INDEX of CASES

NONDELEGATION Cargo of the Brig Auora v. United States (1813) Wayman v. Southard (1825) Field v. Clark (1892) Intelligible Principle Requirement JW Hampton v. United States (1928) Panama Refining (1935) ALA Schechter Poultry (1935) Yakus (1944) Mistretta (1989)/Scalia (dissent) Extent of Non-Delegation Skinner (1989) Touby v. United States (1991) Attempts at revival? South Dakota (1996) Loving (1996) American Trucking (2001)Thomas/Souter (concurring)/Scalia (dissent) REQUIREMENTS OF BICAMERALISM/PRESENTMENT Clinton (1998) Chada (1983) APPOINTMENTS Default clause Inferior Officers clause Are they officers?? Buckley (1976) Freytag (1991 Supreme Court) Landry (2000 DC Cir) Principal or inferior officer Morrison (1998)/Scalia (dissent) Edmund v. United States (1997) Extent of Appointment Requirement Shoemaker (1893) Weiss v. United States (1994) REMOVALS The decision of 1789 Marbury v. Madison (1803 Marshall) Administration/Tenure Act of 1867 Meyers (1926 Taft) Humphreys Executor (1935) Weiner (1958) Boucher v. Synar (1986) Morrison v. Olson (1988) APA Walter Logan Bill (1940) EX PARTE COMMUNICATIONS ACT v. FCC (1988 DC Cir) HBO v. FCC (1977 DC Cir) INFORMATION ACQUISITION American Tobacco (1924 Holmes) Walling (1946) Freedom of Information Act

NLRB v. Sears (1975) DUE PROCESS IMPLICATED? Londoner (1908) Bi-Metallic (1915 Holmes) APA TEST Yessler (1994 9th Cir) CONSTITUTIONAL DUE PROCESS Londoner (1908) Goldberg (1972) Roth (1972) Matthews v. Eldridge (1976) Gilbert v. Homar (1997 Scalia) RULEMAKING v. ADJUDICATION In Re Federal Water Service Corp. (1945, SEC) Chenery Corp. v. SEC [Chenery I] (1946 Frankfurter)/Black, Reed, Murphy (dissent) SEC v. Chenery Corp. [Chenery II] (1947 Murphy1) Dickenson (1927) Fuchs PERMISSIBILITY OF RULEMAKING Storer (1956) Heckler (1983) FORMAL v. INFORMAL RULEMAKING Allegheny (1972) Florida East Coast RR (1973) FORMAL RULEMAKING 556(b) 556(d) 557(b) INFORMAL RULEMAKING Vermont Yankee (1978) Section 553(b) 553(c) 553(d) Notice Portland Cement (1973) Connecticut Light and Power (1982 DC Cir) Building Industry (2001) Chamber of Commerce (1980) MCI v. FCC (1995 DC Cir) Concise general statement of purpose Auto Parts (1968 DC Cir) Reyblatt (1997 DC Cir) Louisiana Federal Land Bank Assn (2003 DC Cir) EPA EXCEPTIONS TO RULEMAKING 553(a) 553(b) 553(d) Procedural Rules Air Trans v. DOT (1990 DC Cir) JEM (1994 DC Cir) Interpretive Rules and Policy Statements Pacific Gas (1974 DC Cir) Cabais (1982 DC Cir)
1

Note that Justice Murphy was in the dissent in Chenery I.

US Telephone Assn v. FCC (1994 DC Cir) P2C2 v. Shalala (1995 5th Cir) American Mining Congress v. Mine Safety & Health Administration (1993 DC Cir, Williams) Syncor International Corp. v. Shalala (1997 DC Cir) Good Cause Exception Tennessee Pipeline v. FERC (1992 DC Cir) INFORMAL ADJUDICATION Citizens to Preserve Overton Park v. Volpe (1971) Camp v. Pitts (1973) Pension Benefit v. Guaranty Corp. v. LTV (1999) CONSTITUTIONAL STANDING Frothingham (1923) Lujan (1992, Scalia) Bennett v. Spear (1997 Scalia) Akins (1998)/Scalia, Thomas, OConnor (dissent) Laidlaw (2000)/Scalia (dissent) Vermont v. Natural Resources (2000) STATUTORY STANDING Agency Action Kansas City Power & Light Co. v McKay (1995, DC Cir) Adversely Affected/Aggrieved within Meaning of Relevant Statute Scenic Husdson Preservation Conference (1965 2d Cir) Office of UCC v. FCC (1966 DC Cir) Camp (1970 Douglas) Arnold Tours (1970) Clarke (1987 White2) Air Courier (1991 Rehnquist) Bennett v. Spear (1997) NCUA (1998)/OConnor (dissent) FINALITY Standard Oil (1980) ADMINISTRATIVE EXHAUSTION McCarthy (1992 Blackmun) Darby (1993 Blackmun) ISSUE EXHAUSTION Sims (2000 Thomas) RIPENESS Abbott Labs (1967, Harlan) Toilet Goods (1967) Ohio Forestry (1998) Natl Park Hospitality (2003) Reno (1993) OVERRIPENESS NLRB (1987 DC Cir) JEM (1994 DC Cir) Eagle Pitcher (1985 DC Cir) Yakus (1944) EXPRESS PRECLUSION Shaughnessy (1955) Wellman (1958 DC Cir) Robinson () Trainor v. Turnich () Weinberger v. Salfi (1975)
2

People had hoped that this case would clarity after Arnold Tours, but unfortunately Justice White wrote the opinion, not that into clarity, liked case by case.

IMPLIED PRECLUSION Switchmans Union () Block v. Comm. Nutrition (1984) COMMITTED TO AGENCY DISCRETION BY LAW Overton Park (1971) Heckler v. Chaney (1985) Webster (1988 Rehnquist) Lincoln v. Vigil (1993) SUBSTANTIAL EVIDENCE Universal Camera (1951) Kimm (1995 DC Cir) Laro (1995 DC Cir) EQUATING STANDARDS OF REVIEW Data Processing (1984 DC Cir Scalia) Allentown (1998) Zurco (1999 Breyer) PRE-CHEVRON REVIEW OF LAW Gray v. Powell (1941) Hearst (1944) OLeary (1951) Packard (1947) CHEVRON Skidmore (1944) Chevron (1984) Cardozo-Fonseca (1987, Stevens) NLRB v. United Food (1987) APPLICABILITY OF CHEVRON Wagner Seed (1991) Rapaport (1995) Haggar (2000) Chemical Waste Management (1995 DC Cir) Lynchburg College (2002)/OConnor (concurrence) Christensen (2000, Thomas)/Breyer (dissent) Mead (2001)/Scalia (dissent) Brand X (2005, Thomas)/Scalia (dissent) APPLYING CHEVRON STEP 1 Dole (1990, Brennan)/White (dissent) Pauley (1991, Blackmun)/Scalia (dissent) FDA v. Brown v. Williamson Tobacco Corp. (2000, OConnor) Sweet Home (1995, Stevens)/Scalia (dissent)/OConnor (concurrence) MCI v. AT&T (1994, Scalia) Public Citizen (1987, DC Cir, Williams) Bowen v. Georgetown Hospital (1988, Kennedy)/Scalia (concurrence) DeBartolo (1988, White) HARD LOOK IN CHEVRON STEP 2 Telecom (2000 DC Cir) Auto Safety (1992, DC Cir) Bankers life (1998 7th Cir.) AGENCY INTERPRETATION OF OWN REGULATION Seminole Rock (1946) Arizona Grocery (1932) Gonzales v. Oregon (2006) REVIEW OF POLICY Pre-HARD LOOK REVIEW Benzene Case (American Petroleum) (1980)/Rehnquist (concurrence, 5th vote) Ethyl (1976 DC Cir)/Bazelon (concurring)/Leventhal (concurring)

Greater Boston (1971, DC Cir. Leventhal) REVIEW OF POLICY: HARD LOOK Hodgson (1974, DC Circuit) Motor Vehicles (1983, White)/Rehnquist (partial dissent) Sun Oil (1993) US Dept of the Treasury, Bureau of Engraving and Printing v. FLRA (1993, DC Cir, Williams) EQUITABLE ESTOPPEL Merrill (1947) Office of Personnel Management v. Richmond (1990)

OUTLINE
NONDELEGATION The constitution is not very clear as to the role of an administrative agency in an administrative state. - Evidence against agencies: o Vesting clause of Art I: All legislative powers should be vested in the Congress of the United States. o The powers are those herein granted (restrains Congress to the enumerated powers); Congress is divided into 2 bicameralism requirement Suggests that the framers were concerned about unchecked power Has implications for agencies, which have all three branches in one o Speech and debate clause protecting members of congress from being arrested on floor o Disqualification clause forbids members of Congress from serving in executive/judiciary during term in Congress; shows that members of government cannot be involved in several branches at once. - But there is some indication that we should have agencies o Congress can raise military; can have postal service o Clear that can hire people to serve at least these functions o Necessary and proper clause ability to make all laws necessary and proper to laws McCulloch (broad interpretation of necessary and proper clause); indicates that Congress can do some other things besides post office and military under N&P not clear what those agencies can do Vesting clause of Art II: the executive power shall be vested in the president of the Untied States - There is not a lot of definition of the executive power is granted not clear what that entails; there is certain enumerated power o Veto Shows that has limited power in legislation might seem contrary to constitution that the legislature gives power to executive agencies o Opinions clause of Constitution: Authorizes the president to require the opinions of the officers in each of the departments; indicates that there will be departments Cargo of the Brig Auora v. United States (1813): Trade prohibition against GB will last until President says that GB no longer poses threat. This is an example of conditional legislation b/c it does not necessarily require a decisionmaker. Any ambiguity could be resolved by the courts. Key about this provision is that it is not just conditional, but that it clearly says that the President is the person who determines when the condition is met the court says that conditional legislation is OK, doesnt get into how far we can go. Wayman v. Southard (1825): Execution of judgments shall be subject to terms that federal courts determine. Its interesting b/c it is a delegation to the courts rather than executive; vesting power doesnt distinguish. Defendant doesnt want to allow this, because he wants to use state notes rather than federal notes. - Holding: The delegation is fine because it is a trivial decision; suggests that some things are so important that they have to be decided by the legislature. o How do we measure importance? [if minor, can be delegated] If legislature is trying to give away essential legislative functions = important Can look at it relative to subject matter has Congress made the essential decisions in this area?? (Have they decided something and left only detailed decision-making to the courts??) Field v. Clark (1892): Whether Country passes unreasonable trade restrictions; the court found that the president did not have discretion if President determined that the country no longer posed unreasonable trade restrictions, then the embargo would be lifted (no discretion as to remedy); There IS some discretion as to determining if terms were met suggests that if the remedy were more vague, it would have been more of a problem. Intelligible Principle Requirement JW Hampton v. United States (1928): President can impose a duty large enough to equalize cost of production; there is some ambiguity about what a cost of production might be.

Holding: Delegation OK here b/c there is an intelligible principle. The court used common sense, looked at needs of government and necessities of government co-ordination.

So now we have a test for determining whether Congressional delegation is appropriate. The next two cases strike down cases for the lack of an intelligible principle. They are still good law, but are very far from the current state of things Panama Refining (1935): If violates state law, President can prohibit interstate transport not quite same formulation as conditional statutes the President can prevent shipment, but doesnt have to. On the one hand there is not much at stake b/c the shipments were illegal, but the addition of federal enforcement will increase enforcement of these state statutes. - Holding: Delegation unconstitutional b/c does not provide an intelligible principle. The court looks to the statute to see whether Congress has declared a policy (echoes of intelligible principle, policy may be a reflection of the word policy). We know what the policy is, we are concerned about illegal shipments of petroleum in violation of state law; Congress requires that the President find a violation of state law. But the court says that there is no standard for the President to make this decision (Y). Given X there is no principle as to whether the President should act (if the statute stated shall prohibit them that would be easy or shall prohibit them if in publics interest these are missing, the President has absolute authority). So Congress can delegate so long as they make all of the big decisions themselves. Can delegate to find facts, recommend policies. - Cardozo (dissent): We need to have a lot of flexibility in this area; there were a lot of unknowns when the statute was passed. He argues that it is not about saving Congress time, it is about allowing agencies to take into account changing circumstances. ALA Schechter Poultry (1935): Act authorizes the President to determine codes of fair competition, competition within industries, extensive industrial policy. It is not clear what entails (could entail a lot). To come up with the standard, the trade group comes up with the proposal, then the President can incorporate that standard if: (a) Group imposes no inequitable restrictions on membership (that they are representative of industry as a whole), and (b) codes do not promote monopolies or eliminate or oppress small enterprises. - Holding: the court strikes it down due to the lack of an intelligible principle. o The Act uses the words fair competition it is a term of art, but the term of art definition is not really applicable here b/c it really applies to a different context o There are a lot of words the President can use: prevent monopolies, has to be fair/equitable not enough o Preamble has goals, policy statements still not enough o Not to mention that Congress CANNOT delegate to private entities (private trade group not suitable substitute for an agency) o Would not satisfy the court if the president set the standards alone because the standard is really open ended that is too much power/discretion to give to discretion even if trade groups were not involved - Relative to what was at stake, this was a broad delegation the issue during the Great Depression was a lot of industrial policy it gave the President a lot of authority to settle policy issues that were central to the political interests/issues of the day. One way to think of Schecther is that there is some limitation on importance Congress cant punt the things that are central to what we are considering as a country. Then the court shifted back After Yakus, a number of VERY broad delegations were upheld. Yakus (1944): Represents an important shift. The statute at issue was the emergency price control act. There is an office of price administration that was delegated the power to fix prices. Very broad power b/c had to set prices of everything in economy. - Holding: The Court upheld this delegation b/c there was an intelligible principle: o Prices set has to be fair, and equitable o More limited decision codes of competition more open-ended than fixing prices; although if this is so narrow, why do we have a delegation?

o Court could exercise judicial review (not possible in Schechter b/c the delegation was too open-ended)
Mistretta (1989): Deals with Sentencing Reform Act. Under the act, the Sentencing Reform Commission comes up with a scheme of detailed regulations to determine with some predictability what kind of sentence someone would receive. The statute provides that sentences should be designed to promote: Retributive, Educational, Deterrence. Incapacitation goals. There are a lot of goals, the truth of the matter is that as there are more goals, it is harder for the court to determine what the commission should decide (although left of rehabilitation). There are three goals of statute: (1) Assuring the purposes of sentencing (back to four purposes we mentioned; but these are in contention with one another), (2) Providing certainty in fairness while maintaining flexibility doesnt really narrow it down much b/c certainty and flexibility are at odds tension, and (3) Update modern knowledge. - Holding: The court upholds the Sentencing Reform Act, finds this to be an informative principle. It is acceptable to have broad standards for delegation, and the court admitted in a footnote that it may use a milder form of non-delegation based on principle of constitutional doubt (footnote); In the end, this is a poor substitute for non-delegation doctrine. Reasons delegation upheld: o Congress prescribed the specific tool that Congress was to use Congress was supposed to use guidelines this gives a lot of guidance for the creation of sentencing guidelines Narrow down to range Allow for judicial discretion gives a system that grants points for mitigating, aggravating factors (grid) Although Congress did not make many policy decisions about what things were to go into the grid (i.e. did not make judgments about whether drug crimes are more serious than others) o Congress did determine factors that could or could not be considered Cannot be considered at all: gender, race (constraints) - this is a reversal of what the court decided in Schecter, where the court says that negative restrictions are not enough, court does not explain why its taking a different approach o This is an intricate labor-intensive task: This is uncontroversial, it is very difficult to assess all of the possible crimes, sentences, although it is not impossible for congress to pass these guidelines - Scalia (dissent): Does not question notion that we may need to have broad standards. However, the delegation should be ancillary to their exercise of executive powers. The sentencing of people in the first place is not ancillary to executive powers, it is an executive agency this is not just co-mingling of power between agencies (that happens all the time), but this is the creation of a new branch altogether, a Junior Varsity Congress. Arguments re: Tradition of Sentencing: 1) The Commission does have a lot of guidance based on tradition eased concern, would have further eased concern if Congress had explicitly stated that the court was supposed to rely on this 2) Seems contrary to constitution to create an agency that was doing a task that had historically been done in courts It is very important that the court never got rid of non-delegation doctrine, they focused on specific nature of statue; at the time these were created, the guidelines were essentially mandatory. Skinner (1989): Can we allow an agency to decide on these fees/taxes?? A previous Supreme Court case had stated that it was yet to be decided whether an agency can set taxes, but here the court confronts it directly. - Holding: it does not matter if an agency decides taxes, does not need higher scrutiny. There are constitutional provisions that give Congress specific taxing power (tax bills must originate in house), but the court recognizes that it is possible that some specific tax provisions could not be delegated. Touby v. United States (1991): Under the controlled substances act, the Attorney General can reschedule drugs into a new classification. The relevant officials can add them to the list b/c is constantly changing. - Holding: not a violation of the non-delegation doctrine; the court declined to find a niche for criminal statutes although we view criminal laws differently (lenity), but this may not apply to separation of powers (there is some concern with individual rights, but does not seem to implicate a higher standards for separation of

powers). The court found that there were enough intelligible principles, was an intricate, labor-intensive task where it was difficult for Congress to determine in advance which drugs should end up in specific classes. Attempts at revival? South Dakota (1996): Government can buy land for purpose of giving to Indian Tribes. There is no standard at all for what land can be bought for Indian Tribes (suggests you can buy Empire State Building for wedding present to Indian Chieftan). There is something to go on from the fact that the land has to be for intergovernment relations. The court argues that they are not without power to regulate this delegation the court can look at legislative history, can look at history, etc. Lower court found not enough of an intelligible principle, not resolved by Supreme Court on Merits. Loving (1996): President supplies criteria for death penalty for use in courts Marshall the court does not deny that death may be different, but since this has to do with the Presidents commander in chief power, already has a lot of power in this area; the court may be willing to consider whether the death penalty is different. Should death be different: 1) Yes, you are killing a human being 2) No, all agency decisions are so important, i.e. people may die if EPA standard not enacted, not strict enough (life and death are at stake in a lot of administrative decisions, its just not obvious. Agencies are NOT required to provide an intelligible principle American Trucking (2001): The DC Circuit finds troubling the agencys implementation of the statute. When they passed the regulations, they did not make them more determinate. This is not a typical application of non-delegation, that the agency supply an intelligible principle. Judge Williams did this to revive non-delegation in novel way found that it was OK to have broad standards, but public needs to understand what standard applies, so if Congress passes broad standard, the agency needs to be more specific. - Holding (9-0): The courts decision was pretty straightforward, the DC Circuit had looked at the wrong actor, had to look at what Congress had done, we allow broad delegation, so this is OK. Congress does indicate that there is some limit that where the decision being made by the agency is so important, we may need some degree of information to the agency. - Thomas/Souter (concurring): argue that the court should abandon distinction between executive and legislative activity in agencies rulemaking is legislative, we should have a doctrine that recognizes that its OK for agencies to co-mingle power; - Scalia (dissent): would not agree with this based on Mistretta because he wants the action to be ancillary to executive power.

REQUIREMENTS OF BICAMERALISM/PRESENTMENT Clinton (1998): Court strikes down line-item veto, does not get to non-delegation question b/c the statute violated the constitutional requirements for presentment, that the legislation had to be passed by both houses of congress and presented to government. How can we make a constitutional version of the veto? - Allow president to pass regulations pursuant to the statute - Congress would give a certain amount of $ to President, he would pass regulations to determine how much would be delegated - Would this violate non-delegation?? Chada (1983): Involved constitutionality of legislative veto one house resolution to strike down act of agency. - Holding: This was not acceptable, you cant have a delegation to the legislature (the Congress is essentially delegating to itself the power to review these standards). Formalist decision, has to follow specific Constitutional provisions. To have a legislative veto requires constitutional amendment. - White (dissent): argues that if we want to control delegation, there is no better way to ensure accountability than allowing Congress to strike at agencies when they exceed their power. Legislative veto is a good idea. Where does this leave the administrative state?? 1) Can pass statute that requires agency to send judgments to Congress, under fast track authority (goes through both houses and presentment) 2) Congress is not as concerned with delegation as Courts are, can use legislative history to control agencies Role of agency Accountability Stricter non-delegation Congress should make all important decisions b/c are elected officials Important policy decisions should be made by elected officials Less strict Congress is a mess, not really that accountable, whereas agencies have expertise Ultimately we have an indirect democracy, agency is taking that a bit further

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APPOINTMENTS Appointments are important. Whatever the preferences are of the administrative officials is very important in determining the policy of the agency What would you want if you were making appointments statute? - Separation of powers: different branch creates position, other branch fills it (two tasks, two bodies as part of general system of checks) - Accountability: appointments should be made by someone who will be responsive to voters (i.e. blame president if doesnt go well) - Policy coherence to what happens in executive branch: Allow president to appoint people who will be under his wing; may be uncomfortable if has to work with people who dont agree with his policy goals although may not want the President surrounded by yes men - Special interests: On one hand may want to make sure that special interests have a say, they have the most information, if they are writing the rules, they will be good rules; although they may be biased, may appoint people who go along with their specific interests (capture) - Ideology: How much ideology do we want? o On the one hand, we want the President to be able to advance his policies, he was elected by the people (although there is an ideological split in electorate, does not represent ideology of everyone), this system is good b/c the president gets to control what he wants (maybe we should even get rid of Senate check, or maybe the Senate check is good); o The flip side is the desire to appoint apolitical experts rather than political hacks (expertise and ideology may be in conflict) to pick experts you may want a commission of experts to pick commissioner (although is tricky how you pick the pickers, leaving it in the Senate may be a better way to get expertise). - Efficiency: do this at appointments stage; argues in favor of Presidential appointment without confirmation of Senate. Current system gridlock b/c Senate can block appointment (currently lots of DOJ positions are unfilled). - Topical: Maybe we should specialize the appointment by the system requiring an appointment (i.e. should Secretary of DOT be appointing criminal judges of Coast Guard Criminal Court) A lot of administrative law would be different if we had the appointments system pick middle of the road people, rather than having the President appoint. Two Appointments Clauses: 1) Default: The President shall nominate with advice/consent of Senate shall appoint Ambassadors and all other public officers of the United states whose appointments are not herein otherwise provided for [roles created by Congress, filled by President]. 2) Inferior Officers: Congress may by law as they think proper provide for appointment of inferior officers by: a. President alone (pretty much required if officer is performing executive functions) b. Courts of Law (need not be Article III courts, generally only if performs court-like function Mistretta, Morrison) c. Heads of Departments (generally consult w/ president, Freytag dicta suggests must be a cabinet position) First Assess whether they are officers Buckley (1976): Federal Election Campaign Act creates an 8 member Federal Election commission. There is probably an even # b/c Congress is concerned about political decision-making does not want decision to be made that there is one more R than D or vice versa. Secretary of Senate and Clerk of house are members are ex officio (cant vote); President Pro Tempore appoints a member from each party from the Senate (confirmed by majority of both houses); Speaker of House appoints two members from different parties (confirmed by majority of both houses); President has 2 appointments (must be confirmed by BOTH houses). Congress justifies this set up under the necessary and proper clause and plenary control over elections. - Holding: the FEC are officers of the United States b/c they have rulemaking authority (substantive rules re: elections), and adjudicative power (can issue advisory opinions re: civil elections law, can engage in injunctive

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action/declaratory relief). Officers are people who perform duties in aid of Congress, must exemplify discretionary power. Therefore, the appointments are unconstitutional b/c (formalist): o Congress cannot give themselves appointment power (unless merely performs research/reports) o Appointments by President should not require 2 house approval (either alone (inferior officers) or w/ advice/consent of Senate (default)). Court rejected any functionalist arguments that this was necessary for the commission to be non-partisan. They argued that either make them mere employees (not officers, i.e. engage in disclosure and investigation powers) or have to change appointments b/c it is a constitutional requirement.

Freytag (1991 Supreme Court): Dealt with Special Trial Judges (STJs) of Tax Court. The court found that they were inferior officers. The STJs were able to engage in de novo review (which they did rarely), and their decisions were final. Although the Supreme Court stated in dicta that it would have found the STJs to be officers if they were subject to review. - Holding: The fact that they were appointed by Tax Court Judges OK b/c is a court of law, are inferior officers. The courts of law do not need to be article III courts. Dicta: the heads of departments must be cabinet officials. - Concurrence: the courts of law should be article III courts, but the appointment here was OK b/c was a head of department. No need for heads of departments to be cabinet members. Landry (2000 DC Cir): Question was whether ALJs of FDIC were officers for purposes of appointments clause. If they were found to be inferior officers, it is possible that the officers of the FDIC that appointed them were Heads of Departments. However, this turned out not to be a necessary analysis. - Holding: the ALJs are not officers. The court defines officer as someone who exercises significant authority on behalf of US. Unlike the STJs in Freytag, the ALJs could not engage in de novo review, and their decisions were merely recommendations, not final (although a direct application of Freytag would have found them to be officers b/c whether subject to review is not important). Types of authority include: o Prosecutorial/enforcement authority: Given that it is an executive function, the appointments clause implicates that Pres has to appoint o Rulemaking powers: we admit that it is more legislative/ judicial than executive; but the court doesnt care b/c it also represents the performance of a significant government duty; the court recognizes that the administrative agency can do some of all three branches powers o The appointments clause should apply to all three types of powers Then assess whether they are a principal or inferior officer Morrison (1998): The Independent Counsel (IC) was appointed if the Attorney General determines that an investigation is necessary. If so, the special court determines who should be IC. The special division is composed of 3 federal judges. The role of the IC is to investigate the president and other high executive officials. The question was whether the IC was an inferior or principal officer. If inferior, probably OK to have special division appoint (is arguably a court of law), but if principal, President should appoint. There is an intuition that the President should not appoint b/c IC investigates him & his officers. - Holding: the IC is an inferior officer. Factors that the court looks at: o Whether removable: Here they are removable for good cause. The fact that they are removable by the AG shows that they are likely inferior o Limited/no policy making authority o Limited Jurisdiction: can only address issues presented to her o Duration of tenure: Limited, temporary, can only stay for duration of investigation - The court notes that this is an interbranch appointment but finds that this is valid that the courts are appointing b/c is an area relevant to courts (court suggests that otherwise may not be appropriate). - Scalia (dissent): Scalia argues that most principal officers are removable for cause, the fact that cant make policy is not that important considering that has a LOT of executive power, that the size of jurisdiction is not important (i.e. Luxembourg ambassador), the fact that the tenure only lasts for the length of investigation is not that important b/c investigation may last longer than most term limits of principal officers.

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Edmund v. United States (1997): Supreme Court revisited the issue of whether officers were inferior or principal. It concerns Coast Guard Criminal Judges. Scalia dissent from Morrison climbs into the majority. - Holding: They found him to be inferior officer b/c he has a superior officer other than the President. In this case, the Judges were supervised by the JAG (Administrative Supervisor) as well as the Court of Appeals for the Armed Forces (reviews their decisions, although they wont reverse as long as there is some competent evidence to support it. They did not overrule Morrison, they used those factors and added another. Interesting to note that under the Edmund test, Morrison likely would have come out the other way. Extent of Appointment Requirement Shoemaker: Do we have to reappoint the person where someone is appointed to a position and then Congress subsequently changes its duties? The members of the Rock Creek Parkway commission are ex officio (were appointed already, got this role by virtue of their previous duties). The question was whether they had to be reappointed to fill that role. - Holding: they dont have to be reappointed because their previous duties were germane to this task. Weiss v. United States (1994): No need for reappointment where there are a large number of people being put into additional procedures. It is much less likely that Congress motive is to expand the duties of particular individuals. Germaneness may not be necessary, but in this case it was germane b/c still serving w/in military justice system.

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REMOVALS There is no removal clause of the constitution Several Theories: 1) There is a removals clause, its impeachment have to go through impeachment to remove a. Requires 2/3 vote in House/Senate; not removable by the President whenever he wants b. Most commonly used for President c. Although officers can be removed when term expired 2) We have no clause b/c removal = part of executive power, which is vested in the President a. President has absolute power to remove b. Appointments clause = check on his power to appoint 3) Congress can do anything necessary and proper to remove a. Can limit removal power b. Can determine term 2) Removal tracks appointment a. Could be that if you want to remove someone, president names person to be removed, confirmed by Senate b. Better option is that if you want to remove someone, you can name new person to replace them, confirmed by Senate The decision of 1789: Congress is getting around to creating Department of Foreign Affairs. The wanted to create a removal mechanism for officers, but the question was whether Congress could restrict removal power. Indicates that President does have some removal power (negates impeachment only option). Not very conclusive b/c still not clear if Presidents removal power can be limited Marbury v. Madison (1803 Marshall): Marbury was appointed to be Justice of the Peace of DC by President Madison. However, the commission was not delivered until Jefferson took office. The reason that the case was important is that Jefferson did not believe that he could remove him on his own free will. If he could, he could have just delivered the commission and then fired him. Marshall in dicta said that DC Justices are appointed for terms of 5 years, not removable by President mentioned it 5 times to make sure that Jefferson knew that he could not go around removing officers. Administration/Tenure Act of 1867: Congress was concerned after Lincoln died that Jackson would back away from Reconstruction, that he would replace agency heads with his own people. Congress passed a statute that all officers appointed by default means could hold positions until successors were appointed and qualified. Suggests that #4 is the best option. This is vetoed by Jackson (he is impeached as a result and almost gets convicted). The Supreme Court never tested the constitutionality of this b/c was repealed. Theory of Unitary Executive: All agencies are all embodied in one person elected President - Relevant to removal power (Lawson); if can remove whoever he wants, can accomplish what he wants to do (remove those who stand in way of effecting his policy goals) - Theoretical basis of unitary executive (Steven Calabresi) the word vested in Article II; refers to a President, NOT agencies!! Meyers (1926 Taft): Taft was former president, believed in strong executive power, when gets on court, his decisionmaking reflects the notion that there should be a strong executive. Postmasters of first, second, third class, appointed through appointments default procedure, held position for four years. The President wanted to remove postmaster, does so through someone else, doesnt obtain any kind of approval from Senate in this case. - Holding: The court concludes this is constitutionally within power of president. Recognizes the counterargument, that at time of founding, many states allowed removal by legislature. However, this is not important here b/c the federal government created unique/new things in constitution (same as many comparisons to foreign law may or may not be illustrative). It is important that the President be able to remove b/c failed appointments may be embarrassing, but not allowing him to remove someone tension, infighting, discord on policy objectives w/in executive branch. The necessary & proper clause is not relevant here b/c this case deals with Article I. Strong victory for unitary executive theory.

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The pressure was put on the decision after New Deal administrative state. Progressive agenda promoted agency independence (scientific, apolitical government). The inherent removal power restricted this movement, made agencies political to allow President to fire at will. Humphreys Executor (1935): FTC is an antitrust agency, it can prevent unfair trade actions. It shares authority with DOJ, but in contrast to DOJ, Congress wanted to create an independent agency. The idea was to create antitrust enforcement that was independent, mechanisms. The Commission has multiple members w/ 7 year terms and a limit on removals. President Roosevelt purports to remove Humphrey, appointment of Hoover 5 years before end of term. - Holding: The court finds that the requirement that the President remove with cause means that he cannot remove at will. In terms of precedent, the court does mention Meyers, but distinguishes it b/c it only applied to officers w/ purely executive functions, whereas here the position was quasi-legislative/quasi-judicial, so it doesnt make sense to give the President power over them (the FTC does have some executive powers, but it has other powers too). So where an agency is an independent agency, Congress can restrict removals. In response that this is a violation of SOP to have Congress limit the Presidents ability to remove in his own branch, the court responds that agencies are essentially a fourth branch of government. Weiner: Brought up the question of the default rule of removals. The conclusion is that where it is an independent commission, the President cannot remove (absent explicit instruction to those effects by Congress). Boucher v. Synar (1986): Gramm-Hollins-Rudmann Act was passed to create a balanced budget. Under the Act, the Comptroller would make cuts if budget was not balanced. The comptroller was removable by a joint resolution of Congress. Can Congress give itself the power to remove executive officials? - Holding: the court found that the Comptrollers position was executive (execution of the law, mechanical approach). Court says that Congress cant give selves removal power. It is one thing to restrict removal power, more problematic to give Congress removal authority. Leaves open that Congress could remove in purely congressional agencies (no executive power i.e. CBO) This did not strike down balanced budget act, but Congress did not reenact it with changes in removal. Morrison v. Olson (1988): The Attorney General can remove the IC for cause. This restriction came out of the Watergate scandal where Nixon got rid of all of the investigators. - Holding: the IC is clearly executive (prosecution is inherently/purely executive). Under Meyers/Humphrey, suggests that the President should have unfettered removal power. However, the court argues that the President still has some removal power, and the President still has the power to make sure that the IC can do his job. This is different from the broader theory of the independent executive, uses more of a functionalist rather than formalist approach. It is not central to functioning of executive branch that the President can remove all executive officers w/o cause. - Scalia (dissent): Shocked that the court allowed Congress to limit removal authority

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APA Focuses largely on procedural issues History of the APA: - Roosevelts view of the government/common law was that the common law protected too much in terms of property rights and too little in terms of individual security and basic sustenance. - He called for a Second Bill of Rights in 1944, which would have granted positive rights, but it was never enacted. Instead he enacted it through statute, creating a machinery to implement his vision through administrative agencies. o This created a lot of tension between Roosevelt and the Supreme Court (which struck down the National Recovery Act). Nonetheless, Roosevelts actions strong legacy, many of the agencies he created are still around: SEC, NLRB, FCC. - These agencies were created under the belief that a scientific government could be created, however, it did not work out exactly as planned disappointment from both liberals and conservatives b/c politics were not erased by the administrative state. Concerns: o Some people wanted to increase the independence of agencies, particularly in adjudicative decisions o Perhaps we should streamline the administrative state. Each of the agencies had its own organic statute w/ its own administrative procedures. o Wanted to bring process under auspices of judicial review more control by judges, less control by government. - Walter Logan Bill (1940) was the first attempt to achieve these goals. It would have included broad judicial review, but it was vetoed by Roosevelt who was already having lots of problems w/ judicial review. - In 1946, Congress enacted the APA, Roosevelt is less concerned about judicial review b/c more of the judges had been appointed by him. APA: Mostly concerned with procedure. Controls what agencies can do (rulemaking, adjudication) and how they can do it (formally, informally). Formal Informal Rulemaking 556, 557 553, 554 Adjudication 554, 556, 557 555 (generally applicable)

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EX PARTE COMMUNICATIONS Ex Parte Communications (ACT): Formal adjudications: There are APA provisions on point - 554(d)(1): specifies that a decision-maker (other than member of agency, i.e. ALJ) shall not consult anyone for fact-finding (i.e. cannot initiate ex parte communications) - 557(d)(1): no interested person outside the agency shall provide ex parte communications - The APA recognizes that this might happen in the context of agencies if a communication that is not supposed to occur happens nonetheless, it must be made part of the record (no longer ex parte communication, is part of the record everyone can have an opportunity to address that information) - The courts have not said that a single ex parte communication irrevocably taints the adjudication gives court opportunity to look into the circumstances to determine whether there was a particular unfairness in each case to determine whether adjudication invalid What about informal proceedings (more important than what the framers of the APA had envisioned important). ACT v. FCC (1976 DC Cir): The ex parte communication at issue is that the media petitions to the agencies that they could regulate themselves AFTER the administrative proceeding. ACT sues, says that it is a violation of the administrative process media is acting behind doors, corrupting the process. - Holding: It would have been wise to have public comment on the proposals by the industry, but was not an abuse of discretion b/c did not. There was a precedent, Home Box, which said that there were no ex parte communications allowed if two private parties are competing for a license, etc. That is how the court distinguishes it in those competitive circumstances, it is really important for there to be a prevention of ex parte communications b/c there is a certain degree of competition. In this case, there may have been some interest of the industry at play, but it was not a zero sum game, so ex parte communication is OK. - Also, Home Box does not apply retroactively (decision came down after this case was filed). In response to this case, many agencies passed regulations prohibiting ex parte communications, so this is sort of moot, but for those agencies that did not, the Home Box and ACT frameworks apply.

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INFORMATION ACQUISITION American Tobacco: The FTC claimed to have an unlimited right to access papers of respondents to see whether had violated a particular provision of the law. - Holding: Holmes invoked the question of constitutional doubt not clear if subpoena power, if broadly read, would violate the constitution (might violate 4th amendment), so we will read it narrowly. Refuses to accept that Congress intended for lower agency to sweep constitutional protections into the fire. Had the effect of limiting governmental access to information. Walling: Again, we have a subpoena from the DOL to see if petitioners are violating the FLSA. There is less ambiguity here than in American Tobacco, so no way to apply doctrine of constitutional doubt. - Holding: Court makes distinction between 2 types of searches: o Actual Search: more constitutionally troubling, more likely to conflict with 4th amendment (unreasonable searches and seizures) o Constructive search: government requests production of certain kinds of documents less constitutionally troubling. Limits on this: Possibility of actual seizure once government does the actual seizure, if did not meet constitutional requirements in that initial seizure, then cant request those documents through constructive document requests Should look at the scope the requirement that the company produce every single document in warehouse may not be reasonable Needs reasonable amount of time Reasonable degree of specificity about the documents Corporations are not entitled to protection under the 5th amendment (self incrimination) Freedom of Information Act: The original APA contains certain kinds of minimum disclosure requirements. Exceptions: 1) Certain kinds of information has to be published a. Exception: secrecy where required by public interest b. Exception was interpreted as being really expansive c. So the APA did not common law version of FOIA 2) There were some requirements i.e. release of final orders, attributable to APA in addition to FOIA Requirements under FOIA: 1) Publication requirements: agencies must put in federal register; some of this was already required by APA a. Names of employees from whom can obtain info b. Rules of procedure c. Substantive rules of general applicability authorized by law (regulations) 2) Public inspection requirements: Must make available documents including: a. final opinions b. Including dissenting/concurring opinions c. Orders 3) Production requirements: must make available a. Documents member of public reasonably describes b. As long as the government is compensated for time/resources This is a journalists best friend information about public universities, etc. Also important for the public as a means of obtaining information Litigation: involves exceptions to FOIA whether they are applicable. - National Defense - Internal personnel - Exempted by statute from disclosure (i.e. organic statute) - Trade secrets

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Exception 5 (*),if certain kind of information could not be made available in litigation, the agency may be able to use certain privileges (executive privilege, work product, attorney-client); Congress did not want FOIA to eliminate the privileges under rules of evidence Personnel medical files (privacy) Records for law enforcement purposes (*) Financial institution regulation Geological, geographical information re: wells

Sears: To bring charges at NLRB: bring complaint to office of general counsel, if takes case, he publishes memorandum re: decision to litigate, if does not take case appeals office memorandum re: why does/does not take case, then it is sent back to regional director sends memo to the parties. Sears wants everything from the last 5 years (all the memos issued) that focus on a particular issue in labor law (wanted an index). There were two questions: (1) Are these identifiable records (cant ask for everything, have to point to identifiable records language was changed so that they need to reasonably describe the records); (2) whether qualified for exemption. - Holding: the records were identifiable. No need to define them in same language used by agency. The exemptions did not apply: o Executive privilege Does not apply b/c explains decisions that had already been met o Attorney-client privilege Does not apply b/c decision already reached

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DUE PROCESS DUE PROCESS IMPLICATED? Londoner: Case involving special assessments, which are a cross between taxes and user fees. Everyone who benefits from a certain project have to pay a fee. Colorado had an elaborate process by which people could petition to have a special project. One specific issue flagged by petitioner was a violation of Due process. - Holding: The law made the agencys final determination unreviewable. The District court found that this process was unacceptable, but the Supreme Court found this was fine as long as the agency has both the power to engage in legislation and adjudication. Therefore, if the states want to prevent the courts from reviewing agency actions, the agencies have to be able to go through adjudication. However, the court found that it was problematic in this case that there was not a hearing b/c after the initial decision, judicial review was foreclosed. The fact that the only opportunity to be heard was in writing was insufficient. The court required that the hearing be verbal (even though it was a tax assessment, credibility was not likely an issue). Interpretations of Londoner: - Broader interpretation: Whenever the agency acts, it must provide a hearing to all interested parties o Agency engaging in rulemaking context would be very different from legislature engaging in legislative process defense of this is that the agency does not have representative power - Narrow interpretation: Hearing is required, but only in subset requiring adjudication. Adjudication is different b/c someones rights are affected, therefore a hearing is required (this prevails in Bi-Metallic) raises the question of what a rulemaking is relative to an adjudication Bi-Metallic (Holmes): Colorado is imposing a tax, but here the law is applying to all taxable property, all goes up 40%; there was no hearing. Someone might, under interpretation 1 of Londoner argue that when an agency acts, it must provide a hearing. - Holding: The agency must provide for a hearing only when engaged in adjudicative decision. Holmes makes this decision for pragmatic reason. He is very concerned about the possibility that whenever everyone is effected, everyone has the right to be heard. If this were the case, we would never get anything done. How do we determine whether something is rulemaking or adjudication?? Three-part test (constitutional cases): o Few people affected (i.e. Londoner): Likely most important element, deals with generality (like Dickenson, Fuchs), not a bright line test. o Big effect on them: You can tell this is not important b/c there was a huge increase, found not adjudication o Each case on particular grounds: Holmes is anticipating a loophole (combining a lot of adjudications to call them rulemaking) o If all 3 met likely an adjudication. APA TEST For the APA, we have a different test (not controlling on whether all of the procedures associated with rulemaking are required): 1) Whether adjudication or rulemaking 2) Whether the requirements of informal rulemaking are required Test for APA: Prospectivity more of an issue under APA (section 551) APA seems to adopt a definition that everyone (Dickenson, Fuchs) thinks is incoherent - Difficult exercise b/c hard to know what to make of the prospectivity requirement - Courts tend to look at generality instead Something can be considered a rulemaking for APA and an adjudication for Constitution and viceversa Yessler (1994 9th Cir): This case concerned whether the agency had been providing adequate procedure for hearing. - Holding: although it was an APA case, the court focuses on generality. Its argument is that this is general b/c even though only one housing authority is involved, a lot of people may be affected by the decisions of that housing

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authority, which would make it a rulemaking (same issue as in Dickenson do we focus on one utility or the thousands of customers). Most would disagree with this focus on the large number of consumers. CONSTITUTIONAL DUE PROCESS 14th and 5th amendments Although the amendments are worded differently, they are interpreted in the same way: 14th: No state shall make or enforce any law which shall deprive 5th: No person shall be deprived. Both share key phrases: 1) Life, liberty or property 2) Without due process of law Londoner (1908): Involved special assessment, Denver would assess costs to properties that abut improvements. Alternative ways to fund the project: 1) tax whole city generally, 2) could take federal taxes, 3) user fees 4) special assessment (whether they like it or not). Dissenters can come forward to protest project. Makes 11 objections, the Supreme Court resolves the case on the basis that there was no hearing; the petitioner also raised notice, but the Court wanted to address whether a hearing should be required it is not enough that a person be able to write in, this case makes it seem that there must be an opportunity for a public hearing. There should be a public hearing for reasons of accountability, and to protect substantive rights. Goldberg (1972): Welfare system in NY has a number of steps before people can be deprived of benefits. Pre-deprivation: (1) Case worker makes recommendation to unit supervisor, (2) Given 7 days notice before discontinuation explains that if you want review, it can be reviewed by local welfare official, has to be higher in hierarchy than unit supervisor, (3) Beneficiary has to submit a written statement as to why benefits should not be terminated (think back to Londoner sometimes a hearing in writing is not enough). Deprivation: Benefits are discontinued. Post-deprivation: Post-termination hearing independent hearing officer (like ALJ). The city of NY agrees that procedural due process does apply to termination of welfare benefits. The court uses this case to get rid of the distinction between rights/privileges. - Holding: a pre-deprivation hearing is required, the court relies on a balancing test to determine this: o Recipient interest: importance of welfare itself. Here if deprived of benefits, has no food Is an irreparable loss b/c will starve to death o Government interest: the state has an interest in not spending too much $$, the court does not pay too much attention to this o Grievous loss: comes from previous case law, but the court applies it in a different way - Even though a hearing is required under due process, it does not need to be a judicial hearing all that is required is: o Notice o Opportunity to be heard not enough that be in writing b/c probably not well-educated, and appearing in person is important to determine credibility o Record: decision needs to state why a particular decision was made , although no need for a formal, written opinion (the court realizes this would be a huge deviation from historical practice) o Impartial decision-maker: doesnt have to be an article III judge, but should not be the same person who participated in making the initial decision (could be really defensive) Roth (1972): the plaintiff was an assistant professor at U of WI who was hired for a one-year term (there may have been an expectation that you will be renewed the next year). He claims there is some reason he did not get renewed that they were trying to punish him for statements that were critical to administration. - Holding: in order to implicate due process, Roth needs to have a protected interest, must be w/in 14th amendments protection of liberty/property. o Liberty: Common occupations (although here not entirely denied right to work)

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Learn, marry, K, establish home, bring up children, worship God Enjoy privileges that orderly pursuit of happiness Reputation (challenges your standing/association in community but must also incidental effects, i.e. ability to buy alcohol) Property:

Legitimate claim of entitlement based on: prior rulings, state law, regulations, understandings3 However, even where the state law does not provide a substantive right, where it provides a certain procedural requirement, due process is implicated if violated Where due process is implicated need for prior hearing in the absence of a really strong govt interest to the contrary (i.e. person committing bank robbery).

Matthews v. Eldridge (1976): Cash benefits are provided to workers during periods in which they are completely disabled. Eldridge was awarded benefits in June 1968, in 1972 he received a questionnaire from agency administering benefits, he responded that condition had not improved they got records from physician. They then sent a letter to Eldridge re: tentative determination that was no longer eligible as of 1972, advised Eldridge that he might request reasonable time to obtain/submit additional info regarding condition. Eldridge disputed characterization of his medical condition and indicated that agency already had enough information. Agency made final decision that not eligible, notification informed Eldridge that could seek reconsideration, Eldridge sued instead. The issue was whether the due process clause of the 5th amendment requires that prior to the termination of SSDI payments, the recipient be afforded an opportunity for an evidentiary hearing. - Holding: Relied on Goldbergs factors to find that there was no due process violation b/c a hearing was not required prior to the termination of disability benefits. The court considered: o Nature of Beneficiarys interest: less than in Goldberg because not on margin of existence like welfare beneficiaries, also if denied, and later appeals and prevails, it is merely an interruption, not termination Degree of deprivation: less likely that in Goldberg and although may still be substantial b/c it is still possible that they will not be able to work, if doesnt have enough resources to survive then, can rely on other sources of govt assistance. Possible duration of deprivation is likely short. o Fairness and reliability of existing predetermination procedures: Welfare termination requires assessment of credibility of witnesses; disability relies on routine, standard, and unbiased medical reports by physician specialists; because these are made by doctors, the educational concerns from welfare case are obviated; also, in termination of disability benefits, beneficiary is given full access to all information relied on by state agency and given opportunity to provide more evidence. o Public Interest: Includes administrative burden, other societal costs that come with requiring more burdensome procedural requirements. While cost is not determinative, governments interest in conserving scarce fiscal/administrative resources is a factor that must be weighed. - All that is necessary is that the procedures be tailored to the capacities and circumstances of those who are to be heard. - Brennan (dissent): The very legislative determination to provide disability benefits, without any prerequisite determination of need in fact, presumes a need by the recipient which is not this courts function to denigrate; also, it is no argument that a worker, who has been placed in the untenable position of having been denied disability benefits, may still seek other forms of public assistance. Eldridge: procedure necessary for due process some pretermination hearing; here the process was upheld even though it was close to the one in Goldberg (Goldberg was distinguished because it had to do with welfare benefits). Gilbert v. Homar (1997 Scalia): Respondent was arrested and charged with drug charges; his employer, a state university (where he worked as police officer) found out and suspended him w/out pay, pending hearing. The charges were dropped, but university continued own investigation. Respondent was informed at meeting with university director of human resources and university police chief that state police had given university info that was very serious in nature, but was not told that report of alleged confession was made on day of arrest (he was therefore unable to
3

Critiqued for letting the state law take such a key role in constitutional rights.

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respond to damaging statements attributed to him in report). The university president allowed respondent opportunity to be heard, then suspended demotion. Respondent filed suit contending that petitioners failure to provide him with notice and an opportunity to be heard before suspending him without pay was a violation of due process. - Holding: There was no need for payment during suspension the due process clause is flexible. If they were wrong, they can pay him back-pay, but b/c he was indicted, there was case law establishing that that is sufficient basis to suspend w/out hearing. Also, due process was not violated when he was not afforded a pretermination hearing: o Individual interests: He will get his paycheck eventually Court says that they need to take into account duration of deprivation o Risk of error: low b/c has been indicted by a 3rd person, seems contrary to standards of evidence, but here there only needed to be a reasonable basis of misconduct to suspension. The important thing is that it is an independent decisionmaker (not the same person); the decision was made by external set of actors outside of his boss that is an additional safeguard. So while the arrest may not have been justified, it was reasonable for the University to conclude that he posed a problem. o State interest: court recognizes this to a greater degree than they did in Goldberg Significant interest b/c police officer was charged with felony; in position of public trust Is the state interest in keeping him off payroll or off the force? What is the strength of the state interest in suspending without pay?? There is clearly an interest in suspending, but not clear if it needs to be done without pay? Court says that the taxpayers should not have to pay for likely criminals to be kept on payroll

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RULEMAKING v. ADJUDICATION In Re Federal Water Service Corp. (1945, SEC): The FWSC owns a number of utilities including Federal Water and Gas. There are a variety of kinds of stock, in particular B stock is owned by UOC, and there are also A and Preferred stock. The company goes through a reorganization, during which the stock moves around. In the initial reorganization, the UOC (class B shareholders) will end up owning the company. SEC rejects re-organization b/c the UOC will end up with more of their share. So, the UOC comes up with an alternative plan where the preferred and A shareholders are going to own most of the company, and the managers go out and buy A and Preferred Stock. - Holding: Although this is not explicitly forbidden by the Public Utility Holding Act, the SEC decides that the actions of the owners is unacceptable and they strike this down. o Legal Argument: provisions fair and equitable and not detrimental to the interests of shareholders in reference to stock issuing, as a legal matter the company violated the fair and equitable requirement, and violated the principles of equity. o Policy argument: Offers additional explanations (post hoc). Chenery Corp. v. SEC [Chenery I] (1946 Frankfurter): - Holding: the only way that the agency can find that the company violated the statute is if it is not fair and equitable, or detrimental to the interests of the shareholders. The court disagrees with the agencys legal analysis that it is not fair and equitable and that it violated principles of equity. The court also states that, with regard to the agencys policy argument, they cannot offer new explanations beyond their initial statement. The court strikes it down, remands to the agency. - The court stated that had the agency promulgated a standard to the effect of their conclusions this case would have been different. This indicated that the court felt that Congress intended for the agency to go through rulemaking to promulgate standards. - Black, Reed, Murphy (dissent): The commissions conclusions are reasonable, and the rule adopted by the commission through the adjudication is appropriate. The fact that the dissent argued that adjudication was a suitable way to promulgate rules indicated that the majority had articulated that it was not question whether agencies could still make rules through adjudications How does this fit together with Overton Park? - No formal requirement to give findings - BUT a decisions will be sustained only if: o Courts know the basis of the decision (Overton Park), and o Basis is sufficient to sustain the decision (Chenery I; cannot add new basis/post hoc justifications) SEC v. Chenery Corp. [Chenery II] (1947 Murphy4): The case was remanded to the agency who again refused to go through rulemaking. The agency takes out its policy arguments and supplies additional policy arguments. - Holding: the rule is OK based on the policy arguments. Murphy argues that the only point made by the court in Chenery I was that the agency could not offer post hoc justifications. It is acceptable to proceed case by case through adjudication rather than resolving everything through rulemaking. Why would the court want the agency to engage in adjudication? 1) As a temporary fix before can start to come up with rule 2) Where requires individualized considerations problems are specialized and variant 3) Some problems cant be foreseen (even with time, there will always be new problems) 4) Also, this falls in area where agency should be entitled to most deference we want to defer to agencys expertise, wants to apply it in context of adjudication. Why does it matter if it is a rulemaking or adjudication? - If rulemaking has to go through certain procedures

Note that Justice Murphy was in the dissent in Chenery I.

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If adjudication there is not much in the APA itself there are minimal backdoor requirements associated with Overton park, but what we have to consider here is that the Constitution may impose some requirements on agencies (i.e. due process)

How do we determine if an agency action is a rulemaking or adjudication?? Matters b/c due process only applies to adjudication Early commentators: - Dickenson (1927): Focuses on generality b/c it has fewer problems, but it is not perfect either o Ratemaking must be legislative b/c is future in application (must be applied to future cases, generally not applied retroactively). Although prospectivity occurs outside legislative context (i.e. writs of mandamus/injunctions). Sawmill: Shows the problem with the prospective test. A state agency orders the mill to make another disposition of the sawdust b/c was harming the pond. This seems like adjudication b/c only one sawmill before agency and they looked at what happened in past. However, it was declared rulemaking b/c prospectivity. o Ratemaking is also legislative b/c it is general in application. However, this depends on the universe from which it is defined. Here is seems adjudicative b/c only applies to the carriers parties to the hearings, but from perspective of public, it appears to be a rulemaking. - Fuchs: Also prefers generality, but he tries to make prospectivity into a more workable test. o Starts with prospectivity and tries to make it more plausible than Dickenson. He argues that it has to be more than just futurity of operation. Not an entirely satisfying distinction. Legislation focuses on future operation, regardless of what happened in the past, this is what will apply in the future (even if consider facts from the past) Adjudication focuses on past facts and existing law, focuses on what happened in the past (although still sets precedents, requires considerations of prospective effects of a certain holding) o He prefers generality, although sometimes something can be phrased in a general way but applies specifically. To try and reconcile this, he states that: Specificity: name directly, or more abstract (i.e. via association with a particular property) Specificity = Adjudication Generality: i.e. class of persons Generality = Rulemaking What if names class generally, but there is only one person/business in that class? He says this still counts as rulemaking, but this seems ridiculous, but it happens all the time. - Alternative: maybe what matters is motive if Congress has intended to deal with a particular individual = adjudication, if not = rulemaking o But the courts dont want to look into the agencies motive, hard for them to figure out what the motive was in a particular situation

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PERMISSIBILITY OF RULEMAKING Flip side of Chenery II Storer: Addresses whether it is acceptable for the agency to use rulemaking rather than adjudication. Each application is ruled individually, but in this case, the FCC creates a general rule that eliminates some of the need for that individualized adjudication, mandating a maximum of five licenses per station. The question is whether the rule is an acceptable basis for engaging in adjudications. - Holding: it is perfectly fine for a rulemaking to obviate the need for adjudication, in that case adjudication is unnecessary even though would otherwise be required to do so. Heckler: Social security comes up with an elaborate grid re: capabilities to perform certain jobs w/in geographical area. They were interested in reducing the number of adjudications because it has the most in the country. However, there is a strong argument that the agency should engage in adjudications: Personal factors are being taken into consideration, and the statute says that these individual circumstances need to be taken into account when determining whether entitled for benefits. Nonetheless, the SS Administration defends itself b/c: The grids were not inflexible, did take into account personal information, and there were opportunities to present evidence with regard to information not taken into account by the grid, or re: categories in grid can make the argument that these rules should not apply to them (like sentencing guidelines can move up or down), so there is an escape provision allowing for adjudication. - Holding: gave the agency broad discretion to create guidelines like these that will simplify its overall decisionmaking process where there is an escape provision.

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RULEMAKING How do we know whether formal or informal rulemaking is required?? 553(c): Creates a default informal rulemaking. - Have to look to: o Organic statute o Legislative History o Regulation the agency could resolve it, establish that we need to have formal proceedings (Arizona Grocery agency would have to follow through) - Formal rulemaking is only required when rules are required to be made on the record after opportunity for hearing ( 556, 557 apply) - hearing is not enough to trigger formal rulemaking, must be more clear o Mention on the record o Mention the numbers 556 and 557 Allegheny: Problem with freight cars, agency required RRs to return boxcars directly. Most of the case dealt with resolving whether there was enough of a shortage to justify requiring direct return of boxcars. But after this was resolved, the court had to resolve the issue of whether informal rulemaking was an acceptable way of resolving this issue. - Holding: The court could have said that this was not an issue of a review, or that it fell into the exception of formal rulemaking. Instead court stated in a footnote that informal rulemaking was an acceptable way of resolving this issue. To draw this conclusion, they cited Davis treatise, which held that in some statutes Congress has written on the record, which must mean something, likely that hearing alone does mean that the process needs to be on the record (although he was referring to adjudication and is not very good reasoning different Congresses may just have used different language unintentionally). The only other support was some improperly cited cases. No other legal support. Probably b/c Courts session was about to end. Florida East Coast RR (1973): Squarely addresses the issue brought up in the Allegheny footnote. Again addresses a problem with freight cars. The agency set per diem rates that RRs would pay to the owners of the boxcars (other RRs). We end up with shortages of cars b/c per diem rate was too low, no incentive to return the car. The question is whether the agency had to go through formal rulemaking. The organic statute uses the word hearing but not on the record. Lower Courts held that hearing means formal hearing. - Holding: The court could have gotten around Allegheny by distinguishing it, overruling it, stating it was dicta. Instead the court came to the same conclusion. The court claimed that when the statute was first enacted, ratemakings were formal proceedings. However, after its enactment, the APA was passed, which talks about ability to due rulemaking in an informal way. Nonetheless, Congress did not change the language of the statute when it subsequently reenacted it. Therefore, the court argued that it should opt for the APAs default, informal rulemaking, rather than the exception, formal rulemaking. - Douglas (dissent): Argued that there was a strong tradition of extensive process in this context. Noted that although rulemaking not subject to due process, a proceeding classified by rulemaking under APA may qualify as an adjudication under Constitution. Douglas wanted to have an expansive definition of what qualified as an adjudication due process would apply where = adjudication; requires more formal procedures (apply Matthews v. Eldridge). Other problems (not cited by dissent): - APA came after initial enactment of statute, the fact was reenacted after APA not too strong b/c word hearing is the same, also b/c APA refers to organic statute, seems like we should defer to that - 553 only uses the word hearing in cross referencing to formal procedures never requires hearing in informal, undermines Supreme Courts argument that the APA used hearing in different context than normally interpreted - Agency had initially thought they were going to apply formal rulemaking - Looking back to initial passage of statute, was passed during time when there was a great concern for property rights would not have allowed informal rulemaking to deprive people of property b/c was a strong interest in due process What was the court thinking? This decision was decided right after Roe v. Wade, so no one really noticed it. It came out of the historical background of a lot of agitating against formal rulemaking. It was argued that formal proceedings

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merely delay and do not enhance administrative decision-making. The commission that studied administrative action urged that formal rulemaking did not work b/c these procedures had run amok and merely caused delay. So this case reflected a collision between honest interpretation and moving the APA in a certain direction. There was no argument that Congress had really intended hearing to mean informal rulemaking.

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FORMAL RULEMAKING What happens if we trigger 556/557?? 556(b): ALJs have role, but final decision can be made by agency. Employees can have role as well, not all decisions need be made by commissioner. 556(d): Interested parties are entitled to submit oral evidence, respond to cross-examination, present documentary evidence (exception: in rulemakingwhen party will not be prejudiced thereby, all or part of evidence can be submitted in written form). 557(b): Even if agency does not make decision, you can appeal decision to agency (i.e. if ALJ makes decision, can be appealed to top of agency) Benefits of Formal Rulemaking: 1) Some parties may be better able to articulate themselves verbally in writing (due to ability to interact and, get to more specific details) 2) Reliance on involuntary submissions of information may be really valuable (informal has only voluntary submissions) 3) Formal institutions may more accurate decisions 4) Oral hearing has a purpose makes decisionmaker confront issues before you (i.e. Supreme Court is largely based on writing, but there is an oral argument as well). Other negatives of formal rulemaking 1) Takes away decision from agency whether to include oral hearing may not always be necessary 2) Formal rulemaking more of a record, allows courts to second guess agency action

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INFORMAL RULEMAKING FECR opened the floodgates for informal rulemaking. This led to courts being concerned about the ability to review these decisions. Vermont Yankee Saga Context of saga: - New deal belief that agencies were apolitical, scientific, but had fallen into disrepute by 1960s-1970s, by which time agencies were viewed as pawns of industry (agency capture model) - A liberal force emerged on the DC Circuit that was interested in environmental issues. They were concerned that environmental protection would suffer w/ Nixon appointing heads of agencies. - They believed in capture model, needed a way to review agency action, options: o Second-guess substantive decisions Involves rather bald assertion of judicial authority Assumes can recognize a desirable policy when you see one Assumes judges have access to the info necessary to make this call o Concentrate on regulating the agencys decisionmaking procedures Judges are generally competent to ID good decisionmaking procedures Procedures are a good in themselves b/c they promote participatory values, expose agency decisionmaking to public scrutiny Good decisionmaking procedures might at least marginally improve the chances of reaching good results when courts cannot ID or command good results directly - The DC Circuit invented hybrid rulemaking, which judicially grafted onto 553 a series of procedural requirements that varied case by case. Legally relevant features: o Notice of proposed rulemaking: Has to publish enough that people can critique agency action meaningfully Needs to provide a record so court can see what major issues of policy were ventilated by the informal proceedings and why the agency reacted to them as it did o Publication of statement and a basis and purpose for the rule: Began to require that the agency responded to every comment (to have something for court to review) o Provide a concise general statement of basis and purpose for rule: Opportunity to comment is meaningless unless agency comments on statements made Agency proposing informal rulemaking has obligation to public in concrete and focused form. Concise general statement must be accommodated to the realities of judicial scrutiny, create a record When dealing with procedural issues, the substantive results may vary over time, with composition of court. DC Circuit may not have been doing this, but rather that the DC Circuit recognized role of informal rulemaking process did not produce enough of a record, and may have been too formal to push it back to being more formaladded some more procedural requirements. Vermont Yankee (1978): The Atomic Energy Act required that Nuclear power plants must be fully licensed licensing hearings (adjudications under APA). The AEA grants NRC rulemaking authority. The Yankee Power plant applied for a license. The Board ruled would not consider envtl effects of reprocessing of waste, however, it WOULD consider environmental effects of transporting the waste. The license was granted, and the Appeals board confirmed. At the same time, the agency proposed a rule that assigned low value to environmental effects of reprocessing, etc. in licensing proceedings. The rule expressly stated that the processing to consider the rule would be informal and legislative type and invited interested parties to attend and submit written or oral testimony (even though not required by section 553). As part of the rulemaking proceeding, the agency was looking at two procedures for assessing information: qualitative and numerically. The agency has a long rulemaking process and opts for option #2. Rule was challenged in DC Circuit by National Resources defense counsel.

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Procedural History: DC Cir sided with NRDC focused on scanty substantive support for agencys action and agreed that the procedures were legally inadequate (no cross-examination, agency did not use mechanisms at disposal to discussion over issue). The key was to create a record that the court could review. The court strikes down the rule. Also notes that studies released at rulemaking must be comprehensible to a layperson. - Supreme Court granted Cert due to concern that the DC Circuit had misread Supreme Court doctrine and tries to embarrass DC Cir to get it to shape up b/c Supreme Court cannot review 100% of their decisions. - Holding: The Supreme Court is not sure why the DC Circuit struck down the rule, they decide that it was either for substantive (record does not give us enough to review, outputs) or procedural (agency has not done enough, inputs) grounds. The court decides that it was for procedural deficiencies that the court struck down the rule (which is the only way that the court could really review the DC Cirs decision). The Court does not really back up this conclusion, but goes on to state that our decisions have already rejected the view that a court can add procedures. The court is referring to Allegheny and FECR, which held that, generally speaking, the APA maximum requirements. It is not clear whether FECR really resolved the issue at stake here. o No: FECR was about the word hearing, it is true it was interpreted to mandate informal rulemaking, but Vermont Yankee is about whether courts could add onto the procedure Congress required o Yes: If courts could add procedure, then maybe FECR should have been remanded to determine if the court could add on procedures (implicitly decided issue in Vermont Yankee based on the disposition of the case) - Although the court does open up the possibility that in RARE cases courts CAN add on procedures. This is puzzling, makes it seem like the Supreme Court can add procedures, but the DC Cir cannot. May also be that if due process is violated, can add more procedures, but that would only apply to adjudications. - Not necessary that the studies published by agency in rulemaking be comprehensible to layperson. The punchline: this case was really moot the commission had already voided this rule. The Supreme Court still decides issue b/c these issues are going to come up again bends mootness doctrine. Why does the court decide the case this way? - Concern about judicial activism - Concern about creating uncertainty in agencies - Preserve informal adjudication (if court could add on requirements, agencies would use maximum procedural requirements, would essentially get rid of informal adjudication) You could argue that adding more procedure is a good thing, but at some point we want these reactors to open. Although the court does open up the possibility Subsequent history: On remand, the DC Circuit set aside the new rule (the original rule was moot). They said that supreme court had already told them that the APA and Organic statute did not provide for more procedure, so DC Cir looks at environmental statute to find that there were more procedures. The Supreme Court took that case too, reversed message that DC Circuit that should not be too demanding with procedures for agencies. Procedures for informal rulemaking: - Section 553(b): notice of proposed rulemaking shall be published in federal register publishing requirement and requirement that you actually make notice of intent to make rule o Must include terms and substance or description of issues/subjects - Federal register: Includes notice + Comment, interpretive rules, policy statements (before APA these were just kept w/ agency). Agency can decide not to put something in the federal register if publicly available (552(a) (1)), except that this is at the discretion of the director of the federal register, may lose his job if the register seems useless. - 553(c): After notice, agency shall give interested persons opportunity to participate through submission of written data, views, arguments (anything that might sway decision-maker) with or without opportunity for oral presentations. - After opportunity for comment, the agency must provide a concise, general statement of basis and purpose o What exactly does concise and general mean? These are vague, can be interpreted several ways - 553(d): Rule must be published not less than 30 days before the effective date, subject to certain types of exception (i.e. de-regulatory rules).

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Hybrid rulemaking: - No longer possible for courts to explicitly say that they are mandating an additional procedure not in APA/statute, but they can use aggressive interpretation of existing procedural requirements - Also, there is such a thing as statutory hybrid rulemaking, which is when Congress adds more requirements in the organic statute (which trumps the APA, although must be read against backdrop of APA). Notice Portland Cement: EPA was instituting pollution standards for cement companies. The EPA puts the exact words of the draft regulation. It seems like they have gone above and beyond requirements b/c they have provided exactly what you can comment on. - Holding: The notice was insufficient b/c omitted background, which is relevant b/c the public has right to know why regulation implemented, cant have meaningful participation in Notice + Comment if doesnt know agencys rationale for proposing the rule. Implicit in the fact that can make comments is that the comments should be informed. Hard to comment if dont know issues being raised. This is more of a concern if agency relies on its own studies to which other people do not have access. Connecticut Light and Power (1982 DC Cir): Fire safety in nuclear power plants had received a lot of attention after the Browns Ferry nuclear plant had a fire, as a result, the EPA was considering a rule. They were considering rules for duplicate safe shutdown capacity, alternative shutdown capacity, and protection of lubricant reactors on cooler systems. The agency was considering both rules and standards, and opted for the rules. There was also an exemption procedure whereby existing plants could opt out of rules if they could demonstrate that what they have is acceptable from the perspective of standards. - Holding: The procedure in this case was upheld (grudgingly) by the DC Circuit, largely b/c of the exemption provision. o Availability of studies: The documents were not made suitably available here, however, the court takes notice of the fact that the studies were part of the common share of knowledge, had been made available in the past. If they were background to discussion before rulemaking, dont need to be rehashed. o Duration of Comment Period: 30 days to comment was a little stingy, but OK notice needs to be long enough to allow for meaningful comment. o Re-Notice: The final rules were a little more stringent than the NOPR, but that is a logical outgrowth of what was planned initially. There was one issue that was not necessarily a logical outgrowth, but the court said there was no need for re-notice b/c there was an exemption procedure. Why is that relevant? Adjudication and rulemaking are substitutes for each other gives agency more lenience in rulemaking if still will be doing adjudication down the line. o Statement of basis and purpose: The court says that they have to provide justification for rule, needs to justify specific decisions that the agency eventually reached. Either the agency has failed b/c failed hard look review or b/c failed to provide adequate justification in statement of basis and purpose courts approach in similar way as 706(2)(A). However, again the court gives them some slack b/c of exemption will be giving these issues more consideration down the road - This case shows that the DC Cir learned something from Vermont Yankee, although they note that the agency procedures were woefully inadequate, they find every way to avoid actually mandating additional procedures. Building Industry: Here the agency had a study that came up later after initial NOPR that they used to justify reducing the number of potentially protected species from 3 to 2. The question was whether the agency had to re-notice. - Holding: On the one hand, the agency has to provide all information relevant to make meaningful comment when proposes rule (Portland Cement), however, the agency met that b/c they published all that they had with the NOPR. Also, the agency has to re-notice if final rule is not a logical outgrowth (Connecticut Light), which was actually met here as well. The court is concerned about infinite delay of rulemaking if re-notice were required each time a study comes out. In this case, the study gave better support for the hypothesis, but it did not modify/reject that thesis. It provided additional support.

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Chamber of Commerce: The agency had to perform a new study. They did so and it supported their findings, however, the agency did not re-notice, provide for comment. The agency argued that they did not need comment b/c the study merely provided support for the initial rule. - Holding: The study was integral, was a change in methodology. Therefore, the agency has to re-notice (distinguished it from Building Industry where the study was merely supportive). MCI v. FCC (1995 DC Cir): The question at issue was whether agencies should try to bundle services or unbundled them. The notice for the proposed rule dealt with Interexchange carriers (IXCs), however, there was a footnote addressing the fact that the agency was also considering a similar rule for Enhanced Service Providers (ESPs). The ESPs challenged the rule on the grounds that they had not received adequate notice. - Holding: The notice given was insufficient as to the ESPs. It has to give some kind of notice to the interested parties that this is something that they might worry about. Here there was one ESP that was on notice. Sprint somehow found about it and responded. But the court found that this was not enough b/c the various ESPs may have varied interests, although it may have been enough if all of the EXPs had actual notice, but that was not the case. MCI did respond to the issues re: IXCs in the text, but did not respond to the notice in the footnote. Concise general statement of purpose Auto Parts (DC Cir): Upholds the statement of basis and purpose, but in dicta warns against an overly literal interpretation of concise and general. The court is essentially saying that the agencies should actually ignore this, the agency should be specific and thorough. This dicta turns out to be important, but the Supreme Court has never ruled on it. Reyblatt: An agency need not address every comment, but it must address in a reasoned manner to those that raise significant problems. This requirement ends up amounting to the same thing as hard look review. If there is a counterargument under hard look review, the agency does not need to be persuaded, but has to give an explanation why does not think comment persuasive. Louisiana Federal Land Bank Assn: Rulemaking involved whether the statute could have geographic restrictions for direct loans and direct participations. The proposed rule was considered lifting geographic restrictions on lending, initially talking about direct loans and loan participations. The agency receives a comment regarding direct loans in particular that: (1) No statutory authority for what agency doing (Chevron), (2) Geographical restrictions integral to statutory scheme (probably also Chevron), (3) Will hurt system/farmers (hard look). The agency decides to relax restrictions on direct participations but not direct loans and never responds to the comment. The agency argues that the comment is only about direct loans so it did not need to respond b/c the final rule relaxed the restrictions only for direct participations. - Holding: The comment was a substantial comment b/c if correct would change the rule (i.e. claims outside of statutory authority), therefore, the agency had to respond to it. The result of this decision is that the agency will always comment to avoid being sued thousands of pages in comments. Two theories: 1) democracy at work we want reasoned decision making; prevents new administrations from coming in and changing all rules b/c takes a long time to go through rulemaking 2) bureaucracy run amok EPA: Case addresses agency practice of responding to comments by pointing to another study. Here the agency added 6000 pages of studies, all of which is the type of material you think the agency would have to release and allow people to comment on. Some people challenged it, arguing that the agency needed to give them a re-notice and some opportunity to comment. - Holding: Court holds no need to re-notice b/c did not change what the agency was doing. The court was concerned that notice periods would go on and on forever every time the agency adds more info. Although the court could have drawn the line where the support did not add to argument.

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EXCEPTIONS TO RULEMAKING 553(a): General Exceptions to Notice + Comment Rulemaking (only procedural exceptions): - Military/foreign affairs country may need to act quickly, or may be question of need for secrecy - Matter relating to agency management or personnel: Public less likely to care about matters that only apply internally to agencies - Public property, loans, grants, benefits, contracts: Agency is spending its own money, has incentives to be careful, no need for N+C to police them (although spending public $ is arguably important). Also, in the case of government contracts, there is already a system of rules about this we dont want two separate systems operating. 553(b): Exceptions from Notice (therefore also exempt from comment, 553(c)): - Interpretive rules, policy statements o Should make sense in context of Mead (policy/interpretive rules do not get Chevron deference b/c does not go through N+C rulemaking) - Rules of agency organization, procedure, or practice (procedural rules) o Distinction between procedure and substance is b/c its arguably more important to have their comments about the substance of the rules than procedure - When agency for good cause finds that informal rulemaking is impracticable, unnecessary, or contrary to public interest (general escape hatch) o This does not seem to be a super high standard, but is interpreted fairly narrowly by DC Cir. the terms impracticable refer to actually having the notice and comment period 553(d): Exceptions from 30 day period for comment: - Deregulatory rule: If all we are doing is relaxing the rule, no need for public to comply, it has more freedom, that can go into effect right away - Interpretive rules/statements of policy: o Interpretive rules are also exempt from (b) and (c). o Leaves question about procedural rulesare they also exempted from 553(d)?? Doesnt say so, but 553(d) says that there is only applicable to substantive rules, so they are likely also exempted (although there is some dispute) - Good Cause: If there is good cause not to require 30 days, dont need to follow that approach. 553(b)(A): Procedural RulesThere is no one test to tell if procedural, best strategy is to look at all of them Tests: - Whether value judgment (if so substantive) o Jem says value judgment takes it too far, but never overruled - Primary conduct - Rights and interests affected - Sufficiently grave effects - Whether we still need to apply a substantive rule subsequently - Whether reasonable (if so procedural) Air Trans v. DOT (1990 DC Cir): This case was dismissed as moot, so it is not good law, but the dissent and majority are both cited as persuasive. The case addressed whether the agency could assess civil penalties. The issue process by which applies penalties. - Holding: This is substantive b/c it seems to reflect a value judgment, there are values that end up being encoded into these rules. - Dissent: does not like the value judgment test (procedural rules also involve value judgments), rather looks at primary conduct test. This test asks if a given regulation purports to direct, control of condition the behavior of those institutions or individuals subject to regulation by the authorizing statute. If so, it is substantive (although procedural rules can also affect conduct, i.e. speed limit enforcement). JEM: Rejects incorrect/incomplete applications for radio stations. On the one hand, this is procedural b/c it just decides what to do with your application. However, it matters a lot whether this is the rule or not b/c it has an impact on whether or not you get your application. The court applied hard look.

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Holding: The court applied a number of tests to determine that the rejection policy was procedural: o Rights or interests: This test is close to the primary conduct test. The court defines the right as the potential to get a radio station, not the right to get a radio station. So even though whether someone fills out the form correctly has a big impact on their ability to get a radio station, it does not have a big impact on their rights (circular reasoning). o Sufficiently grave effects: Substantive rules have grave effects. However, here the rule seems to have a large effect and it still finds it procedural. o Substantive standards: This rule does not change substantive standards of those that make it past this hurdle b/c there is a substantive test later on (although this test makes some sense b/c procedural rules are generally followed by substantive rules, that is not always the case). o Reasonable: Procedural rules are reasonable. However, if you overdo it (i.e. have to turn in your application in 15 seconds), then it is substantive. This is not a great test.

553(b)(B): Interpretive Rules and Policy StatementsStatements about what the agency will do, have not gone through N+C rulemaking and do not receive Chevron deference. Whether it falls into either one of these categories depends on its binding effect going forwards - Interpretive rules: Agencys view on statute in adjudicative role, information on how plans to act in adjudication - Policy Statements: Provide an indication of an agencys objectives in implementing the statute and enforcing it in its prosecutorial capacity. Tests: The same tests seem to apply to policy statements/interpretive rules. Syncor is the best case that distinguishes between them. - Legal effects - Substantial impact - Complexity more likely to bind the public - Impact on agencies intended to be binding on agency - Rules v. standards (rules more likely to be intended to bind the public) What if an interpretive rule/policy statement is stricken down as a legislative rule? - Rule is invalidated back to agency (can reenact via N+C rulemaking) - After the rule is invalidating, the agency can rely on the statement in adjudication - This seems pointless, but it matters b/c if stricken down as an improperly enacted legislative rule, it will not get Chevron deference after Mead. Pacific Gas: The court relies on the legal effects test, which is essentially a restatement of the definition. If it is merely a restatement of the policy that the agency hopes to implement, then it is interpretive rather than legislative and it does not need to go through Notice + Comment. Cabais: The court relied on a substantial impact test, which has been rejected b/c some rules are clearly legislative even though have a minor impact and vice versa. US Telephone Assn v. FCC (1994 DC Cir): The agency created detailed schedule of penalties without going through N+C rulemaking. - Holding: The court looked at a number of tests in finding that the rule was legislative: o Impact on the agency (sometimes combined with the legal effects test); If the agency is slavishly following it then it is a legislative rule, must go through N+C. If the agency is merely relying on it for guidance, then it is an interpretive rule, no need for N+C. To determine the impact on the agency, the court assesses: Complexity: when something is complex, it indicates that the agency will actually do it in the future. This rule is very complex with concrete numbers. Empirically: looks at what the agency has done. Here the agency has applied the rule in 300 cases, only one of which arguably represented a deviation from the rule by the agency. Problems w/ this test: can only be assessed once applied, there is a lot of burden on the court to make initial assessment, and may provide incentives for the agency to

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draft the rule vaguely or to apply it haphazardly to give impression that it leaves discretion neither of these are things we want agencies to do. P2C2 v. Shalala (1995 5th Cir): FDA is concerned about pharmacies manufacturing drugs b/c they are less regulated by the government than pharmaceutical companies are. It is OK for the pharmacy to mix drugs (compounding), but not to the point that it becomes manufacturing. The FDA creates some guidelines to distinguish compounding and manufacturing. These guidelines are both policy statements (who the FDA plans to go after) and interpretive rules (what the agency plans to do once they have been brought before the court). - Holding: the court finds that the rule is not a legislative rule based on the following tests: o Plain Language of agency action: The FDA claims that it is a policy rather than a rule o Empirically: The FDA has always emphasized that when uses guidelines = for guidance o Rule v. Standard: the asks whether the rule draws a line in the sane that once crossed ruins all discretion. The court is more likely to find a rule legislative where it establishes a firm rule rather than a flexible standard. Something that is based on standards is less likely to be legislative b/c you still have to do a lot of individual adjudications. This is an explicit pass from N+C where agencies create standards rather than rules However, this may be contrary to what we want b/c rules more consistency/guidance American Mining new testWilliams gets away with it b/c it ONLY applies to interpretive rules!! Although may not make sense to make this distinction here b/c this case had elements of policy statements. Also, there is no distinction between policy statements/interpretive rules in the APA. Williams distinguishes them merely on the difference in practice between policy statements (announcement about future prosecution) and interpretive rules (interpret statute, will inform subsequent adjudication. American Mining Congress v. Mine Safety & Health Administration (1993 DC Cir, Williams): MSHA tries to determine whether X-ray count as diagnoses with regards to the reporting mechanisms to regional offices. - Holding: the determination that X-rays qualify for diagnoses is legislative b/c: o Congress has delegated legislative power to the agency o Agency has intended to exercise legislative power seems to be binding the public. To determine: No basis for enforcement without rule: The statute is not self-executing, so any regulation the agency Published in CFR: If the agency put it in the CFR, implies to public that these are rules they should follow (weak proxy). Whether agency has explicitly invoked its general legislative authority: If agency says congress has delegated legislative authority to us, indicates that they intend to exercise it Inconsistent with prior legislative rule: An interpretive rule cannot trump an adjudicative rule b/c legislative rule has the force of law, is binding. So if the rule is inconsistent with the former rule, it has to be overruling it by another legislative rule (note: an agency is bound to its regulations, Arizona Grocery). This language is echoed later in Mead, where the court determines whether the agency (1) has a delegation from Congress, and (2) has acted in the scope of that delegation. In Mead this analysis is used to determine whether Chevron deference. Syncor International Corp. v. Shalala (1997 DC Cir): Here the court focuses on the fact that the interpretive rule must be interpreting the statute. The FDA makes a decision to include nuclear pharmacies under the Food, Drug and Cosmetic Act. There was some ambiguity in the statute as to whether nuclear pharmacies were included, but they had not been included in the 1984 guidelines. The FDA did NOT go through N+C, arguing that it was an interpretive rule. Like American Mining, this case only applies to interpretive rules. - Holding: The determination to include nuclear pharmacies was an attempt at a legislative rule. It is not as though the agency is interpreting the word pharmacy to include this group, rather, the agency has previously concluded that these were not pharmacies and now they are. Therefore, they are engaged in policy making. The further the agency gets toward the policy end of the spectrum (think Chevron step 2), the more likely they

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have to proceed via legislative rather than interpretive rule. Here, the FDA should have gone through Notice + Comment. The court distinguishes between interpretive rules and policy statements: o Policy statement: Does not seek to impose/elaborate a legal norm Merely represents an agency position re: how will treat/enforce the governing legal norm The agency issues the statement to let the public know its current position/adjudicatory approach Agency retains discretion/authority to change its position b/c change in policy does not change the legal norm they are not binding on public nor the agency Primary distinction between substantive rule and general statement of policy turns on whether the agency intends to bind itself to a particular legal position o Interpretive rule: Typically reflects agencys construction of a statute that has been entrusted to the agency to administer The legal norm is one that Congress has devised which the agency does not purport to modify (i.e. engage in rulemaking). The difference between an interpretive rule and a legislative rule is that w/ an interpretive rule the agency does not claim to be exercising authority to itself make positive law, instead it is construing the product of congressional lawmaking based on specific statutory provisions. Distinction turns on how tightly the agencys interpretation is drawn linguistically from the actual language of the statute This reflects quite a shift in the attempt from asking what the agency attempts to accomplish to the actual process. 553(b)(d): Good Cause Exception: Not as broad as it might appear Tennessee Pipeline v. FERC (1992 DC Cir): The FERC passed an interim rule requiring the documentation with regards to placement of natural gas line. The agency claims that it will take 4 hours to do that paperwork. The agency does not go through notice and comment b/c it is only an interim rule, agency needs more time to finalize decisionmaking in this area, doesnt make sense to have N+C for interim rule before come up with final rule. - Holding: The fact that the agency is not sure what its final rule will be is not sufficient for a good cause exception to N+C rulemaking. The courts are concerned b/c the agency could go from interim rule to interim rule without ever going through N+C. Essentially the courts are making a value judgment that they prefer the status quo over an interim rule that has not gone through N+C. So unless there is a really good reason to change the status quo from no regulation temporary regulation that has not gone through N+C, agency must go through N+C.

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INFORMAL ADJUDICATION When informal v. formal adjudication?? 553(c): Same language as for rulemaking, if on record with an opportunity for agency hearing 556 + 557 (formal adjudication). Courts are not consistent in their interpretation of this, S. Ct. has not resolved split: - Bias in favor of Informal: The language of the APA is the same for rulemaking and adjudication. Because the courts have found this language to bias in favor of informal proceedings, thats what we should do - Bias in favor of Formal: In FECR, the case that led to that presumption, the court rationalized the bias in favor of informal procedures on the grounds that it was not an adjudicatory procedure at stake. Adjudication is more conducive to the formal procedure. - Defer to agency: The statute is ambiguous, so as long as the interpretation is reasonable, the courts will defer (Chemical Waste Mgmt, DC Cir) although the courts dont do that in rulemakingshould Chevron apply to procedural decisions?? Informal adjudication: The APA mentions informal adjudication, but there are no procedural requirements two possible interpretations: 1) No procedural requirements at all 2) Maybe courts have some role in assuring that informal adjudication takes place in an appropriate way. Citizens to Preserve Overton Park v. Volpe (1971): Road could only be built through the park if (1) there was no feasible alternative, and (2) engaged in all possible planning to minimize the harm to the park. The secretary approved a road through the park, but does not issue findings why he thinks that he has complied with the statutory requirements. The agency relied on findings by the city council that determined that it was not feasible to go around the park, but the agency does have to issue formal findings. The procedural issue is whether this lack of findings is an issue, how far do requirements of informal/formal adjudication extend? - Holding: There are no formal findings and findings are required so that the court can review the agencys decision (dont need to be formal). The court does not want to mandate formal proceedings b/c the organic statute/APA does not require them (the court should not graft on principled requirements to those of the APA note that Vermont Yankee had not yet been decided, but its principle is certainly applied here). Of course there is a counterargument that b/c the APA does not set out procedures, it is left to the common law to determine which procedures should be applied. However, although the court says that formal findings are not generally required, they may be required in the case that the nature of the agency action is ambiguous (perhaps as the result of statutory ambiguity). - So basically formal adjudication is not required, all that the court requires is that there be enough for the court to be able to review the agencys decision. The court needs to conduct review under the A&C standard. Where the agency has not provided findings, the court can rely on standard tools of litigation (affidavits, depositions) as an alternative to findings. This provides the agencies with a strong incentive to provide findings, the court will really investigate their mental process. The court does not want post-hoc rationalizations. - Black (dissent): argues for more formal proceedings, perhaps requiring an informal hearing, although does not need to have judges in ropes, etc (i.e. Goldberg). The Record (706(2)(E)) refers to any set of documents that the agency may have relied on in making the decision whether or not it has put them in formal compilation. So the agency has two choices: - Either give the record (easy), OR - Give no record and allow the court to re-create the record by going through the adjudication to see whether there is a record (hard) Camp v. Pitts (1973): Here the court dealt with a district court remedying the absence of agency findings by its own fact findings. Here the court did fact findings. 706(2)(F) provides that agency action should be struck down if not support by facts if facts are subject to de novo review in district court. - Holding: No deference is given to District Court findings if facts are found de novo. Also if the courts are not given the authority to re-create the record through extensive fact finding by a particular organic statute, they are limited to affidavits, depositions.

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Pension Benefit v. Guaranty Corp. v. LTV (1999): PBGC takes over pension plans when (1) involuntary takeover or (2) Employer asks to (i.e. when does not have $ to pay pension benefits). When the PBGC takes over, it fills in and pays employees. Here the PBGC took over LTVs pension plan b/c steel industry was suffering, but subsequently PBGC determined that financial situation had changed, and restored the pension program to LTV (unhappily for the company). The agency announces the change in its plan by issuing a notice of restoration, which was the result of an informal adjudication (issuance of decision w/out formal proceedings). The 2nd Circuit argue that this was arbitrary/capricious b/c no opportunity to offer contrary evidence (although it was a procedural issue and A&C applies to substantive issues only). PBGC cites Vermont Yankee to support the argument that they did not have to add additional proceedings (although at this point Vermont Yankee only applied to rulemaking). There had been arguments, however, that Vermont Yankee had been implicitly overruled by Overton Park (agency had to do something) - Holding: Overton Park did not overrule Vermont Yankee. o Vermont Yankee should be extended into adjudications o Overton Park merely allows courts to require agencies to go through procedures they were already required to employ through the APA, does not allow courts to graft on new procedures. - The court distinguishes Arkansas Best, which requires notice, as only applying to formal rather than informal adjudication. Basically in informal adjudication, there is no requirement to let the parties know what issues are, give opportunity to be heard

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CONSTITUTIONAL STANDING Justifications for standing requirement: - Separation of Powers: To make sure that what is coming through the courts is actually judicial in nature (cases and controversies) - Avoid frivolous lawsuits: prevent burdening the courts - Increase vigor of litigation: we want people who really care about the cases to be arguing - Concern about manipulation of path of decision-making: more random when people bring cases if they have to bring it when injured rather than when the people they like are in the court Frothingham: Tax payer wanted to limit Congressional spending. This is a Constitutional issue, which we expect the court to be particularly jealous of. If a taxpayer could not bring this challenge, who could?? - Holding: Lacked standing b/c there were lots of plaintiffs generalized interests, the interest of each one is minute and uncertain (hard to determine if would benefit from road Congress was building or not). There is also a great cost to hearing all of this litigation and a lack of precedent to allow it. Not to mention that it was a matter of public concern (court deals with private concerns). Court did not make it clear whether this was a prudential requirement (replaceable by Congress) or Constitutional (congress can only change with amendment). This was not resolved until Lujan (1992). Lujan (1992, Scalia): ESA provides that the federal agencies will make sure that the habitats of endangered species are not destroyed. Under this statute, agencies have to be careful in advance not to do anything that would destroy habitat and must consult with Secretary of Interior and ask to do an ESA assessment as to whether a particular action will be consistent with ESA. In the 1978 Regulation the Secretaries of Interior and Commerce finds that the ESA applies to foreign countries, but a revised regulation changes that interpretation that it only applies domestically and on high seas. Challenge to modification brought by women interested in seeing animals in countries where their habitats would be impaired by USAID projects. - Holding: plaintiffs failed to meet Constitutional standing requirements (first time that court recognized idea of constitutional standing). The burden of proof is on the person invoking federal jurisdiction. Element has to be established with same degree of evidence as any other element on which the party has the burden of proof (increases throughout process). It is a jurisdictional issue so can be raised at any time. o To have constitutional standing, must have: Injury in fact (invasion of a legally protected interest) must be: o Concrete and particularized o Actual or imminent (not conjectural or hypothetical) NOT met by ecosystem nexus (we are all connected) animal nexus (anyone seeing endangered animals anywhere has injury) or vocational nexus (injury if study animal) Court does not completely reject idea of environmental standing Causal connection between injury and conduct complained of: must be fairly traceable to the challenged action to the defendant, not result of third party not before the court. Redressability: the court needs to be likely able to fix the problem (court says defines likely aslikely as opposed to speculativenot clear what that means) o Here the injury is not binding on agencies (if the Secretary of the interior determines something, it is not clear USAID, etc. would be bound by that decision). Even though the Supreme Court can decide what they want, perhaps they shouldnt b/c the other agencies are not parties to the case. o With regards to a procedural injury, the statute required some interagency communication that was not followed. The court argues that it is possible for there to be a procedural injury of someone who has a concern at stake. This is not the case here b/c they are just random people the three part test applies for procedural injury as well (procedural injury cannot substitute for injury in fact) Kennedy, Souter (concurring): ecosystem, animal, and vocational nexus theories should apply elsewhere (argue for a stricter standing doctrine).

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Stevens (dissent): claims that imminence should be measured by threat of environmental harm, and not by the threat of the person actually seeing the harm. When the environmental harm occurs future options are lessened relative to what they once were. With regards to redressability, argues that the Supreme Court can decide whatever they want. Blackmun, OConnor (dissent): thinks injury is met, believes in ecosystem nexus.

Bennett v. Spear (1997 Scalia): Fish are dying out. Agency receives a biological opinion from fish and wildlife service, which acts as a license. If it says that it is OK to proceed, then they can proceed (with exceptions), is a safe harbor in which to operate. Plaintiff is an Oregon irrigation district, claims that they will lose water if the agency complies with the biological opinion. - Holding: the plaintiffs have standing, shows that it is possible to get standing in an environmental case. o Injury in fact: It may be that the injury is not imminent, but we are only at the complaint stage, it is possible to imagine scenarios where we actually have less water. o Causal connection: You can have an injury fairly traceable to an action even if it is not the last step in the procedure (being the second to last domino is enough. o Redressabile: the determination is redressable b/c the biological opinion gives license to act. Although it is possible that the agency may not proceed in accordance with the opinion, the opinion is coercive (avoid legal challenge by agency if comply), so it is likely that the agency would do so. Akins (1998): Groups are classified as political committees, which means that they are subject to disclosure and recordkeeping requirements. A group of voters request that the FEC find that APAIC is a political committee, FEC decides not to. Statutory standing is clearly granted by the statute. The question is whether they have constitutional standing. - Holding: the court finds that they do have constitutional standing. The issue is whether the injury is concrete and particularized b/c anyone could complain about this. The court finds that it is particularized nonetheless b/c this injury is not amorphous, they are deprived of information. While it is the same information, different people may not care about it, others may care about it but for different reasons (although this could be extended to taxpayer standing, not an argument that the majority accepts). - Scalia, Thomas, OConnor (dissent): Because everyone suffers the same injury, it is not particularized. Unlike a mass tort where everyones arms are burned (clearly particularized even though technically the same injury), here the information is actually the same information. This is an issue of institutional competence, if the injury is really the same, they should redress it through the political process. Laidlaw: Has a discharge permit, violated this permit. Members of the environmental group are affected b/c they cant use the water, natural resources, property values have gone down. The court had imposed a fine payable to the Dept of the treasury, so the money is not going to the plaintiffs, but to the government. There are two forms of relief in this case: (1) Injunction (2) Penalty you need a separate basis for standing for each relief sought. Here they clearly have statutory standing b/c the statute has a citizen suit provision (allows anyone to sue). The question was whether the plaintiffs had constitutional standing. - Holding: The plaintiffs have constitutional standing. o Whether injury is actual or imminent: Even though the pollution may actually be harmless, where there is a damage to a recreational interest the fact that someone abstains from some activity b/c of fear of pollution is a loss we can consider the court is willing to go beyond economic harms. o Redressability: there is redressability b/c the injunction issue is moot (they had come into compliance). The only effect of the penalty was that $$ was being paid to the government. While this does not directly benefit the plaintiffs, there is an indirect benefit through the deterrence effect (mere imposition of fines makes defendant less likely to do it in the future). - Scalia (dissent): Can recognize a recreational interest; but if there is no real injury to the environment, there is no injury in fact (there can be no damage to individuals if no harm to environment). This is not redressabile b/c the court actually has to do something that will actually benefit the plaintiffs in the case when remedy entered, cant be shown here b/c they are already complying. Does this case mean that future deterrent effect is enough to standing on redressability issue???

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Vermont v. Natural Resources (2000): Statute provided for a bounty provision plaintiff and government share the money from the lawsuit. Although the plaintiffs may not have been injured in a casual sense, but nonetheless receive money, the court found that this standing. This opens up opportunities for Congress to get around Lujan doctrine. Can Congress say that a plaintiff who wins gets $100 and thereby create standing for citizens? STATUTORY STANDING STATUTORY STANDING AND THE ZONE OF INTERESTS TEST - Must have constitutional AND statutory standing - Statutory Standing: APA 706: A person suffering legal wrong because of agency action or adversely affected or aggrieved by agency action within the meaning of a relevant statute is entitled to judicial review thereof. o Legal Wrong: Plainly did not include generalized assertions of distress at the prospect of government lawbreaking or freedom from lawful competition; Congress can expand the definition of legal wrong beyond what it meant at common law (although cannot grant standing to people who fail to have constitutional standing). o Relevant statute: was a special review statute containing language expanding the class of plaintiffs beyond the common-law legal interest test; even where Congress expands the class of plaintiffs, there are still limits Agency Action Kansas City Power & Light Co. v McKay (1995, DC Cir): Government gave some money arguably illegally to power administration. Other electrical companies are going to cry foul b/c they are disadvantaged in the marketplace b/c the govt is subsidizing a competitor. - Holding: The court says that there is no standing there is no legal wrong from lawful competition. - (dissent): Injury is sizeable, the fact that it was from lawful competition should not deny them standing. Adversely Affected/Aggrieved within Meaning of Relevant Statute Special review statutes/traditional framework Scenic Husdson Preservation Conference (1965 2d Cir): If can show a special interest in areas must be held to be included in class of aggrieved parties. This standard is met here b/c they have injury b/c their trails will be flooded, property values will go down on account of dam. Office of UCC v. FCC (1966 DC Cir): The court says that even though there is no economic injury, the injury was not being exposed to both points of view. This is the kind of injury that Congress envisioned through the creation of the Fairness Doctrine, therefore, they have standing. Zone of Interests Camp (1970 Douglas): The agency rules that banks can provide data processing services. The Data Processors sue, claim that banks cannot do data processing. There is constitutional standing (injury in fact) b/c competition would presumably erode profits. The question is statutory standing. - Holding: Statutory standing is not just about legal wrong, it goes to the merits (look to 702(2)). The question is whether the interest sought to be protected by the plaintiff is arguably within the zone of interests sought to be protected by the statute, regulation, or Constitutional guarantee at issue. The interests here are w/in the zone of interest b/c the statute had a broader purpose. The data processing companies are not bank service organizations, but their interests are clearly related to the interest of restricting what banks do. This approach is reminiscent of Douglas prenumbras in Griswold. States that cannot look to narrow provisions of the statute. - Dicta: Language of section 702 is broad enough to include aesthetic, conservational or recreational values (dicta b/c this case was economic)

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Arnold Tours: If there is no evidence that congress meant to protect YOU (no evidence of a particular interest in plaintiff or class of people represented by the plaintiff), you can still be in the zone of interests meant to be protected by the statutes. After these cases it was hard to determine what the zone is. Allows us to look on a case-by-case basis, but lower courts had no idea how to apply this. Before NCUA, courts really just looked right at the specific group. Clarke (1987 White5): The banks wanted to create discount brokerage offices. The comptroller decided that these offices were not branches, so the bank could open it. Competitor brokerage services sued. District court messed up. They said (1) there is statutory standing b/c there is injury in fact problematic b/c this is constitutional, the statutory standing doctrine is independent, (2) the brokers had standing under McFadden Act because they had standing under the Glass-Steapall Act, which is wrong b/c you need standing for both statutes (like the need to have constitutional standing for each form of relief). The DC Circuit affirmed this inaccurate decision. - Holding: Looking back to Camp, White had a different view, he argued that statutory standing and constitutional injury in fact were one and the same (this is not outrageous b/c Lujan had not come down yet that argued that constitutional standing was its own thing), resists a separate standing doctrine. Claims that what was needed in Camp was a gloss on section 702, and the court supplied this gloss by adding the requirement that the complainant be adversely affected or aggrieved and the additional requirement that the interest sought to be protected is within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question (however, both of these requirements are actually in the statute). - How do we find the relevant statute? o Substantive statute (not special review) o Not specific statute can look beyond that o The court has been expanding statutory standing, making it as little of a barrier as possible - How related does it have to be? o If plaintiffs interests are so marginally related to or inconsistent with purposes of statute o A specific plaintiff need not be benefited this was disappointing to the courts because they had been resisting Arnold Tours, and that they could look at the particular plaintiff that Congress wanted to help. Air Courier (1991 Rehnquist): Postal Service had a monopoly on mail via statute but they made an exception for extremely urgent letters. The question was whether international re-mailing fell within this exception. They found that they did. The postal workers union was upset about thislikely to be injury in fact in terms of economic injury. Is there statutory standing? The appellate court said yes the court looked to provisions of postal services act that dealt with labor relations. - Holding: No statutory standing b/c the purpose of the monopoly had nothing to do with a concern about the postal workers. It was only about the business of the postal service (making sure that they had enough business to stay afloat). The court therefore concludes no specific interest. The court also noted that it was not possible to go to other statutes b/c it is pretty unrelated. The court distinguishes this from looking at two statutes in Clarke because the statutes in Clarke were closely related. Bennett v. Spear (1997): The section whose violation forms the legal basis for the complaint = relevant statute; this clarifies the discrepancy between Clarke and Air Courrier NCUA (1998): Credit unions had been historically people in same type of employment alternative to banks, savings & loans, intended to reach people in underserved unions. But they were limited to people with a common bond. There is a challenge brought by the bank wants less competition for itself. - Holding: Finds statutory standing b/c bank within zone of interests. Court recognizes there is tension in the case law and wanted to harmonize it. States that they do not look to the specific plaintiff that Congress meant to benefit, instead we look: o At the interests that Congress intended to protect Here congress intended to limit markets with this statute
5

People had hoped that this case would clarity after Arnold Tours, but unfortunately Justice White wrote the opinion, not that into clarity, liked case by case.

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THEN we look to see if the specific groups interests were meant to be protected. Banks interest is also to limit markets to reduce competition they are competitors with federal credit union. To harmonize this with Air Couriers, the court states that the Congressional interest in the PES was to reduce competition; the postal workers were not interested in reducing competition (but the counterargument could have been that Congress had an interest in creating market exclusivity of postal service, and the plaintiffs also had that interest). OConnor (dissent): states that this case more or less eviscerates the need for statutory standing, the only thing that stands in the way is Air Courier, but that case was effectively overruled. o

The truth of the matter is that Air Courier is not all that different from NCUA, but perhaps the court is focusing on the fact that the plaintiffs interest and interest protected by the statute are not connected by a tight connection in Air Courier, but that there is a tight connection for NCUA.

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FINALITY 704 Judicial review is available for agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court [final agency action is NOT final] Standard Oil (1980): Agency issues complaint that had reason to believe socal was violating FTCA; standard oil challenges agency decision they argue that the agency would suffer no penalties for ignoring this provision because either the agency will decide in their favor and there will be no reason to appeal, and if they find against them, they can. - Holding: Not definitive no legal consequences to standard oil yet; threshold decision not appealable EVEN WHERE the statute imposes a requirement that the decision be made at the threshold; Allowing challenge now may piecemeal litigation (we will have to argue this at each phase). Although it could be more efficient if standard oil wins at this phase What happens if there is an interpretive rule or policy statement? For a while the DC Circuit was saying that once the interpretive rule is out, that is pretty authoritative, so that is final (assuming that ripeness is also met) BUT the Supreme Court in harris and mead stated that these decisions are not that authoritative, only given Skidmore deference; the court notes that it is possible that there are some interpretive rules and policy statements that are not authoritative (only Skidmore deference) not considered final agency decisions.

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ADMINISTRATIVE EXHAUSTION Rationale for Exhaustion: - Separation of powers - Allow agencies to correct mistakes Common law test (when APA inapplicable) McCarthy (1992 Blackmun) Involves a Bivens action (sue federal official for violation of individual rights, a constitutional claim). The federal prison system has a procedure for you to follow if you have been wronged: (1) consult people informally, (2) file written complaint in 15 days, (3) if you dont receive satisfactory response by warden in 15 days, you can appeal w/in 20 days, (5) court has 30 days to respond. Must follow this procedure before can courts. - Holding: McCarthy did not need to through administrative process b/c qualified for exception in exhaustion doctrine. To create this exception, the court created a balancing test (intensely practical): o Litigants interests Undue Prejudice o Unreasonable timetable o Irreparable harm o Defense to criminal liability (can challenge regulations even though criminal prosecution) Whether agency can grant effective relief o Challenge to agency procedure forcing them to go through procedure makes no sense o Lack of institutional competence o Type of relief Bias: hard to determine that the agency has bias; generally are not really sympathetic to prisoners complaining about wrongful treatment. o Governments interests Allow correction of mistakes always true, in balance but not dispositive No special expertise o Judicial systems interests Judicial economy Creating a record Administrative Exhaustion (APA applies) 704 (APA): Otherwise final is final whether or not reconsideration sought Otherwise final is final could mean two things: 1) Exhaustion: can appeal without reconsideration; makes more sense b/c the statute must do something 2) Finality: exhaustion is a separate requirement, reconsideration not necessary for finality; nonsensical b/c finality would not matter unless you had exhausted Darby (1993 Blackmun): Darby finds a loophole to get loans for multi-family dwelling. HUD never tells him that he cant do it, but they are upset that he is doing this. The agency therefore decides to debar him from participating in HUD game, debars him for 18 months hes upset because he did not technically break the rules. He immediately challenges the agency decision in court. Agency claims has not exhausted administrative remedies. - Holding: The court finds that 704 would be pointless if had to exhaust administrative remedies even after final decision before he appeals there is no point for the APA to talk about finality in 704 if he still could not appeal without exhausting administrative remedies. The exceptions (where they are required to exhaust): o The organic statute requires exhaustion o The regulation requires exhaustion (the agency can do w/o special procedure according to APA).

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So if the organic statute and the regulation is silent and its an APA case, then they do not have to exhaust (the bottom line is simple, hard to get there). This is such an important issue here b/c working through the administrative process is easy to mess up and can cause you to lose suit, etc. This case was so surprising that some subsequent cases required exhaustion if means specified, but that was not the case, the circuits eventually caught on to Darby.

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ISSUE EXHAUSTION Hierarchy of things you might want to bring up in court: Remedy > Issue > Arguments In general, you have to bring up issues and remedies before agency in order to raise them in court. Sims (2000): Sims does not agree with agency decision, through counsel she seeks reconsideration and loses again. She eventually ends up in 5th circuit. The court notes that she has gone through the whole procedure (has exhausted remedies). 5th circuit says they will not address some of the concerns because she failed to exhaust those issues by bringing them up with the agency on appeal. - Holding: If claimant fails to request appeal, there is no final decision and therefore cant appeal (although this contradicts Darby it doesnt matter because in the Social Security context there is a regulation that specifically requires reconsideration). The court says that there is less of a need for issue exhaustion here because: o Inquisitorial rather than adversarial o Informal: the claimant may not have been on notice of the need to bring up all issues; the whole idea of this system is that you dont need a lawyer (would be mousetrapping people if they were told that they did not need a lawyer at this stage, but then later told that they could no longer bring up issues in later cases)

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RIPENESS The concepts of ripeness and finality often run together. Reason for Ripeness: 1) Prevent abstract lawsuits 2) Avoid interference with agency actions Abbott Labs (1967, Harlan): Agency creates a rule that drug name has to be next to brand name every time it appears. Pharmaceutical companies challenge this, they argue that they either have to (1) receive criminal sanctions, and (2) lose ability to challenge regulation. The question was whether this lawsuit was ripe. - Holding: There is a balancing test for ripeness: o Fitness of Issues: Nature of question: purely legal why wait? We dont need facts to develop Direct/immediate consequences for regulated parties: here is met b/c will determine whether they change their drug labels or not o Hardship to the parties: has to choose between Violating provision Having to comply with an invalid provision o Governments interest: has to be considered, but could be promoted by pre-enforcement review (i.e. speed compliance). Where the claim for pre-enforcement review involves a similar hardship as this case, the courts generally find it ripe. Dont want people to have to make this Hobsons choice. Even where they find pre-enforcement review, there is no need for the agency to stay compliance. Abbott Labs did not have the consequences the court intended it tipped the balance toward pre-enforcement review. Toilet Goods (1967): This case was decided at the same time the court put out the rule (Abbott Labs) and the exception (Toilet Goods). 90% of the cosmetics industry is concerned about a regulation that withholds licensing process from companies that do not reveal information about processes, formulae, etc. The industry brings a substantive challenge (Chevron-like). - Holding: not ripe. o Fitness of issues: not clear what the consequences of the enforcement of the regulation will be, needs actual facts to resolve whether the regulation is valid. Not clear how the agency will enforce the statute, should give them the opportunity to apply it reasonably. Dont assess the policy until its been applied. o Hardship to parties: no legal consequences until enforced (although may need to alter behavior as a result). No irremediable adverse consequences unlike Abbott Labs they dont have to spend $ on compliance, they are not criminal sanctions (focuses on severity of the sanctions). Although not having certification may cost the companies moneynot clear whether the court really did this costbenefit analysis. General rule for ripeness: The regulations concrete effects have to be sufficiently fleshed out for the court to see the concrete effects of their decision. Not clear how Toilet Goods and Abbott are different may be that where an intervening government policy is necessary before enforcement, that it is not yet ripe for review. Ohio Forestry (1998): Under the National Forestry Management Act, the Secretary has to develop plans about harvesting timber. In this case, we have a plan that designates an area where some timber will be harvested, but we have not reached the point at which harvesting will take place. We know that some portion of Wayne Forest will be harvested. Before loggers can begin harvest, there are a series of steps. It is possible that the decision to harvest is reversed at any one of these steps. Sierra Club challenges the regulation. - Holding: The challenge is not ripe. o Fitness of issues for judicial review: concrete effects not fleshed out o Government Interests:

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Interference with agency: this might interfere with agency, could hinder efforts to revise policies, may apply in practice in a number of ways (although it is possible that litigation may change the way that the agency proceeds), should let agency decide how to implement policy Effect on courts: would be too complex/theoretical for the courts to address this issue in the absence of some specifics as to how will be implemented, is an abstract disagreement, save courts additional litigation o Hardship on parties: No adverse effect of legal effect. Policy does not abolish legal authority to object (here, unlike 2 previous cases, Sierra is a 3rd party, not injured until 3rd party acts) Counterargument we dont want courts to really focus on the details, we want them to make more general decisions, so it is not clear why they would want the regulation to be applied in order to have concrete details. Natl Park Hospitality (2003): Agency regulation excludes concessionaires from government K disputes act for some provision. This could be bad for contractors b/c it would deny them access to cheaper forums, although they may still be able sue in courts, but not through more efficient fora, They challenge b/c they want to be able to challenge govt action down the line. However, the policy has yet to be enforced and there are still a number of steps before this is fully fleshed out. The challenge revolves around the fact that there is still some uncertainty in the legal environment. - Holding: There is always uncertainty in the legal environment. There is no real harm that will come from not resolving the issue right now. The court does not have the obligation to resolve every uncertainty. If it did, it would have to issue advisory opinions. Even though this is a purely legal question, more things need to happen before the effect of this can be felt. - Breyer (dissent): not relevant that there are steps before effect is felt. This is a purely legal question and should be resolved right now. The fact that this is a non-binding statement backs up the majoritys opinion (particularly after Mead, Christensen. Reno (1993): Challenge brought by Catholic Social Services to INS requirements to request citizenship. The aliens dont want to follow it. The stakes are high if they dont follow them, they will be deported, but it is not clear if the statute will be declared valid. - Holding: This issue is not ripe. The claim would only ripen when steps are taken to get citizenship and the INS blocked the path of that person. First the aliens would have to comply with the policy, then there is an intervening decision that must take place before the court considers that it is mature. This is the general rule for procedural injuries. There is some contradiction to the exhaustion doctrine on this point, because there is a distinction in exhaustion for procedural issues.

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OVERRIPENESS 703: Except to extent that prior, adequate, and exclusive opportunity for judicial review can still challenge agency decisions for enforcement NLRB (1987 DC Cir): The employee union challenges agency decision not to amend regulations to be consistent to organic statute. The statute of limitations had already passed. - Holding: the court breaks down the overripeness challenge to the type of challenge at issue: o Challenge statutory authority in enforcement proceeding (dicta) Yes: regardless of type of challenge. Why?? o Concerned w/ individual rights o Concerns about possibility of an invalid regulation persisting o Even though contrary to text of 703 o Non-enforcement proceeding? Procedural: cannot bring procedural challenges after SOL o Save resources o Certainty (after certain # of days have passed, parties know what to do) Factual/policy: can bring, but are limited to narrow issues as defined by the petition for rulemaking (NOT challenge of agencys original action in promulgating disputed rule) o Also concerned about saving resources/certainty (limited) o But reflects concern that an invalid regulation would persist w/out challenge Legal: Yes always Type of Proceeding Procedural Factual/Policy Legal Enforcement Proceeding No JEM Broadcast Yes? (certainly if = factual issue as applied to defendant in proceeding) Yes Petition to Amend or Rescind a Regulation No Yes, limited - NLRB Yes

JEM (1994 DC Cir): Cannot bring procedural challenge even in enforcement proceeding. This is b/c a procedural challenge is ripe immediately. The harm is done right when proper procedure is not followed. Although the court is concerned with allowing challenges in enforcement proceedings, perhaps procedural problems are less of an issue if no one objects in 60 days, they have lost objection. The court does provide a possible exception: - Where no one could have had standing to challenge the regulation when it was passed Eagle Pitcher (1985 DC Cir): Plaintiff did not file claim because they did not think ripe, then SOL passed, then company sued and the court argued that the case was overripe. - Holding: The court argues that they could only have gotten out of overripness if the challenge was indisputably not ripe within the 60 day period. Because things are never indisputable technique should use as lawyer is to file within 60 day period, the court finds it unripe, then file when ripe, and have defense against overripe challenge by court (protect rights under Eagle Pitcher). Yakus (1944): Involves procedural challenge to regulations in criminal proceeding. - Holding: The court says that even though it is criminal, we can still have overripeness b/c 703 does not make a distinction between criminal and civil proceedings. Since Yakus, there has been a Supreme Court decision that drew this into question.

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EXPRESS PRECLUSION 701(a)(1) Shaunessy (1955) 1952 statute (after APA enacted), deportation orders of AG shall be final, had identical language to an act enacted in 1917. In 1952, a court had found that the word final in the 1917 statute precluded judicial review. - Holding: Final refers to it being the final administrative procedure, but it is still subject to judicial review. Based on debates in Congress, in general Congress wants there to be judicial review (although the 1917 statute was written before those debates and although APA Judicial review, 701(a)(1) allows for statutes to preclude judicial review). So final is not enough. Wellman (): relying on the decision in Shaunessy, Congress tries to limit judicial review of VA benefits, provides: decisions by VA shall be final and conclusive and no other official or any court of the United States shall have power or jurisdiction to review any such decision - Holding: This section does not bar judicial review of constitutionality of veterans benefits statute. The preclusion applies if have not received benefits before (obtain), but does NOT apply if have previously received benefits (termination). This is NOT in the language in the statute (does not distinguish obtain/terminate). The court says that if Congress had wanted 211(a) to apply to termination, Congress could have provided as much. Courts are using creative interpretation to allow for judicial review b/c they are jealous of own powers. Robinson: Congress gets the message, tries again: shall be final and conclusive and no other official or any other court of the US shall have power or jurisdiction to review any such decision by an action in the nature of mandamus or otherwise. Here the agency denied benefits to Robinson b/c was a conscientious objector a constitutional claim. - Holding: the statute is clear, but does NOT say anything about constitutional claims, using the doctrine of Constitutional doubt, the statute does not apply if it is a constitutional claim. It would be unconstitutional for Congress to prevent the courts from resolving a constitutional question (not clear whether jurisdiction stripping is constitutional). Trainor v. Turnich: the same reasoning applies to determination of the validity of regulations. If you are challenging the validity of regulations (i.e. Chevron), the courts will not allow it unless Congress has specifically said that they would not allow that kind of review. Weinberger v. Salfi (1975): statute stated no action against the United States shall be brought to recover on any claim arising under the Act - Holding: The court finds express preclusion b/c the wording is clear and allows for constitutional review. The statute has a specific vehicle for bringing constitutional challenges. It is not clear why the court found express preclusion here b/c its rare for the court to do so. Likely b/c the statute only provided for partial preclusion (there is another means to redress constitutional concerns, so the fact that the ordinary method is taken away is not so bad).

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IMPLIED PRECLUSION Switchmans Union: Under the NLRA, you cant challenge formation of a union. - Holding: the court finds this acceptable b/c these are preliminary decisions, which are protected from judicial review even though they are important decisions b/c otherwise would interfere with the process. Block v. Comm. Nutrition (1984): The law sets prices for handlers to be higher than they would be in the market. These milk market orders are established through rulemaking w/ approval by the handlers (50%) and handlers (2/3). Where cant reach agreement, the Secretary can impose a price w/ 2/3 of producers and a showing that the order is the only practical means of advancing the issues of the producers. There are questions re: re-constituted milk, consumers and handlers try to bring a claim against the agency. Appellate Court finds these claims are not precluded relied on 701(a) presumption in favor of review, but Supreme Court finds that presumption can be overcome. - Holding: the consumers have no role in the statutory framework and handlers have a specific means by which they can object to a milk market order. Relying on the structure of the statute, the court holds that the exclusion of consumers from the framework indicates that Congress did not intend judicial review for them. Otherwise would compromise the complex and delicate administrative scheme. - Reasons that the presumption in favor of review can be overcome: o Specific language if statute says no judicial review (has to be pretty specific) o Contemporaneous judicial construction followed by congressional acquiescence (meaning from later Congressional enactments consistent with earlier judicial review) o Inferences of intent drawn from statutory scheme as a whole. Bowen v. Michigan Academy of Family Physicians (1986): Part A of Medicare is general payment of benefits from government; and B involves supplemental Medicare insurance through private insurers. Part A specifically says that you get judicial review, whereas part B says that you get a fair hearing by carrier. Erika said that you did not get judicial review of challenge to quantity of reimbursement received. Challenge here was re: validity of statute. - Holding: Review not precluded here b/c even where there is implied preclusion, court is careful to allow for preclusion of validity assessments. Even though the statute read that no action shall be brought (same language as Salfi), the court finds that its not express preclusion (indicates that Salfi is about the fact that preclusion of judicial review is OK where there is an alternative method). Policy issue: Should the court be recognizing these special interest group deals. - Easterbrook: court should respect them b/c the legislation has passed when special interest groups have made a compromise - Macey: Courts should take position of interpreting statutes in a public benefiting way. Express Preclusion APA Provision What courts look to Court approach doctrine 701(a)(1) - Express language - Final not enough Hesitant Implied Preclusion None Statutory structure/text Congressional intent Fact and context intensive Committed to Agency Discretion 701(a)(2) - Fact-specific inquiry - Text of statute - National Interests - Originally looked at no law to apply - Now weighs a number of factors, including whether possible for courts to make legal determination Rebuttable presumptions: - Lump sum appropriations precluded

Applications:

Narrow construction Constitutional Doubt Needs clear intent to preclude validity

Preliminary decisions are generally insulated from judicial review No preclusion of

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challenges More likely to find partial preclusion

validity challenges without alternative method

National Security precluded Decision whether to initiate enforcement proceeding precluded (agency inaction)

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COMMITTED TO AGENCY DISCRETION BY LAW 706(a)(2) How resolve tension w/ 706(2)(A)? Burger: Court cannot review lawful use of discretion; can review abuse of discretion are these statutes just redundant Jaffee: there is some range in which the agency is exercising legitimate discretion and courts cant review; not clear how to determine this Davis: really went out on limb, claimed that sometimes an agency might abuse discretion under 706(2)(A), but we still cant review it because of 701(a)(2). 701(a)(2) doesnt come up in every case, in the cases that it does, it may be that the courts can get to the abuse of discretion inquiry. Overton Park: Statute prohibits use of highway funds for highways through parks UNLESS there is no feasible and prudent alternatives and there is all possible planning to minimize the harm to the park. Secretary of Transportation decides to build a highway through a park, argues that the court cannot review this. - Holding: 701(a)(2) is a very narrow exception and the court did not meet it only applies when the statute is really broad and there is no law to apply. There is law to apply here because the there are standards that the court can look at in assessing the secretarys decision. Although it is difficult/vague, the court can do it, there is some basis for deciding. This case resolves the tension with 706(2)(A) b/c where there is no law to apply, you cant abuse your discretion, no need to get to the merits (very narrow situation). However, where there is law to apply, the courts CAN assess whether there was an abuse of discretion and you might wonder where there was a non-delegation problem where there is no law to apply (Separation of Powers issue). Heckler v. Chaney: Cheney is a death row inmate, means of death is to be a lethal injection; Chaney realizes that you are not supposed to use a drug in this country unless it is safe and effective (FDA statute). FDA is supposed to go and find drugs that are ineffective and ban them; Cheney petitions FDA to bring an enforcement proceeding against the agency that is going to administer this lethal drug. The FDA writes back and says that they have limited resources and time, not going to get involved a case of agency inaction (maybe they could bring an enforcement proceeding but they dont. - Holding: There is a presumption of unreviewability where an agency fails to initiate enforcement proceedings. This presumption can be overcome if there was Congressional mandate to act, where the courts could be persuaded that the agency was supposed to act, or if the agency establishes guidelines and fails to follow them. The court follows this rule b/c it is difficult to asses how agency resources should be allocated. Although 551(13) defines action to include failure to act, there is a real hesitancy here, particularly for prosecutorial discretion (less so for initiation of rulemaking). Webster (1988 Rehnquist): Secretary of CIA claimed Ee was a homosexual, it was the policy to terminate homosexuals. The agency did not explain the termination, which seems contrary to hard look review. - Holding: Preclusion of termination review but not constitutional challenge o The courts are precluded from reviewing the termination b/c: The clear language of the statute committed full discretion to the director of the CIA: o May in his discretion terminate the employment of any officer or employment of any officer or employee of the Agency whenever he shall deem such termination necessary or advisable in the interests of the United States. Structure of statute shows that there would be a problem for the CIA if there was a lot of litigation. 701(a)(2) requires careful review of the statute, a context-sensitive determination. o BUT the preclusion of judicial review does NOT apply to constitutional challenge, courts are hesitant to determine that there is a preclusion of review of constitutional claims the United States says that this is terrible b/c would threaten national security b/c would require release of facts re: national security. Rehnquist argues that the courts could control discovery. - OConnor (concurring in part, dissenting in part): Disagrees that the Constitutional claim is reviewable. o Statutory: questions the no law to apply test; argues that there may be other situations in which the decision is committed to agency discretion. The court does not disagree with her.

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o Constitutional: Views that National Security is separated from the Constitution b/c its so special, any claim might harm the ability to protect nation, even if its a constitutional claim (no need to avoid the question through Constitutional Doubt b/c can make determination in context of national security) Scalia (dissent): Actually goes along with statutory review, but claims that finding that constitutional claim is not precluded undoes it. Claims that 701(a)(2) law precludes judicial review is referring to common law, so the political question doctrine, which applies here b/c decisions that are sensitive, discretionary judgment call, the kind of decision that has been traditionally non-reviewable, where there are disruptive consequences of judicial review.

Lincoln v. Vigil (1993): Indian health agency is given a lump sum appropriation, spends the money in a way that was inconstant with how they had spent it before, the people who did not get the money sue. - Holding: Allowing litigation in this area would really open the floodgates; they decide that the decision as to how to spend lump sum appropriations should be presumptively unreviewable. Souter seems to be backing away from no law to apply. Consistent with prior cases that used other tests rather than no law to apply: Heckler (balanced lots of factors to find preclusion) and Franklin (would be difficult for court to make this determination preclusion).

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SUBSTANTIAL EVIDENCE Only applies to formal proceedings (706(2)(E)) Universal Camera: Employee was fired b/c in companys view he called personnel manager a drunk; in Chairmans view it was due to retaliation for having testified in front of the NLRB. Agency had to make a factual assessment, had to see what motive was for termination ALJ decided in favor of company, chairman called the guy a drunk; NLRB reverses b/c they dont agree with the ALJ. - Holding: we have to look at the whole record, including evidence not in favor of agency; less deferential than the test that allowed examination of only evidence consistent with agency findings. o Has to look at findings of hearings examiner b/c had direct contact with witnesses (not necessarily given a lot of weight). o Frankfurter admits that substantial evidence does not automatic answer; its impossible to come up with a phrase that will lead all judges to the same conclusion, courts must exercise some degree of discretion. o It is important to look to the organic statute in addition to the APA the statute may trump, but must be looked at against backdrop of APA Kimm: driving GOV, took son to daycare 2.6 miles out of the way; would have been more disruptive if had taken son in own car. Kimm is punished for having willfully misused GOV. ALJ rules for employee; Agency rules for firm. Circuit court reversed, found for Ee. - Holding: where credibility at stake (i.e. assessing willfulness) more deference to hearings examiner - heard him talk, assessed credibility (suggests some deference, willingness to re-examine facts). o Even though the organic statute had substantial evidence of review, did not state on the record as a whole the court read it in anyways Laro: You cant decide which employees to keep/not to keep based on union membership, employer acted suspiciously towards employees with regards to union membership. Laro had BOP with ALJ and lost; agency found same way (tend to defer to ALJ) hard to overturn agency when decisions consistently go one way.

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EQUATING STANDARDS OF REVIEW Arbitrary and Capricious is catchall standard ((706(2)(A)) Data Processing (Scalia): FTC engages in an adjudication (Citicorp makes the petition to find that Citishare can engage in this activity) and a rulemaking (simultaneously, the board is engaging in amending generally applicable regulation allowing all banks to do this). According to the organic statute, the SE applies, but had already been interpreted to apply to adjudications, not rulemaking, to which A&C applies. - Holding: The SE = A&C because: o Problematic to have two tests o Otherwise anomaly (standard for person bringing case is higher than that for everyone else) o Result = easier for agency to create a rule affecting everyone than just an individual o Counterarguments: Although may make sense in that we may want to apply more strict review when agency makes decision re: individual rights Also, from a textual argument, if they wanted only one test, why would Congress write 706(2)(E) b/c 706(2)(A) already applies. o Scalia argues that the reason for 706(2)(E) is to emphasize that on a formal proceeding, we are focusing on the record, no record in informal proceedings Remains a live issue b/c S. Ct. has yet to rule on this, and this case only involved the organic statute at stake. Allentown (1997): If an employer doesnt think a union has majority support, he can Request formal, Board supervised opinion. Also with the good faith, reasonable support of the unions majority, he can (1) withdraw recognition, or (2) conduct internal poll of employees. Here NLRB found it to be an unfair labor practice b/c the employer did not have a good faith doubt as to the unions majority. - Holding (Scalia): the applicable standards is A&C, but Scalia finds that since he is reviewing agency decisions as to whether there was a good faith, reasonable doubt, he should apply the reasonable jury standard b/c requires assessment of reasonable person. Ends up Reasonable Jury = A&C. Zurco (1999): PTO assesses whether patents are obvious or not obvious based on prior art (facts). The court in charge of reviewing their decisions is the Federal Circuit (considers selves experts on patents), so they apply the clearly erroneous test. Supreme Court finds that the applicable standard comes from APA absent clear statute to contrary A&C applies. - Holding (Breyer): The Federal Circuit cant take into account their experience in using the clearly erroneous test, but the clearly erroneous and substantial evidence test are pretty much the same, so now the standards are all equated, and arranged on a continuum.

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PRE-CHEVRON REVIEW OF LAW Gray v. Powell (1941): Seaboard wants to exempt some coal from the bituminous coal department of the DNR, coal in the program has a tax to regulate the price of the coal. To be exempted, you have to be a producer and consumer of the coal. Seaboard wants to be a producer and consumer of the coal, but the structure of the K was such that Seaboard was essentially a consumer if prices rose, Seaboard would have to pay more. - Holding: the court defers to the agency on whether Seaboard is a producer b/c Congress specifically granted the agency the authority to make determinations in cases like and there is a certain degree of expertise required to answer this question. Court engaged in de novo review as to whether coal was disposed of. The reason for the difference was that the producer question was more fact specific and disposal was a pure Q of law. Hearst (1944): The question was whether the newsboys employees and thus entitled to have a bargaining unit under NLRA. - Holding: court engages in de novo review as to whether employee extends beyond common law (pure Q of law), but defers to agency on finding of whether newsboys were employees. Limited review where the law is being applied to facts. OLeary (1951): Case asks whether employee entitled to compensation. What does it mean in the course of employment? Court exercises de novo review as to whether the common law definition applies treat as an issue of law finds that reasonable rescue attempt w/in course of employment. Shows that this analysis allows the court to frame questions in the abstract and then to apply de novo review to resolve it. On the other hand, the court defers to the agency as to whether the action in this case was in course of employment. Packard (1947): Viewed as inconsistent with at least Hearst if the question were really whether foremen could ever been employees under the Wagner Act, it could be viewed as consistent, but the real question is what level of supervisory responsibility is enough to place persons in the employer rather than the employee category, which requires careful attention to the particular circumstances of the personnel at issue. While one can think of dozens of reasons for not deferring to the agency, this system destroys the two-tiered system that was established in Hearst, etc.

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CHEVRON Skidmore (194?): Seven Employees brought claim directly under NLSA directly, wanted compensation for waiting time they were required to wait to respond to fires if there happened to be any. Trial court relied on a bulletin and amicus brief from administrator to determine that firemens waiting was not work b/c they were performing personal chores and engaging in games. This is different from previous cases b/c the agency is not administering the statute, it is enforcing it; merely policy statements, not binding, although likely seeks compliance. - Holding: administrators views are entitled to more deference b/c he has a certain degree of expertise, he understands the customs of the industry. But the administrators comments are not conclusive, even when engaged in direct analysis of this case, but it should be given respect. The amount of respect the statements should be given depends on agencys (fuzzy/sliding scale standard): o Thoroughness o Validity of its reasoning o Consistency (w/ other decisions) o Other things that would make you defer in general (epistemological deference, as distinguished from legal deference) Chevron (1984): EPA passed a definition of the stationary source, allowed states to use a plant-wide definition (bubble concept). Environmentalists were opposed to this. Is this definition permissible? DC Cir found that it ran contrary to the purpose of the statute (to improve air quality), so struck down regulations. - Holding: Reversed DC Cir. The basic error of the court of appeals was to adopt a static judicial definition of the stationary source when Congress itself did not come up with a definition claims that it should have been left to the agency. Comes up with 2-part test (relying on 706(2)(A) and 706(2)(C)6): o Whether Congress has directly spoken to the question if so, Congresss word applies to the court and agency; Is Congress clear? Footnote 9: court has to use traditional methods of statutory construction to interpret statute. Here the court found that the statute was ambiguous looks at text, definitions of statute, legislative history, administrative history (consistency of interpretation) o If Congress has not directly assessed the issue/the statute is ambiguous, then the question for the court is whether the construction is permissible. Was it a permissible construction by the agency? Court cannot substitute its own judgment Cardozo-Fonseca (1987, Stevens): Decided after Chevron. Asked whether Congress intended the two definitions to be the same is a pure question of statutory construction (this is the old test); they mention heightened deference (sounds like Skidmore). Although this case mixed the old two tests, Chevron was not dead. Scalia (concurrence): The court was right b/c the statute was clear. The opinion was dicta, all that the court had to do was make sure that the agency was making the same decision that had already been made by Congress in the statute. It then becomes clear that Chevron is the test that applies. Scalia is more willing to find statute clear than other justices. NLRB v. United Food: made it clear that Chevron was the law.

Courts can set aside agency action when in excess of statutory authority.

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APPLICABILITY OF CHEVRON Wagner Seed (1991): Environmental statute requiring cleanup of toxic substances allowed that if you are a private company doing a cleanup and you receive and comply with the terms of an order requiring you to do a cleanup, you can petition for reimbursement, but the reimbursement amendment was passed after Wagner Seed finished cleanup. Agency determined Wagner Seed ineligible b/c had to comply after statute enacted. Arguments: - There is de novo fact review in courts: Particularly b/c courts distrust agencies, we should have de novo review of law, whereas Chevron turns the legal world upside down (deference on law, not facts). o Rejected: focus of Chevron is whether agency administers the statute, if so agency should be able to make legal determinations. - We should not defer to an agency when deciding re: own $: gives agency more money/power, a place we should be suspicious of agency. o Rejected: Chevron should apply; $ doesnt go into offiers pockets - Amendment not made through formal/informal rulemaking: agency should not receive deference on adjudications o Rejected: Doesnt matter how decision was made as long as administering the statute. As long as agency making the decision, we will defer to them (comes back to Christensen, Mead) - Agency wont admit mistakes: agency would have to admit mistakes for Wagner Seed to get reimbursed, not likely to do that we should not defer o Rejected: not applicable where a legal term is being interpreted - Should not defer where = pure question of statutory interpretation: you dont need to know facts of case as to whether to receive and comply are in past or future tense. o Rejected: this argument ended with Chevron the whole point of Chevron was to get rid of distinction between statutory interpretation of mixed/pure questions of law/fact. All Qs of law defer to agency. - No political or technical considerations: therefore there was no need to defer to the agency. o Rejected: however, Congress delegated authority to administer the statute and left the statute vague implicit delegation to decide issue. Does NOT depend on expertness, rather ambiguity. If the distinction were expertness much more litigation. Rapaport (1995): Office of Thrift Supervision regulates savings. In 1980s, there were a number of federally insured thrifts that failed. Here the Agency was asking one of the major shareholders to pay 1.5 million dollars b/c he was unjustly enriched. Should we defer to agency as to whether someone unjustly enriched? Strong case to deference because unjust is really vague, but agency shares responsibility for administering the statute with other agencies. - Holding: where several agencies administer the same statute, they do not receive deference because it is hard to argue that OTS administers the statute where other agencies administer the statute, also may lead to several interpretations of the same statute. May be different if agencies are in agreement where the agencies make a joint regulation issued by all of them. Counterargument: may be better to have a few interpretations by the agencies rather than a different interpretation in each court. Haggar (2000): Supreme Court decision revisiting the de novo factual review argument from Wagner Seed. Came out the same way, de novo review of facts has nothing to do with interpretations of law. Regulations can create law in much the same ways as a statute. Chemical Waste Management: Court extended Chevron deference whether the agency should engage in formal or informal adjudication so long as statute was ambiguous. Lynchburg College: Still not clear whether Chevron always applies to procedural decisions by agencies. The Supreme Court did not resolve the issue. OConnor (concurrence) that the EEOC (which has the authority to issue procedural but not substantive regulations) should get deference on procedural issues. The rest of the justices did not necessarily agree with this, they argue that, applying de novo review, reached the same result.

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Christensen (2000, Thomas): Court relied on law review article by Robert Anthony (1992) that argued that agency decisions that do not go through N+C rulemaking or formal adjudication should not be given deference. This case was intended to resolve a circuit split re: comp time issue. The DOL said in an opinion letter (response to a certain inquiry) that the employees could not be forced to take comp time w/out an agreement, Harris County did not comply with opinion letter. - Holding: Chevron deference applies to formal adjudication, notice and comment rulemaking, and formal rulemaking. It does not apply to opinion letter. Whether Chevron applies therefore depends on process. The court can still apply Skidmore deference to the extent that the comments were persuasive b/c agency has a certain degree of expertise. Auer/Seminole Rock deference inapplicable b/c regulation here was not ambiguous. - Souter (concurrence): Not that the DOL cant enact a statute on point, merely that they have yet to go through N+C or formal adjudication. - Scalia (concurring in part): Skidmore deference should NEVER apply b/c there is no such thing since Chevron. Also argues that Chevron should NOT apply where: (1) statute not ambiguous; (2) no interpretation by agency; (3) there is an interpretation by agency but not authoritative. Scalia argues the letter was authoritative (majority disagrees that authoritativeness is the test, focuses on process) b/c makes position of administration as a whole. - Breyer (dissent): Skidmore still applies (champion of Skidmore deference, judicial pragmatism in general). Questions after Christensen: 1) Does Chevron ever apply to informal decisions (the supreme court has granted deference to informal decisions in the past). 2) If it applies to informal adjudication, how do we distinguish between where it applies and where it doesnt Mead (2001): Settles some of the questions from Christensen. Congress delegated to Department of Treasury authority to make regulations, which in turn provides rules by regulation that the Customs Department will make rulings binding on only the specific party. The decisions were not centralized. Here, customs department defined day planners as bound diaries. Federal Circuit reversed decision, did not apply Chevron. The key question was what these decisions were supposed to be - Holding: Created an outline for Chevron: o Express delegation + Decision in scope of delegation Automatic deference o Implied Delegation Chevron Good indicators of implied deference (not conclusive): o Skidmore factors: Thoroughness of consideration Validity of reasoning Consistency with earlier and later pronouncements o Express Congressional delegation to engage in rulemaking/adjudication regulations/rulings for which deference is claimed o Looking at Congressional intent + whether within the scope of Congresss intent o No Delegation (implicit or explicit) Skidmore (fuzzy test, lighter deference than Chevron) - Scalia (dissent): disagrees with courts test b/c open-ended, hard to determine if Chevron applies or not. Also will lots of informal rulemaking b/c N+C is somewhat of a safe harbor to deference (but agency should go through procedure best for them). Also, this test will a lot of Skidmore which is bad b/c its very totality of the circumstances, hard to predict. Brand X (2005, Thomas): Question at issue was whether Cable companies/internet service were common carriers. The 9th circuit issued a ruling in 2000 (AT&T) in which the FCC was not a party and did not file an amicus brief. Later the FCC made a determination inconsistent with the 9th circuits review. The question was what controlled in the 9th circuit Does existence of prior judicial ruling bind the agency, OR does the agency decision trump the judicial decision?? - Holding: The FCC determination trumps the court ruling under Chevron. The court merely determined that the statute was ambiguous and then made own determination. Had court determined statute clear (that the interpretation was the ONLY interpretation, not merely the best), their ruling would have preempted the

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agencys conclusion. As it is, whether an agency can interpret its statute should not hinge on whether a circuit court got to it first. - Scalia (dissent): unconstitutional to apply Chevron b/c would allow agencies to overrule court decisions. Although its not really overturning the statute, if the legislative branch did this, no one would be concerned, the agency is making a quasi-legislative determination. Nonetheless, the majority decision allows the agency to wait and see if the court decision is favorable before engaging in rulemaking, etc.

Note that Brand X applies a reversed version of Chevron first asks whether there is any ambiguity at all, then whether the interpretation was within the permissible range of interpretations. The right way (the way the courts have gone): o The cases dont only say clear when talking about ambiguity; also asks whether Congress has spoken about precise question must also consider the precise question at issue. Is the interpretation adopted by agency a plausible interpretation of what Congress has said? Deals with the ambiguities of law. o Is this side-stepping common carrier regulation? Permissible has come to mean permissible from the standpoint of policy.

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APPLYING CHEVRON STEP 1 Dole (1990, Brennan): DOL requires that all Chemical manufacturers label hazards and provide MSDSs to downstream manufacturers and that the warnings have to be kept on labels or transferred to new labels. These standards were reviewed by the OMB, which, on the basis of its interpretation of disclosure request, disapproved of the hazard regulations on basis of Paperwork Reduction Act, disapproved of exceptions as being too narrow (wanted broader exceptions). The question was whether this was within the authority of the OMB? - Holding: Court defers to the agency even where it is interpreting the scope of its own authority. In determining whether the interpretation was reasonable, the court looks at: o Text of statute: plain interpretation of phrases indicates interpretation not what Congress had in mind w/ Paperwork Reduction Act o Cannons of Construction: Permitted by FN 9 of Chevron, court uses noscuitor a sociis to find that words around it used to refer to transfer from public govt, ambiguous words should be interpreted in same way o Legislative purpose: None of legislative purposes would be advanced by regulating private-private transfer, was enacted to reduce govt paperwork o Legislative History: also relied on by Chevron court, here not too relevant - White (dissent): the court goes though 10 pages of analysis to determine that the statute is clear. Whites argument has been rejected the court is willing to delve deeply to determine whether the statute was clear. Pauley (1991, Blackmun): DOL is administering the benefits program for black lung, previously administered by the HEW. DOLs regulations state that must (1) make it easier for workers to show presumption of pneumoconiosis than under HEW; (2) provides for four ways to rebut that presumption (HEW has only 2). - Holding: The statute is ambiguous because it is not clear whether the criteria to establish pneumoconiosis or to rebut it that should be easier to show presumption. - Scalia (dissent): the criteria are more restrictive b/c there are now 4 ways to rebut instead of 2. The dissent assumes that the criteria cannot be more restrictive means that none of the criteria could be more restrictive, although does not state way. Therefore, the dissent argues there is no need to defer (the statute is clear). This shallow version of determining whether a statute is clear has been largely rejected. FDA v. Brown v. Williamson Tobacco Corp. (2000, OConnor): The FDA can regulate drugs and devices. The question is what is a drug? The statute includes a definition: articles other than food intended to affect the structure or any function of the body. The FDA argues that a lot of evidence has come out about cigarettes, that they are designed to affect the structure of the body. They want to regulate it, argue is safe. - Holding: The court finds a logical flaw in FDAs argument wants to regulate it but finds it safe. Court applies Chevron and looks to a number of factors to find that the statute is clear, if FDA regulated tobacco, would have to be taken off the market, which is contrary to Congress intent: o Plain words of statute: tobacco seems to fit in the definition. Court goes well beyond this o Structural/logical argument: if agency takes the position it can regulate tobacco, it must take tobacco off the market o Legislative history/subsequent congressional action: makes it clear that Congress did not intend for tobacco to be banned or to be in the jurisdiction of the FDA. Congress had passed subsequent legislation showing id not want FDA to ban it. o Importance: No one lobbied to create a specific exception from FDA regulation (was taken for granted that FDA could not regulate). Dont want to do something new that no one thought about before. - Dissent: the FDA says that the drug is safe in that it is safer to have it legal than illegal (would black market b/c people are addicted), but there is a public health benefit in regulating it. Although the people who enacted FDA regulation probably didnt mean to cover tobacco b/c was not considered a drug then, Congress enacted a broad principle, the changing understanding of tobacco should fit into it.

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Sweet Home (1995, Stevens): Under the Endangered Species Act, Congress had made it illegal to take a species. The term take means to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect or attempt to engage in any such conduct. The question in the case is habitat degradation is that a violation of the endangered species act? - Holding: the statute is ambiguous o Dictionary definition: defines harm by ordinary meaning does not need to be direct (i.e. cause hurt, do damage to, injury) o Cannons of Construction: under surplussage (we should avoid defining words in the same way), if harm does not include indirect harm, it is a superfluous word in the sentence o Statutory purpose: broad purpose of endangered species act = save species; to save species, you have to protect their environment o Subsequent Congressional Action: Congress later permitted for incidental takings b/c these actions were less direct, maybe Congress conceding that takings could be less direct. o Legislative History: Congress did remove mention of habitat modification, but they did not explain why it was removed. The fact that it once said it indicates that is what Congress really intended. o Terms of Art: there is a definition of take in the common law, but it was defined in the statute. If Congress intended to use the common law definition, they would not have made their own definition. Also, this is different from the common law definition b/c here it is taking a species rather than taking an animal. o Rule of Levity: rejects Scalias argument the statute can be litigated civilly or criminally; the justification for the rule of levity is to give people notice, this law gave people lots of notice. - Scalia (Dissent): statute is clear o Dictionary definition: defines harm under the BEST definition that direct harm is required o Cannons of Construction: under nositur a sociis (the word should take meaning from words around it), all of the words in the definition appear direct). o Purpose of statute: skeptical of majoritys argument b/c legislators generally have different purposes in mind. The purpose reflects a compromise between lots of people. o Subsequent Congressional Action: Disputes the relevanceCongress did not say directly that it was going to outrule incidental takings. o Legislative history: Congress removed mention of habitat modification b/c that was NOT what they really intended. Scalia hates legislative history, but he mentions it to play along, wants to support view that courts can rely on a lot to resolve ambiguity. o Terms of Art: taking is a term of art from common law (Pierson v. Post), so we need to understand the meaning of the word take with relation to the common law. o Structural elements: forfeiture section refers to guns, but now plows, other things that have to do with destruction of habitat. o Rule of Levity: we dont apply Chevron deference to criminal statutes. The rule of levity says that where the statute is ambiguous, we should rule for the defendant. - OConnor (Concurrence): There might still be problems, but in this case the interpretation is acceptable, so a facial challenge fails. So, it could be argued that it was different in future cases. OConnor also suggests that if a regulation is ambiguous, the court should interpret it to avoid conflict with the statute (Doctrine of Constitutional Doubt). So if one interpretation would pass Chevron, and another would not, the court should accept the interpretation that is consistent with the statute. Not clear how many justices agree. MCI v. AT&T (1994, Scalia): The FCC was required under the filed rate requirement to make sure rates were reasonable and nondiscriminatory by filing rates with the agency. The statute allowed the agency to modify any requirement made by or under the authority of this section. The question is whether Chevron applied to the interpretation of a statutory grant of authority: - Holding: Chevron is still relevant in context of interpretation of a grant of statutory authority. Here applies to the discussion of what is considered a modification (whether statute is ambiguous). The court finds that modify means to change moderately or in a minor fashion. He is clear of what counts as a modification and what doesnt. - Dissent: disagrees, thinks whether definition of modify is ambiguous, should defer to agency.

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Public Citizen (1987, DC Cir, Williams): Involved the interpretation of the Delaney clause, required prohibition of any additive found to adduce cancer in man or animal. The risk that orange # 17 and red # 19 cause cancer seems de minimus (1 in 9 million). The de minimus doctrine applies where a statute, if read literally wont make sense, and allows for some deviations from the most literal interpretation. - Holding: the court does not implement the de minimus doctrine here b/c Congress was exceedingly clear in the Delaney clause that any risk adduce to cancer. Bowen v. Georgetown Hospital (1988, Kennedy): Regulations were passed in 1981 but were stricken down b/c were not passed via notice and comment, making them invalid. However, the agency does not have enough time to recover and pass new regulations before the rule is up. Agency then passes new regulations via notice and comment and applies them retroactively. - Holding: retroactive legislation/regulation is not inherently unconstitutional, but is questionable with agencies. If the statute is ambiguous re: retroactivity, then the court will always be hesitant to allow for retroactivity. The courts apply the clear statement rule (interpretive rule): if not clearly stated in the statute that the agency can pass retroactive legislation, courts will assume no retroactivity (default rule) - Scalia (concurrence): should not allow retroactivity b/c the APA defines regulations to have future effects. Thus no regulations under APA can be retroactive. Where a statute is ambiguous of retroactive activity, we should apply the clear statement rule b/c it Trumps Chevron! However, the result is really the samewhere regulation passed is retroactive: - If ambiguity Chevron, apply Cannon of Construction clear statement rule - If ambiguity clear statement rule, apply default DeBartolo (1988, White): NLRB determined there is an unfair labor practice, seems like a 1st amendment problem. The constitution trumps statutes and regulations (Constitution > statute > regulation). The Doctrine of Constitutional Doubt should be applied when potential problems with constitution we resolve ambiguity by choosing the interpretation that avoids the problem. This doctrine also TRUMPS Chevron!! But it also same resultwhere the rule has possible conflict with Constitution: - If ambiguity Chevron, apply Cannon of Construction of constitutional doubt - If ambiguity constitutional doubt, apply narrowly construed statute that avoids constitutional problems

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HARD LOOK IN CHEVRON STEP 2 Two Views about Chevron Step 2it is ultimately about statutory interpretation, but 1) Step 2 is the policy hat anything legal needs to be addressed in Chevron Step 1 (cannons of statutory construction, dictionary definition, legislative intent, etc.) 2) Step 2 relates to policy, but the agency still has to explain itself through legal reasoning. Both the agency and the court should be thinking about legal reasoning in step 2 (Lawson) Both considerations play a role Telecom: Police required to get a warrant to get phone numbers that are relevant. However, a statute is passed (CALEA) that requires telecommunications providers to assist the government in doing this, so that they are capable of this. Under the act, the companies develop a standard, on which the FCC rules to see if they are deficient. The privacy groups challenge the FCC decision as being beyond their statutory authority b/c it allows the govt to track people via cell towers. And the govt challenges is as not being invasive enough, they wanted to know additional digits dialed on phone and identity of callers on conference calls. - Holding: Chevron Step 1: definition of call identifying information in the statute is ambiguous. Chevron step 2: court looks to a mix of legal and policy factors: o origin of communication: agency claims origin not just phone #, also tone indicating new call is waiting. Court finds agency has not explained itself enough in relation to statute (combination of policy + legal analysis as required by Lawson) o cost effectiveness: FCC decides that standard J not exorbitant. Court challenges this b/c did not consider costs other than software. This is a policy decision, demands agency to explain its decision. Auto Safety (1992, DC Cir): The agency provides for a requirement for a 2 year inspection (statute requires that that the agency provide a maximum interval) for bridge inspections. Subsequently the agency modifies the 2 year requirement allowing for exemptions and allowing underwater inspections to take place on a 5-year basis. - Holding: Chevron step 1: the statute is ambiguous, Chevron step 2: o Changing 2 year requirement: The agency reasons decision on fact that they have limited money, and they want to divert some of the money spent on inspections to bridge replacement. The court rejects this b/c agency relied on studies not in administrative record w/out fully explaining why. Also, the agency has violated the provision that requires the agency to require a maximum interval for inspecting bridges. Combination of legal + policy analysis. o Five Year Requirement: The agency claims that it was a difficult issue b/c there was not enough data, they need to do inspections to get data. The court gives a lot of deference to this sort of reasoning b/c there is a lot of uncertainty, gives agency more latitude. This case reminds us that we need to look at the statute even when the agency is making a policy decision (i.e. requirement for a maximum). This case is notable for a different view on the degree to which scientific uncertainty that can be used to rationalize agency decision. Bankers life (1998 7th Cir.): This case shows how inconsistently Chevron is applies most courts put legislative history in Chevron step 1, the court here puts it in Chevron step 2 merely to assess if it was ambiguous this is probably not the best procedure.

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DEBATE RE: CHEVRON Pierce More accountable to electorate, Congress deferred to them Reduce # of difficult cases, reduce impact of each judges personal political philosophy Agencies better at resolving political disputes Scalia To be consistent w/ congressional intent (when statute is unclear) Blanket rule to provide for certainty and consistency defer unless Congress provides otherwise Courts are just as good at resolving policy issues; does not violate SOP to defer to them when consistent w/ Congressional intent Courts should refrain from creative statutory authority only when inconsistent with Congressional intent; otherwise it is emphatically role of courts to say what law is (determine best textually possible determination) Merill None None. Does not increase accountability and is not consistent with intent of congress b/c APA claims courts should decide all issues of law N/A

Reason to defer to agencies Benefit of Chevron

Agency Expertise?

Role of Courts

Courts should refrain from creative statutory authority (dont use Legislative history in Chevron step 1)

Should engage in de novo review

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AGENCY INTERPRETATION OF OWN REGULATION Seminole Rock (1946): Price control statute had phrase: highest price charged during March, 1942. The question was whether the price charged applied to payment, order, delivery. There is also a regulation that says: chargedfor the delivery of the material during march 1942, which is again not usefuldoes it apply to charged or delivery? - Holding: the agency has explained what it meant, therefore, the court should defer to the agencys interpretation. The agency will receive deference regardless of the procedure used to go through so long as the agency had the authority to write the initial regulation. The reason for this deference is that the agency is likely most in tune with what is intended by the regulation. Arizona Grocery (1932): Agency set a rate and then made a determination inconsistent with that rate. Agency argues that if they were bound to the regulations like the carriers, it would great inefficiency. - Holding: Agencies are bound to their regulations, too (until repealed). Once agencies enact regulations, they cant just ignore them or get around them by announcing a ridiculous interpretation in the absence of ambiguity. The only way they get deference on interpretation is if there is some ambiguity. While the court may defer to the agencys consistent interpretation of its regulation, it will not defer to an inconsistent interpretation (not clear how consistent they have to be). If the agency is really concerned about efficiency, it should not make regulations. Gonzales v. Oregon (2006): The statute regulating schedule II controlled substances required that physicians register with the federal government, and that the substances be used for legitimate medical purposes. The Attorney General interpreted regulation that was merely a copy of the statute finding that assisted suicide was not a legitimate medical purpose, making it a federal crime to use these drugs for that purpose. Oregon had passed a statute legalizing physicianassisted suicide in a limited way, challenged the rule. The question was whether Seminole Rock/Auer deference applied. - Holding: The interpretation should not receive deference b/c the regulation is merely parroting the statute. If the government could get away with this, it could get around Chevron all the real work would happen through procedures other than N+C rulemaking. Not clear how far this goes, how to determine if agency is merely parroting. Here it is a syntactical ambiguity the statute and regulation both use fair, which is vague. But it not be parroting in other cases where the statute and regulation use the same word. Case Christensen/Mead What is being interpreted Statute Standard Delegation (explicit/implicit) of interpreting authority + exercise that authority Defer to agencys interpretation of its own regulations Limitation on Auer Deference if regulation parrots (does not go beyond the statute) Type of Deference Interpretive rules dont get Chevron deference (they get Skidmore deference) Interpretation of rules get Auer deference (that is real deference, unlike Skidmore) No Seminole Rock deference on the interpretation of that regulation

Seminole Rock/Auer Gonzales

Regulation

Regulation

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REVIEW OF POLICY Pre-HARD LOOK REVIEW Arbitrary and Capricious is catchall standard ((706(2)(A)) Benzene Case (American Petroleum) (1980): OSHA stated agency shall ensure to the maximum extent feasible, on the basis of the best available evidence, that no employee will suffer material impairment of health or functional capacity. There were many undefined terms, some of which were in conflict (maximum extent feasible v. best available evidence). It is difficult for an agency to make the decision re: acceptable levels of ambient benzene b/c there is no objective way to implement the statutes phrase. The question was the level of review that should be applied. - Holding (4 Justices): the agencys decision be reviewed based on procedure look to the statement of jurisdiction and purpose and make sure that the agency was acting within it. This review had no review of substance. The regulation establishing ambient levels of benzene was stricken down b/c Secretary of Labor made no pertinent findings as required by OSHA. - Rehnquist (concurrence, 5th vote): OSHA represents an unconstitutional delegation b/c gave absolutely no indication of where on the continuum of relative safety he should set the toxic materials standard. Ethyl (1976 DC Cir): Agency trying to come up with an acceptable level of lead in gasoline. - Bazelon (concurring): justices should defer where the policy choice is in a technical area, however, policy choices that are non-technical are in the purview of the court. However, even if technical, the court should not give up altogether in really extreme cases, there should be some review (the court would have to know something about science). Looks more at procedure. - Leventhal (concurring): judges can gain the amount of expertise required to determine if the agencys decision was irrational/discriminatory (no need to be experts). Does not require the court to make determinations of whether decision is technical/non-technical. The court should still defer to some of the courts scientific determinations. Looks more at substance. This does not save the courts from complexity instead it adds another question to the analysis whether the question is technical or not. Greater Boston (1971, DC Cir. Leventhal) Its supervisory function calls on the court to intervene not merely in case of procedural inadequacybut more broadly if the court becomes aware, especially from a combination of danger signals, that the agency has not really taken a hard look at the salient problems, and had not genuinely engaged in reasoned decisionmaking. - Combination of danger signals: court will look at decision as a whole; recognizes that the problems are multidimensional (agencies are deciding lots of policy decisions at the same time). - Hard look: famous words from decision; the hard look refers to the agencys hard look (its not that the courts are supposed to look hard); o The agency should look at the salient issues; should do so genuinely o Should not fake process of reasoned decisionmaking even policy issues have to be based on reason.

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REVIEW OF POLICY: HARD LOOK Arbitrary and Capricious is catchall standard ((706(2)(A)) Hodgson (1974, DC Circuit): When OSHA founded, there was evidence showing that high levels of asbestos exposure were bad, but there was little evidence re: lower exposure levels. There were other options to predict those levels, but each of them involved some arbitrariness. OSHA relied on a dose-response curve to extrapolate the relationship between dose and exposure to those lower doses. Based on this relationship, OSHA decides will implement a 2 fiber standard. Also declares that there is a 4 year window for the adaptation of the new standard for asbestos exposure. Also decides that records monitoring asbestos exposure would be kept for 3 years, and medical records for 20. - Holding: The court declares they are entitled to forthrightness from the Secretary. He needs to admit uncertainty and describe the rationale (although tricky in light of uncertainty). Remands so agency can explain the nagging questions that it has left unanswered w/ a reason and rationale court recognizes are inexpert observers, but can ask questions left unanswered, even where not directly in statute so long as they are relevant concerns of the act. o 2 fiber standard: upheld b/c (1) agency had taken a hard look, (2) more deference in light of scientific uncertainty. o Four Year Implementation: Not irrational with regards to certain parts of the industry (agency shows that it may take that long for certain parts of industry); however, the agency did not take into account the fact that some parts of industry could implement it faster/slower. It is possible that an industrywide standard is reasonable, but the agency needs to explain why. Demands more precision and explanation. o Retention of monitoring/medical records: Court is concerned that the exposure records being retained for only 3 years will limit ability of OSHA to do research on asbestos (probably Congress intent in requiring its retention in the first place). Court looks at a comparison between these retention practices shows the depth the court will go to assess agency policy making. Motor Vehicles (1983, White): In 1966, Congress passes the National Traffic and Motor Safety Act out of a concern re: car accidents, and creates NHTSA to administer it. NHTSA can issue standards that shall be practicable, shall meet the need for motor vehicle safety, and shall be stated in objective terms. These words give little guidance to the agency as to how should approach the tradeoff, or what the agency should specifically address. In 1967, NHTSA passed Std. 208 requiring seatbelts, which was amended in 1972 to include passive restraint (either airbags or automatic seatbelts). The statute was first delayed by Congress and in 1976, it was repealed. In 1977, the statute was reenacted. In 1981, the Regan administration took over, repealed passive restraint requirement. The agency argued that the use of passive restraints would not enough safety b/c manufacturers chose belts over airbags, people disengaged belts. In addition, the public would disapprove of the regulation as being useless, lowering their view of regulations. - Holding: The agencys decision to repeal the passive restraint requirement is subject to arbitrary and capricious review (not the same standard as decision not to pass regulation in the first place). Court found decision was arbitrary & capricious, remanded to agency. o Agency cant consider factors which Congress has not intended it to consider o Agency cant fail to consider an important aspect of the problem Had to address all strong counterarguments that are important parts of regulation Agency failed to consider just an airbag requirement court does not mandate this choice, just its reasoned consideration Agency cannot offer post hoc rationalizations to justify decision. o Agency cant offer an explanation that runs contrary to evidence or is so implausible that the court cannot possibly acceptcourts deference to agency explanation is not infinite. Agency did not provide convincing explanation as to why rejected benefits of passive seatbelts. Agency said field studies did not allow them to reliably predict a 5% increase in seatbelt use b/c those studies did not involve typical drivers Court argues there needs to be a rational connection betwn facts found and choice made - Rehnquist (partial dissent): the agencys decision-making is not a model, but it is reasonable. Argues there should be deference to agency, and that the change in the standard is related to the election of a new president,

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which is OK b/c this is an important issue, got a lot of attention, electorate is likely choosing person who represents what they consider the most appropriate policy choice on this issue (winner spoints). Sun Oil (1993): The EPA made EQB their Puerto Rico licensing agency for the clean water act. Under this arrangement, the EQB issues certification that will become incorporated into the EPA permit to pollute. Here the EQB does not include a mixing zone analysis in this permit despite having done so before and including such an analysis in regulations that they promulgated only four days before incorporating a new mixing zone analysis. However, the EPA has an anti-backsliding rule once in permit, do not apply to changes made in an effluent limitation prior to its compliance date. EQB realized mistake, asked EPA to reconsider permit w/out mixing zone analysis. However, the EPA does not consider the petition to delay implementation of the challenged permit. The decision here being challenged is the EPAs decision not to delay implementation of the challenged permit. - Holding: It is NOT enough for the agency to argue that they just rubber stamp state decisions, they have to explain why they are not giving special consideration when it has been asked for. The court decides that it was an arbitrary decision not to reconsider the permit it was a weird outcome; the EPA may have been trying to mousetrap the polluter (the people working at the EPA may have been concerned about the goal of environmental protection); the court is saying that they could have done something that would have right result, they didnt, that was arbitrary and capricious. US Dept of the Treasury, Bureau of Engraving and Printing v. FLRA (1993, DC Cir, Williams): there is a common law type of reasoning, courts are generally bound by decisions of previous ALJs, so the court will require that the agency explain itself in a common law-type way (if the agency does not want precedent to apply, they have to say why it has to be a real distinction) if they want to decide the case another way. - If agency fails to actually distinguish from prior cases, the court will remand to the agency to explain itself, must be honest. Court does not look at the issue de novo looks at the agencys rationale for certain decisions. - There is a preference for agency consistency to the extent that the agency is consistent, it is easier to look at the decision with a hard look review, but the court does not require stare decisis. Reasons for agency inconsistency: - Different Presidential Administrations - New scientific knowledge - Different facts in the cases (distinguish, has to explain why its different) - Different ALJs different ALJs may come out different ways (but courts have to police ALJs to consistency)

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EQUITABLE ESTOPPEL Merrill: Presents a strong argument for estoppel. A farmer had applied for crop insurance that was federally subsidized, was assured that his entire crop was covered. He suffers a crop loss, and when he looked at the regulations, the advice that he received was wrong, part of his crop was ineligible. He said that b/c they had given him improper advice, should be estopped from not covering him. - Holding: The case basically said that the government is not estopped in the same way that a private party is. Maybe b/c the govt does not run as well. Office of Personnel Management v. Richmond (1990): Government worker was disabled, went to ask govt employee how much could make and still qualify, the worker gave him incorrect advice was deemed ineligible for benefits. There was some concrete evidence that he was told that taking on an additional job should disqualify from benefits. Secretary: argues for per se rule that the government cannot be estopped - Holding: decides the case under more narrow grounds the constitution prevents $ from being appropriated in ways that are contrary to the statutes/regulations the government has made, even if the government has given them guidance that suggests otherwise. The Supreme Court had previously indicated in dicta that sufficient grounds for estoppel may have been found in cases of affirmative misconduct (but not with regard to actual appropriations from the treasury after Richmond). Lower courts have grabbed onto this these cases really tug at the heartstrings. - Dissent, Stevens: disagrees with appropriations clause argument it is true that entire programs cant be created without a statute under appropriations clause, but does not restrict the exact amount of money that is spent in each program; Congress recognizes that money may be spent in a slightly different way. - Dissent, Marshall, Brennan: Its an equitable doctrine, can be tailored (does not need to be as expansive as majority/secretary fear) What policy supports the doctrine of per se prohibition of - Endless litigation - Prevent public fisk - It could be a narrow doctrine, but depends on convincing the jury that estoppel should apply; courts may not be very good at applying it - If we had estoppel against the government, the government would avoid giving advice, or you would seek government advice until gives you the advice you want to hear and then hold government to it via estoppel

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