Outline 1 : Admin Law Overview

Thursday, April 14, 2011

7:15 PM

A. What is Admin Law and Why should We study it?

- Law of how gov't interacts w/ the world | Comprises majority of Am. Govt
- Admin law includes two different facets
a. Law that governs agencies
b. Law that agencies make
1. What is an Agency:
a. -551(1)- 'agency' means each authority of the Government of the United States, but does
not include, congress, courts, DC, military.
2. What do Agencies do ?
a. Execute the laws of the US
b. Regulate private conduct
- corrects imperfections in private market system
- Addresses inadequate consumer information, insufficient competition
c. Administer entitlements programs
- Social Security, Medicare
d. Everything else - IRS, Immigration
3. Types of Agency action
1. Rulemaking -Corresponds to legislative action
2. Adjudication -Corresponds to judicial actions
3. Investigations -Corresponds to enforcement

B. A walk through the APA

Definition of Adjudication and Rulemaking - Distinction is future effect
1. Rulemaking-
A. 551(4)-agency process for formulating, amending, repealing a rule!!
- an agency statement of future effect designed to implement, interpret, or prescribe law or
policy
- When an agency engages in rulemaking, it promulgates a regulation that has the same force
and effect of law as if it has been passed by congress or a state legislature. §551(4)
B. Types of Rulemaking:
1) Formal
2) Informal
3) Hybrid

2. Adjudication
A. -551(7)-agency process for the formulation of an order
- Order = whole or part of a final disposition other than rulemaking, including licensing
- When an agency applies an existing rule or statute to a set of facts to determine what
outcomes is required by the rule or statute. The power to adjudicate means that an agency
decision concerning how a law or regulation applies in a specific circumstances has the same
force of law as if it had been made by a specific court. §551(6)
B. Types of Adjudication:
1) Formal Adjudication
2) Informal Adjudication

3. Judicial review
 Courts generally defer to agencies choice of whether to proceed by adjudication or through
rulemaking
 Agencies may preclude parties from raising certain issues in adjudication by deciding them

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  Agencies may preclude parties from raising certain issues in adjudication by deciding them
in rules.
 Trend toward greater use of rulemaking to set policy, but some agencies (e.g. NLRB)
continue to use case by case adjudication to do so
i. What can be reviewed:
a. Constitutionality of agency action - Standing (Case or controversy)
b. Whether agency action is contrary to a specific statute
c. Adequacy of agency procedures used

ii. Standards of Review:

a. De novo
b. Substantial Evidence
c. Arbitrary and Capricious

C. Professional Considerations:
1. Who is the client?
- Normally the agency itself will be the client.
- The public interest approach - Makes serving the public good the attorney's primary duty

2. What are the Ethical Obligations?

- Radack reading -Agency Interest v. Public Interest

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 Outline: Rulemaking
Friday, April 15, 2011
3:22 AM

A. Rulemaking initiation
a. Events to prompt agency to propose rule:
i. Statutory command
ii. Response to staff recommendations
iii. Political pressure
b. Source of Proposed Regulations
- legislation requiring specific regulations
- Agency initiation (staff recommendation)
- Congressional persuasion (investigation, hearings, budget)
- Public (petition, lobbying)
c. Lobbying
i. McGarity Reading - Institutional structure
- Workgroup, steering committee, red border review, final rules
ii. Bailey Comments -Initiating action
- You need skills, know what the agency's mission is, make it easier for them to their
purpose/job.
iii. Hitchcock Comments -6 tips on how to influence agencies

Process: RULEMAKING (timeline)

- Time 0 - rulemaking begins when agency starts thinking about rulemaking
- Time 1 - when agency does something besides thinking
 Decides whether to initiate a rulemaking.
 What procedures have to be followed between T1 and T2?
- Time 2 - issuing a rule/adopt a rule
 Finish rulemaking
- Time 3 - court issues decision of validity of rule
- Time 4 - enforcement - enforce the rule - proceedings and procedures
- Time 5 - experience with the rule (agency) - questions, agency issues interpretations of the rule,
things to explain
- Time 6 - agency decides we need to amend or change this rule
- Start over at time zero/time 1
- Amendment is the same as new rulemaking process

5 Possible Ways an Agency can act:

- to what procedures an agency has to follow to propose and adopt a rule (between T1 and T2)
1. No procedure except issue a rule
2. Informal Rulemaking - Notice and Comment (Section 553 of APA)
3. Notice and Comment Procedures even though not required
4. Notice and Comment Rulemaking + some other steps (Hybrid rulemaking)
5. Formal Rulemaking
Other Requirements:
- 553b – Notice: general notice of proposed rule making will be published in the federal register or
persons subject to are personally served or have actual notice
- 553c – Comment: obligation to provide comment - inextricably linked to notice
- If something is an exception in b, then the exception applies to c
- If something is totally procedural then NO notice and comment necessary
- Triggers formal rulemaking –must comply with 556 and 557
 Adjudicatory procedures for trial like procedures and the creation of a record from which
the agency is to make a decision
- 553 d – timing of rules and obeying – must allow 30 days between the notice of adoption and when
the people are obliged to obey the rule.
- 3 Exceptions
 1) A substantive rule which grants or recognizes an exemption or relieves a restriction
2) Interpretative rules and statements of policy

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  2) Interpretative rules and statements of policy
3) As otherwise provided by the agency for good cause found and published with the
rule
- Procedural rule is exempt from notice and comment but not from (d)

Petitions for Rulemaking

○ §553e – right to petition – each agency shall give an interested person the right to petition for issuance,
amendment, or repeal of a rule.
○ §555e – when written application, petition, or other request of an interested party made in connection
with agency proceedings is denied, agency must give prompt notice, notice shall be accompanied by brief
statement of grounds for denial.

1. What if the agency doesn’t do anything???

A. Agency Action:
- 551(13)of the APA defines agency action to include "failure to act"
 §551 - Agency Action – includes the whole or a part of an agency rule, order, license,
sanction, relief, or the equivalent or denial thereof, or failure to act.
Overall Rule: If person petitions an administrative agency for rulemaking, but agency fails to
respond within reasonable time, petitioner may seek judicial review of unreasonable delay - get
either mandamus or continuing court jurisdiction until final agency decision.
Telecommunications Research & Action Center v. FCC
1. Determine if delay is so egregious (flagrant) as to warrant mandamus
A. Whether agency delay warrants a mandamus: (from Telecommunications)
1. Time agencies take to make decisions must be governed by a rule of reason
2. Where Congress has provided a timetable or other indication of speed with
which it expects the agency to proceed in enabling statute, that statutory
scheme may supply content for this rule of reason.
i) Courts have still have refused to issue a writ
3. Delays that may be reasonable in the sphere of economic regulation are less
tolerable when human health and welfare are at stake
4. The court should consider the effect of expediting delayed action on agency
activities of a higher or competing priority
5. The court should also take into account the nature and extent of the
interests prejudiced by delay
6. The court need not find any impropriety lurking behind agency lassitude in
order to hold that agency action is unreasonably delayed
- A finding of agency impropriety is not necessary in order to determine that the
delay is "unreasonable”

B. Denial of petition
- A common basis for denial of a petition could be that the issue is simply not important enough,
given the agency’s resources and priorities, to justify rulemaking at this time.
- Once an agency has denied a petition for rulemaking, one of the obstacles to judicial review
has been eliminated because the agency made a decision that can be reviewed.
- Section 706 (1) can compel agency action unlawfully withhold. - APA, Judicial review
Standard of Review: Arbitrary and capricious – see judicial review of rulemaking
- RULE: When agencies deny rulemaking petition, courts will overrule decision only if:
1) Agency did not adequately explain the facts and policies it relied on, or
2) Facts cited have no basis
- Arkansas Power & Light Co. v. Interstate Commerce Commission – p69, coal consuming
power companies filed a rulemaking petition with the agency responsible for regulating
railroad rates, demanding extensive study which would locate the cheapest coal shipping
railroad routes for them, agency refused contending rulemaking was too cumbersome
and individual adjudication was more efficient, companies sought judicial review to
compel rulemaking.
- The petition presented unreasonable demands, court found no reason to compel
rulemaking. Hard to get denial reversed.
- Court is looking for a reasonableness test
- reasonableness of agency explanation given the record
What is the record - look at explanation of agency and its rationale

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 reasonableness of agency explanation given the record
- What is the record - look at explanation of agency and its rationale
 The record is the petition and whatever you and your client submitted
as part of petition and agency's letter of denial
- MASS. v. EPA
◊ Court finds CAA states that EPA can avoid rulemaking only if it finds that GHGs do
not contribute to climate change or if provides some statutory reason to state why
it cannot make that determination. EPA didn't give a good reason initially.
► EPA said not under jurisdiction
 SC said they did.
► EPA stated unwise to do so at the time
 Court was distinguishing between policy a consideration vs. a question
of law
- Interpretation of Clean Air Act - EPA was under congressional mandate and
had to address endangerment question
 Under statute EPA did not have discretion to refuse rulemaking on the
things it talked about
 Only refuse if concluded greenhouse gas was not a danger then could
refuse
- Note: ARK Case still governs
- RULE: Agency’s rulemaking actions are judicially reviewable under arbitrary and
capricious standard – courts must defer to the agency expertise unless it failed to
articulate a satisfactory explanation, including a rational connection between the facts
found and the choice made

B. APA rulemaking procedures:

1. The exceptions
A. The first step for an agency lawyer is to determine whether the procedures apply at all, determine
whether notice and comment were required.
a. General Exceptions:
1) Rules involving military, foreign affairs, public property, loans, grants, benefits, contracts not
subject to 553.
2) Military, social security, Medicare all exempt.
b. Exceptions from Notice and Comment:
1) Certain rulings outside N+C provisions of 553
1) Rules of agency organization, procedure, or practice
2) Interpretive rules (clarifies existing law, does not create it)
3) General statements of policy
4) Other rules for which notice and public procedure are impracticable, unnecessary, or
contrary to the public interest
i) Require agency to find good cause and to publish finding and reasons with the
rule.
a) Definitions:
i) Impracticable: a situation in which the due and required execution of
the agency functions would be unavoidably prevented by its
undertaking public rulemaking proceedings.
ii) Unnecessary means unnecessary so far as the public is concerned, as
would be the case if a minor or merely technical amendment in which
the public not particularly interested were involved.
iii) Public Interest: requires that public rulemaking procedures shall not
prevent an agency from operating and that on the other hand lack of
public interest in rulemaking warrants an agency to dispense with
public procedure.
2) RULE: Agencies procedural rules are exempt from APA 553’s notice and comment
requirements if they do not suggest approval/disapproval of certain behavior, even if the
procedural change affects parties’ rights.
o Procedure is not defined in the APA – up to the courts to determine between substantive
(which requires NC) and procedural rule which doesn’t
 Agency label is not determinative on the whether it is procedural.

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 Agency label is not determinative on the whether it is procedural.

- American Hospital Assn. v. Bowen

(when federal agency authorized to oversee Medicare hired private doctors to audit hospitals’ Medicare fraud, it
enacted audit procedures without public notice or formal rulemaking. The hospitals sued to void the procedures,
claiming necessary notice and comment was omitted)
- The agency didn’t call it a rule, called it a manual, but it was actually a rule, so the court found the
enactments to be procedural, thereby exempt
- manual imposes no new burdens on hospitals that warrant notice and comment review.
- Reason for exemption -to ensure that agencies retain latitude in organizing their internal structure
- Overruled Rule: Exemption from N+C covers agency actions that do not alter the rights or interest of
parties although it may alter the manner in which parties present themselves or their viewpoints to
the agency.  this proved to be too difficult of a standard to prove
- Behavioral Response

Air Transport Association of America v. Dept. of Transportation (overruled)

(The federal aviation safety agency increased civil penalties and changed administrative and adjudication
procedures without prior notice and comment contending the rules were exempt as procedural)
- Exemptions to N+C do not apply to action that 'substantially alters the rights or interests of regulated'
parties.
- "In the instant case, because the penalty rules substantially affected civil penalty defendants' right to avail
themselves of an administrative adjudication"
- Rather than focus on whether rule is procedural or substantive, decisions employ a functional analysis.
Where nominally procedural rules encode a substantive value judgment or substantially alter the rights of
interest of regulated parties the rules must be precede by notice and comment. (553 exemption does not
apply)
RULE: For APA 553 purposes, agency rules are deemed procedural (exempt from NC) if the rules’ substantive
effects on parties’ rights are too minor to justify notice and comment’s inefficiency and expense
- Consider whether the rules’ substantive effects are sufficiently grave so that the notice and comment are
needed to safeguard the APA underlying policy
- What matters is the effect’s degree, not just the presence of an effect on rights

JEM Broadcasting Co v. FCC

(the federal radio licensing agency adopted rules without NC whereby license applications containing errors were
summarily rejected. When an applicant’s ambiguous application was rejected, it sued to declare the rules void –
court found the rules to not be void)
- Hard look" procedure of review announced w/o N+C
- Critical test: the actions do not themselves alter the rights or interests of the parties, although it may alter
the manner in which the parties present themselves or their view points to the agency
- Also held that Air Transport is no longer binding precedent, the opinion there extended the value
judgment rationale further than any case of the circuit.

- Good cause exception is when a change in a rule, or a rule, is extremely trivial, or where things are
extremely urgent:
o Post 911 – rules adopted asap or when things are misspelled
o If there was an emergency justifying an exception from prior notice and comment, the APA
does not require later notice and comment nor does it limit the time the rule may remain in
effect
- Interim final rule: Sometimes an agency will allow comment after the passing and make changes
accordingly.
- Direct final rulemaking: An agency publishes a final rule in the federal register with a statement that the
rule will become effective on a particular date unless an adverse comment is received before that date. If
adverse comment is rec, the agency withdraws the rule and it ten publishes it as a proposed rule under
notice and comment procedures.

Formal, Informal, or hybrid rulemaking

- Rules mostly made by informal which are only subject to N&C.
- Congress requires formal rulemaking in certain areas which requires trial type procedure.

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 Congress requires formal rulemaking in certain areas which requires trial type procedure.

1. Formal Rulemaking:
○ RULE: formal rulemaking per APA 556-557 is required only when the agency’s enabling legislation specifies
1) there must be hearing AND 2) hearing must be “on the record”
□ Unless Congress uses the phrase “on the record” then agency is not required to use trial like
procedures
 US v. Allegheny Ludlum Steel Corp
(After federal agency regulating railroad rates enacted rules without hearing, dissatisfied users sued,
contended formal rulemaking and a hearing were required – court found that formal rulemaking only
required when the statute explicitly requires it to be on the record)
o Formal rulemaking triggered (556 and 577 need to be applied) only where the agency statute,
in addition to providing a hearing, prescribes explicitly that it be "on the record"
○ RULE: statutory provisions requiring a hearing do not trigger formal rulemaking APA 556-557, and the
hearing sometimes need not include the right to present evidence orally, cross examine witnesses or
present oral arguments to the agency
 United States v. Florida East Coast Rwy. Co. p92 – While the ICC’s enabling statute requires rate
regulations be made “after hearing” the ICC made rules after accepting only written comments,
regulated railroads sued, contended that the hearing was inadequate, court found that “hearing”
could mean just Notice and Comment.
□ Requirement of "hearing" does not trigger formal rulemaking.
□ "Thus even though the commission was not required to comply with 556 and 557 of that act, it
was required to accord the "hearing" specified in 1(14)(a) of the interstate commerce act"
○ RULE: Courts reviewing agency rulemaking procedures can’t impose additional procedural rights, absent
constitutional constraints or extremely compelling circumstances.
 Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc. p94 –
(agency enacted atomic energy rules without allowing discovery or cross examination of experts, an
anti-nuke group challenged the procedure as denying meaningful participation –court cannot
require an agency to grant additional procedural rights during rulemaking)
- Considered whether the courts can impose hybrid rulemaking procedures on an agency?
□ The answer of which is no. The adequacy of a record in a proceeding is not correlated directly
to the type of procedural devices employed but rather turns on whether the agency has
followed the statutory mandate of the APA.
- If courts reviewed all agency proceedings to determine if the agency employed the proper
procedures to reach the "best" result, the agency model would fail.
- APA lays down the only procedural requirements unless Congress has ruled, not just because the DC
Circuit says so – wanted to put an end to the judicial expansion of notice and comment rule making

2. Informal Rulemaking Requirements

A. Notice
 APA requires general notice of proposed rulemaking shall be published in the Federal Register 5
USCA 553(b)
 Supplementary Information – agency explains background, elements of proposed rule, agency’s
justification, section by section summary, legal authority
□ Findings and Certifications – agency statement about how it meets other laws, ex why an
environmental impact standard isn’t required
□ Agency’s failure to give adequate notice can result in a remand, start over again
 Not subject to publishing in FR, if persons subject to the rule are named or either personally service
or otherwise have actual notice of rulemaking in accordance with law agencies seldom if ever rely on
actual notice,
□ The notice shall include:
a) A statement of the time place and nature of public rulemaking proceedings
b) References to the legal authority under which the rules is proposed and
c) Either the terms or substance of the proposed rule or a description of the subjects and
issues involved”
□ When an agency fails to make the necessary disclosures, a court will remand a final rule to an
agency for a new notice and comment period
 to protect the interest of parties in commenting on proposed rules, the courts have
consistently held that the notice of proposed rulemaking must fairly appraise interested
persons of the issues in the rulemaking.
If you’re unhappy with the issued regulation you can challenge the notice

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 persons of the issues in the rulemaking.
□ If you’re unhappy with the issued regulation you can challenge the notice
o Grounds for reversal if the agency doesn’t say enough in the notice about what it
knows or what it thinks it knows at the start of a rulemaking – does it have an
obligation to share what it knows?
□ RULE: Court held that when the basis for a proposed rule is a scientific decision, the scientific
material believed to support the rule must be shared… to suppress meaningful comment by
failure to share the data relied on is akin to rejecting comment
 US v. Nova Scotia Food Products, p98 – case about smoked white fish, FDA
proposed a regulation to require all smoked fish to be heated to a certain
temp for a certain time to kill botulism spores… receive comments that say it
should be regulated species by species – the heat would destroy the fish,
commercially infeasible, FDA refuses and adopts the rule anyways.
 NS keeps selling fish that doesn’t meet the standard of the rule,
violates the rule and concedes that it violates.
 NS argues that rule is invalid because FDA didn’t share any scientific
thinking behind imposing rule on all fish.
- Problems with notice
□ TEST/RULE: if a proposed rule is later revised, the original notice was adequate if the revisions
are in character with the original scheme, and the final rule is a logical outgrowth of the notice
 Affirmative rule puts readers on constructive notice that the exact opposite may be
adopted, so readers should expect both
 Suppose the agency proposes that it will do regulations A and B, and then it adopts A and
B and C – is it okay for the agency to include in the final rule/regulation – no, potential
problem because public lacked notice about C
 Agency will say that it just modified A and B in response to comments and developed C,
its not new, just changes to what was put out in notice
 Chocolate Manufactures Ass. v. Block: – the agency administering subsidized food
proposed a rule disallowing high-sugar cereals, but continuing to allow flavored milk, yet
after receiving comments, in enacted a final rule disallowing chocolate milk. Chocolate
milk makers sued, claiming insufficient notice – court found there wasn’t fair notice here
because USDA never proposed rejecting it and the notice said it would permit flavored
milk.
◊ Logical outgrowth test-Was the concerned party put on notice that its interests
were at stake?
◊ "Notice is adequate if the changes in the original plan are in character with the
original scheme and the final rule is a logical outgrowth of the comments already
given"
◊ if the final rule materially alters the issues involved in the rulemaking or if the final
rule substantially depart from the terms of substance of the proposed rules, the
notice is inadequate.
NOTES:
- Relevant inquiry is whether or not potential commentators would have known that an
issue in which they were interested was on the table and was to be addressed by final
rule.
- FACTORS to determine the adequacy of a NPRM:
1) Determined by a close examination of the facts of the particular proceeding
2) Rule will be invalidated if no notice was given of issue addressed by final rules
3) Inadequate where an issue was only addressed in the most general terms in the initial
proposal, or where a final rule changes a pre-existing agency practice which was only
mentioned in an NPR in order to place unrelated changes in the overall regulatory scheme into
their proper context
4) Crucial issue - whether parties affected by a final rule were put on notice that their interests
were at stake
- Whether or not potential commentators would have known that an issue in which they
were interested was on the table and was to be addressed by a final rule
- One way an agency can both set forth specific proposals in an NRPM and retain flexibility in
fashioning the final rule is to include in the NPRM several alternatives that are under considerations
- A related approach would be for the agency in addition to its specific proposal, to pose a series
of questions going beyond the terms of the proposal on which it seeks comment

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 of questions going beyond the terms of the proposal on which it seeks comment
A. Opportunity for Comment:
- The purpose of NPRM is to enable interested persons to comment on proposed rule, 553c
requires agencies to provide interested persons an opportunity to comment through
submission of written data, views, or arguments
- It does have a requirement that final rules be published 30 days prior to their effective
date – sometimes misinterpreted as mandating 30 day comment period

Ex Parte Communications:
- Ex parte communication: APA places specific prohibitions on ex parte communications for
formal rulemaking. communications made to decision makers in the agency outside of the
prescribed and public procedures
- 553 doesn’t ban ex parte communications for informal rulemaking
o Congress could have if it wanted to but didn’t
- 2 Perspectives on ex parte communication
- RULE: When private parties/lobbyists attempt to communicate with agency officials off the
public record, then
1. Communications received before formal notice need not be included in public record,
unless communication formed basis for agency action,
2. Once notice of proposed rulemaking issued, all agency officials should refuse to discuss
rulemaking proceedings with interested parties, AND
3. If ex parte communications occur, their documentation should be placed in the public
file immediately  advises use of caution
- HBO v. FCC
DC Circuit, agency initiated rulemaking about cable TV standards, accepted comments through
end of the comment period, then solicited and received hundreds of off record
communications from cable companies, court found final rule void
- DC Circuit feels it is inconsistent with process of 553 for there to be secret ex parte
communications with agency decision makers
- Once a NOPR has been issued, any agency official who is or may reasonably be expected to be
involved in the decisional process should 'refuse to discuss matters relating to the disposition
of a rulemaking proceeding with any interested private party"
- Can't be two different paths of information, one open and then one secret.
- RULE: Agencies in rulemaking
 1) May accept comments submitted after the comment period without giving notice, and
refuse to docket such late comments if they are not of central relevance to the
rulemaking,
 2) May have off-record meetings after comment period with lobbyists and politicians,
and refuse to docket transcript of such meetings i f they’re not of central relevance, AND
 3) May have off-record meetings with other executive branch officials and must not
docket those meetings transcripts unless information or data from them formed the
basis for the rule
- Sierra Club v. Costle, p116 – when the EPA lowered emissions standards after accepting post-
comment period comments, and then having off record meetings with lobbyists, politicians,
and the president, environmentalists challenged the rule’s procedural validity
 The attitude that the court brought here was totally different than that which they had
in Home Box Office (rules were much stricter)
o Reverses HBO v. FCC effectively
 Naturally people are going to want to meet, its part of the process, docketing
requirement allowed the public to find out
 Typically this is given more weight because it reflect intervening SC case decisions.
Statement of Basis and Purpose
- After receiving comments from interested persons, §553c requires agencies after consideration of
relevant matter presented to incorporate in the rules adopted a concise general statement of their
basis and purpose
- The agency’s explanation for its action, supported by information in the rulemaking record, is the
basis upon which courts review the substantive rationality of the rule
o To skimp on the statement of basis and purpose, effectively limits the ability of the agency
later to justify the rule if it is challenged in court

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 later to justify the rule if it is challenged in court

3. Hybrid rulemaking procedures

- Rare for agency to only have APA rulemaking procedural requirements
- Look to other sources of requirements, organic act, agency rules
- Consider:
- 1) What triggered the rulemaking?
- 2) What analysis must the agency undertake?
- 3) Is the agency’s compliance with the analytical requirements subject to judicial review, and If so,
what relief can the court grant to plaintiffs?
- Pre-judgment TEST - agency member should be disqualified only when there has been a clear and
convincing evidence of a closed mind.
o Merely commenting about an issue that will come up in rulemaking isn’t enough..
- T0 – time when idea emerges, T1 is the first leap by publishing notice of proposed rulemaking, T2 – agency
first adopts the rule, T3 – judicial review
□ In between - agency may have to tell public that its thinking about making notice
□ 555 of APA requires some notice before the first leap
- Notice that the agency considers beginning a rule, Look before you leap, The costs of
information gathering are usually less than the costs of recovering from a bad decision
- Hybrid Rulemaking – addition of procedures somewhere along the timeline amounts to a series of
additional points at which the agency is required to stop and reflect on what the agency is doing –
somewhere between formal and informal – uses formal esque procedures – only proper when specifically
provided for
o Vermont Yankee – no more judicial addition of stopping points, but Congress can and does still
add procedures for individual agencies
o Focus on time between T0 and T1 – what is it that the agency ought to do and think about
before it publishes?
o Sources of additional requirements
 Congressional Enactments – outside the APA
 Executive Order – applies only to executive agencies, not agencies whose decision
making authority is directly vested in people not under the power of the president
 Agency Regulations
- Statutory hybrid v. Executive hybrid
o Congress may make agency compliance subject to judicial review
o Executive orders always have provision that eliminate judicial review, solely a matter of the
business of the executive branch
- If an agency fails to follow its own regulations than that is subject to judicial review because it is
arbitrary and capricious.
- Ossification of rulemaking - Academic debate over whether the increased accountability imposed by
Congress and the President have greater costs, in terms of slowing down the rulemaking process, than
benefits, in terms of making agencies smarter about the rules they promulgate
- NEPA, Regulatory Flexibility Act, Paperwork Reduction Act, Unfunded Mandates Reform Act, Data
Quality Act – p127-126

4. Negotiated Rulemaking
- Negotiated Rulemaking – an agency and other parties with a significant stake in a rule participate
in facilitated face-to-face interactions designed to produce a consensus
o Together explore their shared interests and differences of opinion, collaborate in
gathering and analyzing information, generate options, and bargain and trade across
these options according to their differing priorities
o If a consensus is reached, its published in the Federal Register as the agency’s notice of proposed
rulemaking, and then the conventional review and comment process takes over
- Occurs between T0 and T1 – work it out with the key players before notice
o Doesn’t excuse compliance with APA, but makes it easier
- FACTORS - when it makes sense to try to negotiate the outcome of a rule
o Issues should be mature and ripe for decision
o Issues should not be such that would require participants to sacrifice their fundamental tenants
o Interests significantly affected should be such that individuals can be selected who will adequately
represent those interests
Growing interest in Alternative Dispute Resolution and it's applicability to rulemaking

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 represent those interests
- Growing interest in Alternative Dispute Resolution and it's applicability to rulemaking
- Susskind reading
- The government's efforts to limit agency discretion have increased the time and cost involved
in rulemaking.
- Negotiated rulemaking may be a solution to the increased delays and costs.
- Funk Reading -Regulatory negotiation
- Agency is in the negotiations simply to give effect to the agreement
- Regulatory negotiation substitutes a private law remedy with a public one

A. Judicial Review of RULEMAKING

- All federal officers are bound by the constitution to follow the laws of the US.
- Courts review agency actions alleged to be substantively unlawful either because agency has incorrectly
interpreted governing statute or because agency’s decision is arbitrary and capricious
Ambiguous Rules (page 398)
- A regulated entity may be subject to an enforcement action under circumstances it did not anticipate
- If the enforcement occurs in a judicial forum, the court will interpret the meaning of the regulation
with possible issues of deference to the agency if the agency has expressed an interpretation of the
regulation
- If the enforcement occurs in an agency adjudication, the agency interprets the regulation
• TEST: whether the regulation itself, or other agency statements that might have been issued to explain the
regulation, give the party acting in good faith enough to identify what was required/prohibited with
ascertainable certainty.
- Test for due process issues
General Electric Company v. U.S. Environmental Protection Agency – when the EPA fined a polluter under a
creative interpretation of its regulations, the polluter claimed the fine violated due process
 After this decision can GE bring an enforcement action for other companies at that time? No – they
lacked ascertainable certainty for activities before the case, but for activities after the case may be fined

Statutory Interpretation
§706 – To the extent necessary to decision and when presented, the reviewing court shall decide
all relevant questions of law, interpret constitutional and statutory provisions, and determine the
meaning or applicability of the terms of an agency action
1.
Compel agency action unlawfully withheld or unreasonably delayed, and;
2.
Hold unlawful and set aside agency action, findings, and conclusions found to be:
-
(A) Arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law
-
(B) Contrary to constitutional right, power, privilege, or immunity
 De novo review
- (C) In excess of statutory jurisdiction, authority, or limitations, or short of statutory right
- (D) Without observance of procedure required by law
 Compliance with §553 procedures and rulemaking
 De novo review
- (E) Unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise
reviewed on the record of an agency hearing provided by the statute; or
- (F) Unwarranted by the facts to the extent that the facts are subject to trial de novo
• When there is a claim that an agency is acting not in accordance with a statute:
o When there is an argument over the meaning of the statute it is the job of the court to resolve it and
neither party gets particular deference unless there is a special base line…
Chevron 2 Step: If an agency’s interpretation of its enabling statute is challenged, reviewing courts must
1) Determine if the statute clearly requires or forbids the agency’s interpretation… then
2) If the statue is ambiguous, courts must uphold the agency’s interpretation if it is a permissible
construction of the statute
o 1) Did Congress itself resolve the precise question – is there one and only one plausible
interpretation? Job solely for the court to interpret – determine if Congress definitively resolve the
issue, did they define the terms
 Yes – then that must be adopted, if the agency has adopted a different interpretation then its
interpretation is unlawful
 No – two or more plausible constructions of the statute, then proceed to step 2 - deference
o 2) If the statute is silent or ambiguous with respect to the specific issue, the question is whether the
agency’s answer is based on a permissible construction of the statute – agency can choose any

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 agency’s answer is based on a permissible construction of the statute – agency can choose any
interpretation among a range of reasonable alternatives
 Must be a plausible construction – doesn’t matter which the court prefers
o *** Chevron itself involved a formal rule – if an agency adopted formal rule with NC, then the 2 step
applies BUT there is disagreement as to whether if an agency adopts construction of statute by other
means – whether that’s entitled to chevron or Skidmore??
Chevron v. Natural Resources Defense Council, Inc. – when the EPA interpreted the Clean Air Act to allow
polluting factories to add new equipment while keeping pollution levels constant, environmentalists claim
Act should be interpreted to reduce pollution – SC found COA erred because the mandate was ambiguous,
COA’s failed to consider whether the EPA construction was permissible instead imposed its own reading
Factors court will consider in determining step 1
 The statutory text – words of the statute – you enact a document not purposes or intentions –
evaluating what the words say is the key first step
 How has the statutory text changed during the course of consideration – what was the motivation
behind the changes
 Plain meaning – dictionary definitions
 Cannons of constructions - construe a statute to avoid a constitutional problem
 Legislative History – history of the voting, reports on committees, statements by legislators,
comments from executive branch agencies
- Many courts will use the legislative history to clarify general ambiguity
- Some feel its improper because Congress doesn’t enact legislative history, or intentions, or
committee reports, only the text is law, nothing else

Substantive Decisions
- When an agency promulgates a rule, it reaches two types of substantive decisions:
o First – determines on the basis of available evidence what the relevant facts are
o Second – decides what type of rule, if any, is appropriate in light of those facts

Scope of Review
- 706 states the substantial evidence standard applies when an agency must comply with §§556-557 which
involves formal rulemaking
o Arbitrary and Capricious scope applies to informal rulemaking
o Litigants must check an agency’s statutory mandate to determine whether it imposes a different
scope of review on the agency’s rulemaking
- Substantial Evidence – instructs the court to uphold a rule if it finds the agency’s decision to be reasonable or the
record contains “such evidence as a reasonable mind might accept as adequate to support a conclusion”
- Arbitrary and Capricious – standard of review, used to be deferential but now is like the substantial evidence
standard
o 1) Failure of the agency to explain its decision adequately (see below for more)
o 2) Failure to take account of key facts or alternatives
o 3) To arrive at an irrational or implausible decisions
 If the agency’s decision is one that could not have been what congress authorized (limited to
reasonable/plausible choices)
 No rational connection between the findings and the conclusions
- Hard Look Approach - The current approach (post Overton Park) to judicial review of agency rules, legislative
rules adopted under §553… stresses thorough, probing review
o Did the agency itself take a hard look at facts, and reason about those facts to come to a conclusion
o Did the court take a hard look at how the agency made its decision?
o Used to deal with the overlap between substantial evidence and arbitrary and capricious standards
o Applies to informal rulemaking and informal adjudication

Rulemaking Record
- 706 requires court review the whole record when determining whether to affirm a rule
- Facts: In a formal agency adjudication, as well as in court trials, the nature of the facts in issue usually relate to
what happened in the past, in rulemaking the facts in issue relate to what will happen in the future – thereby
justifying a regulation to prevent it

Adequate Explanation
- Requirement that agencies provide adequate reasons for adoption of the rule

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 Adequate Explanation
- Requirement that agencies provide adequate reasons for adoption of the rule
- When an agency lacks “adequate reasons” its action is “arbitrary and capricious”, court will normally remand a
rule to an agency rather than declaring it to be invalid
- When an agency hasn’t provided adequate explanation, even if court itself could discern an adequate
explanation from record, court should remand the case back to the agency

- RULE: Agencies’ rescission of their own rules are reviewable under the arbitrary and capricious standard,
meaning they must be rational, based on relevant considerations, and within the agency’s statutory authority
o Motor Vehicle Manufacturers Assoc. v. State Farm Mutual Automobile Inc. Co. p175 – when an
agency first enacted a rule that cars be equipped with airbags or passive seatbelts, then rescinded
the rule, an auto insurer challenged the recession as arbitrary capricious… failure to consider
alternatives was arbitrary and capricious

1. Statutory interpretation
- Agencies interpret statutes in determining what type of rule to adopt, these interpretations are
subject to judicial review under 706
Chevron v. NRDC
- Strong agency deference to interpreting it's organic act
- Chevron two-step
- Step one, court determines whether the statute clearly requires or forbids agency's
interpretation (i.e. is the statute ambiguous If so the agency has wiggle room and the court
should give deference).
- Step two, the court determines whether the agency's interpretation is reasonable or
permissible. Deference is given in step 2.
1. Substantive Decisions
- When an agency promulgates a rule it reaches 2 types of substantive decisions
1) Determines on the basis of the evidence available, what are relevant facts
2) It decides what type of rule is appropriate in light of those facts choosing the regulatory
option that will best further its statutory mandate.
- Judicial review of substantive decisions under 706 involves 3 issues.
1. Scope of Review
- Formal rulemaking: 556,557requiresubstantial evidence
- Informal rulemaking: arbitrary or capricious
- Although the court has traditionally said that "arbitrary and capricious" was more lenient, it
has never defined the difference between the two standards
2. Rulemaking record
- Court is required to review the entire record under 706
- What is the "entire record"?
- No record required by APA for informal rulemaking
- In Overton Park, SC defined "record" for informal proceedings to be the information that
the agency actually considered in making the decision
3. Adequate explanation
- Agency must provide adequate reasons for adoption of the rule
- Overton Park
- "At most OP suggests that706(2)(A)which directs a court to ensure that an agency action is not
arbitrary and capricious or otherwise contrary to law , imposes a general 'procedural'
requirement of sorts by mandating that an agency take whatever steps it needs to provide an
explanation that will enable the court to 3evaluate the agency's rationale at the time of
decision"
Motor Vehicle Manufactures Assoc v. State Farm Mutual Automobile Ins.
- Application of "hard look review"
- an agency rule would be arbitrary and capricious if (multifactor test)
- agency relied on factors which congress has not intended it to consider
- Entirely failed to consider an important aspect-offered an explanation for its decision that runs
counter to evidence
- is so implausible that it could not be ascribed to a difference in view or the product of agency
expertise.

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expertise.

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Adjudication Outline:
Sunday, April 24, 2011
8:23 PM

Chapter 3:
Rulemaking’s Impact on Adjudication Rights
- Statutes or regulations may give individuals a right to formal adjudication of a dispute before an agency
BUT by adopting a legislative rule, an agency may be able to restrict the scope of such rights
- RULE: If the rule is in place, cannot use adjudication to challenge the factual basis for the adoption of the
regulation in the first place – Storer Broadcasting, p335
o Agency has no duty to hold a formal adjudicatory hearing if there were no material facts to be
resolved in such a hearing

A. Introduction
- APA defines adjudication as the process for formulating an order
- One major caveat is an investigation, which is neither a rulemaking or an adjudication, but where
the agency is seeking information
- 555 sets minimum requirements for any agency action, and that includes adjudication
- representation, right to appear before the agency
- right to have matter concluded in a reasonable time
- several others relating to evidence, subpoenas, notice of denial
- reasonable time for notice and time to achieve compliance
- An agency's informal adjudications can be subject to the Due Process clause
- 5th, 14th amendments
B. Formal or Informal Adjudication
- Adjudication as distinct from rulemaking, involves application of existing regulations.
- Any agency process that results in final disposition, which is not rulemaking, must necessarily be
adjudication
- Adjudication = anything that is not rulemaking
- Formal – APA 554, 555, 556, 557
- Informal – APA 555 - the right in any proceeding to be represented by counsel or other qualified
representative… requires agencies to conclude matters within a reasonable time, and give prompt
notice of the denial with brief statement.

○ SC has not established a controlling test to determine when section 554requires an agency to use formal
adjudication.
- Marathon Oil v. EPA
- Even when a statute requires a hearing, if the nature of the proceeding is one for determining
facts and applying the law to them, the language of section 554 is triggered.
- Do the proceedings under review fall within that category of quasi judicial proceedings
deserving of special procedural protections??
3 Perspectives on what a “hearing” requires between formal and informal
A. 7th Circuit 1983 - RULE: APA 554 specifies that the governing statute must satisfy the on the
record requirement…. There is no presumption in favor of a formal hearing – without those 3
words congress must clearly indicate its intent to trigger formal hearing.
- City of West Chicago v. NRC
- the plaintiff contends that the defendant violated the Atomic Energy Act of 1954
by denying its request for a formal, trial-type hearing
- A formal adjudication is not required if a statute does not use the words "hearing
on the record".
B. 1st 1978 - Use of the word hearing should be presumed to mean full blown formal AH under
554 of the APA  require formal adjudication
- Seacoast Anti Pollution League v. Costle
- environmental groups challenged decision made by EPA after public service
company applied to EPA for permission to discharge heated water from nuclear
generator into gulf of Maine – overruled by west Chicago
Unless a statute otherwise specifies, an adjudicatory hearing subject to judicial

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 generator into gulf of Maine – overruled by west Chicago
- Unless a statute otherwise specifies, an adjudicatory hearing subject to judicial
review must be on the record
C. DC Circuit 1989 - If hearing isn’t defined in the statute and you cant conclude based on
analysis of the statute that Congress legislated one and only one meaning of “hearing” then
you go to step Chevron 2
- Chemical Waste Management, Inc. v. U.S. Environmental Protection Agency, two
waste management companies seek review of EPA regulations that establish informal
procedures for administrative hearings concerning the issuance of corrective action
orders -
- court applied Chevron 2 step to this case because didn’t define “hearing”
- Held that EPA had "provided a reasonable explanation for its choice of informal
procedures based on the number and nature of factual issues expected in a typical
proceeding"
- This approach seems to have won the day!!!
- Notes:
1. Should Chevron deference apply to the issue of whether an agency is required to use formal
adjudication?
2. Because of the potentially significant differences in procedural protections afforded person
under formal and informal adjudications, one might hope Congress has given a logical basis
for when it requires one and when it does not. However, this is not the case.
- There is little rhyme or reason behind which proceedings must be formal and which may
be informal
C. Adjudicatory Procedures
1. Notice
- 554b requires that the proceeding begin with notice that includes the time place and
manner of the hearing; the legal authority and matters of act and law asserted by whoever is
bringing the proceeding.
- Defendant is usually required to reply to notice with issues controverted in fact or law
2. Intervenors
- Many adjudications are of major consequence, setting precedents for future cases and for all
practical purposes, establishing agency rules
- Not uncommon for persons not parties to want to participate
- 555(b) as far as orderly conduct of public business permits, an interested person may appear
before an agency" in a proceeding
- Applies to all agency proceedings, very permissive standard
- SC has not declared a standard to control when a person can intervene as a party
- DC circuit has
◊ Office of Comm. Of United Church of Christ v. FCC
- Held that if a person has standing to appeal the decision of the agency, as a
matter of the case and controversy requirements of the constitution, the
person has a right to intervene
- May not hold in all cases, NRC has different requirement in organic statute
- Envirocare v. NRC
◊ Provision that allowed NRC to admit any person as a party in a hearing "whose
interests may be affected by the proceeding"
3. Settlement
- APA always provided that there should be an opportunity before a hearing for the parties to
settle or adjust their dispute - §554, 556(c)(6)
- ADR is always voluntary
4. Admin law judges
- 556(b) at hearing, 1 of 3 entities must oversee the taking of evidence
1. the agency
2. one or more members of the body that comprise the agency, or
3. ALJ - (same types of authorities and responsibilities as a federal judge in a trial without
a jury.)
- Formal – ALJ, informal – AJ
- AJ is not protected by the agency
ALJ functions like a judge but is not independent, is an employee of the agency

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 AJ is not protected by the agency
- ALJ functions like a judge but is not independent, is an employee of the agency
o APA envisions the possibility that the head of the agency would run the hearing –
not reality… Head of the agency or members of commissions or boards are not
forbidden from participating in the adjudicatory or prosecutorial functions
o Inherent tension because the ALJ is an employee of the agencies, agencies want
ALJs to move things along, what the agency sees as poor performance the ALJ
sees as appropriate judicial thought
o Agencies aren’t allowed to rate, evaluate, discipline, reward, punish, or remove
the ALJs who work for them – performed by the Merit Systems Protection

- 557b ALJ either decides the case or recommends the agency make a decision
- -Separation of functions
- Provisions requiring "an internal separation of the functions between the agency
officials who hear and decide those who investigate and those who prosecute"
- Describes agency norm that personnel should not participate in the decision of cases
that they have helped to investigate
A. Institutional separation of functions
i) 554d of the APA requires the institutional separation of an agency's law
enforcement officers from its ALJs
B. Separation of functions limitations on ALJs in formal adjudicatory proceedings
- 554d1 provides that an ALJ presiding over a formal adjudicatory hearing may not
"consult a person or party on a fact in issue, unless on notice and opportunity for
all parties to participate"
- No consultation rule applies only to the ALJ and is limited to consultation
regarding "a fact in issue"
- Exception to act w/o notice for adjournments, continuances, paper filings
C. Separation of functions limitations on agency law enforcement personnel in formal
adjudicatory proceedings
- 554d provides that agency personnel who prosecute or investigate a case "may
not in that or a factually related case participate or advise in the decision"

5. The "Split-Enforcement arrangement"

- Head of an agency can engage in both prosecutorial and adjudicative functions, but in two
instances Congress has separated these functions by adopting a split enforcement model
- OSHA and OSHARC – separate agencies bring the complaint and decide the ultimate
disposition
- OSHA, Mine Safety and Health Administration
- Special review commission (OSHRC)
- Adjudicates if a person has violated OSHA
- OSHRC is the ALJ employer
- OSHRC stands in the position of the agency under sections554, 556, 557
6. Burden of Proof
- proponent has the burden of proof
- Burden of persuasion rather than burden of production – need preponderance of evidence
for adjudication
- 556d Agency's decision must be supported by and in accordance with the reliable, probative
and substantial evidence
- Substantial evidence refers not to the quantity but the quality
- Must at least meet the preponderance of the evidence test from civil cases
- Hearsay is permitted – commonly entered, can be deemed sufficient to meet burden of proof
and satisfy the sufficient evidence test… as long as it is not irrelevant, immaterial, or unduly
repetitious
7. Testimony and documents
- APA permits parties to present their case by oral or documentary evidence, to submit rebuttal
evidence, and to conduct cross examination
8. The record and Ex parte communications
- 556e The transcript of testimony and exhibits together with filed papers constitutes the
exclusive record for decision

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 exclusive record for decision
- To protect the exclusivity of the record as the basis for the decision, the APA PROHIBITS ex
parte communications during APA adjudications.
9. Appeals
- ALJ makes either a recommended (Agency reserves the right to review) or initial (agency must
demand review) decision for the agency, decision includes findings of fact and conclusions of
law, the reasons or basis for those findings and conclusions, and the appropriate order
- Decision itself becomes part of the record
- ALJ makes a final decision or recommendation if the initial decision is not appealed by a party
or an agency official decides to review it.
- Parties can submit proposed findings and conclusions supporting their case
- These are internal agency appeals
- Appeals within an agency are not in the nature of appellate review, instead APA states that
the agency has all the powers which it would have in making the initial decision
- Appeals board or agency head decides the case de novo
- The agency cannot appeal it's own decision
- Private party may seek judicial review under the APA or the agency statute that provides for
it.
10. State adjudication
- Adjudication in most states mirrors the federal mode
11. Applying Adjudicatory procedures
- RULE: An ALJ may not sua sponte raise an issue that was not previously raised in the
complaint, briefs, or oral argument, and when no evidence was presented concerning the
issue
- When a hearing is broader in scope than the notice provided, it has been held that there
may not be a subsequent challenge of issues that are actually litigated as long as there
has been actual notice and an adequate opportunity to cure surprise
- NLRB v. Local Union 25
- p220 – worker filed a complaint alleging the union had engaged in unfair labor
practices by failing to provide him with referrals because he wasn’t a union
member, ALJ found for the union, but ALJ went beyond the complaint to consider
the legality of the CBA
- Judge found some stuff sua sponte
- case cannot stand because the D's did not receive notice.
- RULE: The purpose of the notice requirement is satisfied if the party proceeded against
understood the issue and was afforded full opportunity to justify his conduct, even if the legal
standard for adjudicating his conduct changed during the course of the hearing
- The important consideration in permitting an agency to rely on a new theory is the
respondent’s opportunity to present an argument
- Generally entitled not to have theories switched on you mid stream
- -Southwest Sunsites v. FTC-
- p221 the FTC found that the defendants violated the FTC Act by engaging in unfair
and deceptive practices in their sales of undeveloped land – new standard was
actually more difficult to prove a violation under, SW’s argument had no notice
fails
- P's contend that application of a new standard violates the APA.
- New standard was not substantially different that prevented an opportunity for
the D's to respond
- Commission did not violate the APA
- RULE: high degree of flexibility for forgiving shortfalls of notice if the shortfalls don’t really
effect the delivery of notice… where there is prejudice it will matter
- Copanos v. FDA
- drug manufacturer challenges FDA’s decision to withdraw its approvals of
manufacturer’s applications for new drug products… Granted summary judgment
because there was a lack of prejudice – they may have had to read all the
violations, but they knew what the issue was.
- FDA published notice in the register proposing to withdraw the drugs b/c of
inadequacies , and then followed through

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 inadequacies , and then followed through
- "requirements of due notice depend on the context of the agency's action"
- D's were not confronted with ambiguity regarding the type of information that
would warrant a hearing before the agency
- RULE: When ALJ goes outside the testimony adduced at hearing in making decision, ALJ must
afford claimant the opportunity to comment and present evidence, and opportunity to cross-
examine authors, and must reopen hearing if requested
- Wallace v. Bowen
- – p226 – the plaintiff challenged the ALJ’s decision denying him disability benefits
based upon medical reports obtained outside of his hearing which he was unable
to cross-examine – court found that ALJ’s reliance
- Wallace found not disabled, claims he couldn't not cross examine expert medical
reports, denied due process
- secretary may not rely on post-hearing reports w/o giving the claimant an
opportunity to cross examine the authors
1.
D. Ex parte communications
- APA prohibits ex parte communications during formal rulemaking but not for informal rulemaking

- Exclusivity of the record created in the proceeding is what marks formal adjudication
- Ex Parte Communication – Means an oral or written communication not on the public record with
respect to which reasonable prior notice to all parties is not given, but it shall not include requests
for status reports on any matter or proceeding covered by this subchapter … From someone to an
adjudicatory decision maker
o There is a comparable provision that prohibits an ALJ from consulting a person or party
on a fact in issue unless on notice and opportunity for all parties to participate
- If the objective is to have a closed record, then that would be undermined if the decision maker
were free to augment the record ex parte
- Even if APA doesn’t apply, sometimes ex parte communication can violate due process
- Don’t want agencies to be sealed from the industries – not all communications are problematic –
issue of line drawing

Ex Parte
- §551(14) – oral or written communication not on prior record…
- §557d – applicable to prohibition, addressing ex parte communications from outside the
agency – no interested person outside the agency shall make a communication to the decision
maker relative to the merits
- §554d – separation of functions– applicable to persons within the agency who play specified
roles
- Evidence taker may not consult a person or party on a fact
- Employee or agent investigating or prosecuting may not participate or engage in the
decision
- Formal agency adjudication should be based solely on the record compiled by the ALJ

- RULE: When agency proceedings have been blemished by ex parte communications, a court must
consider whether, as a result of the improper ex parte communications, the agency’s decision
making process was irrevocably tainted so as to make the ultimate judgment of the agency unfair
o Factors for irrevocably tainted
 1) Gravity of ex parte communications,
 2) Whether contracts may have influenced the agency’s ultimate decision,
 3) Whether party making improper contacts benefitted from agency’s ultimate
decision,
 4) Whether the contents of the communications were unknown to opposing
parties, who had no opportunity to responds
 5) whether it would be useful to remand.
o Ex parte communication should be disclosed if:
 1) The person is an interested party – greater interest than general public
2) Communication is relevant to the merits of the proceeding

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  2) Communication is relevant to the merits of the proceeding
 3) Communication threatens interests of openness and effective response
- Professional Air Traffic Controllers Organization v. Federal Labor Relations Authority
- PATCO challenged the FLRA’s revocation of PATCOs status as exclusive bargaining
representatives for the air traffic controllers after PATCO called a nationwide strike against
the FLRA… court found that mechanical rules have little place in judicial decision whether to
vacate an agency proceeding, instead the focus should be on the integrity of the process and
fairness of result
- ALJ had several ex parte communications with a union during formal adjudication
- 557d prohibits communications relevant to the merits of the proceeding by an
interested person.
- 557d provides two remedies
i) Disclosure of content discussed
ii) Requires the violating party to show cause why his claim or interest in the
proceeding should not be dismissed denied or adversly affected.
- Ex parte communications do not void an agency's decision
◊ but make voiding the decision a potential action.
- RULE: Only the introduction of new and material information by means of ex parte communications
to deciding official in administrative proceeding undermines public employee’s constitutional due
process guarantee of notice and opportunity to respond.
- Factors: whether ex parte communication merely introduces cumulative information or new
information, whether employee knew of error and had chance to respond, whether
communications likely to result in undue pressure
- Stone v. FDIC -- the plaintiff sought review of decision upholding his termination from
employment, claiming that harmful error occurred in removal proceedings because the
deciding official received ex parte communications – court found for the plaintiff
- EE made false requests for leave, fired, ex parte comm during appeal
- Essential requirements of due process: Notice and an opportunity to respond
- Introduction of new and material information by means of ex parte communications to
the deciding official undermines the public employee's constitutional due process
guarantee of notice
- But, material not new here, so no DP violation.

E. Due Process Hearings

- When APA procedures do not apply, must look to other statutes that may provide certain
procedures
- Usually agencies will have adopted procedural regulations governing
- Due Process – no person shall be deprived of life, liberty, or property without due process of law,
requires the government to hold some type of hearing before it deprives an individual of life, liberty,
property based on the resolution of disputed factual issues
- 5th Amendment – federal government
- 14th Amendment – state and local governments
- Two types of Due Process: Substantive and procedural
- Substantive – traditionally discussed in courses on con law
- Procedural – issues 1) whether the clause applies at all; 2) assuming the clause applies, what
procedures are required
- Admin law is generally procedural,
- Due Process applies if: Individualized decision making AND deprivation of a property or liberty
interest
- Generally, DPC requires the gov't to hold some type of hearing before it deprives an individual
of life liberty or property
- Not to policy based deprivations affecting a class of people

1. Individualized Decision making

- Court distinguishes between individualized deprivations of life liberty and property, which
require due process, and those of a class which do not.
RULE: Key is whether person is exceptionally affected in the case on individual grounds
Londoner v. Denver- a landowner challenged a tax assessed by the city to his property for

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 RULE: Key is whether person is exceptionally affected in the case on individual grounds
- Londoner v. Denver- a landowner challenged a tax assessed by the city to his property for
improvements to a street which abutted his land
- Where a legislature delegates authority to assess taxes, due process of law requires
that, before tax becomes irrevocably fixed, taxpayer have notice and opportunity to be
heard
RULE: where a rule of conduct applies to more than a few people, it is impracticable that everyone
should have a direct voice in its adoption
- Bi-Metallic Investment Co v. State board of equalization - a property owner brought suit to
enjoin an order increasing property values by 40%, thereby increasing tax obligations, because
the plaintiff was not given an opportunity to be heard as it claims is its constitutional right
- Where a rule of conduct applies to more than a few people, it is impracticable that
everyone should have a direct voice in its adoption
- Distinguished Londoner as being a relatively small number of persons.
- Distinction between this case and Londoner draws on three factors
1. Number of person affected
2. Extent of the impact on each person
3. Factual basis for determining the impact on each person
- The fact that it might disparately effect members of large group doesn’t give special
protections to those more severely effected

2. Protected interests
- Sources of liberty or property
o Liberty is inherent in the Constitution itself- “Liberty denotes contract, engage in the
common occupations of life, knowledge, marry, children, religion”
o Property –framers intended to build into that term the content with reference to the
history of what we understand property to be
 Neither importance nor unilateral expectation is sufficient
1. Property Interest
- Citizens have an expectation that entitlements, like private property, are protected by
the government’s obligation of due process
- Particularized act of state power to deprive someone of something – must be either
liberty or property, otherwise government is constitutionally free to deprive you of it
without any procedures
RULE: a person must have legitimate claim of entitlement in order to have property interest
in benefit, and right to procedural due process - the fact that its important doesn’t make it
property, person must have government actions/rules that support the expectation… more
than a unilateral expectation
- To determine if DPC applies, court must find deprivation of life, lib, prop
- Board of regents v. Roth- p257 an assistant professor brought suit against the
university for a violation of his 14th amendment rights after his employment contract
term expired and he was not subsequently rehired for a new term, name can be
considered property – didn’t have the right to due process
- Faculty appointment for one year, released after that year
- suit brought, alleging no notice, due process violation
- To have a property interest in something a person must have a legitimate claim of
entitlement to it.
- Perry v. Sinderman
- Court buys the notion that more process is required when someone has been lead
to believe the contract will be renewed
- Wisconsin v. Constantineau
- Govt action that adversely affected a person's reputation might be a denial of
liberty w/o any adverse impact on the individual's job opportunities
2. Liberty Interest
- All those privileges long recognized as essential to the orderly pursuit of happiness by
free men
- Gov't action that adversely affects a person's rep might be a denial
- includes when it denies or revokes a person's professional license
RULE: For stigma cases, reputation is not sufficient… reputation alone apart from some more

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 includes when it denies or revokes a person's professional license
RULE: For stigma cases, reputation is not sufficient… reputation alone apart from some more
tangible interest, is neither liberty nor property by itself sufficient to invoke the procedural
protection of the DP
- Stigma Plus TEST - in order to trigger due process protections, the government action
not only must harm person’s reputation, but must also subject individual to some other
disability - loss of a job or the ability to purchase alcohol
- Paul v. Davis 261 – man identified in police flyer naming potential shoplifters, it was
circulated to local merchants, he brought an action claiming he was impermissibly
deprived of some liberty protected by the 14th – court found against him because he
lacked interest harmed other than reputation
- Flyer distributed with mug shots of "active" shoplifters, Reputation alone apart
from some more tangible interests such as employment, is not enough to make a
due process claim
- Stigma-plus test

Prisoner Cases:
- Morrissey v. Brewer-parole system creates entitlement to liberty if meet required
conditions
- Wolff v. McDonnell -Good time credit system creates a liberty interest in credits
- Sandin v. Coner-Due process protects against atypical and significant hardship, but not
ordinary prison discipline

RULE: An employee’s liberty interest is implicated where the employer levels accusations at
the employee that are so damaging as to make it difficult or impossible for the employee to
escape the stigma of those charges
- Stigma been found where employer accuses them of dishonesty, immorality, criminality,
racism.
- Shands v. City of Kennett- four firemen were fired for insubordination and misconduct,
and they allege that their due process rights were violated because they were not given
a hearing – court found DP not deprived because only 1 official made statements about
them and it was politically correct
- A gov't EE is entitled to procedural due process in connection with being
discharged from employment only when he has been deprived of a
constitutionally protected property or liberty interest
- City official claimed in an interview the EEs were insubordinate
- Court holds these statements did not create the level of stigma required to
implicate a constitutionally protected liberty interest.
- No stigma plus here
- RULE: For due process to apply there must be some fact in dispute
- Codd v. Velger- – plaintiff alleged he had been wrongly dismissed without hearing or
statement of reasons after material was placed in his file that he held a gun to his head
in an attempted suicide – didn’t assert that report was false, court found no factual
dispute
- Must be some factual dispute between an employer and a discharged employee
which has some significant bearing on the employee’s reputation in order for a
hearing to be mandated under DP
- No dispute of facts = no hearing
- Dissenting opinion
- The purpose of a hearing is twofold
1. To establish the truth or falsity of the charge
2. To provide a basis for deciding what action is warranted by the facts.
3. What Hearing Procedures Must Be Used?
- SC requirements for a hearing:
o Timely and adequate notice detailing the reasons for proposed
termination
o Effective opportunity to defend by confronting and cross-examining
adverse witnesses, present own arguments and evidence orally
Right to be represented by counsel, but not to have counsel provided

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 adverse witnesses, present own arguments and evidence orally
o Right to be represented by counsel, but not to have counsel provided
o Decision that rests solely on the evidence adduced at the hearing
o An impartial decision maker, with statement explaining decision and
evidence relied upon
- TEST for determining process due – whether or not evidentiary hearings are required
o 1) Importance of the interest of the individual
o 2) Considering current procedures, what is the risk of an erroneous
determination under current procedures (or, degree of increased accuracy if
additional procedures were implemented)
o 3) Government interest re: additional cost of more procedures
 Procedure is not free—recognizes the frequent truth that there are only so
many resources, so for every dollar we spend on procedure there is going to
be one less dollar for actual benefits
- Matthews v. Eldridge- a disabled worker filed suit after his disability benefits were terminated
without evidentiary hearing, claimed that due process requires pre-termination hearing - An
evidentiary hearing is not required prior to the termination of disability benefits under 5th
amendment due process clause
- The Matthews Balancing test
- Interests of individual + Risk of deprivation VS. govt interest in reducing costs.
- Matthews has been criticized because the 3 elements are not weighed comparatively –
how do you actually go about performing the utilitarian calculus
 Does it lead to predictable law, or is it totally ad hoc
 Split among the SC applying the Matthews test – illustrative of the fact that
Matthews doesn’t result in a due process bottom line other than that some kind
of notice and some kind of hearing are required
- RULE: The plaintiff must show that her dismissal deprived her of either a liberty or a property
interest to make a claim that her due process was violated
- Board of Curators of the University of Missouri v. Horowitz - a medical student claims she
was denied procedural due process by not receiving a formal hearing prior to her being
dismissed for failure to meet academic standards, she was unable to demonstrate
- Court disagrees, says enough procedure was followed, refuses to invade traditional
academic sphere of evaluating academic performance w/ procedural requirements
- RULE: The Due Process clause of the 14th Amendment does not confer a right to counsel in student
disciplinary proceedings
- -Osteen v. Henley -college student filed suit after being expelled for fighting, claimed his right
to counsel at hearing was denied – he had no right to counsel
- Hearing was held, P questions right to counsel ability
- P has right to advice of counsel, but not to be represented at hearing.
- Trend is to let things be in educational disciplinary matters
- Goldberg v. Kelly - dealt with this issue
- court concluded that an evidentiary hearing was required before termination
Neutral Decision-maker
- It is not unconstitutional for agencies to perform both investigative and prosecutorial functions in a
an administrative proceeding – 554(d) – this is a broader authorization than the APA
o Withrow v. Larkin - SC a medical examining board appeals a district court’s decision
finding that the combination in the board of prosecutorial and judicial functions was
unconstitutional as a violation of due process
o No DP violation when judge issues restraining order, injuction, and hears case
- When decision makers publicly prejudge a case, it is a DP violation
o Texaco v. FTC 283 – DP violation was found when an FTC commission made public
speeches where he manifested pre-judgment about a pending case

Judicial Review:
- 706-After an agency has rendered a decision in an adjudication, a disappointed party ordinarily may
sue for judicial review of that decision
- Review would take place in federal district court
- Congress has generally authorized appellate court review for the independent agencies that conduct
formal adjudication.

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 formal adjudication.
- §706 of the APA specifies the grounds for judicial review of any agency action
1. The Substantial Evidence Standard (Formal Agency Action)
- 706(2)(e) - If its an adjudication that’s required to be on the record, subject to 556, 557, then
the court must set aside if the decision is unsupported by substantial evidence according to
the entire record
o Only applies to formal agency action
- If a reasonable person could find that a preponderance of the evidence supports the agency
decision then that decision must be upheld, even if the court thinks that there is a better view
of the evidence.
- Universal Camera Corp v. NLRB
- Court ruled that the admin factual findings, though entitled to respect must nonetheless
be set aside when the record clearly precludes the agency's decision from being justified
by a fair estimate of the worth of the testimony of witnesses or its informed judgment
on matters within its special competence or both; Court looked at whole record
- Highly deferential standard
- If the court thinks that the agency has adopted procedures that are fair and reasonably
thorough then it is more likely to show deference
- This is a highly deferential standard

2. Substantial Evidence and the ALJ's credibility findings

- 557 the reviewing agency "has all the powers which it would have in making the initial
decision."
- Means that the agency makes its decision de novo and that the agency is not required to
defer to the ALJ's findings and conclusions
- But, because the ALJ’s decision is part of the record, a reviewing court must take it into
account when assessing whether an agency has substantial evidence for its findings and
conclusions.
- 2 forms of credibility
1) Testimonial – the demeanor of the witnesses, gives the ALJ more power, because the ALJ
was there when it happened, the Agency on a cold record cannot get that same impression
2) Derivative – substance of the testimony

BUT in Universal Camera, SC held the ALJ's findings are part of the entire record
- Torres v. Mukasey
- Guy was tortured in his home country, IJ and board both denied asylum
-IJ was argumentative during the hearing
- Court will not automatically yield to the IJ's conclusions when they are drawn from
insufficient or incomplete evidence'

RULE: Deference given to the ALJ’s determination because of his first hand exposure to the
testimonial information – especially if its demeanor based.
Penasquitos Village, Inc. v. NLRB – the NLRB reversed the decision of an ALJ and instead held
that the defendant wrongfully discharged two employees in violation of the NLRA – the
dispute was basically factual and the decision turned on the credibility of witnesses – NLRB
gets deference but because the ALJ’s findings were part of the record that is reviewed, court
gives those findings on demeanor special deference
When finding by an agency’s presiding official has been reversed by the board, a court will not
sustain the board’s decision unless it has articulated a sound reason, based on the record, for its
contrary evaluation of the testimonial evidence
- Jackson v. VA
- when a finding by the presiding official of this nature has been reversed by the board,
we cannot sustain the board's decision unless the board has articulated a sound reason,
based on the record, for its contrary evaluation of the evidence
- Credibility determinations based on testimonial inferences, weight is given to the ALJ

Mixed questions of law and fact

Substantial Evidence applies for formal adjudication when there is a dispute concerning the facts

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Substantial Evidence applies for formal adjudication when there is a dispute concerning the facts
found by the agency BUT different standard applies if it is a legal issue
Factual issue – use substantive evidence
Legal Issue - §706 authorizes a court to hold unlawful and set aside agency action that is
unconstitutional “in excess of statutory jurisdiction, authority, or limitations, or short of
statutory right” or “otherwise not in accordance with law”
- Legal issue - one that can be resolved without any consideration of case facts
 When it is a legal question:
1) Court must determine if Congress answer the question in a meaningful way;
if no…
2) The agency’s construction of the ambiguous term and the application of
the term to the facts has to be ACCEPTED unless its unreasonable

RULE: Agency decisions should be ACCEPTED if they are reasonably based in the record and in
law – its not the court’s function to substitute its own inferences of fact for the agency’s – must
have a “warrant in the record” AND “reasonable basis in the law”
National Labor Relations Board v. Hearst –
- 4 newspaper publishers refused to bargain collectively with a union of newsboys,
claiming the newsboys were not employees within the meaning of the act – this was a
mix of law and fact –
 court found that the NLRB’s determination that they were employees must be
accepted because it was warranted by the record and reasonable basis in law
- NLRB v. Hearst
1. Court has 2 functions when it reviews a mixed question of law and fact
1. The court reviews the facts found by the agency and determines whether these
conclusions have a "warrant in the record"
2. The court reviews the agency's explanation for its decision to decide whether it
has a "reasonable basis in law"
2. Although courts haven't indicated how they determine whether an issue is a mixed
question of law and fact, they often employ a two step approach similar to chevron.
1. They ask if congress has defined the term or whether it has delegated that
responsibility to the agency
- If it has defined it, then the question is purely legal
2. If congress did not define it, it will conclude that the question is one of specific
application of a broad statutory term and that deferential review is therefore
appropriate

RULE: judicial review - inferences drawn by ALJ are to be accepted unless they’re irrational or
unsupported by substantial evidence from whole record
Evening Star Newspaper Company v. Kemp 302 –
- an employer was held liable for compensation to an employee’s widow after one of its
delivery drivers was killed when his gun, which was being handled by a co-worker went
off
◊ Unless activity is so totally unreasonable that it severs the employee’s connection
with employer, any accident resulting there from should be considered as
sustained in the course of and arising out of employment
 Delivery guy moonlighted as a taxi driver. Cab was in an accident, on break time he took
the cab to get fixed, got accidentally shot.
 Two basic rules
1. If ALJ's decision is supported by the evidence as a whole and not inconsistent w/
the law, it should be upheld
2. The strong legislative and judicial policy favoring awards in workmen's comp cases
- Courts are to defer to the agency when the agency made a reasonable decision

RULE: A violation of a rule which does not place an employee in the path of new risks not inherent
in his employment will not render his activity nonincidental to employment… fairness in agency
action is the bottom line.
Durrah v. WMATA

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 action is the bottom line.
Durrah v. WMATA
p306, workers compensation was DENIED to an employee who fell down the stairs to
the employee break room and injured himself while taking an unauthorized break, ALJ
found that he had violated a rule in taking an unauthorized break and refused worker’s
compensation because his actions were removed from the course of employment
– DC Circuit found that his fall was within the time and space boundaries of his
employment, reversed the ALJ
- The asserted violation did not place Durrah in the path of new risks not inherent in his
employment situation.

Arbitrary and Capricious Review (Informal Adjudication)

§706(2)(F) – courts to determine the facts independently by authorizing a court to overturn an agency
decision if it is unwarranted by the facts to the extent that the facts are subject to trial de novo by the
reviewing court
- Is hardly used anymore
706(2)(a) – arbitrary and capricious, abuse of discretion > standard for informal review…. Basis for this
finding:
- Failure to explain - no coherent explanation then typically there is a remand for the decision maker
to provide one
- Inadequate explanation – Ignores important parts of record, too opaque/vague
 Adequate Reasons – applies to agency rules and judicial review of adjudication… Arbitrary
and capricious standard requires agencies to articulate a satisfactory explanation for its action
including a rational connection between the facts found and the choices made – State Farm
- Consistency: decisions inconsistent with comparable prior decisions, with failure to distinguish
seemingly comparable prior case would be an abuse – if the reasoning is there, then that’s not an
abuse
 Like cases should be decided alike - inconsistency is interpreted as evidence of the agency
acting arbitrarily and capriciously
 RULE: In making a discretionary decision, an agency must indicate how it weighed the factors
involved and how it arrived at its conclusion
- Yepes-Prado v. US INS 1993, p315 – permanent resident alien challenges his
deportation after he was refused a waiver of deportation and judge failed to offer a
reasoned explanation for denial – court found judge abused discretion by failing to
explain
- IJ failed to offer a reasoned explanation of why the only adverse factor, the single drug
conviction, outweighed all of the equities in Yepes-Prado's favor

- RULE: Agency is prohibited from adopting significantly inconsistent policies that result in the
creation of conflicting lines of precedent governing the identical situation
- Davila-Bardales v. INS, 1994, p316 – 15 year old boy entered the country illegally and
challenged his deportation order because the INS considered unlawful evidence in its
immigration hearing, considered his admission to border officer when he was under the
age of 16 – not permissible under INS regulations
- BIA affirmed IJ's deportation order
- Two similar circumstances, two different outcomes by the BIA
- For a finding of abuse of discretion, court must review the material that was available to the
decision maker when he made the decision plus his explanation

RULE: 706 requires that in reviewing an administrative decision, the court must determine whether the
Administrator:
1) acted within the scope of his authority,
2) made a choice which was not arbitrary/capricious, an abuse of discretion, or otherwise not in
accordance with law, and
3) followed the necessary procedural requirements
Citizens to Preserve Overton Park v. Volpe p308 – plaintiffs contend that defendant violated
federal statutes by authorizing the expenditure of federal funds for construction of a highway
through a public park, the secretary announced that he agreed with local officials but didn’t
explain his reasoning, district court rejected their claim

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 explain his reasoning, district court rejected their claim
- Was an order because it was a final disposition of question of whether there will be
funding for highway and is not rulemaking  adjudication
- After Overton Park, the courts apply the arbitrary and capricious standard in the same
manner in informal rulemaking and informal adjudication  Hard Look
De Novo review of whether the secretary’s decision was unwarranted by the facts is
authorized by 706 only in 2 circumstances:
o When action is adjudicatory and agency fact finding procedures are inadequate
o When issues that were not before the agency are raised

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 Non Legislative Rules
Friday, May 06, 2011
11:39 PM

CHOICE - ADJUDICATION, LEGISLATIVE, AND NON-LEGISLATIVE RULES

- Nonlegislative rules, briefly
- advises the public of an agency's view on an issue
- No binding legal effect , but technically rules 551(4)
- Generally two types, statements of policy and interpretative rules

- RULE: courts may refuse to enforce agencies’ retroactive adjudicatory orders if retroactivity is unfair…
- FACTORS:
- 1) Whether the case is one of first impression
- 2) Whether the new rule departs abruptly from settled practice or merely decides new issues
- 3) The extent to which the defendant relied on the old rule
- 4) The retroactive order’s burden on the defendant
- 5) The statutory interest in applying the new rule despite reliance
o Retail v. NLRB – When the NLRB suddenly changed policies after an adjudication, requiring
bosses to re-hire fired strikers, it applied the rule retroactively… highlights the problem
when the agency’s statute imposes harsh penalty when the defendant followed the prior
rule faithfully

- By seeking interpretive guidance, the regulated individual might alert the agency to an interpretive
problem and prompt it to render an undesired interpretation

- If an agency can engage in rulemaking and adjudication, it can adopt a new policy and make
it legally binding through rulemaking and then, if necessary, enforce it through
adjudication or judicial action
o Does the agency have the authority to promulgate substantive rules?
o Can an agency restrict the scope of adjudicatory hearing rights by promulgating a rule that
eliminates the materiality of facts otherwise subject to resolution by hearing?
o Can an agency give retroactive effect to a rule?
o To what extent does due process limit an agency’s authority to use adjudication to clarify an
ambiguity in a rule

- Agency Can:
1. Make decision through adjudication that is binding on parties to the adjudication
and may be precedent with respect to non-parties in future adjudications
2. Or it can promulgate a rule that is binding on all those subject to the rule
 Legislative rule – one adopted through notice and comment
3. Or can promulgate a nonlegislative rule
 Nonlegislative rule - agency pronouncement that advises the public of the agency’s
view on an issue
 Interpretive rules or general statements of policy
 Exempt from notice and comment of §553

- Rule – whole/future effect designed to implement, interpret, or prescribe law or policy

- If an agency has both rulemaking and adjudicatory powers (granted by Congress) then the agencies
must specify the behavior – should it develop through legislative rulemaking or through adjudicatory
decision?
o Maybe since it is future oriented the agency is required to use rulemaking
Leads to the conclusion that the only way you can make a rule is through rulemaking

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 Maybe since it is future oriented the agency is required to use rulemaking
 Leads to the conclusion that the only way you can make a rule is through rulemaking
 Not the way the SC has seen it – Bell

Advantages and Disadvantages

- Main Factors to Consider:
o Comparative cost
o Timing – which is faster – incentive to get it done
o Adjudication is more hermetically sealed than rulemaking –includes political considerations

- Reasons why an agency might prefer rulemaking

o Rulemaking has only a prospective effect
o Availability of notice before the promulgation, wide public participation in rule making
avoids the problem of singling out a single defendant among a group of competitors for
initial imposition of new and inevitably costly legal obligation
o Uniform for industry – adjudication risks that there will be different conclusions because of
particular facts, would loose clarity for future behavior
o All competitors are bound to follow the new policy
 Adjudicatory order is legally binding only on entity against which issued
o Political input – virtue – inherently political process, ought to include political input…
Rulemaking is more likely to engage national interests
o Broader record – adjudication is better with specific facts, but less on industry wide
practices
o Rules are easier to find than adjudicatory decisions
o If the agency uses rulemaking, it can establish a bright-line policy, which is clearer and more
precise than a policy developed on case-by-case basis
 Clarity increases compliance with the policy and decreases opportunistic behavior by
regulated entities that seek to avoid the new policy

- Reasons why rulemaking might not be suitable

o Adjudication, generally, is less costly and faster
 Proceeding against one individual/firm is likely to be significantly less expensive /time
consuming than rulemaking applicable to entire nation
o Problems may arise in a case which the administrative agency could not reasonably foresee,
problems which must be solved despite the absence of a relevant general rule
o Agency may not have had sufficient experience with a particular problem to warrant
rigidifying its tentative judgment into a hard and fast rule
o Problem may be so specialized and varying in nature as to be impossible of capture within
the boundaries of a general rule
o Agency can pick weakest defendant with adjudication, perhaps in terms of having the most
egregious practices or perhaps in terms of lack of resources
o Agencies will have to adjudicate anyway – rules aren’t always precise enough

- The NLRB generally prefers adjudication to rulemaking for the adoption of new policies
o Ex parte contacts are prohibited in formal adjudication, which the NLRB uses, but not in
informal rulemaking
o NLRB avoiding being lobbied by management/unions regarding labor policies
- RULE: agencies have discretion to adopt rules through adjudication rather than rulemaking unless
granting adjudications retroactive remedy would be unfair… reaffirms agency discretion
o National Labor Relations Board v. Bell – NLRB previously adopted a narrower definition of
which employees could unionize, When the NLRB changed the rule in an adjudication, an
employer sued to require public rulemaking instead, court found no proof of great reliance,
fines incurred – not unfair

- Agency has discretion to choose, but discretion is limited

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- Agency has discretion to choose, but discretion is limited
o Court can reverse agency’s decision to proceed by adjudication if that decision is an abuse of
discretion
- Unfairness depends on the extent to which the interpretation is novel and unanticipated as well as on
the severity of its impact
- By seeking interpretive guidance, the regulated individual might alert the agency to an interpretive
problem and prompt it to render an undesired interpretation

OPTION THREE: NON-LEGISLATIVE RULES

Advantages and disadvantages of option nonlegislative rules
- Nonlegislative rules are efficient
- Disadvantages
o May be adopted without public input
- agency thinks that its binding on the public due to inadvertence
- adversely affected by regulated communities' reliance

o Most members of the regulated community will change their behavior in accordance with
the expressed views of the agency
o Nonlegislative rules can be used as a management tool to issue guidance to agency
employees, thereby ensuring centralized policy control and administrative uniformity
o An agency may treat a nonlegislative rule as binding on members of the public
o ISSUE: Because members of the public who rely may be adversely affected by their reliance
because agencies can change these without NC
- When agencies use N+C for interpretive rules, courts give them the same deference that they give
to legislative rules

**Party might challenge nonlegislative rule on grounds that the pronouncement is really a
legislative rule
- court must determine whether rule is nonlegislative or legislative
APA procedures
- § 553 exempts interpretive rules and policy statements from the notice and comment rulemaking,
but APA mandates procedures for nonlegislative rules for PUBLICATION
- §552 – FOIA – requires each agency to publish in the Federal Register statements of general
policy or interpretations of general applicability formulated and adopted by the agency
- Judicial authority to give relief when an agency fails to publish a nonlegislative rule is RARELY
exercised perhaps because agencies make so much available and perhaps because few citizens
have ever demanded their full statutory rights

Distinguishing Non-legislative From Legislative Rules

- Look at the relationship between the interpretation and the predicate statute to determine if the
interpretation is legislative or nonlegislative

A. Policy Statements: Future oriented, provides guidance to employees and announces intentions
to the public
1. Binding Effects Test-Courts use binding effect test to distinguish policy statements from
legislative rules,
1) court will ask whether the statement of the agency imposes a new duty or merely
announces the intention to impose a new duty at some future time
1. If a court finds that the agency has adopted a new duty, its statement is a rule
that can be promulgated only through rulemaking procedures
2. Court will refuse to give the statement any legal effect
- General Statements of Policy -
 Used to indicate to the public/regulated community when the agency will take investigative
or enforcement action, or to indicate how an agency intends to act under certain
circumstances

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 circumstances
o Agencies routinely put guidance documents on the internet
- 2 criteria for distinguishing a general policy statement from a legislative rule:
1) Does the rule have a present effect – does it make a binding norm right then? If yes, then
it’s a legislative rule. If no.
2) Does it leave the agency with authority to use discretion in the future?
o AHA v. Bowen – when the federal agency authorized to over-see Medicare hired
private doctors to audit hospitals for Medicare fraud, it set auditors
qualifications/procedures without notice and comment, contending they were
exempt as general policy statements.
 -Issue: Implementation of peer review system in Medicare w/o N+C
- RULE: agencies general statements of policy are exempt from NC if:
 1) They do not presently impose any rights/obligations
 2) They leave the agency free to exercise discretion

B. Interpretive Rules – states what the agency thinks the underlying statute means, and only
REMINDS affected parties of EXISTING duties
o Are rules, but they are not subject to N&C rulemaking because of exception within 553
o Theory is that interpretation is fingerprint dust, bringing out latent fingerprint (obligation) –
interpretation only illuminates that which was already there
o CHEAP: Agencies like them because they save money on not having to do NC
□ Then industry has no role in the rulemaking
o Difference between IR and legislative rule is whether the statement is the imposition of a
BINDING requirement
□ When Congress has not granted an agency the authority to make legally binding rules,
any rule that the agency issues is necessarily interpretive.
o Courts may defer to it as the agency interpretation – legal significance
o Courts are to give far greater weight to the language actually used by the agency than its
characterization
o Cannot ALTER legal rights established in PRIOR law, cannot add a NEW duty
o Consistency: Can NOT repudiate or be inconsistent with an existing statute or regulation
o Agency cannot enforce an interpretive rule as such – people cannot be charged with
violation of an interpretive rule – must be violation of the rule that the interpretive rule
interprets
- RULE: a rule is legislative if it is binding on an agency, regardless of whether it is also binding on
a regulated entity
o Community Nutrition v. Young p344
- RULE: agency rules are Interpretive –no legal effect when:
1) Without the rule, there would be no adequate legislative basis for agency action –
- some statues command the agency to establish the specific duty or
qualifications for benefits, with them the agency must exercise legislative
rulemaking power to establish the required legal duty or qualification, under
them there is nothing to enforce or carry out with respect to the public until the
agency has adopted legally binding rules à if the agency can enforce duties or
confer benefits in the absence of the questioned rule, then its interpretive
2) The agency never published the rule in the Code of Federal Regulations
3) The agency never invoked its general legislative authority explicitly AND
4) The rule does not amend prior legislative rules
o American Mining – a statute required mines to report miners diagnoses of disease, when
the mine safety agency defined diagnosis, the mining industry challenged it as a legislative
rule requiring notice and comment - Dominant test
 Issue: Do X-Ray readings qualify as diagnoses?
- RULE: Legal Effects Standard - Agency rules are deemed legislative if they have no legal effect,
considering the agency’s characterization and whether they interpret existing laws or create new
law

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 law
o Metro School District v. Davila – When agency interpreted statute to require school districts
to keep providing special education to expelled students, the agency challenged the
interpretation as legislation under the traditional test (substantial impact on the regulated
community)
 Starting point is the agency's characterization of the rule
 Interpretive rules are statements as to what the administrative officer thinks the
statute or regulation means, whereas legislative rules have effects completely
independent of the statute
o Don’t want agencies to immunize themselves from NC by labeling rule non legislative
o The way in which the agency characterizes what it has done is RELEVANT, but is not
determinative

Reliance on Guidance – Interpretations of an Agency

- Agency advice about the meaning of its statutes is very common and has benefits… allows regulated
entities to avoid unexpected liability
o System usually works well, people mostly get the correct answers
o What about when the agency changes its mind?

1. RULE: If an agency gives its regulations an authoritative interpretation, it can change that interpretation
only through rulemaking (sometimes this presents difficult factual issues)
o Alaska Professional Hunters Association, Inc. v. Federal Aviation Administration – When
the FAA changed a longstanding regulatory interpretation exempting hunting-guide pilots
from licensing, the industry sued to require rulemaking – notice was invalid because it was
published without notice and comment – this protects regulated entities reliance on agency
interpretations
- Pilots relied on the regulations for 30+ years before FAA changed
- No opportunity to participate in the development in new regulations
- "Express, direct, and uniform interpretation" present here
- Metwest Inc. v. Secretary of Labor
- so long as a new guidance document "can reasonably be interpreted" as consistent w/ prior
documents, it does not significantly revise a previous authoritative interpretation
2. RULE: For a governmental agent’s mistaken advice to estop the government, the agent must at least
have misrepresented facts upon which another relied reasonably to his detriment
o Heckler v. Community Health Services - When a government agent mistakenly advised a
nursing service the government would reimburse extra expenses, the service sued to estop
the government from demanding refunds, here there was not enough reliance p376
o Government is rarely estopped by its agents misinterpretations of policy – court will go to
extremes to find that reliance was not detrimental or not reasonable to prevent estopping
the government from collecting funds
- Reliance on agency advice regarding reimbursement procedures
- Regulatee had other ways to get information, was on notice

3. RULE: Estoppel cant force the government to make payments not authorized by statute
o Office of Personnel Management v. Richmond – when the navy’s mistaken advice caused a
pensioner to forfeit his benefits, he sued to require the government to pay him anyway –
court found that allowing estoppel to force the government to make payments would cede
Congress’s control of public funds… forcing the government to pay him would violate a
federal statute making the requested relief illegal
o can a gov't EE who received erroneous oral and written advice regarding benefits estop the
government from barring claims.
o Appropriation clause in the constitution requires that money may be paid out only through
an appropriation made by law
Here, statute of limitations ran, therefore no law authorizing payment

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 Here, statute of limitations ran, therefore no law authorizing payment

4. RULE: Agency may not promulgate mush then give rule concrete form through subsequent interpretive
rules
- The more general the language is in predicate rule (fair, reasonable, equitable language), the more
likely it is that later rule is legislative and not interpretive
- The more specific the language in the predicate rule is, the more likely it is that the later rule is
interpretive
- If the predicate rule imposes a duty the later rule is more likely to be interpretive
- When is the statement the statement of an agency?
o Something is a rule when it is an agency statement
o Fact related problem - which agency representatives are empowered to make agency
statements
o Issue of reliance only comes up if there are differing agency statements, but what if one of
the statements wasn’t an agency statement in the first place?
o Factors:
 The lower in bureaucracy someone is, the less likely it is that that person has been
authorized by the agency
 Does the document claim high authority? Does it purport to speak for the agency?
5. RULE: Regulated entities must show actual reliance on an agency’s interpretation to require that it can
be changed only through NC – difficult factual issues to determine if regulations have authoritative
interpretation

D. JUDICIAL DEFERENCE to AGENCY CHOICE OF PROCEDURES

- Deference – allocation of power, to resolve statutory construction problems
o Little Deference – agency is simply a litigant
 No Deference when agency makes argument as to what the statute means
 No deference if an agency is advancing an interpretation of a statute for the very first
time in the case in which it is a litigant – Bowen
o High Deference - agency’s interpretation of its own rule
 Relies on a theory of implied congressional preference, Congress ought to be
understood to intend that agencies, not courts, be the arbiters of its own ambiguous
rules because agencies have expertise
 Seminole Rock – courts should defer to an agency’s interpretation of its own
regulation – highest level of deference
- Chevron Deference – more deferential end, below Seminole level
o Step 0 – Congress actually intended the agency to resolve statute’s ambiguities
o Court will defer to an agency’s statutory interpretation if it concludes that a statutory term
is ambiguous and that the agency’s interpretation of the term is reasonable or permissible

- Skidmore Deference – may be given when the agency’s interpretation of the statute is embodied in
something other than a rule adopted under 553 of APA
o Rulings and interpretations and opinions of the Administrator, not controlling, but do
constitute a body of experience and informed judgment to which courts and litigants may
properly resort for guidance
o Agency interpretations in forms like opinion letters, policy statements, agency manuals – all
lacking force of law, are entitled to some deference but only to the extent that they have
the power to persuade
 Skidmore v. Swift 1944 - overtime compensation issue, employees not being paid for
time spent off shift monitoring premise to be able to stop fires if started… Court took
the agency interpretive agency bulletin into account, valued agency expertise
o Weaker deference than Chevron because it assigns the decision to the court, but the agency
interpretation is owed respect
o FACTORS to analyze the amount of respect due:
1) Thoroughness evident in a judgment’s consideration

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 1) Thoroughness evident in a judgment’s consideration
2) Validity of the reasoning
3) Consistency with earlier and later pronouncements

1. Determining which agency actions get Chevron and which get older weaker Skidmore
1. Focus on whether an administrative decision has the force of law
 Christensen v. Harris SC 2000 p389– overtime dispute between sheriffs and their
employer, employer adopted policy requiring employees to schedule off time in order
to reduce amount of accrued overtime – the statute didn’t expressly authorize or
prohibit and because the opinion letter lacked the force of law court found against the
sheriffs
 Sheriffs wanted chevron to apply to get deference to letter
 Chevron only applies with formal rules…
o If the agency interpretation was embodied in a statement that has the force of law, then its
entitled to Chevron
 Only legislative rules and formal adjudications
 Strong evidence that what congress wanted was the agency given the lawmaking
power to be the one to deal with ambiguities in the statutes…
 Comparatively elaborate rulemaking process of agencies fosters greater deliberation
and fairness
o If not, Skidmore deference – gets respect

- RULE: When congress delegated to the agency authority to make rules of law, and the agency
interpretation claiming deference was promulgated in the exercise of that authority… a reviewing court
is obliged to accept the agency position where Congress is silent and the interpretation is
reasonable…(Chevron) opens the door a little
o TEST: If Congress delegated to the agency authority to make rules with the force of law, and
if the agency interpretation was promulgated in the exercise of that authority, then the
agency interpretation gets Chevron deference
o United States v. Mead Corporation – the customs service issued a ruling letter classifying
planners as diaries and Mead challenged that ruling
 Was a HQ letter, one of many a year, not a legislative rule or formal adjudication 
under Christensen it would not be entitled to Chevron deference.
 administrative implementation of a particular statutory provision qualifies for Chevron
deference when it appears that congress delegated authority to the agency generally
to make rules carrying the force of law,

- RULE: Barnhart says that even if the text is not a legislative rule or formal adjudication, Chevron
deference may be given if the pattern of agency pronouncements is sufficiently robust in a technical
area and consistent:
o 1) Importance of question to administration of the statute
o 2) Interstitial (interconnected) nature of the legal question
o 3) Related expertise of the agency
o 4) The complexity of the administration
o 5) Agency’s careful consideration
o Barnhart v. Walton SC 2002 p394– Walton’s application for social security disability benefits
was denied because he was out of work for only eleven months
o Court responds that the less formal means does not automatically deprive that
interpretation of the judicial deference otherwise due
 Even without the regulation, there is still something to give deference to and the fact
that it isn’t in regulatory form doesn’t matter
o Assumes that deference will be afforded unless there are clear reasons not to
- BOTTOM LINE - Non force of law items may still get chevron deference

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BOTTOM LINE - Non force of law items may still get chevron deference

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 Reviewability
Saturday, May 07, 2011
4:19 AM

Brett Notes:
- If a P has standing, a court must still have a statutory grant of jurisdiction
o The general federal question jurisdictional statute is normally available
- Next, P must state a cause of action, needs statute granting some judicially enforceable right
- To assert a cause of action under the APA, a P must meet 5 requirements:
1. The appeal must be one that is not excluded from review
- 701a states the APA's judicial review provisions do not apply to the extent that
a) statues preclude judicial review, OR
b) agency action is committed to agency discretion by law
2. The agency must have performed an agency action under 551(13)
3. 702 cause of action is limited to persons suffering "legal wrong" or those "adversely affected
or aggrieved w/in the meaning of the relevant statute"
- if a federal statute limits the type of development that can occur in a wilderness area,
hikers are likely within the zone of interest that congress intended to protect
4. 704 provides that only agency action specifically reviewable by statute or "final agency action
for which there is no adequate remedy in a court" is reviewable under the APA.
- The requirement for final agency action is known as the finality doctrine
5. 704 requires exhaustion of remedies, has an exclusion if there is an agency appeals process

JUDICIAL REVIEW
Hurdles a litigant must overcome in order to get to an argument on the merits in court
- Does the court have subject matter jurisdiction
- Does at least one plaintiff have standing
- Does a plaintiff have a right to review – particular grievance
- Does any statute preclude judicial review or is it committed to agency discretion
- Does the plaintiff have a cause of action? Is there agency action?
- Timing hurdles
o Finality
o Exhaustion
o Ripeness

STANDING
- Standing – issue that never goes away, can be raised by the court on its own motion, is not waived even if
not raised by government, required by case or controversy language of Art III (injury in fact, fairly traceable,
likely to be redressed with concrete remedy)
o 1) Plaintiff must allege personal injury in fact
 If government action or inaction injures a 3rd person in some real fashion, then the person
has suffered a sufficient injury for standing purposes
 Associational or representational standing if:
1. One of its members would have standing to bring the action (Sierra Club v. Morton)
1) The lawsuit relates to the purposes of the organization
2) Neither the claim asserted nor the relief requested requires the participation of
individual members
 Future plans must be concrete and be thwarted
o 2) Injury must be fairly traceable to defendant’s unlawful behavior
 Court must determine whether the injury is result of the government action and that a
favorable court decision would remedy the injury
 Warth v. Seldin – poor people did not have standing to challenge a city’s zoning
requirements which prevented the construction of low cost housing because the lack of
low cost housing could be attributable to other factors
3) Injury must be likely to be redressed by requested relief

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 o 3) Injury must be likely to be redressed by requested relief
 That a favorable court decision would remedy the injury
o 4) Injury and redress must be concrete, specific, not too hypothetical

- Prudential requirements intended to assure that courts don’t exercise judicial power unnecessarily … Not
based on the case and controversy requirement
o §702 – outlines the prudential requirements for admin law
1. Zone of interests,
2. no 3rd party standing,
3. claim cannot be generalized grievance
RULE: For plaintiffs to have standing to sue in federal courts, they must
- 1) suffer an actual or imminent, and concrete and particularized injury in fact which
- 2) was caused by the defendant’s actions, must be fairly traceable, and
- 3) is likely redressable by the court in a favorable decision
o Lujan v. Defenders of Wildlife - When Congress passed a statute protecting endangered
animals, it authorized any person to sue the administrative agency for violating it… moved from
foreign to domestic… wildlife activists sued, the agency claimed they lacked standing
- Its very difficult to predict what will be enough to satisfy the judges, unpredictable to answer how much of
an interest and injury is enough to have standing
o Best you can do is try to strengthen your position
- RULE: if an agency decision deprives voters of disclosure mandated by statute, then any voter has
standing to challenge it… limited to voter standing – will not extend to taxpayers and environmentalists
(court still unfriendly to them)
o Argument - failure to produce information impairs their ability to inform their members about
those situations who would then lobby congress etc
o Federal Election Commission v. Akins – a voter claims standing to challenge the federal election
agency’s decision to exempt a Jewish political group from disclosure
- Emotional impacts/ reasonable fear for people who experience some place may be sufficient injury in fact
o Laidlaw p428 – there was sufficient injury in fact for people who sued claiming they feared to
swim in polluted river
- Indication that when a state is a litigant the federal courts ought to be more lenient about applying a
criteria for standing
o Mass v. EPA – p427 2007 - Doesn’t matter that global warming is massive effect, as long as
Mass can talk about its particular impacts – shore erosion – is enough
- Federal taxpayers generally don’t have standing because illegal appropriation of funds is not an injury in
fact
o Flast v. Cohen – 1968 p436 – notable exception, allows hearing of generalized grievances –
taxpayer had standing to challenge a federal expenditure as unconstitutional under the
Establishment Clause of the 1st Amendment
 But limited in Hine to its facts, no precedential impact
- Summers v. Earth Island Institute
- P's injury in fact w/ regard to that project has been remedied, and is "not at issue in this case"
- "We know of no precedent for when a P has sued to challenge the lawfulness of certain action
but has settled that suit, and retains standing to challenge the basis for that action"
- P claims procedural injury, but deprivation of a procedural right w/o some concrete interest is
insufficient to create article 3 standing

AGENCY ACTION AND EXCLUSIONS FROM REVIEW

If you’re in court its because either a statute or the APA gives you a cause of action
- APA 701(a) – you don’t get judicial review if (1) either a statute precludes judicial review or
(2) agency action is committed to agency discretion by law
701(b)(2) – preserves definitions – same meanings apply from 551

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 o 701(b)(2) – preserves definitions – same meanings apply from 551
- 702 – adversely affected or aggrieved by agency action has right to judicial review
o What counts as agency action?
 Includes the whole or part of agency rule order, license, sanction, relief, or the
equivalent denial thereof, or failure to act
 Not everything an agency does is agency action
- 703 – if there is a provision that enables that is what applies
- 704 – private right of action in 2 circumstances
o Agency action is reviewable if non APA statute makes it so
o Final agency action is reviewable under the APA – if there is no final agency action then there is
no basis for review or relief
RULE: if your complaint is about a broad policy, as opposed to specific instances of the policy manifested
through rules, orders, etc, then it is not a case for judicial review
o Court is not meant to deal with programmatic (policy) issues
o Ongoing agency action is not subject to judicial review under the APA
o Lujan(2) v. National Wildlife Federation – the national wildlife federation challenged the
agency’s implementation of laws relating to public lands
RULE: For a failure to act to give rise to remedy under 706 (scope of judicial review) it must be discrete,
specific and identifiable, comparable to the other defined agency actions à 706 allows court to review only
final actions and can compel an agency to act but it cannot say how the agency should have acted
o Norton v. Southern Utah Wilderness Alliance – the SUWA brought an action to compel the
agency to prohibit off-road vehicle use in the wilderness study area
o Allegation that the agency generally fails to carry out its responsibilities is not a cognizable
claim
- Harder to identify concrete failure to act
o The greater the specificity of the predicate law, the more likely it is that the failure to act will be
failure to take agency action
o If the agency says no to something you want, the agency acted by refusing the request – that is not
a failure to act
o If the agency just ignores you, that is a failure to act if it is something that a suit could be filed for

Exclusions from Judicial Review

Statutory Preclusion
- Statutory Grant of Jurisdiction – court must have this, usually not a problem in
administrative law because many statutory regimes contain specific jurisdictional provisions,
and if a plaintiff doesn’t have jurisdiction under a statutory regime, the general federal
question jurisdiction is normally available
- 701 – if some other statute precludes judicial review then you don’t get it under APA
- This restrictive interpretation stems from two considerations
o Preclusion of judicial review of constitutional claims is probably unconstitutional
o The APA is perceived as codifying a presumption of affording judicial review to those adversely
affected or aggrieved by agency action
- ISSUE: More frequently, the agency claims that statute implicitly bars judicial review
RULE: All agency decisions are presumed judicially reviewable, unless the agency offers clear and
convincing evidence congress intended to preclude review
o Abbott Laboratories v. Gardner - agency argues that statute prevents APA review of adopted
regulation, but the agency claims that no one is entitled to judicial review now – only if/when its
been enforced against company can it be judicially reviewed
- In Abbott labs, the court required "clear and convincing evidence" that congress
intended to preclude judicial review, but in Block the court indicated that this standard is
satisfied if congressional intent to preclude review is "fairly discernible in the statutory
standard"
- Defendant agencies may overcome the presumption of reviewability by showing Congress’ intent to

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 - Defendant agencies may overcome the presumption of reviewability by showing Congress’ intent to
preclude review is fairly discernable from the text, and outside the text of the statute and its legislative
record
o Statutory scheme’s structure, objectives, legislative history, or the type of agency action
involved
o Fairly discernable test - Allows the court to reject review whenever it feels that review would
violate the statute’s main purpose of public policy
o Block v. Community Nutrition Institute – when agency regulations increased the price of milk,
advocates for poor consumers claimed they should be allowed to seek judicial review… court
found that the statutory scheme was intended to provide only limited review and to deny it to
consumers
 Block signals the SC’s retreat from the strong presumption of reviewability noted in
Abbott

Committed to Agency Discretion

- 701 excludes agency action from review if committed to agency discretion by law
- If a statute grants discretion to an agency, and the law does not establish a standard against which to
assess the exercise of that discretion, then congress has committed that action to agency discretion
by law
- Language in 701 – “applies except to the extent that 1) statutes preclude judicial review or 2) agency action
is committed to agency discretion by law”

o Webster – the agency action is committed to the CIA discretion by law to the extent that it is a
question of the statutory standard of hiring BUT with respect to the constitution it is not
committed to the agency

- 706 allows court to overturn agency action for abuse – how can there be no review at all when action is
given to agency discretion – would be no standard against which to judge if there is an abuse
o Heckler serves to work this contradiction out:

RULE: agency decisions not to begin enforcement proceedings are presumed discretionary and
unreviewable, unless enforcement is required by law (where statute has provided guidelines for the agency
to follow in exercising enforcement powers) – courts want to leave this to congress
o Heckler v. Chaney – inmates condemned to lethal injection challenged the poison used did not
meet FDA standards, but the FDA claimed discretion not to investigate – there was no
redressability here, they would still be dead
- TEST: Whether there is law for a court to apply? Overton Park
o If yes, then 701(a)(2) is NA – court is able to consider whether the action was an abuse of discretion
taking into account what the law is
o Question – is there law to apply – shifts to what law is relevant here
 If there is law that is not relevant, then there is other law to apply
- If all you’re left with is nothing but the provision, then there is no law to apply

- Decisions that are traditionally committed to agency discretion:

o Decision not to bring an enforcement action - Heckler
o Question of how an executive branch agency would spend a portion of a lump sum, left to
agency discretion, traditionally no agency review - Lincoln
o Congress could subject these traditional exercises of discretion if it chose to by explicitly
imposing criteria
o If Congress doesn’t, then silence = presumption of nonreviewability
- RULE: even if a statute grants an agency discretion, its decision is still presumably reviewable for
constitutional claims, unless Congress clearly intended otherwise
o Webster v. Doe – when the CIA director claimed discretion to fire a gay employee, the worked
sued, claiming abuse of discretion and constitutional violations

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 sued, claiming abuse of discretion and constitutional violations
o SC’s CL modification of APA to confer reviewability on constitutional claims, even if the statute
expressly confers unreviewable discretion, reviewability is still presumed for constitutional
claims
o DISSENT – Scalia - Proposition is illogical – Simultaneously saying it is reviewable because its
constitutional but is committed to agency discretion so not reviewable

CAUSE OF ACTION
- Having established standing and the existence of agency action, and having survived any claim that their
action is precluded under the APA, a person must still establish the existence of a cause of action to sue
o Congress may establish a cause of action in the statute’s mandate
o Cause of Action – means that there is a statute granting the plaintiff some judicially
enforceable right, where there are specific judicial review provisions, they can provide both
jurisdiction and a cause of action
1. Agency must have performed an agency action - §551(13) – the whole or part of an agency rule,
order, license, sanction, relief, or the equivalent thereof, or failure to act.
2. Agency must be one that is not excluded from review§701 – states that APA judicial review
provisions don’t apply to the extent that
1. A) statutes preclude judicial review or
2. B) agency action is committed to agency discretion by law

For matters not covered by specific review provisions of the organic or regulatory statute, APA §702 is fall
back provision, establishes a cause of action for a person suffering legal wrong because of agency action.
o 702 – person suffering legal wrong because of agency action, OR adversely affected/aggrieved
by agency action within the meaning of the relevant statute is entitled to judicial discretion
 Legal Wrong – direct injury traditionally recognized by courts, action by the government
that interferes with a person’s constitutional, statutory or common law rights
 Doesn’t cover competitors, or people not directly in the relationship with the
government agency
 Narrow in scope – people do not suffer a legal wrong from lawful competition…
Narrow CL notion
 Adversely affected/aggrieved –if this were construed narrowly, then many people might
not have a basis for judicial review
 Statutes that explicitly identify those who have a cause of action, those adversely
affected…
 Bennett v. Spear p479 – Endangered Species Act allows any person to sue through
citizen suit provision, limited by constitutional standing requirements, but extends
zone of interest to all persons with constitutional standing
 When statute is not so explicit  Zone of Interests test
- Zone of Interests Test – authorizes lawsuits by persons who assert interests that are within the zone
of interests to be protected or regulated by the statute that the person claims is violated… court looks
to who congress meant to protect - permissive test
RULE: ZOI test should include all interests that the statute arguable protects even if congress never
intended to protect those interests… injury effectively confers standing if the statute conferred some
articulable benefit on the plaintiff since if the plaintiff received protection, then it may be argued that
he was an intended beneficiary and arguably anyone who gains a benefit from a statute should have
standing
o National Credit Union v. First National Bank(1998) – when the agency’s regulatory
interpretation allows credit unions to compete more effectively with banks, a bank claims
standing to challenge it… the banks did have a cause of action under 702, statute meant to
protect the banks themselves… modifies Air Courier

o Air Courier Conference v. American Postal Workers Union (1991) – when the postal service
allowed some competition by private couriers, postal employees sued, claiming the statutes
were intended to guarantee their employment… employees did not have cause of action

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 were intended to guarantee their employment… employees did not have cause of action
because the statute in question was meant to protect the postal service itself, not the workers.
 Only SC case to find that ZOI not satisfied… modified by Credit Union
 Plaintiffs asserting standing under 702 must prove the agency’s challenged action caused
an injury in fact which is within the zone of interests and was intended to be protected by
the relevant statute, or a closely related statute
 Postal workers had constitutional standing – the more postal services that went to
private carriers, the fewer jobs there would be  just because you have constitutional
standing doesn’t mean you have standing under 702

TIMING
3 principles impact timing – finality, exhaustion, ripeness

1. Finality
- Looks to the conclusion of activity by the agency, party can get judicial review ONLY if agency
action is final, unless congress authorized review at an earlier stage
- When a particular statute specifically provides for judicial review of agency action, then the
review proceeds pursuant to that statute, not the APA
o If there is no specific statutory provision for judicial review, then 704 restricts review to final
agency action for which there is no other remedy
o 704 - only agency action specifically reviewable by statute or final agency action for which there
is no adequate remedy in court is reviewable under the APA, requires people to wait until an
agency has reached its final decision in the matter
- Purpose of finality – avoid judicial review of preliminary and subsidiary agency actions separate from
the final action, and without a final decision, a court often lacks a record of the matter and a complete
justification for the agency’s action
Finality Factors:
o 1) Does it have a direct/immediate effect? Look to whether its impact is sufficiently direct and
immediate – not final if it only is the ruling of a subordinate official
 Franklin v. Mass, 1992
 If the agency sends a letter to A and you’re B, and you’re circumstances are similar to As, then
there is more potential for direct effect on A than B
 Whether the agency has completed its decision-making process and whether the result of that
process is one that will directly affect the parties.
2) Does it determine rights or obligations, will legal consequences will flow… does it have penalties for
noncompliance?
 Bennett v. Spear 1997
3) Who took the action? More likely to be seen by the courts as final if done by the head of the agency
4) When you read it, does the action purport to reflect the views of the agency itself – definitive
statement of the agency’s position?
5) After the action has occurred, after the thing issued, how much latitude does the agency have to
then do something different?
6) Situation specific
7) Leaves no administrative remedy whereby to overturn it
o Taylor v. Dole – Labor Department changed its overtime policy – lists factors
- Courts are concerned with agencies playing games with rulemaking provisions, making statements that are
meant to be rules, but they don’t follow procedures because they’re not final…
o RULE: Agencies’ nonlegislative rules are reviewable if they are effectively final and binding
 If it seems clearly intended to make people comply with “guidance” – can be binding in
practical sense even if the agency tries to label it otherwise
 BUT policy statements aren’t binding even though they effectively threaten regulation
with costly enforcement litigation if party fails to comply
 Appalachian Power Company v. EPA – DC Circuit 2000, EPA issued an informal bulletin
setting guidelines for states’ pollution monitoring, polluters challenge the bulletin as final
and binding
- To have final agency action, there must have first been an agency action

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 - To have final agency action, there must have first been an agency action
o Court may treat administrative inaction as equivalent of an order denying relief

2. Exhaustion - is directed to the steps a litigant must take,

- General requirement that if an agency provided an internal means of review of its decisions, persons should
be required to use those means before coming to court
- Courts may make exceptions to this rule because it is a CL rule – judges have flexibility
- Application can result in preclusion of judicial review
- If by the time a court finds that a person has not exhausted available remedies, the deadline for
invoking those remedies has passed, the person will be precluded from either further administrative
review or judicial review
- Congress can require exhaustion through statute, but has not done so in the APA itself
- Goals of the Doctrine - McCarthy
o Allow the agencies to use discretion and expertise
o Save the courts from needless work, cases that would get resolved through exhaustion
o Helps ensure that an adequate record has been developed
- Balancing Test – McCarthy (CL doctrine)
o Administrative remedies need NOT be pursued if the litigant’s interests in immediate judicial
review outweigh the government’s interests in the efficiency or administrative autonomy
 Only applies to agency requiring exhaustion – not statutes – common law cannot
contradict congressional statutes in this area
o Problem with incommensurable weights
o 3 circumstances where there is sufficient justification to overcome exhaustion
 1) If exhaustion would result in undue prejudice to the plaintiff
 If would suffer irreparable harm without judicial review
 If agency would take unreasonable amount of time to make a decision
 2) If there is doubt about whether its possible for the agency to grant effective relief (how
long would it take)
 If statute under which agency acts is unconstitutional – agencies don’t have the
authority to declare their own statutes unconstitutional
 3) If the agency is biased or has predetermined the issue
McCarthy v. Madigan – a prisoner suing his jail for money damages over unconstitutionally denying
medical treatment seeks to bypass the prison’s internal grievance system, contending it cannot award
monetary compensation, all he wanted was money, and the agency couldn’t provide that

RULE: If agency action is FINAL under the criteria for finality (above), and you’re seeking APA review under §
704 and not some other statute… then you’re NOT required to have exhausted administrative remedies
unless
○ 1) the agency by RULE requires exhaustion AND
○ 2) suspends the action during the appeal process
o If agency action is challenged under APA procedures, exhaustion is not required unless
mandated by statute or regulation
o Language of 704 – ANTI EXHAUSTION - forget the CL exhaustion doctrine, it doesn’t apply to
final agency action unless the agency says so – agency would have to have rule and must
suspend action while you let people appeal
 No exhaustion unless the agency has taken those 2 steps, not the business of the courts to
change what congress said
o Darby v. Cisneros – a housing developer appealing his suspension claims the APA precludes
discretionary application of the exhaustion doctrine.
 704 – sentence 1 provides reviewability for final actions, sentence 3 defines final action as
including unexhausted decisions unless expressly required by statute, then courts cannot
demand exhaustion unless mandated by statute

- If a plaintiff does file an intra-agency appeal, he cannot later sue in federal court before that appeal is
resolved – once the agency action is appealed internally, it becomes non-final pending the appeal’s outcome
- Issue Exhaustion – note 4 p500 - If you don’t raise an issue in the administrative process (adjudication) you

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 - Issue Exhaustion – note 4 p500 - If you don’t raise an issue in the administrative process (adjudication) you
likely will not be allowed to raise it later when you get judicial review
o Ohio Forestry – was a ripeness decision, but SC tried to introduce new information with SC and
SC said it had to be raised in the lower courts first

3. Ripeness - CL
- Deals with an attempt to obtain pre-enforcement judicial review, review of an agency action before the
agency tries to enforce that action against the person in court
- Partly grounded in case or controversy language – if issue isn’t ripe then court decision on the issue
amounts to an advisory opinion, art III doesn’t allow for advisory opinions
- Goal - protects agencies from premature interference, protects courts from suits with abstract policy issue
- Abbott Laboratories v. Gardner – When the agency overseeing drug labeling required greater disclosure
than mandated by statute, the industry sued, the agency claims the statue makes its decision implicitly
unreviewable – creates 2 part test
o RULE: where the legal issue presented is fit for judicial resolution, and where a regulation
requires an immediate and significant change in the plaintiff’s conduct with serious penalties
attached to noncompliance, access to the courts under APA must be permitted absent a
statutory bar
○ TWO PART TEST:
1) Whether the issues presented are ready for judicial decision? Fitness test
 Must be purely legal – Abbott was purely legal
 Is the regulation formal and definitive?
 Would judicial intervention interfere with further administrative action?
 Is there yet more to happen?
2) Would delay cause hardship to parties by court withholding the decision if yes, then violate
 Court CANNOT better resolve the issue by waiting for enforcement
 Is there a direct and immediate impact? Change business practices immediately?
 In Abbot, statute was new and obviously going to be enforced (direct and
immediate impact)
 Fines were heavy for violation, already a lot of money invested in the labels, a lot of
economic hardship here

- If the court would LEARN ALOT about the legal issue, then it may want to wait for enforcement action
- When there is too much yet to happen for the court to gain an adequate understanding between the
alleged illegalities and the harm then the issue is not ripe
o Ohio Forestry v. Sierra Club – When the federal forests agency approved a forest for logging,
subject to more specific environmental studies, treehuggers sue, Gov claiming ripeness,
challenge here was not ripe – technical plan not finalized
- Fitness:
 Later agency action would be better. To rule now would limit agency action.
- Hardship:
 the Forest service's plan would not cause the organization or its members any
significant hardship
- Did not inflict significant practical harm
- Toilet goods – here it wasn’t ripe, not appropriate for judicial review, not as clear cut as the advertising rule
in Abbott
o Day to day business practices not significantly impacted

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 Ch 6: Agency Structure - Delegation Doctrine
Saturday, May 07, 2011
7:38 PM

CHAPTER 10: DELEGATION OF LEGISLATIVE AUTHORITY AND LEGISLATIVE VETOES

INTRODUCTION TO AGENCY STRUCTURE
- Agencies routinely engage in adjudication
- Independent Agency –one for which congress has forbidden the president from firing some
administrators because of a policy agreement
- Under a legislative veto, congress reserves for itself the right to void agency orders or rules by the
passage of a resolution by one or both houses of congress
- Lawyer seeking to block agency action:
o Argue the action is invalid because the agency is structured in an unconstitutional way
o Argue that the interpretation proposed by the agency would make the statute
unconstitutional
- Powers may comingle so long as one branch’s exercise of power does not jeopardize the
core function of another branch

DELEGATION OF LEGISLATIVE POWER

- Congress can give agencies zero discretion – doesn’t happen often
o Its impractical to have congress foresee all the circumstances
o Don’t get the benefit of agency expertise
- The more agency discretion afforded by congress, the more there could be a constitutional issue with
separation of powers

- Delegation Doctrine - Delegation of power issue  SOP, Art I § 1 – all legislative power is vested in the
Congress
o Framers used this to establish the separation of powers, congress is more politically
responsive because of frequency of elections
o Discerning the line between permissible and impermissible grants of jurisdiction
o Issue arises when Congress writes broadly or imprecisely worded grant of authority
o Delegation doctrine is a tool that courts use to give a narrow construction to an agency’s
statute
 Courts can reign in agencies depending on how they answer the Chevron step 1
question
 Courts can say that there is a possibility of a delegation problem, and in order to avoid
that (which would be presented if it is broadly construed) we will narrowly construe it

- Intelligible Principle - if the delegation is intelligible then it is permissible

o Impermissible if there is no intelligible principle, if you think about what the principle was
that made it constitutional to delegate authority, the line is close to the max delegation…
 Whitman v. American Trucking – 2001 – the Clean Air Act required the administrator
of the EPA to promulgate rules regarding air pollution, and the rules were challenged
as an unconstitutional delegation of legislative authority – IP was “means sufficient,
but not more than necessary”
 A congressional grant of rulemaking authority is not an unconstitutional
delegation of legislative authority if the statute has an intelligible principle to
guide the exercise of the authority
 Scalia: when a statute authorizes the creation of an agency in the judicial branch
to make rules, even subject to an intelligible principle, this is unconstitutional
because the judicial branch can exercise neither legislative powers nor executive
powers
A broad grant of discretion is likely to be held constitutional in the future barring a radical

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 o A broad grant of discretion is likely to be held constitutional in the future barring a radical
change in the supreme court because court has not found IP only twice

Statutory Interpretation
- Although the SC has not struck down any statutes under the nondelegation doctrine since the 1930s, it
has used the doctrine to give narrow constructions to statutes that might otherwise have violated the
doctrine
- Traditional cannon of construction – if there are 2 readings of a statute possible, and 1 raises a
constitutional issue but the 2nd doesn’t, then courts should adopt the 2nd, the reading that does not raise
a constitutional issue
RULE: the judiciary will interpret legislation delegating power to government agencies in a manner
that limits agency discretion so as to avoid conflict with the constitution’s nondelegation
principle if reasonably possible
o International Union, UAW v. OSHA 1991 DC Circuit – representative organizations from
industry and labor challenge the OSHA regulations, aimed at reducing accidents caused by
industrial equipment, promulgated under federal statutes as an unconstitutional delegation
of congressional authority
□ Court found statute to be broad – the criteria by itself might be insufficient under the
IP standard  so court construed the language as requiring a cost benefit analysis
requirement

THE LEGISLATIVE VETO

- The legislative veto was declared to be unconstitutional because it violates requirements of
presentment and bicameralism
o Statute enacted that delegates power to agency/official… within that statute there is a
reservation of power by congress to review and nullify the executive agency action… agency
acts… congress nullifies what the agency did, not by passing statute but by using the
reserved power
- It basically allowed congress to veto rules or orders in almost 200 statutes. Congress could
delegate substantial discretion to agency and still retain the authority to disapprove the specific
agency decisions.

- RULE: Once delegated authority, Congress may not legislatively overrule or veto decisions made by the
agency pursuant to the delegated authority without following the constitutional procedures of
bicameralism and presentation
o INS v. Chadha – 1983 p552 - grant of discretion to the AG to exempt people from
deportation but also says that either house can overturn the AG’s exemption… AG grants
Chada exemption, House resolves under the veto provision that says they nullified the
exemption granted to Chada… Here, the action by the house violated both the bicameralism
and presentment requirements… 3 views
1) That the legislative veto is an unconstitutional bypass of the process set forth in Art
1 – bicameral and presentation requirements
2) White’s Approach – Constitution doesn’t provide a clear answer, when the text is
silent, proceed to perceived purpose of Art I – system of checks and balances
 Purpose of the presentation requirement is satisfied by proxy and because
either side of congress may pass a resolution to overrule the decision to
suspend deportation, the purpose of bicameralism is met
3) That when initially enacting the Immigration Act, all constitutional requirements were
met, both branches knew what the law provided for and chose to approve it – renders
bicameralism and presentation issues moot

- Severability/Separability
o What happens when a legislative veto provision is part of a statute, then the
legislative veto is held to be unconstitutional, to the rest of the statute?

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 o
legislative veto is held to be unconstitutional, to the rest of the statute?
 Or for whatever reason, its unconstitutional
o Alternatives:
 1) The whole statute goes
 2) The rest of the statute stands
o Statutes may have explicit severability clauses – that if any part of the law is
unconstitutional, the rest stays in effect….
 If statute doesn’t have it, there is still a presumption that Congress means for what
can be saved, to be saved

Post-Veto Developments
Other Forms of Congressional Control over Agencies
Corrections Day - faster way of getting something through the House – no constitutional issue here,
step in when agencies have made mistakes.
- Expedites process:;
1. Limited time for debate
2. Only the chair of the committee with jurisdiction over the bill can move to amend
3. Opponents are limited to one motion to recommit the bill.
- Requires 60%.
- Congressional Review of Agency Rulemaking - Agency not permitted to make a Major Rule effective
until 60 days have gone by – theory is that congress can prevent it if it doesn’t like it by passing
legislation against it
o Submits to congress, then must wait 60 days
o Major rule – one with an annual economic impact of 100 million or more, or with other
significant regulatory impacts identified in the legislation

Key Constitutional Question – was it legislative? Is this legislation?

- Does it change the legal rights and responsibilities

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 Ch 7: (1) Inspections Reports and Subpoenas
Saturday, May 07, 2011
8:12 PM

CHAPTER 11: INSPECTIONS AND SEARCHES

INTRODUCTION TO INSPECTIONS, REPORTS AND SUBPOENAS
- Kind of information agency needs and sources depend on what the agency is doing
o If its rulemaking, then the needed info comes from internal agency expertise
o If the activity is licensing or relief so information comes from the applicant
 Agency has what the applicant wants
 Application process – agency gets the info to decide whether the
applicant qualifies – met the regulatory criteria
 Burden on applicant to provide enough information to satisfy agency
o Obtaining information for law enforcement purposes – info from complaints, consumers,
competitors, whistleblowers, voluntary or no coercive
- In a regulated enterprise, are strong economic incentives to comply with regulations
- Regulations become meaningless if they’re not enforced

INSPECTIONS
- Agency’s authority to inspect is only as great as its statutory authorization
- 3 basic tools that a statute might provide to an agency to acquire information, typically get more than one
1) Authority to physically inspect regulated facilities
2) Authority to require information to be maintained, record keeping
3) Authority to subpoena
- For some agencies inspections are indispensable – the only way to find safety violations
o Agencies highly value flexibility in where/when to inspect
o There usually aren’t enough inspectors to go around

- 4th amendment grants a right that is subject to waiver. If I allow the inspector to come in, I
have waived the right I had
o Protects us from unlawful seizure
o Warrant requirement – must be specific and supported by probable cause

- RULE: for the purposes of an administrative search and 4th amendment probable cause justifying a warrant
may be based on:
1) Specific evidence of an existing violation
2) Showing that the plan pursuant to which the warrant is issued must be based on specific,
neutral criteria… particular company must be selected pursuant to application of neutral
criteria
o Marshall v. Barlows p90-91

- With Respect to Administrative Inspections:

1) Is it a search subject to the 4 th amendment?
 No – because it’s a public space/open field (fly over example)
 Yes – then it must be reasonable
2) If the search must be reasonable, then warrant required – under Camara
unless emergency
 RULE – agency must get a warrant because it is the best guarantor of
reasonableness in searches – UNLESS its emergency (includes public health)
3) When a warrant is required, then you need probable cause
 Camara says that in the nature of things you don’t know without looking if
something has a problem… statutory or regulatory criteria for area

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 inspections that establish how you inspect to see whether the standards are
met
 If they want to inspect Bob’s building because of things they think they
know about Bob that requires particularized probable cause
 If there are criteria set out for how you go about inspecting a whole
area, and that building falls within the area, that is sufficient probable
cause – still need a warrant
 Diluted probable cause requirement because they want people to be able to
do searches, to find a violation… want the 4th to apply – don’t want regulators
to be blocked from carrying out statutory regime

- RULE: Agency must get a warrant unless it is an emergency, if a warrant is needed then must have
probable cause (this is administrative)
o Camara v. Municipal Court – 1967 p583 – San Francisco resident was charged with violating
the city’s municipal code when he refused to allow city building inspectors to enter his
apartment without a warrant… the resident had the right to demand a warrant before this
inspection and cannot be convicted for refusing to consent to the inspection – even
 When government is conducting a search of an entire area with a reasonable basis, it
may search all apartments in that area

- 2 ways to get a warrant- LAUREN

1) Justified by probable cause that the search will uncover evidence of a statutory or regulatory
violation
2) Takes place in a residence or business under a warrant issued based on a showing that the
inspection comports with reasonable administrative and legislative standards
 See Barlow above

- RULE: When agency inspection is prompted by a complaint regarding certain workplace violations, agency
is not permitted to make comprehensive inspection of the alleged violator’s worksite, only inspect things
that bear appropriate relationship to complaint.
o Connection between affidavits and scope of investigation
o Specific evidence of existing violation  inspector limited to scope of the evidence
o Trinity Industries, Inc. v. OSHRC (Trinity 1) 1994 p588 – A lawsuit ensued when OSHA
attempted to use an employee complaint about certain specific workplace safety violations to
justify a full scale administrative inspection of a company’s entire workplace

- RULE: an administrative search warrant for a particular company, with probable cause from neutral
administrative standards, will only withstand judicial scrutiny if the inspection plan is based on specific
neutral criteria
o In re Trinity Industries, Inc. (Trinity 2) – Manufacturer fines $10,000/day for not allowing
OSHA inspectors to enter and inspect its facility

- Highly regulated industries are an exception to warrant requirement  exception to probable cause
o Essentially a waiver theory – if you want to do this type of business you have a lowered
expectation of privacy
 Nuclear?
o Warrantless searches, unreasonable in other business settings, in this setting is reasonable
 Examples: Liquor dealer, auto junkyard, firearms dealer, nuclear power

- EXCEPTION TEST – when don’t need a warrant - Burger(604)

o 1) The search must further an important government interest
o 2) Warrantless searches must be necessary to achieve that interest
o 3) The statute authorizing the warrantless searches must provide other safeguards to those
subject to the search
- If You’re Industry Attorney and inspector show up unannounced:

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 - If You’re Industry Attorney and inspector show up unannounced:
o Why are you here? If its for a neutral search then let in, if its in response to a complaint and
that issue can be fixed before inspector could return with warrant then don’t let in
o Try to do limited grant of permission
o Generally – let inspector in

REMEDIES for ILLEGAL INSPECTIONS:

- RULE: Evidence illegally seized by law enforcement and inadmissible in criminal proceedings is admissible
in subsequent civil proceedings because to exclude it from these civil proceedings would provide no
deterrent effect to those who illegally seized it
o United Stated v. Janis – a defendant in a civil tax suit brought by the US government objected
to the IRS’ use of evidence illegally obtained by police who were executing a defective search
warrant in an unrelated criminal case
o Exclusionary Rule – a constitutional requirement that evidence obtained in violation of the
constitution be excluded at trial – purpose is to deter future misconduct by officials
conducting a search
 When the exclusion of illegally obtained evidence will have no deterrent effect on those
officials, the SC will allow admission of the evidence
o Argue around this – distinguish by saying different agencies, different proceedings
o INS v. Lopez-Mendoza – expands Janis rule to situations involving only one agency, significant
extension
 A dispute arose when the INS introduced an illegally obtained confession in a
deportation proceeding

- This kind of lawyering problem, there are 3 ways to argue

o Case precedent is wrong
o Distinguish on the facts – look at salient facts
o Take advantage of exception indicated – or narrow the scope

“SPECIAL NEEDS” SEARCHES

- RULE: In the context of safety and administrative regulation, a search without probable cause may be
reasonable when there are special needs, beyond the normal need for law enforcement, that make the
warrant and probable cause requirement impracticable
o Board of Education of Independent School District No. 92 of Pottawatomie County v. Earls –
p610 – board of education required students participating in extracurricular activities to
consent to drug testing, Earls claimed that policy violated of the 4th amendment… even though
there was no evidence that drug abuse was rampant – court student’s privacy interest in
public schools is limited

- Why does the government need the info – how urgent is it?
- Special Needs Analysis – balancing test used by the SC to determine whether certain searches impose
unreasonably on individual rights… consider:
o Privacy interest allegedly compromised by the testing/investigation
o Nature of the intrusion
Nature and immediacy of government’s concerns

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 CH 7: (2) RECORDKEEKING AND REPORTING REQUIREMENTS
Sunday, May 08, 2011
5:23 AM

RECORDKEEKING AND REPORTING REQUIREMENTS

- Record keeping requirements imposed by agencies through regulations, statutes, or simple agency
communication
- Agencies may subpoena if they’re expressly authorized by statute
o Ad Testificandum – requires the person to come and testify
o Duces Tecum – requires the person come testify and bring materials with him
 Usually don’t require probable cause to issue
o Subpoenas used when agency investigates possible violations of regulations/law

Statutory Authority and Limitations

- Agency substantive authority derived from statute, limitations from statute, constitution…
○ No implied authority to issue a subpoena
- Agency must be able to find statutory authority for any reporting or record keeping requirement that it
imposes on people
- When the requirement is imposed by regulation, no need to have express authority – its implied by the
statute creating the regulatory program
Administrative Procedure Act
- When an agency imposes a reporting or record keeping requirement by rule, the rulemaking
requirement of the APA apply

RULE: information gathering was not required to be done by rulemaking

o Line of Business – DC Circuit – SC denied cert - accepted universally

The Fourth Amendment

- Administrative agency has no inherent subpoena authority – must be granted by statute, requirements of
the 4th amendment (diluted and weak) must be complied with
o The 4th Amendment at most guards against abuse only by way of too much indefiniteness or
breadth in the things required to be particularly described, if also the inquiry is one the
demanding agency is authorize by law to make and the materials are relevant…. Disclosure shall
not be unreasonable

- Oklahoma Press Publishing v. Walling – Court enforced a subpoena issued by the Wage and Hour
Administrator despite the lack of probable cause. Probable cause was not necessary because neither the
statute nor the 4th amendment required it. No 4th amendment requirement because the agency subpoena
involves less of an invasion of privacy. (Court also said that the agency needed this leeway.)
- Government agency can investigate merely on suspicion that the law is being violated, or even just for
assurances that it is not being violated – Morton Salt
o Demands of the 4th amendment are:
 1) The inquiry is within the authority of the agency
 2) The demand is not too indefinite and is not excessively broad (if there are fights they
are over this)
 3) Information sought is reasonably relevant
o What’s missing from the demands is reasonable cause – none required
- Morton (SC) overtakes this RULE: To issue a valid subpoena, agency must 1) issue for a proper purpose, 2)
the information sought is relevant to that purpose and is adequately described within the subpoena, AND 3)
proper procedures have been followed in the issuance of the subpoena
o To look for wrongdoing when there is no indication that any had occurred is an unreasonable
purpose
o Freese v. Federal Deposit Insurance Corp. – District of NH When bank went into receivership,
the FDIC initiated an investigation into potential wrongdoing by the bank’s former officers and
directors and issued subpoenas as a part of that investigation – subpoenas sought extensive

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 directors and issued subpoenas as a part of that investigation – subpoenas sought extensive
personal financial information, court held it was a fishing expedition

- RULE: 4th amendment places some important restrictions on what an administrative agency can ask for in a
subpoena duces tecum
o Broadness alone is not sufficient justification to refuse enforcement of a subpoena so long as
the material sought is relevant
o Reasonableness and relevance are the key
o Denial of subpoena is appropriate when court finds subpoena to be unreasonable, arbitrary, too
broad in scope
o Adams v. Federal Trade Commission 8th Circuit – dairy company resisted compliance with
subpoenas issued by the FTC, FTC sought judicial enforcement
- For the most part if an agency wants documents from a business, the agency will get them … difficult to
mount 4th amendment resistance to this kind of information demand

The Fifth Amendment

- No person shall be compelled in any criminal case to be a witness against himself
o Neither courts, nor congress, nor agencies
- Not much easier to mount 5th amendment defense
o Sometimes information gathered in admin hearings can lead to criminal charges
- 5th amendment offers only limited protection against administrative attempts to obtain documents as
opposed to oral testimony
- 5th amendment
o Does not apply to
 Corporations – corporation cannot resist production on grounds of self incrimination
 Corporate documents
o Applies to
 Natural Persons
 Sole proprietorships
 Testimony
- RULE: When the government seeks documents from a non natural person, the natural person who must
respond for the organization cannot claim a personal privilege for the organization’s documents, even
though those documents might incriminate the person
o Wilson v. US
o Cant claim a privilege for organization.
- RULE: If an individual is required by virtue of entry into regulated activity to keep certain records, the 5 th
amendment doesn’t apply to those records
- Summary: Required to keep because of industry you are involved you cant plead 5th.
o Voluntarily undertaken the requirement to do these records through choice to enter that field -
Shapiro

- Require Records:
o Even when records are not required to be kept by the government, the court has indicted that
requiring the production of already created documents is not self incrimination… Because the
5th goes to compelled testimony and compelling the production of already existing documents is
not compelling testimony
 US v. Doe – compelled surrender of self incriminating document was not compulsion to
testify unless author had been forced to write document
o Sometimes the 5th gives right not to produce the record, even when the government requires
it – when engaged in criminal activities
 Marchetti – government said if you’re a bookie you have to keep records, the court says
this went to far
o Distinction about the reason for required records – is it legitimately linked to a regulated field of
endeavor other than being a criminal
- Main surviving area where 5th is still pertinent in administrative world is notion that the act of producing
documents (not what they say) can itself be testimonial
Fact of producing tells government that you had them, had knowledge of them

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 documents (not what they say) can itself be testimonial
o Fact of producing tells government that you had them, had knowledge of them

- RULE: Regardless of whether it is addressed to a corporation or to an individual in his or her capacity as

records custodian for a corporation, a corporate custodian may not resist a subpoena for corporate records
on 5th amendment grounds
o Those documents cannot be used against the person outside of his role as corporate custodian
o Braswell v. United States – p632 – the president of two related corporations chose not to
comply with a subpoena issued to him in his capacity as president of the requested documents
would incriminate him personally
 Government cannot use the fact that B turned over the documents against him personally
because it was the corporation and not b that turned them over, but it can use the fact
against B because he is an officer of the corporation

- RULE: Required Records doctrine is inapplicable in cases in which the production of records would have
testimonial force incriminating the taxpayer, and in such cases production is excused by the self
incrimination clause
o Smith v. Richert – a man was jailed when he failed to produce tax documents to the government
in compliance with a subpoena issued by the state – mere fact of possession of the documents
was incriminating, permits Smith to resist production

WHEN DEALING WITH SUBPOENA – ANALYZE UNDER 4TH AND 5TH AMENDMENTS
- Person receiving the subpoena can:
o 1) Comply
o 2) Go to court and move to quash
o 3) Ignore it – await government’s invocation of judicial enforcement, failure to comply post
judicial enforcement results in contempt of court
o 4) Negotiate – unrealistic
- To resist subpoena: Argue that
o Specifications are overly broad – in time or substance
o Specifications aren’t relevant (what the business is worth isn’t relevant to pricing
methodology)
- Reason to believe you have a 4th amendment right not to provide?
o Morton Salt Criteria
 1) Does the agency have jurisdiction
 2) Breadth in scope and duration
 3) Is the request relevant to agency inquiry
- Reason to believe you have a 5th amendment right not to produce?
o Doesn’t apply to corporations – corporate documents
o Applies to natural persons and sole proprietorships

PARALLEL PROCEEDINGS
- Parallel proceedings = simultaneous civil and criminal proceedings
- Except in extreme situations, such as evidence that the civil or administrative proceeding is really just a
sham, then courts will not interfere with parallel proceedings
o Wont allow potential harm from testifying in civil proceeding to interfere with criminal
proceeding
- Congress’s choice to give the agency the ability to pursue both tracks at the same time
- PP are unobjectionable unless they create substantial prejudice to one or more of the parties involved - SEC
v. Dresser
- US v. LaSalle National Bank – the IRS may not use its subpoena power when its sole purpose for doing so is
to gather evidence for a criminal investigation

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Timing Sheet
Saturday, May 07, 2011
6:03 PM

1 4 0.04 7.2
2 4 0.04 7.2
3 4 0.04 7.2
4 4 0.04 7.2
5 4 0.04 7.2
6 4 0.04 7.2
43.2 45
1 19 0.19 34.2
2 19 0.19 34.2
3 19 0.19 34.2
4 19 0.19 34.2
136.8 2 hrs
Total 180 100 180

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