b/c
so broad, rendered whitefish unmarketable (quality makes it inappropriate for heat and time
required by agency.) They suggest individualized standards. Agency ignores this comment, then
brings action against them for not following the regulations.
o N.S. wanted DC to consider new scientific evidence showing why regulations cant work.
When agency RMing is on the record, typically reference to formal RMing - this rule
was made under informal 553 proceedings, but Court wants it on the record, meaning
they can only consider the evidence offered at the first hearing (not in the technical sense)
o N.S thought that procedure was wrong because:
(1) Agency ignored the comment about commercial infeasibility of procedure
(2) Agency withheld scientific evidence used to come to their conclusion
Court: (1) This procedure was inadequate - should have shown their evidence so that NS could
properly comment.
o Where does this requirement come from?
APA 553?: Doesnt seem to require giving notice of evidence used nave
reading of the statute doesnt require this
Must give notice of either terms or the substance of the proposed rule

43

Judicial Review: 706: Put enough in the record so that a court conducting
judicial review could tell what had happened
Requirement for comment, c: Req. that interested parties can
participate, and cant participate without full information to respond
(akin to suppressing the comments)
Its not really in the APA its a judicially required addition
(2) Clear error of judgment to not respond to the comments. Where does this come from?
706?: Judicial review: whatever the agency does, court can set it aside if its
arbitrary or capricious. Court seems to think not responding to comments is A&C
APA 553? Doesnt seem to be. If it had to be there, might find it in 553(c):
Agency shall give interested persons a chance to participate... after
consideration of relevant matter presented, agency incorporates the rules
o Raising a vital question of cogent materiality requires a
response from the agency -- Court
o BUT this really isnt required in 553 only have to consider the
comments

Notes:
Rulemaking: Countertrend using informal rulemaking
o Courts start to interpret 553 to require things that the statute doesnt explicitly require:
1) Giving scientific information on which the agency is relying
2) Document the process used by the agency so that court can consider the whole
record
o Is this a good or bad idea?
Good:
Makes it public disclosure available to interested parties (transparent)
Doesnt go too far in either direction compromise
o Streamlined procedure, but doesnt give them too much leeway
Bad:
Is this within the courts power?
o It is in their power to decide what is arbitrary or capricious
The court doesnt attack the rule on substantive grounds, only procedural ones. Why?
o Deference to agency expertise in these areas
o Highly unusual for courts to say that a rule is substantively arbitrary or capricious
Still want to encourage experts to use appropriate procedure for arriving at their
standards, and revealing scientific evidence is part of this
Proceduralized substantive review
Problem?: Changing rule in response to comments doesnt allow for another set of comments for
this changed rule
o Principle is that it must be a logical outgrowth of the rule in light of the comment, no
new round of comment is required
Pacific States Box & Basket Co. v. White (US 1935)
Facts: Regulation regarding the dimensions of berry boxes. Pacific makes round containers, and
so were upset, claimed that the regulation was A&C and not necessary to accomplish any
legitimate purpose. State had not compiled a record.
Court: This could serve a purpose, though there isnt any evidence offered, but:
o Regulations are similar to state statutes, so presumption that regulation is valid, and:

44

If any valid facts could reasonably conceived, it is presumed that those state of facts
are true (= RB test)

Notes:
Ps argued RB shouldnt apply b/c this wasnt a statute, but since this is a delegation of legislative
power, it does apply
Different from Nova Scotia case:
o There, rule was adopted by a federal agency; here, the rule was adopted by a state agency
APA doesnt apply to state agencies
Wont check the actual record, as long as it could be conceived that there are rational facts in case
o Burden on challenger to prove that the facts are wrong
Under this case, and constitution, state agencies arent obliged to gather facts and info before
promulgating a rule (like Congress). Good idea, but not necessary.
What actually happens:
Motor Vehicle v. State Farm (US 1983)
Facts: NHTSA passed passive restraints requirement for cars (airbags/auto seatbelts). In
interim, (73-74), cars could have ignition interlock. 1974: Congress forbids ignition interlock.
1976: Secretary of DOT (Coleman) called for demonstration project to build up public good-will
for concept of passive restraint, scraps mandatory requirement. 1977: Successor (Adams) scraps
demonstration, goes back to mandatory passive restraint system. 1980: Successor Lewis
withdrew mandatory problem (no realized benefit.)
o Thought cars would have airbags 60% of the time and auto seatbelts 40% of the time, but
it turned out that auto seatbelts were installed 99% of the time (werent as effective
because they could be detached - cost more than they were worth)
Court: Should review validity of the rule by A&C standard (deferential.) Finds this is arbitrary:
o Agency failed to consider alternative possibility of whether modifying the standard to
require the airbag technology would meet the desired safety standards. Failed to consider
salient alternatives. Also too quick to dismiss the benefit of automatic seatbelts.
Dissent: Agrees with majority re: not considering the use of seatbelts.
o Rehnquist: policy is a perfectly good reason (gets 4 votes)
o If secretary had simply said that there was a difference in policy between Democrats and
Republicans, they may have even gotten another vote
Notes:
Agencies duties in carrying out a rule making:
o (1) Give notice
o (2) Respond to comments
o (3) Give rational connections
Detaching = affirmative act just like buckling a seatbelt agency has drawn the
wrong conclusions from the studies. Right conclusion is that people are passive,
are less likely to detach a seatbelt
This happens all the time agencies must make rules in face of uncertainty
At a minimum, the agency simply has to explain its expertise. Must offer a
rational connection between the facts found and the choice made
o (4) Consider other options (alternatives)
Dont have to consider every conceivable option just those that:
Are within the ambit of the standard (airbags already in the regulation)

45

Cogent, salient alternatives suggested in comments from the

regulated (agency didnt even mention why it didnt consider airbags)
This duty all comes out of 706 its A&C to make a rule without considering
alternatives that they ought to rationally be considering
Nova Scotia rational process (p. 540)
o (5) Explain why its changing its mind
Ok for agency to change its mind about policy, but it must give a reason why its
changing its mind (reasoned analysis.)
All these things are about accountability
o Court is empowered to find things arbitrary substantively, but they rarely do they focus
on procedure (again, gives deference to agency expertise)
o Proceduralized substantive review
10.

Other Rulemaking Procedures:

a.
Hybrid Rulemaking
Vermont Yankee
Court: In general, procedural challenges to informal rulemaking will not be successful because
the standard in 553 of the APA sets maximum procedural requirements. Where the APA does not
apply, discretion is usually left to the agencies.
Impact of Vermont Yankee is not very significant. State Farm was decided five years after
Vermont Yankee, and it required agencies to consider alternatives and to articulate the rational
connection between factual bases and decisions. Also, Nova Scotia requirements are still valid.
Practical rule to draw from Vermont Yankee: cross examination is not required in an informal
rulemaking. Agencies can receive oral/written comments as evidence, but need not allow cross.
b.

Even less than formal Rulemaking

American Mining Congress

Court: MSH Letters, stating that certain x-ray readings qualify as "diagnoses" of lung disease
w/in meaning of agency reporting regulations, are interpretive rules under the APA [and thus not
subject to the procedural requirements of 553].
Factor analysis for determining whether a rule has "legal effect":
o Whether, in absence of rule, there would not be adequate legislative basis for
enforcement/other agency action to confer benefits or ensure the performance of duties
Ex.: SEC statute just says to do what the agency tells you to do. ("Operators
must comply with the SEC standards"). There is no notice. MSHA agency statute
also just says "do what the agency tells you."
o Whether the agency has published the rule in the CFR
Later cases have rejected this as a factor
o Whether the agency has explicitly invoked its general legislative authority
o Whether the rule effectively amends a prior legislative rule.
The rule in Morton v. Ruiz: an agency is bound by its legislative rules. If the
agency wants to amend the rule, it must use the legislative rulemaking process to
change the rule.
[Posner's addition: an interpretative rule must rationally be an interpretation of something else.]
11.

Politics, Ex parte Contact, Bias

46

Sierra Club v. Costle (DC 1981)

Facts: EPA set standard for coal emissions. Challenged by both parties as being either too lax or
too strict. EPA used basic 553 rulemaking procedure - if it was made any lower, it would be too
expensive and wanted to encourage coal use; on the other hand, they thought if it was any higher
it wouldnt protect the environment.
o Petitioners: there was ex parte political pressure after the comment period:
(1) After comments closed, leak in the community and EPA received comments
after the close of the period
No chance for response
No chance to see the comments
Defeats purpose of the comment period
(2) Object to meetings that took place with Congressmen (political pressure)
(3) Objected to political pressure (meetings with) from White House
Court:
o (1) Ex parte comments: Doesnt care - Just wants records of comments placed in the
docket. Why?
Realities of admin policy making
Ample opportunity to respond to the majority of the comments
Message to practitioners: keep your eye on the docket, right up to day the rule is
issued
Organic statute (Clean Air Act) didnt explicitly bar ex parte comments (can
always relieve agency of rules that would otherwise apply)
o (2) Ex parte Congressional and White House contact (political pressure): Looks to
legislative character of the agencys commissioner
Agency processes are of 2 different varieties: Quasi-judicial and quasi-legislative
Dont like ex parte contacts in QJ context, but not so bad in QL context
o This happens all the time
Agency does both things at the same time, but when it does legislative
function, its more appropriate that agency follow legislative model
Vermont Yankee case: Dont want to over-judicialize the rulemaking process
Notes:
What degree of formalization is required?
o Can rely on ex parte contacts, but must put it on the docket
What about meeting with President & his staff?
o Need for briefing the President
o Agency isnt considered independent, has always been an extension of the executive
W/o other Congressional requirements, face-to-face meeting with the President
does not generally need to be docketed
President can provide a broader policy focus
Presidents statement neither adds to nor detracts from the agencys authority to
do something
Is this good or bad?
o Agency is supposed to consider the factors under the act not extraneous circumstances (
o Ps: Congress shouldnt be allowed to pressure the agency in this case:
Cant push them outside of something they were considering to begin with
o Seems like a very inside the beltway anyway

47

Assn of National Advertisers, Inc. v. FTC (DC 1979)

Facts: FCC thought about issuing a rule re: childrens advertising. Chairman had gone around in
interviews expressing his view against childrens ads; said to be prejudged. Wanted him to recuse
himself.
Court: Unless theres clear and convincing evidence that hes so biased (an unalterably closed
mind), then hes not required to recuse himself
Notes:
Good rule?
o Distinction between type of agency action involved: difference against between QL
(policy/rule-making function)
o Need an unbiased decision-maker BUT this doesnt mean that they cant have opinions
Simply must be conceivable that he could change his mind at trial
Must be impartial as to parties no monetary/familial interest in the outcome or the parties
e.
1.

Judicial Review of Administrative Action

The Scope of Review

Civil Procedure Appeal Analog:
What is appealable?
o Question of timing (when can you take an appeal)?
o Can you take one in the middle of a proceeding?
What is reviewable?
o When can you seek judicial review?
o What can you get an appellate court to look at?
Pretty much everything, if brought at an appealable time
Not quite everything in Admin law
What is the standard of review?
o How does the reviewing authority look at what the original authority has done?
2.

General

Camp v. Pitts (US 1973)

Facts: Comptroller rejected applicants who wanted to establish a new bank by sending them only
a short letter. No formal hearings required by statute. Upon reconsideration Comptroller did a
field exam but again rejected the application with a short letter.
Court: Comptroller's action is subject to judicial review under APA 701, but neither Act nor APA
require Comptroller to hold a hearing or make formal findings on the record when deciding on
applications. Thus, the "substantial evidence" test, which is appropriate when findings on a
hearing record are required, is inappropriate here.
o Under Overton Park, de novo review is appropriate only when there are inadequate factfinding procedures in an adjudicatory proceeding or where judicial proceedings are
brought to enforce certain administrative actions. Neither applies here.
o The "arbitrary and capricious" standard under APA 706 is the appropriate standard for
judicial review. The focus is on the administrative record already in existence
Notes:

48

Reminds us that: Agency action is presumptively reviewable, but review is limited

o Procedurally: reviewing court doesnt make new record, even where the record is
inadequate for judicial review
Normal procedure: remand to agency for creation of a better record
o Substantively: court typically doesnt review agency action de novo shows deference to
agency decision
Asks whether decision was arbitrary or capricious
3.

Questions of Fact

Universal Camera Corp. v. NLRB (US 1950)

Facts: NLRB determined that UC committed unfair labor practice in retaliation for employee
given testimony in a US proceeding, ordered to rehire the employee. Adjudication was at issue:
o Hearing examiner (ALJ) had a hearing, found in favor of employer. Board has appeal
authority, and overturns in favor of employee. Employer appeals, goes to judicial review
Court: Case presented factual issues; different standards of review for findings of fact and law
o How to evaluate findings of fact? Look to:
The organic statute (Wagner Act): If supported by evidence shall be conclusive
APA: A&C (always applies, catchall), or Unsupported by substantial evidence
o Original standard: Evidence means substantial evidence
SE means evidence as a reasonable mind might accept to support a
conclusion, or More than a mere scintilla
Some interpreted this to mean that if there were any evidence anywhere in the
record, ruling is conclusive (not taking into consideration contrary evidence)
Congress then amended statute to say that boards findings must be
supported by substantial evidence on the record as a whole
o It is fair to say that Congress expressed a mood but didnt want to change things
drastically
Evidence must still look substantial when viewed in the light of the entire record
Not the courts role to say what they think the facts are based on the facts only what a
reasonable mind might find - Deferential standard
o So if the ALJ is coming out different from the board, there may not be substantial
evidence for the agency to come out the way it did (though its not invalid per se)
Notes:
Hypo: Question that turns almost exclusively on credibility: If Board upholds ALJs decision:
o Court reviews all the evidence very difficult to get the court to overturn
If ALJ believes one witness, and discredits the other 7; Board upholds:
o Likely court will still uphold, because unlikely that 2 separate finders of fact would not
have substantial evidence
And yet, sometimes the court does overturn a decision on these facts
Review of Rulemaking:
o 706(2)(e): doesnt apply to rulemaking, only to cases subject specifically to 556, 557
(not RMing which is under 553)
o 706(2)(a) applies to everything, including RMing
But it is essentially the same, see case below:
ADAPSO v. Board of Governors of the Federal Reserve System (DC 1984)

49

Facts: FRB passes rule allowing banks to engage in certain activities

Court: A&C is essentially the same as substantial evidence: It is A&C to adopt a rule when its
based on factual findings and there isnt substantial evidence to adopt those findings
o Organic statute called for substantial evidence standard - Congress likely wouldnt have
passed this if they thought SE was the same as A&C

Notes:
Scalia thinks that this statute doesnt do anything b/c a departure from the APA scheme will only
be found when it is expressly stated
o Doesnt make sense to apply one standard to the RMing part and another to the
adjudication part
o Doesnt like what Congress is doing here - wants Congress leaving them alone, without
mucking around with the standards
Courts have been all over the place on this issue
o Some think they are the same standard; others dont
o Some think there are only 2 kinds of review (Posner) de novo and deferential
RMing is still a little different involves more general policies/ facts (legislative facts) v.
adjudication which involves specific facts (adjudicative facts)
o Which should get more deference?
Adjudication: Should be more deferential toward adjudicative facts because
theyre credibility-related, Particular facts of agency expertise
Rulemaking: RMing not for the court
o Court could overrule agencys policy findings (has to draw a rational connection between
facts found and choice made) (See State Farm case), but very unusual for court to
overturn ultimate rule on substantive grounds usually attacks on procedural grounds
Bottom Line: Deferential Standard. Ask if reasonable person could come to this conclusion
4.

Questions of Law

Chevron, USA, Inc. v. Natural Resources Defense Council, Inc. (US 1984)
Facts: Congress amended the Clean Air Act to say:
o If a state has non-attainment areas, state must have plan that provides that any new or
modified (when changed so that it produces more pollution) stationary source of
pollution, must get a permit. To get a permit, Equipment used must use the lowest
possible emissions rate.
o EPA came up with bubble concept, which treated the whole construction or plant as one
stationary source, even if there were several pollution-emitting sources within source
Court: Can EPA could adopt a static definition of what a stationary source is?
o APA Provision 706(2)(a): cant be A&C, abuse of discretion, or otherwise not in
accordance with law. Review should be deferential:
If it represents a reasonable accommodation of all the various policies, the
court is not supposed to set it aside:
Two Step Test:
(1) Has Congress explicitly spoken on the issue?
o If yes, thats the end of the matter
(2) If Congress has been silent or ambiguous, is agencys decision based on a permissible
construction of the statute?

50

o Court shows deference on questions of law something unique to administrative law

Notes:
Why is this?
o Expertise Theory: Deference to finder of fact because of comparative expertise. Rulemakers might have been involved in the process of fact-finding. The agency deals with
the statute everyday
o Uniformity Theory: De novo review in admin law will tend to show disuniformity;
deferential review will show uniformity, because all the decisions will come out of the
same agency interpreting its own organic statute
This doesnt apply to agency interpretation of APA, Constitution, etc.
This is the reverse of the court system, where deferential review tends to produce
non-uniform results
o Delegation Theory: Most official reason from the S. Court as to why we have the
Chevron decision. Congress has delegated power to the agencies to figure out what the
statute means.
Innovation of Chevron: recognize that sometimes delegation is implicit (by using
broad, general terms)
Like FCC: public interest, convenience, and necessity. By telling them
that this is their authority, its obviously up to FCC to figure out what
that means
Now Court is saying that every time Congress uses ambiguous language,
its an implicit delegation of authority to the agency
o Why might there be an ambiguous term in the statute?
Deliberate decision
Factions in Congress couldnt agree on one term
Congress hadnt thought about it
o Accountability theory: Political reasons: agencies are part of the legislative branch.
Eventually accountable to President, who is accountable to the Congress.
o Policy Balancing Theory: Chevron deference should apply in policy questions like this
o Process Theory: (Found mostly in literature) We give deference because we like the
process by which the agency makes its decisions (heavily involved throughout, etc.)
See APA 706: reviewing court shall decide all relevant questions of law
o Some think this explicitly forbids the use of Chevron deference (i.e., Ken Davis)
o Others say deciding questions of law could mean deciding them deferentially
Courts always seem to do what they think is the best in the end this is the pre-Chevron rule
o Overton Park: There, federal funding for a highway was at stake highway could go
through a park only where there were no feasible and prudent alternatives
Who gains, who loses?
o Gains:
Executive branch gains power
Agency has more leeway (re: power)
o Loses:
Courts lose used to say what the law was, what the statute means
Congress loses some control (more subtly) now Congress is now held to a
much higher standard of specificity in legislative drafting
Has to make its precise intent clear
When does Chevron apply?

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o
o

When Congress hasnt spoken clearly; where there are ambiguities in a statute that the
agency administers (when they interpret their organic statutes)
Not question about Constitution, APA, etc.
Almost always applies, but there are some exceptions:
Remember: these are exceptions to the rule!:

EEOC v. Arabian American Oil (US 1991)

Facts: P claims rights under Title VII were violated was working abroad. EEOC said Title VII
applies extraterritorially; if theres any doubt, there should be Chevron deference.
Court: No deference due: Congress never gave EEOC rulemaking authority
o Wasnt even ambiguity here EEOC just didnt have the authority to promulgate rules
Where there has been delegation, Chevron applies because in deferring to the agency youre
actually deferring to Congressional intent
o Note: unusual agency that doesnt have RMing authority
Lechmere, Inc. v. NLRB (US 1992)
Facts: Union was trying to get to employees of Lechmere to show interest in forming union. L
denied them access to the company grounds/ property. Law says that organization shall not
interfere with employees right to organize .
o Jean Country case, 1988: NLRB found that there was a 3-part balancing test
o Here, apply the balancing test and find that L is required to allow people onto their
property. Since the statute is ambiguous, they should get Chevron deference.
Court: Looks to NLRB v. Babcock & Wilcox (US 1988): decided there that companies dont have
to allow non-employees onto property, except where plant is so remote (where workers live at the
company property.) This issue was decided; stare decisis prevents agency from applying a new
rule (the balancing test.) Contrary interpretation will not get Chevron deference.
Notes:
B&W was decided before Chevron
o Chevron only has A&C standard whole point was that it doesnt matter what the best
construction of the statute is
Lechmere: Court holds that by reversing the NLRBs interpretation of the issue in B&W, they
were finding the clear and unambiguous meaning of the statute
o But were they really? This was pre-Chevron, so it might be that they actually were
determining the best interpretation
o Best interpretation should be irrelevant Court should only be able to say if theres a
one and only interpretation of the statute under Chevron
Puzzling.
Good Samaritan Hosp. v. Shalala (US 1993)
Facts: Agency had one interpretation of the Medicare statute, then later changed their minds
Court: Inconsistency does have some relevance agency gets less deference if theyve changed
their interpretation. (Its one factor in assessing the weight the position is due.)
Notes:
Is this consistent with Chevron?
o Yes:
Creates a possibility of less deference

52

Expertise basis of deference best supports this:

If agency keeps changing its mind, that undermines the expertise factor
If statute has a true meaning, and you think agency would be in the best
position to know what this true meaning is, then we might question their
expertise if they keep changing their minds

No:

One of the purposes of giving an agency ambiguous statutes is to give them

flexibility for changing circumstances
In Chevron, deference was given to a change in agency policy
All depends on why you think we have Chevron deference in the first place
o (1) In some ambiguous statues, we think the agency is in best position to know what
Congress is trying to say (so changing minds seems like they dont know whats best)
o (2) Other situations it seems that a statute is ambiguous because they want to leave it up
to agency to decide whats best in certain circumstances (changing minds makes sense)

National Cable & Telecommunications Assn v. Brand X Internet Services (US 2005)
Facts: Agency changed its mind and was inconsistent with past Court decisions regarding whether
broadband providers were considered providing telecommunications services
Court: Agency inconsistency is not a basis for declining to apply Chevron
o Agency must take into account varying circumstances
o No mention of why theyve completely changed their mind since Good Samaritan
o Chevron applies, and it applies the same way regardless of inconsistency
But not entirely inconsistent might still find that inconsistency has some impact
Courts prior construction of the 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.
o Doesnt say this Courts prior construction, it just says a courts literally would
apply to any court
o Could read this to overrule Lechmere, but not clear
Stevens concurrence: Thinks Supreme Court interpretation would overrule agency interpretation
FDA v. Brown & Williamson Tobacco Corp. (US 2000)
Facts: FDA had control over drugs, put out new notice that they now consider tobacco a drug
and had RMing procedure, and adopted the rule. Find that it meets the statutory definition, and
should otherwise be entitled to deference.
Court: Mostly clear that Congress has spoken. Clear from all these other statutes that Congress
didnt intend for FDA to control tobacco.
o Sometimes Chevron doesnt apply, even where statute ambiguous
This is a special circumstance if tobacco was a drug, FDA would be obliged to
ban tobacco completely. If Congress had intended to delegate such power to the
FDA, they wouldnt have done it so cryptically (just too big of a deal to find
implicitly)
Notes:
Siegel: If I were cynical, I would think that Chevron doesnt apply when big money-making,
Republican-supporting companies interests were at stake.
Basis for Chevron deference is delegation, and here they havent delegated
Question of Chevron deference is independent of the question of what is the right technique
for statutory interpretation - Use traditional tools of statutory construction

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US v. Mead Corp. (US 2001)

Facts: Tariff statute distinguishes between bound diary and other register or account book for
import taxes. Customs services issued ruling that Mead notebooks were bound diaries, claimed
Chevron deference
Court: These were not rulings (no notice or comment), just made by letter rules. Problem was
the manner in which the agency arrived at this interpretation - just arrived at by a local office.
o But the national office agreed with this ruling by the time it got to the Court
o No explicit congressional delegation to the agency (Different from Chevron, where court
held that any ambiguity was an indication of delegation.)
o Must be other indicators such as authorization to engage in RMing and adjudication
This way, go through all 553 procedures
First time Court picks up on process rationale for Chevron deference
o Where there hasnt been authorization of RMing or adjudication, theres no
Chevron deference
o BUT, in this circumstance the agency might get Skidmore deference (according to how
persuasive what the agency says is)
Is this really deference at all?
Its the way any argument would work if its persuasive, then the court
will accept it
Court just does what they think is right after reading the briefs
Scalia: Goes ballistic
o For Chevron deference: (1) Must have ambiguity in the statute; (2) Agencys
interpretation must be authoritative (genuinely the agencys interpretation not a local
officials interpretation)
Presumption that agency has been delegated this power
o Calls Skidmore deference an empty truism
Notes:
The bottom line: Formal Adjudication is still safe. Anything else who knows?
o See p. 806 Court has afforded Chevron deference even when no such administrative
formality was required and none was afforded
Sense on when it should or should not apply depends on which reason you think is most
important for Chevron deference in the first place
5.

The Availability of Review

6.

Preclusion or Limitation of Review

Questions about appeal:

What is APPEALABLE? (Question about timing)
What is REVIEWABLE? (What decisions can be up on review?)
What is the STANDARD OF REVIEW? (Who can get reviewed?)
What is appealable?
Basic rule: agency action is presumed to be subject to judicial review
o APA 702: presumption of reviewability
o APA 703: how to get review
First, look at organic statute

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If not there, look to any applicable form of legal action (ordinary lawsuit)
Exceptions:
o APA: Action might not be reviewable where:
(1) Organic statute precludes judicial review
(2) Agency action is committed to agency discretion by law

(1) Organic statute precludes judicial review:

Johnson v. Robison (US 1974)
Facts: R applied for veterans benefits, but not eligible because he was a conscientious objector.
Claimed that this violated his EP rights, sued in federal DC. There was a section of the statute
which held administrators determinations w/r/t law or fact concerning a claim for benefits as
final (38 USC 211(a)). Congress thought this should help veterans b/c when a matter goes to
judicial review, if agency has a contemporaneous written explanation, court assumes thats the
real explanation post hoc explanation is looked upon with skepticism (Overton Park)
o So agency must formalize action if they think something was headed for judicial review
Court: Can get judicial review, because this case does not arise under the act.
o Basic holding (best reading): Court has read this statute, and it simply doesnt
preclude a constitutional challenge to the statute itself
o Invokes 2 principles of statutory interpretation:
Preclusion of review is disfavored (must be clear and convincing evidence of
congressional intent to preclude judicial review)
Court will construe the statute if possible to avoid constitutional questions
Sub-principle: what if statute doesnt preclude review, just channels review?
Weinburger v. Salfi (notes case)
Facts: Widow brings suit for SS benefits, claiming its unconstitutional for SSA to discriminate
based on how long people have been married for benefits. Code 405(h) expressly barred suits
under Fed Q JD (Secretarys actions are reviewable, just have to follow specified process.)
o Unlike 211 in Johnson, where R couldnt take his claim anywhere, P here just has to
follow a particular procedure
Court: Everyone agrees Congress can channel judicial review (can set out procedures for getting
judicial review)
Notes:
Today, statute has been changed:
o Even more clearly precludes review
o Created for the first time judicial review (channels)
o Art. I court of Veterans appeals is directly appealable to Art. III court
(2) Agency action is committed to agency discretion by law:
Webster v. Doe (US 1988)
Facts: Doe fired from CIA for posing national security threat (b/c he was a homosexual). Director
had discretion under statute to terminate any officer when he deems it necessary or advisable in
the interests of the US (NSA). Does brings claims: 706(2)(a) claim (A&C); Abuse of discretion;
Violated procedures; Constitutional claims.
o No statute precluding review

55

Court: 701(a)(2): this is committed to agency discretion by law (when statutes drawn in such
broad terms that there is no law to apply). No meaningful standard against which to judge the
agencys exercise of discretion
o Statute only says that the director must deem someone a threat to security how
would court review whether he deemed him a threat?
Scalia: Arbitrary and capricious standard always applies theres always law to apply, even if
the organic statute doesnt provide it
o Doe has good argument that his termination was arbitrary and capricious

Notes:
How does the Court get there?
o Puts a lot of emphasis on the statutory history and special position of the CIA
o Even though Court says there isnt law to apply, always seems to be something else going
on (Court saying, In the CIAs case, we dont want judges meddling.) (Scalia)
Overriding need for ensuring security in the agency
Alternative formulation: Problem with nondelegation doctrine (if statute is so broad that the
court cant tell if the agency is obeying it is a violation of the nondelegation doctrine)
o Yet here, Court finds that where statute is so broad that court cant tell if the agency is
obeying it, is a reason for precluding judicial review
o If theres no law to apply, doesnt it violate nondelegation? Possible explanations:
Slight difference btw level of no law-ness and what they have in mind for this
test
One issue in determining nondelegation is how broad the issue is
In Doe, its a very narrow power
Court only addresses non-constitutional claims the constitutional ones are reviewable
o Court uncomfortable with having no place for review of a constitutional claim (like
Johnson v. Robison)
Congress must be very explicit in forbidding review of constitutional claims
o Scalia: disagrees with this
Heckler v. Chaney (US 1985)
Facts: Prison inmates on death row (lethal injection) bring suit against FDA, trying to prevent
them from using drugs to kill people - only supposed to approve drugs that are safe and
effective and they cant be so if theyre killing people
Court: Agency decisions not to act (withhold enforcement action) is generally presumptively
unreviewable. Starts with no law to apply argument
o FDA statute doesnt provide any guidance
Gives more reasons why it wouldnt be appropriate to review here:
Complicated balancing of factors peculiarly of their expertise
Not using its coercive power
No process for review
Like prosecutorial discretion
o Again, Court uses other factors under the no law to apply test
o Comes up with presumption of non-reviewability but just a presumption
Could be taken away by Congress, Could be rebutted
Marshall, concurring in the judgment: Doesnt like the presumption rule
o APA defines agency action to include failure to act, which would suggest that authors
of APA thought failure to act should count as actions

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o
o
o

Not really analogous to prosecutorial discretion (which is backward looking, where the
act has already occurred)
People are entitled to ask the agency to do just about anything, and if they dont do it, that
should be judicially reviewable
Concurs because if agency doesnt act its usually because its got more important things
going on, that would be upheld by the court so it doesnt really matter
BUT there are other reasons for agency to not take action (i.e., if they were
bribed seems that this would be reviewable [Brennan])

Notes:
How serious is the Court about saying agency action is not reviewable?
o Court has said that if the agency denies having JD, the court could review this
o Pp 930-931: If agency decides to stop enforcing act altogether, that would be reviewable
o Court seems to be saying: If agencys reason for not taking action is that theyve got
other priorities thats unreviewable. But for any other reason, its not clear whether it
would be reviewable
If theres a legal issue underlying the decision, that would likely be different
(also, declining to make a rule would probably involve a legal issue)
7.

Ripeness

Abbott Laboratories v. Gardner (US 1967)

Facts: FDCA requires manufacturers to print generic name of drugs along with brand name of
drugs on bottle, but statute didnt 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.
o Governments reasons for dismissal:
(1) Statutes preclude review: Statutes listed specific instances in which decisions
could be reviewed, so government thought that this was a negative implication
that there couldnt be review outside of these situations
(2) Ripeness precludes review
Court: (1) Statute doesnt preclude review: Negative implication not usually enough.
Can get review of rule in the context of an enforcement proceeding
Statute might say that you must seek review at the moment the statute is issued,
and then there cant be review. But absent this, there almost always is review.
Want it before enforcement because:
Dont want stigma/ bad publicity of being prosecuting for selling
misbranded drugs
Being prosecuted would involve enormous time and expense
Complying with the statute is also very costly
o (2) Issue is ripe for review: 2-Fold Inquiry:
Is this issue FIT?
Is there a legal issue? Yes
Is it a final decision? Yes
o If agency is making a rule by notice and comment, during
comment period is NOT final decision (cant get review)
o Being accused by NLRB of unfair labor practice is not final
decision (Ewing case mentioned in Abbott)
o Here, this IS final agency is done with the RMing proceeding

57

Is there immediacy?
o This is immediate because the day the rule becomes effective,
regulated parties are all affected and must all do something
Is there HARDSHIP? Yes
Great hardship expensive to comply with or not comply with regulation
Relies on special status of drug industry and the necessity for public trust

Toilet Goods Assn v. Gardner (US 1967)

Facts: FDA issued regulation that they must be able to inspect plants where color-additives were
manufactured. Rule said that without free access to inspect, they would suspend the license to
make color additives.
Court: This was also final there can be no question that after notice and comment, this is a final
agency action (Finality and ripeness are 2 different things (in both cases, the action was final)).
But not ripe for review:
o Fit:
Legal: possibly (the way its framed by Ps, possibly)
Final: yes
Immediacy: no
On the day the regulation becomes affected, no one has to do anything
o Hardship:
Worst that happens is that license is suspended and that can automatically be
appealed or reviewed (even though this really means shutting down the business)

Siegel: Finality is a hard, necessary factor; the others are more soft
o The rule is the immediacy factor
Not 100% good law, but generally the rule
Justice Fortas, dissenting: Court is taking the side of the manufacturers, a much greater hardship
on the public.
o 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
Courts answer: govt can present its argument that the public will be negatively
affected, and the Court will take that into consideration
Factors for preliminary injunction:
o Likelihood of success
o Balance of hardships

Notes:
Ultimate Rule: Typically, will be able to get pre-enforcement review of an agency rule if that rule
requires you to act immediately upon enforcement.
Good? Bad?
o Gives less discretion to the agency obviously gone through formal RMing, and
presumably those who would be affected would have brought up the potential illegality
during comment period, and agency has obviously disposed of this
Where does the rule of ripeness come from?
o Part of case or controversy requirement
8.

Exhaustion

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Myers v. Bethlehem Shipbuilding Corp. (notes case, US 1983)

Facts: Company tried to enjoin admin proceeding because board only has JD over companies
engaged in interstate commerce, and they argued that they werent. Wanted to go to court first
because of: efficiency and cost (why endure this whole proceeding when they dont think theres
any JD over them?)
Court: DC didnt have power to enjoin the proceedings have to exhaust their administrative
remedies. NLRB responsible for finding the basic facts (whether they were engaged in IC).
o Courts answer to efficiency argument: suck it up
This happens all the time wherever youre sued gets to decide whether they
have JD, and must wait for final decision before you can appeal it
Rule: No one is entitled to judicial relief for supposed or threatened injury before the
prescribed remedies are exhausted
McKart v. US (US 1969)
Facts: M was originally classified as exempt from service as sole surviving son; then later
reclassified as Class IA (subject to draft). With new classification, he could have appealed to
the agency, but instead he did nothing. When he didnt show up for his inspection, they ordered
him to, and then when he didnt again they pressed criminal charges. Defense was that he should
have been exempt, so he didnt have to show up. Govt: didnt exhaust his administrative options
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)
Court: 2 kinds of exhaustion cases: (1) exhaust admin remedies, then get judicial review; (2)
Govt says if you had a remedy available in the past and it wasnt exhausted, even though its now
barred, the exhaustion remedy 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: Exhaustion rule is very harsh, No expertise involved in
interpreting the statute, Unlikely that people will choose to make an agency appeal (risk)
with criminal charges in the background
Notes:
Exhaustion is different from finality: Mushier, Constitutionally developed doctrine
Up to Court to balance these factors
Darby v. Cisneros (whole case is about reading 704) (US 1993)
Facts: D was real estate developer who came up with plan to get mortgage insurance from HUD
while avoiding the Rule of Seven. HUD approved at the time. Darby went to ALJ, didnt
appeal internally (appealing to Sec. Of HUD for discretionary appeal). Sued in court to get
judicial review of the decision.
o Govt: need to have exhausted this before suing in federal court; should have done this at
the time. Though statute says parties may request review, everyone knows you must do
so in order to get judicial review. Should just be barred, lose.
o Court of Appeals: Yes, this is exactly how its worked for 50 years
o D read the APA 704: Except as otherwise expressly required by statute; agency action
otherwise final is so for purposes of this section whether or not there has been presented
or determined an application for a declaratory order, for any form of reconsideration, or
unless the agency otherwise requires by rule and provides that the action meanwhile is
inoperative, for an appeal to superior agency authority

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If agency action is otherwise final, is so for purposes of this section for an appeal
to a superior agency authority
Not both these requirements were satisfied
o Govt: 704 is about finality: Though it shows us that there isnt a finality problem,
theres still an exhaustion problem
Court: Not just about finality: look at title of section.
o When its final its subject to judicial review; and when otherwise final, its final
(regardless of whether other remedies have been exhausted)
o In cases where APA applies, there is no exhaustion rule only this finality rule

US v. Menendez
Facts: Fed agency was going to fine M for shrimping without using a turtle excluder device. M
hires lawyer to represent him in admin proceeding. ALJ didnt like Ms lawyer, so he refused to
receive papers from Ms representative. This led to essentially default judgment, M did nothing.
o Govt eventually brought action against him in court for owing the fine. M claimed his
constitutional rights were violated under DP clause. Govt claimed there was no
exhaustion so these claims cant be barred.
Court: He could have appealed within agency but is the agency done? Yes, they werent
planning to do any more with this case (this wasnt a preliminary judgment)?
o 2 sections to think about: 704
703, last sentence: except to the extent that prior adequate and exclusive
opportunity for review is provided for by law
o Was he barred b/c he didnt exhaust admin remedies?
No he can absolutely raise defense, and it was a good defense
Notes:
Unless otherwise required by statute always check the organic statute
Statute and Rules are different!!
9.

Standing

TVA (Tenn. Valley Authority) case

Facts: Some people think this is contrary to everything America stands for (government
competing with private enterprise). Tenn Electric Power Co. brings suit; suit is dismissed for lack
of standing.
Court: Test was 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 TEP not a proper party, so Court wont decide it
Notes:
P must be in proper relationship to challenge what the agency decides. LEGAL RIGHTS TEST
o At common law (takes property, injures person, restricts liberty, etc.), or
o By statute (Harden case, notes)
Criticism of the Legal Rights test: its all intertwined with the merits of the case, so the Court had
to look at the merits without deciding them
o People thought it should be independent of the merits:

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Assoc. of Data Processing Service Org (ADPSO) v. Camp (US 1969)

Facts: Commissioner passed rule allowing national banks to make data processing services
available. Claim: banks are supposed to only be banks, and now theyre violated that law (Bank
Service Corporation Act) by provided data processing services
o Govt: theres no standing here
Court: NEW TEST: Injury in Fact; Zone of Interests. Reasoning: We want them to bring these
suits, even if theyre eventually going to be dismissed on the merits
o Injury in Fact: Not asking whether theres a right to be protecting by competition)
Loss of business and money is an injury in fact
Injury in fact could be economic, recreational, environmental,
conservational, aesthetic, spiritual
o Must change your life in some detrimental way
o More of a societal, rather than legal, question
o Zone of Interest: Are you one of the people the statute was concerned with?
Bank Act/ Bank Service Corporation Act passed to protect safety and soundness
of the banks from crashing again (after the Depression)
S. Ct.: thought it was at least arguable that it was passed to protect other entities
from competition

New Test For Standing: 2 parts:

Is there an injury in fact? (new buzzword for standing)
Does it fall within the zone of interest?
Notes:
Why do we have the doctrine of standing?
o Case or controversy requirement
Injury in fact: Comes straight from the constitution, Congress cant do much about it
o S. Ct.: in 1789, P was always injured and these were the only cases that were decided
Zone of Interests: Additional test, not a prudential requirement
o APA: Aggreived person part of 702 : Person suffering legal wrong because of agency
action, or aggrieved within the meaning of the relevant statute = zone of interest test
o Implication is that Congress could get rid of this if they wanted to
Injury in Fact Test:
Sierra Club v. Morton (US 1972)
Facts: US Forest Service contracted out Walt Disney to use Mineral King Valley, build ski resorts,
hotels, etc. 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
Court: No standing - no injury in fact per se. Aesthetic and environmental injury in fact, but Ps
arent suffering it
o Need to show that someone had actually used the facilities, and they themselves must be
injured Sierra Club didnt name anyone in particular who would suffer
o Just having a substantial interest in conservation is not enough
SC didnt think that alleging one individual members injury would outweigh the
public interest in having resort in the mountain

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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

Notes:
Why does it matter that theyre not individually affected?
o Clogging of the system - but isnt our system clogged anyway?
o Case or controversy requirement - parties must have a stake in the litigation
But wouldnt Sierra Club have the requisite interest to litigate this to the fullest
too? This is what they do
the time, you can just join the affected group (i.e., go to Mineral King Valley
and then you do have standing)
ADAPSO is a liberalization of the standing doctrine, but still retains requirement of injury (SC)
In a way, this case is generous:
o At CL, if you used someone elses land and they decided to build a factory on it, youd
have no remedy
o Now, court is holding that something like this could be considered an injury (sticking
with requirement of injury, but expanding the definition of injury)
Mere ideological interest/ caring is never enough
Schlesinger v. Reservists Comm. To Stop the War (US 1974)
Facts: Committee found that congressmen held position in the Army reserves thought this
violated separation of powers
Court: No standing. This is a generalized grievance (suffered in the same way by everyone)
o If everyone is suffering, thats a signal that the political process can be trusted to take
care of it
o But lack of political support might fail the system (might work, might not)
Zone of Interest Requirement:
Air Courier Conference of America v. American Postal Workers Union (US 1991)
Facts: 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 dont 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.
Court: There was Art. III standing (injury in fact): Economic: Job security threatened, reduced
business, some lost jobs
o Prudential standing: Zone of Interest
Statutes were not passed to protect the jobs of postal workers
At the time the statute was passed, there were no federal postal workers
Goal 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
To be within Zone of interest, seems that Congress must have intended to protect a certain
class of Ps
Notes:

62

How is this different from ADAPSO?

o Must be intended, not incidental beneficiary
o Employees have generally been denied standing to enforce competition laws, even where
businesses may have standing

National Credit Union Admn v. First National Bank & Trust Co. (US 1998)
Facts: 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.)
o Early 80s: FCUA said everythings 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
o ATT&T credit union allowed many other groups to join their credit union. Banks sued
said this was an incorrect interpretation of the FCUA
Court: Banks had Art. III standing: Obvious injury in fact IDs particular people who left the
bank
o Zone of Interests:
o

Prudential Zone of Interest Test:

(1) Discern interests intended to be protected by the statute
(2) Then, inquire whether Ps interests are among these intended

Common bond requirement was meant to protect the unions, not to prevent competition
or protect the banks:
o Interests involved in statute:
(1) Meant to limit the market of the credit unions
(2) Here, 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
OConnor, dissenting: 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
o Courts response: has to be the right relationship to the injury in fact
This is just semantics. Respondents (banks) here are more than mere
incidental beneficiaries of 109s effects on competition
Intended beneficiaries are sufficient to confer standing (theyre definitely
within Zone), but its not necessary
o Mere incidental beneficiaries arent enough (but you cant be
so far removed that there couldnt 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.
o

Associational Standing:
Notes:
When does an association have standing?
o (1) When members would otherwise have standing

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o (2) Interests it seeks to protect are germane to the organizations purpose

o (3) Where relief requested doesnt require participation of the individual member
(2) and (3) rarely are contested
o (2): Org wouldnt contest something that wasnt germane to its interest
o (3): Cant seek monetary relief anyway under the APA

Organization can also sometimes have standing in its own right:

Havens Realty v. Coleman (US 1982)
Facts: Racial steering case. HOME, nonprofit org, wanted standing.
Court: 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
o Tester even had standing: Still had injury to his legal rights
Havent thrown out legal rights test for injury in fact both are still around
(Congress can create standing by statute where it would not otherwise exist)
Under this reasoning, shouldnt Sierra Club have had standing?
o This case/theory hasnt been heard from since
Notes:
There is a certain political element to these cases:
o Why did Ps in Havens have standing but not Ps in Reservists?
More individualized injury
Racial tensions political aspect
o Banks have standing because theyre banks!
Whats the actual rule?
o If youre a business, and your claim is my competitors are being regulated insufficiently
strictly invariably theres standing
o If youre an employee, environmental group, animal rights group, etc those are required
to show that Congress intended to benefit them

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