Admin Law - Debow

7/30/2019 Admin Law - Debow

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ADMIN. LAW OUTLINE

Trevor Jones

Introduction

a. Interpretation: 2 Schools of Thought

i. Textualist/Formalist

1. Text itself to find meaning of drafters (Debow)ii. Living, Breathing, Document

1. Constitution must change with society

2. Under this view, due process and equal protection clauses can be

interpreted in various ways.

b. Art. I § 8 has been misconstrued .i. Art. I § 8 cl. 1 gives legislative powers herein granted , thus states

retain police power. No broad authority however, to promote generalwelfare—text says that Congress has power to tax and that money

must be spent for general welfare

ii. Cl. 3: Control over commerce only supposed to cover control over interstate and foreign commerce—not instate commerce.

iii. Cl. 18: Also not a broad grant of authority: Framers were saying “If

we have overlooked something in 1-17, Congress can legislateaccordingly.

c. Bill of Rights Issues

i. People opposed Bill of Rights b/c why addres things Congress can not do? This gives Congress idea that they can do anything not listed. 10th

amendment attempts to reinforce this idea.

ii. States are supposed to have all other powers to legislate. Have police

powers and can make whatever laws they want. However, Congresshas all but taken over police power.

Text Intro

d. Agencies

e.Administrative Procedure Act (APA, 1946)—is a statute that regulatesmany of the operations of federal administrative agencies.

f. Agencies : each authority of the U.S. government except Congress, thefederal courts, territorial governments, and certain military entities.

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i. An “authority” can be an agency even if it is within another

agency.

ii. Heads of departments are the President’s cabinetiii. Behind every agency lies a legislative act, called an organic act

or organic statute, that creates, empowers, defines, and limits that

agency.iv. Congress creates agencies.

g. Structural Distinctions Among Agenciesi. Single-Headed v. Multi-Member

1. Single-Headed means that there is a single person at the

top of the organizational chart, while multimember means that

there is more than one sharing ultimate decisional authority.2. The term “commission” or “board’ usually means

that it is multi-member.

ii. Executive v. Independent Agencies1. Agencies whose heads are subject to unlimited

presidential removal authority are executive agencies2. Agencies headed by persons who the president cannot

remove at will are independent agencies.

3. Generally, single-headed are executive, while multi-member are independent.

h. Why Insulate Agencies from Presidential Control?

i. Congress began to do this beginning with the Progressive Movement.ii. The progressives wanted to keep a unitary executive out of politics

with regard to policies, management, and administration. (Bureaucrats

(on policy side) instead of Politicians) They wanted to takegovernment away from politicians and give it to experts.

iii. The flip side of this is that politicians are politically accountable while

bureaucrats are not.iv. Is it good to give someone governmental authority and then

completely insulate them from the democratic process?

i. Agency Historyi. Interstate Commerce Commission is first in 1887.

ii. FDR and New deal: major progressive president creating many new

agencies which are generally multimember.iii. LBJ and Nixon later create new ones which focus on health and safety

—theirs are generally single member because the Progressives were

overly optimistic about taking it out of the political process.

j. Rulemaking Vs. Adjudication : When agencies affect the rights and

obligations of people, they do so through one of these two methods.

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i. Rulemaking: this looks very much like a legislature passing a law. A

properly conducted rulemaking results in a rule, which functions like a

statute (quasi-legislative). Rules have General Applicability and

Future Effect

1. If you violate a rule, you can be heavily fined or event sent to jail.

2. Rulemaking is the function of laying down general regulations(rather than identifying an individual).

3. Rules do not name particular persns or entities at whom the rule is

directed.4. Rulemaking is prospective, and has a definite effect on individuals

only after the rule is subsequently applied (general and prospective

application.

ii. Adjudication : this looks very much like a court deciding a case. A

properly conducted adjudication results in something called an order,

which functions like a court judgment.(quasi-judicial)

1. If you violate an order, it can be legally enforced.2. Orders apply to named persons or to specific situations

(individuals are named).3. Adjudications also differ from rulemakings in that they have an

immediate effect on specific individuals (backward looking and

specific parties).

iii. Londoner v. City of Denver (1908) pg. 15

1. Facts: Series of procedures were supposed to be followed before

city (board of public works) paved and charged property owner for improvement. City says this must be started by petition from the

owners—this petition never occurred. City also lied about there be

no objection that the property owners filed—the city met withoutnotifying property owners.

2. Holding: Due process of law requires that the plaintiffs have an

opportunity to have arguments heard. Thus court holds thatagency was constitutionally required to hold hearings.

3. Debow says: This holding is absurd. Is oral hearing the true

meaning of “due process”? (Contrast with Bi-Metallic)

iv. Bi-Metalic Investment Co. v. State Board of Equalization of

Colorado(1915) pg. 20.

1. Facts: Agency increased the value of all taxable property inDenver by 40 percent. No property owners are given opportunity

to be heard.

2. Holding: When an agency imposes a tax on an across-the-board basis, without attention to the particulars of any taxpayer, due

process does not require individualized hearings. “There must be a

limit to individual argument in such matters if government is to go

on.”

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a. Due process is required only when “a relatively small number

of persons was concerned, who were exceptionally affected,

in each case upon individual grounds.3. Distinguished from Londoner: Holmes says that a relatively

small number of persons were affected in Londoner compared with

a large number here; and this decision is decided on generalgrounds rather than individual grounds (different situations and

facts).

4. Londoner and Bi-Metallic as applied today: Due process isrequired when the proceeding is functionally an adjudication, as

opposed to a rulemaking.

II. THEORIES OF AGENCY BEHAVIOR

a. 1787, James Madison

i. “If men were angels, no gov’t would be necessary. If angels were to

govern men, neither external nor internal controls on gov’t would benecessary.” Gov’t reflects the fallen human nature. The difficulty of

creating & maintaining a gov’t is this: “you must first enable the gov’tto control the governed; and in the next place oblige it to control

itself.”

1. This is a positive claim: it is a statement about the way the worldis (true or false—it is a claim of fact).

2. Normative statements are neither true nor false, but rather are

arguments about the way things should be (claims of opinion.

b. 1928, Eastman

i. Highly naïve view of agencies: “independent regulatory commissions

are clearly nonpartisan in their makeup, and party policies do not enter into their activities… When once the members are selected their

political affiliations cease to be of the slightest consequence.”

c. 1938, Landis

i. Optimistic view of agencies (arrogant/egomaniac). Basically thinks

that people like him ought to be given power to deal w/ problems;

arbitrary decisions w/out regard to law/political process. Totally notw/in the const. process. Argues that the legal field loses nothing from

the increasing reliance on administrations instead of judges, but that

under the banner of the law “as a commanding discipline are enlistedarmies of men dedicated to the idea of justice.” “The rise of the

administrative process represented the hope that policies to shape such

fields could most adequately be developed by men bred to the facts.”ii. Major administrator of new deal under FDR

iii. Lawyers would not have a function in court under this philosophy.

iv. Basically says set a match to the Constitution (and he was Dean of

Harvard law school0

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v. Wants lot of authority in agencies with little judicial oversight.

d. 1955, Bernsteini. Human life cycle view of agencies: agencies begin w/ an aggressive,

crusading spirit, but in the period of maturity, “the Commissions

become more concerned with the general health of the industry andtries to prevent changes which adversely affect it. Cut off from the

mainstream of political life, the commission’s standards of regulation

are determined in the light of the desires of the industry affected.”ii. A generation after the beginning of the New Deal, people begin to

realize actual performance vs. what was promised; the agencies didn’t

turn out as great as they were supposed to

iii. Debow says there is naturally a limit to how much regulating acommission does to the industry.

e. 1971, Noll

i. Public Choice Theory: Applying economic reasoning to politics &gov’t: says that human behavior is more or less predictable; it’s goal-

oriented & rational.1. Concentrated benefits & (broadly) dispersed costs—sugar farmers

example. Those with concentrated benefits are more successful

than those with dispersed costs. Lots of politics involves actorswho get organized to receive concentrated benefits, & the cost gets

spread out broadly in a way that doesn’t really affect everyone else

too much (slightly more expensive sugar). This is why consumers’

interests are underrepresented—don’t have incentive to get politically involved in things that don’t really affect you much.

2. Easier to get small numbers of people to do things than to get large

numbers—also easier to get people to do things that they have astrong interest in.

3. Free Rider Problem-- people think, “I’m just one person—it won’t

make a difference one way or the other, so I won’t do it” so they just free-ride the other people’s effort. If the group is small

enough, you can’t really get away w/ being a free-rider (small

study groups, etc.).

a. Politics is an attempt to get people to overcome this problemin very large numbers.

ii. Industry Capture Model of Agencies: it’s the industries that the

agencies regulate who are affected most by agency decisions, sothey’re going to make the most effort (spending time & money) to

sway the agency decisions. Agencies get captured by the interest

groups that they are supposed to assert authority over iii. Negative view of agencies. “An agency that tries to minimize the

chance of being overruled by subsequent legal or legislative decisions

must, when the interest of a regulated firm and its customers or the

public generally are at odds, be overly responsive to the interests of the

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regulated.” Theoretically, appointees to agency commissions are

neutral, but practically, they must have the tacit approval of those in

the regulated industry. Also, economic analysis demanded lessregulation & more protection of individual liberty from gov’t intrusion

f. 1980, Wilsoni. Notes that agency behavior is “complex & changing; it cannot easily

be summarized as serving the interest of either the regulated sector or

the public at large.” Says that the trend now is for agencies to chose“stricter and more costly standards over more lenient, less expensive

ones,” and that the cost of political access has been lowered. “Any

generalization about how government works is vulnerable to the

behavior or persons who have learned that generalization and wish torepeal it.”

III. THE CONSTITUTION AND THE ADMINISTRATIVE STATE

a. Concept of Separated Power

i. The 18th Century vision

1. Madison, Federalist 10 & 51 : the powers properly belonging to oneof the departments ought not to be directly and completely

administered by either of the other departments. Must provide

some practical security for each, against the invasion of the others.

Ambition must be made to counteract ambition (have to give each branch incentive to guard their respective power). Madison

realizes that the Constitution can be a “mere parchment barrier”

against the encroaching human spirit of power

ii. The 20th Century Vision

1. Landis: Opposite of Madison: Says the admin process springs

from the inadequacy of a simple tripartite form of gov’t to deal w/

modern problems. Wants to recombine the three powers in

agenciesa. Example of New Deal attitude—to extent that Constitution

stops them, they will ignore it.

b. Says modern problems are different from madison’s and thuswe cannot always strictly follow Constitution.

c. Debow says the framers gave us a way to change the gov’t in

a Constitutional way—through amendments.

2. Straus, Formal and Functional Approaches another example of

functionalism, though not as brash as Landis (at least tries to

reconcile). Says administrative issues aren’t political, so it’s ok for

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agencies to have such power. Says agencies are unavoidable given

Congress’s need to delegate at some level the making of policy for

a complex and interdependent economy.a. Truth is that agencies are unconstitutional.

iii. The 18th Century strikes back: formalism v. functionalismdebate.

1. Burns and Markman: Formalists: There are no “inherent” power of national gov’t (as opposed to state gov’t, which does have

inherent power to legislate about anything express what’s

expressly disallowed in the state constitution); the national gov’t

only has the power enumerated to it by the constitution.2. Formalism would take the original constitution and place it next to

the gov’t institution in question and determine whether the latter is

consistent with the former. If not, then it is unconstitutional.

3. Functionalism turns this around—takes the existing institutions,and if they look unconstitutional, they come up with an

interpretation that makes those institutions look constitutional.Their arguments are:

a. Congress has near plenary regulatory power.

b. Congress has an almost unlimited powr to delegate thisalmost unlimited legislative power.

c. Combination of the 3 functions in a single entity is OK.

d. It’s OK to insulate administrative agency decision makers

from political influence.4. Debow says formalists interested in protecting Constitution while

Functionalists interested in protecting institutions.

b. Agencies and Article One

i. Incentives problem: if you’re an elected official, you’ll be tempted toPUNT controversial issues to wherever else you can

ii. Art. I vests legislative power in Congress

iii. Concerns federal statutes that delegate “quasi-legislative power.

iv. Issue is whether Congress has given an agency so much rulemakingdiscretion that Congress has abdicated its responsibilities to exercise

“all legislative powers” as granted by Art. 1 Sec. 1.

v. Even the First Congress carved out an exception, allowing thePresident to essentially legislate on matters concerning pensions for

Revolutionary War vets

vi. Basic Rule —Congress can delegate quasi-legislative power as long asit gives the agency an intelligible principle to follow in exercising that

power.

1. Test (1928): If Congress shall lay down by legislative act an

intelligible principle to which the person or body authorized to fix

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such rates is directed to conform, such legislative action is not a

forbidden delegation of legislative power

vii. The New Deal

1. National Industrial Recovery Act (NIRA): instituted by FDR;allowed for a bypass of the legislature; the code allowed industries

to waive anti-trust laws in exchange for labor concessions

2. Panama Refining Co. v. Ryan (1935) pg. 55

a. Facts: President, by Executive Order, prohibited the

transportation of petroleum exceeding a certain amount, as he

was authorized to do by section9(c) of the NIRA. P claimsthat it’s unconstitutional b/c the section authorizes the

President to pass a prohibitory law

b. Issue: whether such a delegation of legislative power is

permitted by the Constitution (no).c. Holding: Unconstitutional because it contained no standards

guiding the President’s decision of whether to invoke his powers in a particular case (no intelligible principle).

Concerning the matter in 9(c), Congress has declared no

policy, has established no standard, has laid down no rule.There is no requirement, no definition of circumstances and

conditions in which the transportation is to be allowed or

prohibited. Therefore, if 9(c) were held valid, it would be

idle to pretend that anything would be left of limitations uponthe power of the Congress to delegate its lawmaking

function.

i. The Congress manifestly is not permitted to abdicate or to transfer to others, the essential legislative functions

with which it is thus vested.

d. Test: whether the Congress has declared a policy w/ respectto that subject; whether the Congress has set up a standard for

the Prez’s action; whether the Congress has required any

finding by the Prez in the exercise of the authority to enact

the prohibition.e. Dissent (Cardozo): Says that concerning the separation of

powers, there should be sensible approximation & elasticity

of adjustment in response to the practical necessities of today’s gov’t

3. Schecter Poultry Corp. v. United States (1935)

a. Facts: Ds were indicted for violating the Live Poultry Code

which was approved in NIRA by President. (D was letting

his customers pick out the chickens that they wanted). Ds

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claimed that the Code had been adopted pursuant to an

unconstitutional delegation by Congress of legislative power.

b. Issue: Whether Congress in authorizing the code has itself established the standards of legal obligation, thus performing

its essential legislative function, or, by the failure to enact

such standards, has attempted to transfer that function toothers. (the latter).

c. Holding: Section 3 of the Recovery Act doesn’t prescribe

rules of conduct but rather authorizes the making of codes to prescribe them. Such a sweeping delegation of legislative

power finds no support in the decisions upon which the Gov’t

especially relies

i. Congress cannot delegate legislative power to the Prezto exercise an unfettered discretion to make whatever

laws he thinks may be needed or advisable for the

rehabilitation and expansion of trade or industry.

d. Last of Its Kind: Court totally invalidates the NationalRecovery Act. ***This is the first and the last time that the

Court has decided that there has been a delegation of power that violates the constitution.

viii. After the New Deal—The Modern Doctrine

1. Congressional Directives to Regulatory Agencies

a. Example of the Broadness: “The FCC shall grant broadcast

licenses to applicants if public convenience, interest, or necessity will be served thereby.” Basically, the FCC gets to

define “public interest.

2. Mistretta v. U.S. (1989) pg. 64

a. Facts: Ds were sentenced after being found guilty of drug

possession. They argue that the Sentencing Guidelines,under which they were sentenced, which are promulgated by

the U.S. Sentencing Commission are unconstitutional b/c the

legislature transferred its power to this commission.

b. Issue: Whether Congress delegated excess authority to theCommission to structure the Guidelines. (No)

c. Holding: The holding allowed the Prez to remove art. III

from sentencing commission. The nondelegation doctrinedoes not prevent Congress from obtaining the assistance of

its coordinate Branches; so long as Congress shall lay down

by legislative act an intelligible principle to which the personor body authorized to exercise the delegated authority is

directed to conform, such legislative action is not a forbidden

delegation of legislative power.

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d. Analysis: The Court held that the act’s declaration of

purposes and goals, and its specification of the factors to be

considered by the commission provided a sufficientintelligible principle.

i. The Commission was not part of the executive branch

—it is an independent commission in the judicial branch. Thus, this gave Prez authority to remove

supposedly impartial judges.

e. Dissent (Scalia): i. The “guidelines” have the force & effect of laws, which

is solely the legislature’s job

ii. There is no acceptable delegation of legislative power,

& this case presents an example of a completedelegation. It is irrelevant whether the standards are

adequate, b/c they are not standards related to the

exercise of executive of judicial powers; they are

plainly standards for further legislationiii. The Const. doesn’t allow for a body which is not

Congress and yet exercises no governmental powersexcept the making of rules that have the effect of laws

f. Death of Delegation Doctrine: Mistretta means that the

Delegation Doctrine is Dead. This means that courts are OK w/ the legislature punting issues to agencies to

decide/legislate. Who are these agency people, who are they

accountable to, what are they up to?

3. Industrial Union Dept AFL-CIO v. American Petroleum Inst.

(1980) pg. 74 (though the court has not invalidated a delegation

since 1936, this case uses it to justify interpreting a federal statutenarrowly)

a. Facts: OSHA tried to limit industries to 1 ppm for benzene

rather than the suggested 10 ppm. It had no data that said 1 ppm was safer than 10 as far as causing cancer goes; it only

assumed it, citing that it could basically do what it wanted

under §3(8) & §6(5) of the Congressional Act that instituted

OSHA. Court concluded that §3(8) requires the Secretary of OSHA to find, as a threshold matter, that the toxic substance

in question poses a significant health risk in the workplace

and that a new, lower standard is therefore “reasonablynecessary or appropriate to provide safe or healthful

employment and places of employment.”

b. Issue: Whether a showing that workers exposed to highlevels of benzene is a sufficient basis for a standard that

places the most stringent limitation on exposure to benzene

that is technologically and economically possible

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c. Holding:. No. The plurality construed the statute to require a

threshold finding of significant risk in the workplace before

the agency was authorized to promulgate a workplace safetystandard.

d. Rationale: OSHA presented no evidence to support their

conclusion that the ppm should be reduced tenfold, yet theyare supposed to have the burden of proof, not the industry.

OSHA just noted that the 10-100 safety factor was

“customary.i. Court found that this broad interpretation may violate

the delegation doctrine, and so construed narrowly.

e. Occupational Safety and Health Act of 1970 §3.8 —“The

term occupational safety and health standard means astandard which requires conditions, or the adoption or use of

one or more practices, means, methods, operations, or

processes, reasonably necessary or appropriate to provide

safe and healthful employment and places of employment.i. Does Congress mean this to be read “benefits are

greater than costs”?f. Legislative Intent: * In interpreting a statute, you

ALWAYS discuss the text first & try to determine what it

means on its face (the language, the structure), before youlook at legislative intent.

i. The statute was not designed to require employers to

provide absolutely risk-free workplaces whenever it is

technologically feasible to do so, so long as the cost isnot great enough to destroy an entire industry.

ii. The statute was intended to require the elimination, as

far as feasible, of significant risks of harmg. Concurrence (Rehnquist): The Court should have deemed

the statute unconstitutional, since it delegates power to

legislate to another entity. Congress needs to stop avoidingits responsibilities & get other the fact that there will be some

political division. Should revive nondelegation doctrine

h. Law of Agency

i. Agencies acting pursuant to Congressional power andso act as Congress’ agent.

ii. In this case however, Dept. of labor (exec. Branch)

seems to act as principal as well.i. Note 4, page 97-99

i. Multi-factor balancing tests

ii. Problem: it’s always open to the decision maker to say,“Well, this one thing outweighs this other thing.”

iii. You can justify practically anything under a multi-

factor balancing test.

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c. Life After Mistretta--A Spark of Life?

1. American Trucking Assn’s v. US EPA (2001) pg. 97

a. DC Circuit court makes attempted revival of nondelegation

doctrine, but the U.S. Supreme Court reverses unanimously.

d. Controlling Delegations— The nondelegation doctrine is dead—what can

we do to make agencies more accountable?

i. Legislative Overrides1. Statutory Overrides: Congress can control agency decisions by

passing statutes that override the agency decision or can amend the

organic statute to eliminate the agency’s discretion or even the

agency itself 2. Legislative veto: Congress gives the agency discretion that is

conditional on subsequent approval or lack of disapproval by

Congress; the alternate to a full blown bill

ii. Appropriations: Congress has exclusive control over federalspending; agencies cannot fix their own budget but must rely on

congressional appropriation legislation for funding. Congress thuscontrols the resources that are available to each agency and can use

that control to penalize or reward agency behavior through reduced or

expanded budgets.iii. Legislative History: Paper trail of documents surrounding the passing

of the bill, including:

1. Hearing transcripts

2. Committee reports from the House, Senate, or both3. Statements on the floor of the House and/or Senate from individual

members of Congress

4. A conference committee report5. A presidential signing (or veto) statement

a. Each of these gives the legislature/president a chance to

say/record what they think the statute means (or what theywant it to mean). Therefore, there are almost always

conflicting statements

6. Agencies will treat legislative history very seriously regardless of

whether or not courts continue to use it as an authoritative tool of statutory interpretation. That is because leg. history is a formal

way in which member and committees of Congress can

communicate their desires to agencies. Agencies ignoreCongressional intentions at its peril

7. Immigration & Naturalization Service v. Chadha pg. 101

a. Facts: Deportation of immigrant is suspended. Congress passes immigration legislation without the bill going to both

houses and without the president’s approval.

b. Holding: One-house legislative veto is unconstitutional.

End of the legislative veto. Veto not upheld b/c violated

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i. Formalistic Opinion (Debow says rightly decided)

e. The Scholarly Debate—Are Delegations good policy?

i. Mashaw thinks death of delegation doctrine is a good thing.

1. Have presidential elections for accountability.

2. Those concerned about this accountability can choose to elect adifferent president.

3. Says the amount of discretion in an administrative system is

always constant.

f. Agencies and Article II

i. The Appointment of Agency Officials

1. The fed gov’t now has virtually unlimited legislative jrd over nat’laffairs, & Congress has virtually unlimited power to delegate that

expansive legislative jrd to administrative agencies

2. The Constitution contains an Appointments Clause that specifies a

method of selection for many of the gov’t positions that Congresscreates.

3. Art. II’s appointments clause does not vest this power in Congress,however.

4. Two distinct modes of appointment

1. For “principal” officers--Presidential appointment subject toadvice & consent by the Senate (default mode) &

2. For “inferior” officers--Appointment, w/out Senate participation,

by the President, the courts, or department heads (exclusive

mode)i. Available only for “inferior Officers” & only when

Congress chooses to utilize that mode.

ii. Buckley v. Valeo pg. 126 (1976)

1. Facts: The election commission was appointed by members of

Congress, but the Commission is given extensive rulemaking &

adjudicative powers. Appellants urge that this is unconstitutional b/c of Art. II, § 2, cl. 2

a. The Appointments Clause: “The president shall

nominate…all other officers of the US…but the Congress

may by law vest the appointment of such inferior officers, asthey think proper…

2. Issue: whether, in view of the manner in which a majority of its

members are appointed, the Federal Election Commission mayunder the Constitution exercise the powers conferred upon it. No;

these administrative functions may therefore be exercised only by

persons who are Officers of the US3. Holding: No. The FEC cannot engage in executive functions

such as rulemaking and enforcement because four of its six

members were appointed by members of Congress.

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a. “Officers of the United States” must be appointed under the

Appointment Clause. If Congress appoints, the Commission

must then be limited in its power. b. Any appointee exercising significant authority pursuant to the

laws of the US is an “Officer” & must therefore be appointed

in the manner prescribed by the appointment clause.c. Principal Officers are selected by the Prez w/ the advice &

consent of the Senate. Inferior officers Congress may allow

to be appointed by the Prez alone, by the heads of departments, or by the Judiciary.

d. Unless their selection is elsewhere provided for, all Officers

of the US are to be appointed in accordance w/ the Clause

4. Debow says rightly decided.

5. First time in 40 years that congressional statute concerning

structure of government is struck down.

a. Model of formalism

iii. Landry v. FDIC pg. 132 (2000)

1. Facts: The ALJ (administrative law judges) held a hearing & proposed to the FDIC that a bank officer should be removed. P

argues that the method of appointing the ALJ (allowing the

banking agencies to establish their own pool of ALJ) violates theappointment clause b/c they are inferior officers.

a. Prosecutor and judge both work for agency

2. Holding: ALJs are not “officers” b/c they don’t have the power

of final decision in cases (the FDIC ultimately decides).3. Dissent: ALJs are officers b/c their role is functionally

comparable to that of a judge.

4. Debow does not like outcome.

iv. Morrison v. Olson (1988)

1. Facts: Federal statute authorizes independent counsels toinvestigate and prosecute crimes by high level federal officials.

Under the statute, independent counsel was not appointed by the

Prez with advice and consent from the Senate. Instead, she was

appointed by a panel of 3 Fed. judges. The case arose whenIndependent Counsel (Morrison) had Olsen held in contempt of

court for refusing to cooperate with her investigation. Olsen

challenged the order, arguing that independent counsels were principal officers and should be appointed only with advice and

consent of Senate.

2. Issue: whether independent counsel is an “inferior” or “principal”officer (if she’s the latter, the Act violates the appointment clause).

Held: Inferior

3. Rationale: Inferior officer because:

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a. She is subject to removal by a higher Executive branch

official

b. She is empowered by the act to perform only certain limitedduties—investigation and prosecution

c. Her office is limited in jurisdiction (only certain serious

federal criems) and limited in tenure4. Dissent: Scalia combats each of the court’s points of rationale:

a. She’s only removable for good cause, meaning that she’s

harder to remove than most principal officers b. Her authority is not that limited (she has “full power &

independent authority,” etc.)

c. Unlike most high-ranking executive branch officials, she

continues to serve until she decides that her work issufficiently complete; plus, although her jrd is small, w/in it,

she exercises more power than the Atty General.

d. Debow agrees with Dissent—(textualist/formalist)

e. Notes following the casei. Whether one is an inferior officer depends on whether

he has a superior. Inferior officers are officers whosework is directed & supervised at some level by others

who were appointed by Prez nomination w/ the advice

& consent of the Senate.ii. The exercise of significant authority pursuant to the

laws of the US marks, not the line between principal &

inferior officer for Appointments Clause purposes, but

rather the line between officer & non-officer (employee)

iii. Once an officer is appointed, then gets new

responsibilities, does the officer have to bereconfirmed? No answer right now.

g. Removal of Agency Officials

i. Removal Possibilities:1. Should be solely an executive power/right.

a. According to this standard (a unitary executive view),

although the Prez cannot directly exercise power vested by

statute in another official, any action by that subordinatecontrary to presidential instructions is void.

2. Same standards for removal as for appointing

a. This was the founding fathers’ choice, known as “thedecision of 1789.”

3. Rely on the sweeping clause & say that Congress could condition

the removal of anyone4. Each house of Congress can expel (remove) its members by a 2/3

vote

5. Congress may also remove the Prez & all other executive &

judicial officers via impeachment (in Constitution)

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a. Prez’s pardon power doesn’t extend to impeachments

b. Impeached officers are not entitled to trial by jury in senate

6. Appointment & removal powersa. Madison said that Art. II by vesting the executive power in

the Prez was intended to grant to him the power to

appointment & removal of executive officers (except asexpressly limited by Art.)

i. Also said that the power of removal of executive

officers is incident to the power of appointmentii. Warned: vest this power in the Senate jointly w/ the

Prez & you abolish at once that great principle of unity

& responsibility in the Exec Dept, which was intended

for the security & liberty & the public good.7. Myers v. U.S Court struck down a federal statute that required the

President to get Senate approval to remove a postmaster. Court

held that Congress could not interfere with the President’s removal

of an executive officer who the president had appointed withadvice and consent of the Senate.

8. Humphrey’s Executor , contrary to Myers —Court upheld afederal statute restricting the President’s removal of a member of

the FTC who had been appointed by the Prez with advice and

consent of the Senate.i. Court explained that postmaster in Myers was a “purely

executive officer”, while FTC in Humphreys carried out

quasi-legislative and quasi-judicial powers.

ii. Thus, Congress could restrict the president’s powr toremove presidential appointees who carried out quasi-

legislative or quasi-judicial powers.

9. Morrison v. Olson, part II

a. Independent counsel, under statute, could be removed by

Attorney General, who is a subordinate to the Prez.

However, independent counsel could be removed only for “good cause”—this restriction was set by Congress.

b. Issues

i. Whether the removal restrictions (i.e., the Atty Gen can

only remove the independent counsel for good cause)are of such a nature that they impede the Prez’s ability

to perform his constitutional duty. Held: No.

ii. Whether the Act (concerning the independent counsel)taken as a whole violates the principle of separation of

powers by unduly interfering w/ the role of the Exec

Branch. Held: No.c. Rationale

i. Changed the “category” test of Humphrey’s (i.e.,

restrictions on the Prez’s power turns on whether that

16



official is “purely executive” in nature) & created a new

test:

1. So long as Congress does not interfere w/ thePrez’s exercise of the executive power & his

constitutionally appointed duty to take care that

the laws by faithfully executed, a statute limitingPrez’s removal power is valid.

2. Court said, “we simply do not see how the Prez’s

need to control the exercise of the independentcounsel’s discretion is so central to the

functioning of the Exec Branch as to require as a

matter of con law that the counsel by terminable

at will by the Prez.”3. B/c the independent counsel may be terminated

for good cause, the executive retains ample

authority to assure that the counsel is competently

performing his statutory responsibilities in amanner that comports w/ the provisions of the

Act.ii. Concerning the second issue, court said they have never

held that the Const. requires that the three branches of

gov’t operate w/ absolute independence.iii. Held that this case simply does not pose a danger of

congressional usurpation of exec branch functions

iv. Functional Approach: Court considers whether the

restriction impedes the President’s ability to performhis constitutional duties.

d. Scalia’s dissent

i. The Constitution vests ALL of the executive power inthe executive branch.

ii. The statute at hand deprives the Prez of exclusive

control over a quintessentially executive activity (gov’tinvestigation & prosecution of crimes).

iii. It’s irrelevant how much the statute reduces Prez control

in this area: the fact that it reduces it at all should render

it void.iv. Evidently, the governing standard is to be what might

be called the unfettered wisdom of a majority of this

Court, revealed to an obedient people on a case-by-case basis. *** This is not only not the gov’t of laws that the

Const. established; it is not a gov’t of laws at all.

v. It is now open season upon the Prez’s removal power for all executive officers. The Court essentially says to

the Prez: Trust us. We will make sure that you are able

to accomplish your const. role. I think the Const. gives

the Prez & the people more protection than that.

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vi. ***The law is, by definition, precisely what the

majority thinks, taking all things into account, it ought

to be. I prefer to rely upon the judgment of the wisemen who constructed our system, & of the people who

approved it, & of 2 centuries of history that have shown

it to be sound. Like it or not, that judgment says that“the executive power shall be vested in a Prez of the

US.”

ii. The Unitary Executive1. Unitary executive: the Const’s vesting of exec power in the person

of the Prez rather than in the exec dept as a whole.

2. But if a statute vests discretionary authority directly in an agency

official (as do most regulatory statutes) rather than in the Prez, theArt. II Vesting Clause seems to require that such discretionary

authority be subject to the Prez’s control.

h. Agencies and Article III ( Agency adjudication raises a separation of

powers problem. Because Art. III vests the judicial powr in Art. III courts,it has been argued that administrative agencies usurp that power when they

adjudicate cases. However, the Supreme Ct has approved of a great deal of agency adjudication.

i. Commodity Futures Trading Comm’n v. Schor pg. 174 (1986)

1. CFTC regulates items bought and sold through brokers. Schor is acustomer of one of these brokers. Schor alleges that the broker

violated trading laws. The broker counterclaimed that Schor owed

him balance of debit account. No dispute about Commission’s

power to hear Schor’s claim (arising from federal statute).Broker’s claim, however, is a state contract claim.

2. Issue: whether the commission’s assumption of jurisdiction over

common law state counterclaims violates Art. III of the Const3. Holding: No. the limited jrd that the commission asserts over

state law claims as a necessary incident to the adjudication of

federal claims willingly submitted by the parties for initial agencyadjudication does not contravene separation of powers principles

or Art. III

4. Rationale:

a. Court declines to “adopt formalistic & unbending rules.”Looks instead to the “practical effect that the congressional

action will have on the constitutionally assigned role of the

federal judiciary.” Instead, weighed a number of factors. b. Court made the decision based on four factors:

i. Extent to which essential attributes of judicial power

are reserved to Art. III courtsii. Conversely, the extent to which the non-art. III forum

exercises the range of jurisdiction normally reserved to

Art. III courts

iii. Origins and importance of the right to be adjudicated

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iv. Concerns that drove Congress to depart from the

requirements of article III.

1. The constitutionality of a given congressionaldelegation of adjudicative functions to a non-Art.

III body must be assessed by reference to the

purposes underlying the requirements of Art. IIIc. Reasons that the commission’s adjudicatory powers departs

from the traditional agency model in just one respect: its jrd

over CL counterclaimsi. “There is little practical reason to find that this single

deviation from the agency model is fatal to the

congressional scheme.”

d. Court is persuaded that “the congressional authorization of limited commission jrd over a narrow class of CL claims as

incident to the commission’s primary & unchallenged

adjudicative function does not create a substantial threat to

the separation of powers.”i. Reasons that the decision to invoke this forum is left

entirely to the parties & the power of the judiciary of these matters is unaffected

5. Dissent: Says the court should only recognize 3 narrow

exceptions to the otherwise absolute mandate of Art. III (whichvests the judicial power solely in the judiciary): territorial courts,

courts-martial, & courts that adjudicate certain disputes concerning

public rights (claims against the gov).

a. The Framers knew that the accumulation of all powers,Legislative, Executive, & Judiciary, in the same hands,

whether of one, a few, or many, and whether hereditary, self-

appointed, or elective, may justly be pronounced the verydefinition of tyranny

b. The Fed judicial power, then, must be exercised by judges

who are independent of the Exec & Legis in order tomaintain the checks & balances that are crucial to our const.

structure.

c. By sanctioning the adjudication of state-law counterclaims by

a fed admin agency, the Court far exceeds the analyticframework of our precedents

d. The Court requires that the legislative interest in convenience

& efficiency be weighed against the competing interest in judicial independence.

i. The danger in this balancing approach is that as

individual cases accumulate in which the Court findsthat the short-term benefits of efficiency outweigh the

long-term benefits of judicial independence, the

protection of Art. III will be eviscerated

ii. Administrative Adjudication and Jury Trial

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1. When politically accountable agencies adjudicate, and perhaps

impose fines on defendants totaling hundreds of thousands of

dollars, does the 7th amendment require the use of a jury? NOsays a unanimous S.C.

i. Agencies and the Separation of Powersi. Modern admin agencies are Madison’s worst nightmare come true.

Agencies routinely combine in one body the executive power of

enforcement & administration, the legislative-like power of rulemaking, & the judicial-like power of adjudication

ii. Withrow v. Larkin(1975)(heads of agencies may be involved both in

directing the investigation and prosecution of someone as well ashaving ultimate responsibility for the adjudicatory decision—APA

creates exception from the separation of functions provision.)

1. Facts: state medical board initiates an investigation of Larkin, a

doctor, after he begins performing abortions Board later chargeshim with licensing violations and sets a hearing date where the

board will preside. Board also refers matter to local prosecutor after finding probable cause that he had committed criminal acts.

Larkin sues to enjoin the board from hearing the case on the

ground that given the board’s prejudgment as evidence by its prior actions, it would violate due process for the board to hear the case.

2. Issue: Specifically in this case, whether the authority given to a

statutorily created medical examining board both to “investigate

physicians & present charges & rule on those charges & impose punishment, at least to the extent of reprimanding or temporarily

suspending” violated the physician’s due process rights. Held: No.

3. Holding: S.C. holds that it would not violate due process for the board to hear the case after its investigation and referral to the

prosecutor. Court held that the combination of these functions did

not constitute a per se violation of due process. The Courtsuggested that a due process violation would be found only when

some additional evidence existed that the board had prejudged the

ultimate outcome of the case.

4. Rationale: The challenge to this combination of function assumestoo much and would bring down too many procedures designed, &

working well, for a gov’t structure of great & growing complexity.

a. * W/out a showing to the contrary, state administrators areassumed to be men of conscience and intellectual discipline,

capable of judging a particular controversy fairly on the basis

of its own circumstances. Right… b. The risk of bias or prejudgment in this sequence of functions

has not been considered to be intolerably high or to raise a

sufficiently great possibility that the adjudicators would be so

psychologically wedded to their complaints that they would

20



consciously or unconsciously avoid the appearance of having

erred or changed position

5. ***This case was doomed to fail, b/c the S.C. was not going to saythat 2/3 of the US Gov’t (the agencies, which combine all 3

functions of gov’t) were unconstitutional. Here, the same people

(the board) were the prosecutors & the judges, but the courtwouldn’t say it’s unconstitutional (although it clearly is).

iii. Separation of Powers and Separation of Functions

1. Formal proceedings : agency proceeding that use procedures

resembling those of judicial trial

2. Administrative Law Judge (ALJ ): agency official who makes an

initial (& sometimes final) decision, performing many of theadjudicative, judge-like functions carried out by agencies.

a. Unlike const. judges, ALJs have no guarantees of salary or

tenure: salaries are set on a gov’t-wide basis, & ALJs can be

removed for good cause3. Separation of functions : the agency as an entity is permitted to

combine prosecutorial and adjudicative functions, but different personnel in the agency generally must perform those functions

a. Gaping hole : proceedings can be conducted by a semi-

autonomous ALJ or by some or all of the Commissioners.Agency heads, therefore, may be personally able to

investigate, prosecute, & adjudicate the same case

4. The problem of bias

a. Court will set aside a commission member’s decision not torecuse himself from his duties only where he has

demonstrably made up his mind about important and specific

factual questions and is impervious to contrary evidencei. Essentially impossible to prove.

IV. Statutory Constraints on Agency Procedurea. Intro: the Administrative Procedure Act

i. Origins of the APA

1. Originated in 1946

2. First statute to systemize admin law on a gov’t wide basis.3. Hardly been amended at all

4. In many aspect, agency and judicial application of the APA bears

no real relationship to the statute that was enacted in ’46.ii. Structure of the APA

1. Provisions cover 4 subjects; this chapter focuses on provisions that

regulate the procedures that agencies must employ when makingdecisions.

2. Relies on two fundamental distinctions:

a. Distinguishing rulemaking from adjudication

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b. Distinguishing between what have come to be called formal

(trial type/ on the record) and informal procedural modes.

3. In formal rulemakings, the procedure is very similar to formaladjudication in that there is a trial-type procedure governed by

sections 556 and 557 of the APA.

4. In informal rulemakings (notice-and-comment rulemakings),agencies need only provide minimal notice and a right to file

written comments on the agency’s proposals (called notice-and-

comment rulemakings). (APA 553). In general, the agency givesnotice of the rulemaking to the public, accepts comments from the

public about the proposed rule, and after consideration of the

comments provides an explanation of the basis and purpose of the

rule when it adopts the final rule.a. It is sufficient notice for the agency merely to describe a

problem that it is investigating (has the option of, but doesn’t

necessarily have to include the terms or substance of the

proposed rule). b. The public has a right to comment on the agency’s proposal,

but the agency determines the form in which those commentsare presented (can allow oral, but doesn’t have to).

c. After the agency’s consideration of the matter, they must

incorporate in the rules adopted a concise general statementof their basis & purpose

d. Rules that emerge from informal rulemakings do not need to

be based solely on material presented in the proceeding.

i. In informal adjudications, the APA requires virtually no procedures at all

e. Determining which procedural mode to use :

i. For rule-making & adjudication, must employ theformal mode when the proceedings are required by the

organic statute that created the agency to be

made/determined on the record after opportunity for anagency hearing

iii. Shapiro Essay

1. During the New Deal, Democrats’ view was “agencies good,

courts bad.” Republican’s view was “agencies bad, courts good.”The APA was a limited concession to the Republican’s criticisms,

since it provided for some adjudication/judicial review. However,

its provisions/requirements for rulemaking are lacking, to say theleast.

2. Original understanding of APA: agency had very broad discretion

to make rules & only had to supply a concise general statement of their purpose, & if anyone bothered to take them to court on it, the

standard of review (only way to overturn the agency) was to find

that the agency had acted “arbitrarily and capriciously” (i.e., like a

lunatic) (§ 706).

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a. Courts do not use this standard today—now agencies must

convince the court that its rulemaking is reasonable.

b. Until Congress comes in to rewrite the APA, we’re stuck w/it the way it is, even though it’s interpreted differently from

how it’s written.

c. APA was obsolete when it was passed, b/c it was written inthe 30’s, but was not passed until 1946 (after FDR had died

& after WWII).

b. Formal Rulemakingi. Formal rulemaking is required when the agency’s enabling act

requires that rules are to be made “on the record after opportunity for

an agency hearing.” APA Section 553(c) states that “when rules are

required by statute to be made on the record after opportunity for agency hearing, sections 556 and 557 of this title apply instead of this

subsection.” 556 and 557 prescribe formal, adjudicatory type

procedures.

1. The Original Understandinga. Instead of reading the actual APA, courts look now to the

“cliff notes” version: the Atty General’s Manual on theAdministrative Procedure Act. From the manual:

i. Statutes rarely require hearings prior to the issuance of

rules of general applicabilityii. Where rates or prices are established by an agency after

a hearing required by statute, the agencies themselves

and the courts have long assumed that the agency’s

action must be based upon the evidence adduced at thehearing

iii. In the type of statute that doesn’t contain “on the

record” language, there is no requirement, express or implied that the rules be formulated on the record

b. Rate regulation historically required formal procedure

ii. U.S. v. Florida East Coast Railway (1973) (Supreme Court interpreted language in section 553 very narrowly, requiring a statute

either to state in terms or by reference to sections 556 and 557 that

formal rulemaking is required or to use language explicitly invoking

the need for the rule to be made both on the record and after anopportunity for agency hearing.)

1. Facts: Background: Informal rulemaking is now the default

mode, even in rate regulation. Basically, court ignores the APA.All agencies have to do now, in most cases, is to allow written

comments to be filed.

a. The Esch Car Service Act said that the ICC could establishrules “after hearing.” In this act, they were given the power

to regulate the terms by which railroads borrow rail cars from

each other (ratemaking, which is rulemaking).

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b. In 1966, after a number of years in which portions of the

nations were plagued w/ seasonal shortages of freight cars in

which to ship the ICC was considering whether to establishan incentive element increase. Congress pressured it, so after

some time, they decided to make the increase. They had

gone through the formal rulemaking procedures, butultimately did not hold an oral hearing, but only allowed

dissenting comments to be filed. The railroads complained,

but the ICC said that the railroads were not prejudiced by thelack of oral hearing (they claimed they could do this under

the last sentence of §556(d). Basically, everyone thought that

the formal procedure requirement was there, even through

they differed on whether the ICC had appropriately met them2. Holding: S.C. held that the ICC’s proceedings were only

governed by § 553 & that the “hearing” requirement was met

a. Allegheny--Court looks to its decision in U.S. v. Allegheny-

Ludlum Steel Corp. In that, they held that the language in theICC’s organic statute (“after hearing”) was not the equivalent

of a requirement that a rule be made “on the record after opportunity for an agency hearing.”

b. Court said the term “hearing” does not necessarily provide

for oral argument.c. Paper Hearing OK--Even where the statute requires that the

rulemaking procedure take place “on the record after

hearing,” thus triggering § 556, the agency may proceed by

the submission of all or part of the evidence in written form

if a party will not be prejudiced thereby.

d. The fact that the order may in its effects have been thought

more disadvantageous by some RRs than by others does notchange its generalized nature (in other words, the court is

saying that this was a rulemaking, not adjudicative thing).

3. Dissent:

a. This is clearly a rate regulation, and a hearing under the ICA

that fixes rates, charges, or fees is certainly adjudicatory, not

legislative in the customary sense.

b. These rules involve the creation of new financial liability.Although quasi-legislative, they are also adjudicatory in the

sense that they determine the measure of the financial

responsibility of one road for its use of the rolling stock of another road.

4. The Aftermath:

a. Apart from the few rulemaking statutes that contain anexpress “on the record” requirement, formal rulemaking has

virtually disappeared as a procedural category. Although

the ICC case said that a statute didn’t necessarily have to

24



have the magic “on the record” phrase to require formal

rulemaking, that’s how lower courts have interpreted it.

5. The Stakes:

a. Rulemaking activity was dramatically increasing just as this

case substantially reduced the procedural requirements in

many rulemakings. b. The combination of increased rulemaking activity under

sharply decreased procedural constraints and a gloomy view

of agency behavior proved highly volatile. Indeed, must of this course charts the consequences of this combination

i. The courts will begin to try to re-write the APA; there

will be a lot of judicial inventiveness, as a result of the

distrust of agencies & the lack of requirements for aformal proceeding under the APA. Federal judges are

now trying to make §553 more formal by elasticity of

interpretation.

c. Formal Adjuciation (Section 554 of the APA contains procedural requirements for cases of adjudication “required by statute to be

determined on the record after an opportunity for agency hearing.”Sections 556 and 557 then apply specifying more procedure.)

i. Seacoast Anti-Pollution League v. Costle

1. Facts: Environmental group challenges a Clean Water Act permitissued by EPA to a nuclear power plant. Petitioners claim that the

decision contravened APA 554, 556, and 557. The Clean Water

Act provides that permits are issued “after opportunity for public

hearing” but does not specify that the hearing must be “on therecord”. Thus, if the case would have involved rulemaking, the

presumption against formal procedures would apply, as in Florida

East Coast.2. Holding: Where a statute specifically provides for administrative

adjudication (such as the suspension or revocation of a license)

after opportunity for an agency hearing, such specific requirement for a hearing ordinarily implies the further requirement of

decision in accordance with evidence adduced at the hearing

a. Presumes that unless a statute otherwise specifies, an

adjudicatory hearing subject to judicial review must be on therecord. Holds for formal adjudication. When nature of

determination is adjudicatory, determining facts and

applying law to them, the presumption should be in favor of trial-like procedures, because adjudication is the

administrative equivalent of judicial determination.

b. Case here is fact-specific to the particular situation and soshould look more like a trial than a piece of legislation.

Adversarial hearings will be helpful. A record that is

developed at trial type setting will be helpful and will

facilitate meaningful judicial review.

25



c. Opposite holding from Fl. East Coast .

ii. City of West Chicago Il v. NRC (Opposite view of Seacoast (split in

the circuits). Assumes informal adjudication by simply citing to Alleghany and Florida East Coast —unless precise language displays

clear indication of Congressional intent, a presumption towards

informal proceedings will be asserted)1. Facts: Atomic Energy Act. Commission regulations provide that

a notice of hearing will issue when a hearing is required by

Act/this chapter or when the Commission finds that a hearing isrequired in the public interest. NRC denies the city’s request for a

formal hearing. NRC had adopted a section in the AEA on its own

which requires a formal public hearing. However, court allows the

agency to interpret its own regulations in case of ambiguity.2. Issue: Did the agency violate the organic statute (AEA)?

3. Holding: No. Court says that the particular license amendment in

question does not trigger notice of hearing or formal procedures.

4. Rationale: Court uses legislative history, and finds no intention inlegislative history for formal procedures. Debow asks why not use

the language of the statute?a. Ultimately presumes that the restrictive rule of the Florida

East Coast case applies to adjudications as well as

rulemakings b. This case responds to the criticism that formal rulemaking

was getting out of hand (ex., the long process of determining

what percentage of peanut butter must be peanuts).

c. In absence of literal “on the record” language, no formalhearings.

d. Case line up with Fl. East Coast .

iii. Chemical Waste Mgm’t Inc. v. US EPA (235) (represents a third lineof analysis for formal adjudication. The court uses the Chevron

analysis, finds Congressional intent to be ambiguous, and then defers

to the agency’s interpretation.)1. Holding: DC Circuit holds that where the Resource Conservation

and Recovery Act required the EPA to hold a “public hearing”

before issuing certain orders, the nature of the required hearing

was ambiguous. Thus, the Court, under Chevron, defers to theagency’s interpretation that the language did not require formal

adjudication, because that interpretation was reasonable in light of

the issues likely to be considered in such proceedings.a. Thus, rather than trying to determine itself what the statutory

language meant, the court would defer to the agency’s

interpretation of the language. b. This represents another line of analysis for formal

adjudication.

2. Chevron Analysis (2 steps):

26



a. If Congress directly speaks to the precise question at issue,

the court must give effect to the expressed intent of Congress

(no deference to agency). b. If the statute is silent/ambiguous w/ respect to the specific

issue, then the court must ask “whether the agency’s answer

is based on a permissible construction of the statute”; if so,then the court must defer to the agency’s construction

3. If the agency determines that the proceeding is to be informal, the

court will then evaluate the reasonableness of the agency’sinterpretation using the normal tools of statutory interpretation—

such as legislative history, structural inferences, or exceptional

circumstances

a. Basically, if the agency’s reasoning is not “arbitrary &capricious,” then it will be upheld

b. Court must give deference to agency interpretation of

i. Its own regulations

ii. Its organic statuteiii. This is strange, b/c shouldn’t judges be deciding this?

4. Legislative history: it shouldn’t be very important, b/c you can findanything that some senator said to support your view, just as the

other side can do that

d. Informal Rulemakingi. The Rise, Fall, and Rise of Hybrid Rulemaking

(Hybrid=somewhere in between informal procedures and formal

procedures. Problem is, the APA only speaks to these two categories.

While it might be a good idea to have a hybrid category, it’s not up tothe D.C. Circuit to amend the APA & create it.)

ii. The Supreme Court Speaks

1. Vermont Yankee Nuclear Power Corp. v. Natural Resources

Defense Council, Inc.

a. Facts: The agency in question granted licenses to petitioner

(Vermont Yankee) after following an informal rulemaking procedure. D.C. Circuit overturned: despite the fact that the

agency employed all the procedures required by §553 &

more, the court determined the proceeding to be inadequate

and required a trial-type hearing. b. Holding: Supreme Court vigorously reversed in favor of the

agency. Court holds that courts may not require procedures

in addition to those specified in the APA or other applicablestatutes. While agencies were free to adopt additional

procedures voluntarily, courts are not authorized to require

agencies to use the courts’ notions of appropriate procedures.c. Rationale:

i. Absent constitutional constraints or extremely

compelling circumstances the admin agencies should be

free to fashion their own rules of procedure and to

27



pursue methods of inquiry capable of permitting them

to discharge their multitudinous duties

ii. Congress intended that the discretion of the agenciesand not that of the courts be exercised in determining

when extra procedural devices should be employed

iii. The court should not stray beyond the judicial provinceto explore the procedural format or to impose upon the

agency its own notion of which procedures are “best”

or most likely to further some vague, undefined publicgood

2. The End of an Era? Vermont Yankee and the Rise of Hybrid

Rulemaking 1968-78.

a. It was odd for the Supreme Court to have taken this case,since the issues were muddy & it seemed to turn on a

question of fact (sufficient evidence) rather than a question of

law. Further, it was clear to everyone that the agency had

followed §553 & even went beyond that, having more procedures

b. Historical Explanationi. As agencies were increasing in scope & authority, trust

in them was weakening. There was widespread belief

in the “agency capture” model (i.e., that agencies were pawns of special industry interests).

ii. Further, there was a solid majority of proudly activist

liberal judges on the D.C. Circuit Court. David

Bazelon, Skelly Wright, Carl McGowan, & HaroldLeventhal. They believed in the agency capture model

& watched dourly as President Nixon appointed

administrators to run the agencies. They madethemselves gatekeepers.

iii. The D.C. Court was more important than the Supreme

Court when it came to admin law, since venue wasalmost always proper in D.C. & since the Supremes

rarely took admin cases.

iv. Since it would have been too brash for the judges to

second-guess the substantive decisions of the agenciesoutright, they went about concentrating on the agencies’

decision-making procedures. Of course, the end was

both substantive & procedural activism.1. If the courts can really attack the substance of the

agencies’ decisions, agencies are meaningless.

That means the court is now legislating. It’s like ahot potato, passing around who can legislate,

when the Const. clearly says the Legislature

should legislate.

28



2. The court REALLY stretched the meaning of the

phrases in §553 (for example, “opportunity for

meaningful participation by interested parties”meant extremely meaningful).

i. The result of all these factors was hybrid APA

rulemaking—the judges required much more than theinformal procedures of the APA demanded, but they

stopped short of requiring absolute formal procedure.

ii. Oral hearings and cross-examination were among themost common judicially imposed procedures.

iii. For example, the APA requires a “concise general

statement of basis & purpose.” However, it soon

became clear to the agencies that if they didn’t wanttheir decisions overturned (or to be taken to court),

they had to respond in detail to every significant

comment made by private parties participating in the

rulemaking, which could include thousands of pagesof supporting documents.

iv. Further, the judges expanded the meaning of therequirement of a “general notice of proposed

rulemaking.” If the agencies did not want their

decisions tied up in court for years to come, theylearned that they had to put a whole lot more info in

their notices (ex., all relevant underlying studies &

data).

v. It was definitely not enough to have just a“description of the subjects and issues involved,”

even though the APA literally gives that option (the

other option is “the terms or substance of the proposed rule).

3. Then came the S.C. decision in Vermont

Yankee. However, the DC Circuit will still findways around Vermont Yankee through steps one

and three, though Vemont Yankee did plug up the

hearing requirement.

3. So They Spoke. Did anyone listen?a. Conneticut Light and Power Co. v. NRC (DC Cir. 1982)

i. Claim One: NRC not helpful in providing the

technical studies upon which they based their decisionson proposed rules. (concise statement)

1. Holding: Technical background of rules

sufficient for meaningful comment.ii. Claim Two: Differences b/t fire protection program as

proposed and as adopted. (Notice)

29



1. Holding: Court bears down on this one—notice

must be clear so that other side will be able to

comment effectively.iii. Summary: Court begrudgingly holds that the NRC met

the notice and comment rulemaking standards required

by §553, but chides them for “just barely” meetingthem. Lower Courts had listened to Vermont Yankee,

but only to hearing stage.

iv. Current view: the purpose of the comment is to allowinterested members of the public to communicate

information, concerns, and criticisms to the agency

during the rule-making process, which is why the

agency should be detailed in its notice.1. Proposed rule must provide sufficient info to

permit informed adversarial critique

2. Rule adoption rather than rulemaking.

3. Original idea behind APA was that the agencywould announce that it was thinking about a

problem and wanted to develop a rule around it. Now, agency has a rule in mind and in the first

state, expect an adversarial critique.

v. Agencies fight with Information Cascade: InformationCascade: if you try to get too much disclosure, the

incentive is to overflow the requester w/ volumes of

info. Therefore, this is what the agencies do—flood w/

infovi. An agency adopting final rules that differ from its

proposed rules is required to renotice when the changes

are so major that the original notice did not adequatelyframe the subjects for discussion.

vii. The statement of basis & purpose doesn’t have to be

comprehensive, according to the court, but it mustindicate sufficiently the agency’s reasons for the rules

selected so that the reviewing court doesn’t have to

“rummage through” the record to find a rationale.

b. Informal Rulemaking Procedure Steps (3)i. Notice—issuance of a notice of proposed rulemaking.

ii. Opportunity for Public Comment—the conduct of the

rulemaking itself, during which the agency receivescomments and formulates its rules.

iii. Issuance (or not) of a final rule, along with a statement

of basis and purpose for any rule adopted.c. Vermont Yankee (that the courts cannot require agencies to

use specific procedures during a rulemaking proceeding

simply b/c the courts consider them a good idea) only applies

to the 2nd part.

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i. Courts have not read Vermont Yankee as broadly as the

language permit; i.e., have not extended its ruling to the

1st & 3rd parts.ii. Therefore, hybrid rulemaking is still very much alive.

4. The Notice of Proposed Rulemaking (did not discuss in class)

a. The purpose of informal rulemaking as contemplated by theAPA in 1946 was to allow the agency to educate itself about

the subject matter or its rulemaking so it could formulate

intelligent rules. b. In the post-1986 era, however, the rulemaking process is

viewed more as a check on agencies than as a facilitative

device. Under this model, it’s essential that the agency give

detailed proposed rulemakings so that public comments can be directed at the agencies’ actual proposals.

i. Turned from a rule-making process to a rule-adopting

process. Agency now decides what it wants to do (has

its rule in hand), then gives the notice & is already in anadversarial mode w/ those who will comment.

c. Challenges to the adequacy of the notice are common & takedifferent forms

i. A party might object that an agency’s notice of

proposed rulemaking failed to disclose all of therelevant data that animated that agency’s thinking and

therefore did not give the public an adequate

opportunity to address the agency’s proposals. Two

potential focuses:1. Focus on what the agency knew when it issued its

notice

2. Focus on what the agency knew when it issued thefinal rule

d. Does the agency have to have a new comment period if it

bases its decision on info acquired after the initial notice?i. Rule: To avoid perpetual cycles of new notice &

comment periods, a final rule that is the logical

outgrowth of the proposal does not require an additional

round of notice and comment even if the final rulerelies on data submitted during the comment period

(i.e., after the initial notice). But if the final rule

departs too drastically from the original proposals, thena new notice and a new comment period is required.

1. How much of a departure is too much? Don’t

really know.e. Another type of challenge argues that the agency’s final rule

concerns a subject that was not adequately “flagged” by the

notice. (case below)

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i. Rule: Agencies cannot give notice that they are

considering A, B, & C and then adopt a rule concerning

D. The public must be made aware of the agency’s proposals.

5. MCI Telecommunications Corp v. FCC

a. Facts: Court held that the agency’s notice failed to meet therequirements of the APA

b. Issue: whether the notice was adequate to afford interested

parties a reasonable opportunity to participate in therulemaking process.

c. Holding: The “notice” was insufficient because it was in a

footnote in the “Background” section, and the corresponding

text had nothing to do w/ the people who are nowcomplaining (an IXC). This footnote was the only thing in

the whole notice that had anything to do w/ the IXCs (the rest

of it covered a proposed rulemaking for ESPs)

iii. The Statement of Basis & Purpose (did not discuss)1. Modern statement

a. Monstrously long & complex document that contains adetailed exposition of the agency’s reasoning and the

agency’s response to the views expressed by commenters

during the rulemaking.i. They’re long b/c courts don’t look at anything else in

making their determination—agencies use the B & P to

convince an appellate court that they’ve behaved

reasonably. b. An agency need not address every comment, but it must

respond in a reasoned manner to those that raise arguably

significant problemsi. The level of detail required in a response depends on

the subject of the regulation and the nature of the

comments received.ii. An agency doesn’t have to address every comment b/c

some of the comments are goofy ones from crazy

people. However, agencies do have incentive to

address every sensible comment.c. Although an agency is not required to discuss every item of

fact or opinion included in the submissions it receives in

response to a Notice of Proposed Rulemaking, it mustrespond to those comments which, if true, would require a

change in the proposed rule. This is really the minimum.

d. Commenters have a right to comment on proposed regs, notto comment in a never-ending way on the agency’s responses

to their comments

i. I.e., courts are reluctant to order new rounds of notice

and comment simply b/c material that shows up in the

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statement of basis & purpose was not mentioned in the

notice of proposed rulemaking.

ii. However, the agency would be wise to err on the sideof disclosure, & put anything that they think they might

use in the notice of proposed rulemaking.

iv. Statutory Hybrid Rulemaking (did not discuss)1. By adding statutory procedures to the basic informal rulemaking

package, Congress can produce any level of procedural formality

that it desires on a case-by-case basis.2. One statute (Clean Air Act) expressly provides that the APA’s

procedural provisions are inapplicable expect to the extent that

they are specifically made applicable by the statute. The statute is

thus a self-contained substitute for the APA’s rulemaking procedures.

3. Presidents can also affect the rulemaking procedure. Executive

Order 12,866 (under Clinton) (pg. 994). Allows agencies when

evaluating costs & benefits to use both quantitative measures &qualitative measures (which are much harder to quantify; ex.,

measuring the aesthetic benefits of reducing pollution). Says theagencies need to maximize net benefits, unless another statute

requires otherwise.

v. Exemptions from Informal Procedures1. Informal rulemaking procedures do not apply

a. To interpretative rules (i.e., interpretation of the organic

statute), general statements of policy, or rules of agency

organization, procedure, or practice; (these do not have alegally binding effect on the conduct of the public) or

b. When the agency for good cause finds (& incorporates the

finding and a brief statement of reasons therefore in the rulesissued) that notice & public procedure are impracticable,

unnecessary, or contrary to the public interest.

2. Exemptions are much more important today: since notice andcomment rulemaking is so involved, agencies would like to claim

an exemption so as not to have to fool w/ it.

3. Procedural Rules

a. Air Transport Association of America v. Dept. of

Transportation

i. Issue: whether the agency (FAA) was obliged to

engage in notice & comment procedures before promulgating a body of regs governing the adjudication

of administrative civil penalty actions

ii. Agency argued that the exception applied b/c thesewere clearly procedural rules, not substantive. Majority

disagreed.

iii. Holding: The court of appeals held that although the

rule appeared to be procedural, it did not fall within the

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§ 553 exemption because it affected the civil violators

rights, including the right to a hearing

1. Where nominally procedural rules encode asubstantive value judgment or substantially alter

the rights or interest of regulated parties, the rules

must be preceded by notice & comment.2. The penalty rules fall outside the exemption b/c

they substantially affect a civil penalty

defendant’s right to an admin adjudication.3. Narrowing of APA

iv. Dissent (Debow Agrees with): Argued that, in effect,

the majority had mischaracterized the procedural right

to a hearing as a substantive right.1. advocates a bright line test between substantive &

procedural:

2. Substantive: when a given reg purports to direct,

control, or condition the behavior of thoseinstitutions or individuals subject to regulation by

the authorizing statute3. Procedural: when the regs deal w/ enforcement or

adjudication of claims of violations of the

substantive norm but which do not purport toaffect the substantive norm.

4. Interpretive Rules and Policy Statements

a. Interpretive Rules —Interpret statutes or other regulations, but

do not have legal binding power and so do not require noticeand comment.

b. Policy Statements —Also do not have legal binding power,

and thus do not require notice and comment. Occur mainly insituations when agency indicates that it will take

investigative or enforcement action, or when the agency

intends to act under certain circumstances in agencyadjudication.

c. 4 different tests for distinguishing substantive rules from

interpretative rules or policy statements

i. Legal effects test : if the rule creates a binding norm onregulated parties (if the rule standing alone affects

regulated parties), it is substantive; otherwise, it’s

interpretative (merely offering the agency’s opinion onmatters of law or policy)

1. This test is easy to administer (bright line)

2. Does the agency use interpretive tools? (leg.history, statutory construction, etc.)

3. Is the claimed interpretive rule consistent with the

legislative rule it is supposedly interpreting? (If

not, then not interpretive)

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4. Practical Effects of this test:

a. A properly adopted substantive rule

establishes a standard of conduct which hasthe force of law

b. A policy statement announces the agency’s

tentative intentions for the future (cannot usethe rule as binding law in subsequent

adjudications; no present legal effect); it’s a

glorified press release; have to prove thatsomeone violates the statute; not enough that

they violate a policy statement.

ii. Problem: the practical effect of such rules on regulated

parties may be hard to distinguish from the practicaleffect of leg. rules (if you’re a regulated party, you’ll

try to comply w/ their policy statements as well as

rules).

d. Substantial impact test (invalidated by Vermont Yankee)i. Courts look to the practical effect of the rule to

determine whether it had a substantial impact on theregulated community. If it does, then it held that the

rule requires notice and comment. Thus, even if sec.

553 did not require notice and comment, the court couldrequire it.

ii. Says notice-and-comment procedures are required for

rules that have a substantial impact on regulated parties,

even if those rules didn’t satisfy the formal legal effectstest.

e. Impact on Agencies Test

i. Look at how the agencies treat the rule: if the agenciestreat the rule as substantive, it is; if the agencies treat

the rule as discretionary, it’s interpretative.

5. U.S. Telephone Ass’n v. FCC

a. Holding: The penalty schedule is not a policy statement and

should have been subject to notice and comment procedures.

b. Rationale: The schedule of penalties is detailed & is

applicable to specific infractions & has adjustments for specific situations

i. The # of times the agency adhered to the policy makes

the case easy to decideii. The agency treated the rule as substantive (impact on

agencies test)

6. Professionals and Patients for Customized Care v. Shalala

a. Facts: : FDA compliance policy guide describes pharmacy

practices that give rise to enforcement actions that make

pharmacies lose their retail capabilities

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b. Contention: District court erred in concluding FDA

compliance policy guide is not a substantive rule and not

subject to notice and comment.c. Holding: Affirmed. Procedural—not substantive. Court

finds that the policy guide merely identifies some indicia of

drug manufacturing.d. Policy matter: you don’t want to discourage agencies from

promulgating these policy statements—at least you know

what the agency’s thinking & whether they might sue you.i. If we force agencies to have notice and comment these

types of guides won’t be used.

e. Problem w/ the impact on agencies test: requires considerable

experience w/ an agency’s application of a rule before youcan determinatively say whether the rule is interpretative or

sub. In other words, you don’t know at the moment its

promulgated whether it’s substantive or interpretative

f. Debow says we should go back to the legal effects test.

vi. Modern Test1. American Mining Congress v. Mine Safety & Health Admin

(barely discussed)

a. Court here attempts to make a distinction betweeninterpretative rules & statements of policy

i. Interpretative rule: rules/statements issued by an agency

to advise the public of the agency’s construction of

rulesii. General statements of policy: agency statements that

advise the public prospectively of the manner in which

the agency proposes to exercise a discretionary power iii. Distinction is vague

2. Syncor International Corp. v. Shalala

a. Facts: FDA indicated (w/out notice & comment) that itwould require PET manufacturers to comply w/ the Act (they

were exempt under the 1984 Act, but not under this new

1995 publication). Held: substantive

i. By issuing a policy statement, an agency simply lets the public know its current enforcement or adjudicatory

approach (it’s not binding on the public or agency)

ii. An interpretative rule, on the other hand, typicallyreflects an agency’s construction of a statute that has

been entrusted to the agency to administer.

iii. A substantive rule modifies or adds to a legal norm based on the agency’s own authority.

1. Debow still says this is vague and we should

use legal effects test.

vii. Good Cause

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1. Most common exception invoked by agencies is for “when the

agency for good cause finds that notice and public procedure

thereon are impracticable, unnecessary, or contrary to the publicinterest.” Agency must put this finding in the rule and the reasons

for it when rule is adopted.

2. Tennessee Gas Pipeline Co. v. FERC(did not discuss)a. Law

i. The good cause exception should be narrowly

construed & should be limited to emergency situationsand

ii. The grounds justifying the agency’s use of the

exception should be incorporated within the published

rule. b. FERC fails b/c they claimed good cause without offering any

evidence, beyond its asserted expertise, as to why the public

interest is served by the immediate implementation of the

interim rule.e. Informal Adjudication

i. Citizens to Preserve Overton Park v. Volpe

1. Facts: Secretary of Transportation approved, w/out any factual

findings, a plan to build a highway through the park

a. Statute said that the Secretary shall not approve of anythingthat interferes w/ a public park unless

i. There is no feasible & prudent alternative

ii. Such program includes all possible planning to

minimize harm b. There are no procedural standards in the statute: it’s informal

adjudication

2. Citizen Group Argument: Secretary violated the statute. TheSecretary found that there was no feasible or prudent alternative

routes, but did not indicate why; instead he relied totally on the

city council. They think it is possible to go around the park or usetunneling methods.

3. Sec. of Transportation Argument: It was unnecessary for the

secretary to make formal findings, and that he did, in fact, exercise

his own independent judgment which was supported by the facts.Introduced affidavits from the Secretary’s office that say that

Secretary’s decision were supportable for certain reasons

4. Holding: to review the decision, the court needs more than theaffidavits (which are just post hoc rationalizations)—it needs the

full admin record that was before the Secretary at the time he made

his decision. “Arbitrary and Capricious” standard of reviewinterpreted to mean a “substantial inquiry” and a “thorough,

probing, in depth review.” Reversed & remanded to District

Court (dissent says it should have been remanded to the Secretary).

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5. Law: §706(2)(A): An agency action must be set aside if the action

was arbitrary, capricious, an abuse of discretion, or otherwise not

in accordance with the law OR if the action failed to meetstatutory, procedural, or constitutional requirements

a. Original understanding of “arbitrary & capricious”: absolute

insanity b. New understanding: court invades; court will decide whether

it’s arbitrary & capricious based on

i. Findings from the agency (a record)1. Also, must be contemporaneous record—agency

records as it goes along, not after the fact.

c. Standard of Review: Not de novo or substantial evidence.

Use “substantial inquiry” instead (Debow says this is not in706). Will do a “thorough, probing, in depth review

6. Most agency decisions are made through informal adjudication.

This case puts procedural requirements that don’t exist in the APA

on agencies conducting informal adjudication.7. After Overton Park: Agencies will submit a record of their

actions. This is good because it keeps them in check and forcesthem to be more thoughtful, but bad because it is expensive to do

this

8. Overton Park & Vermont Yankee are in conflict w/ each other.Apparently, as long as the court’s vague enough w/ what they want

(not directive), court can require more from the agencies.

a. Basically, Vermont Yankee doesn’t have a lot of clout.

ii. Pension Benefit Guaranty Corp v. LTV(did not discuss)

1. Issue: whether PBGC’s decision to restore the ERISA pension

plans to LTV after LTV became financially viable again was

arbitrary & capricious. No.2. Held: the lower court that struck down PBGC’s decision did not

point to any provision in ERISA or the APA which gives LTV the

procedural rights the court identified. Thus, the holding runs afoulof Vermont Yankee and finds no support in Overton Park (which

merely held that the admin record was inadequate to enable the

court to fulfill its duties; here, the court focused on “fundamental

fairness”).3. Vermont Yankee stands for the general proposition that courts are

not free to impose upon agencies specific procedural requirements

that have no basis in the APAf. The Strange Saga of C.T. Chenery

i. SEC v. Chenery Corp. (Chenery I)

1. Facts: Respondents bought preferred stock in their own company(at market price) so as to protect their interests in it during a

reorganization period. The Commission said that Chenery could

not do this, that its shares could not be placed on par w/ others b/c

38



it had a duty of fair dealing not to trade in the securities of its corp

while undergoing reorganization

2. Holding: Since the Commission professed to decide the caseaccording to settled judicial doctrine, the court must judge its

action by the standards the commission invoked. Since there is no

law/rule that prohibits officers/directors from purchasing their owncompany’s stock, the Commission’s order can’t stand. Remanded.

a. “We merely hold that an admin order cannot be upheld

unless the grounds upon which the agency acted in exercisingits powers were those upon which its action can be

sustained.”

b. “The grounds upon which an administrative order must

be judged are those upon which the record discloses that

its action was based.”

c. A reviewing court will not look at the record and try to find

another explanation that would work—they would simply

remand it.d. “An appellate court cannot intrude upon the domain which

Congress has exclusively entrusted to an administrativeagency” (expert agency point) (there is also a division of

labor point.

ii. In Re Federal Water Service Corp.1. On remand, Chenery group proposed the same plan, which the

Commission again rejected and reaffirmed its original order.

Commission “reserved for future consideration the question of

whether or not a rule should b adopted” (i.e., they kept it as anadjudication for now).

a. Commission gives no legal authority in its decision

iii. Chenery Corp. v. SEC

1. Court of Appeals holds against the Commission, saying the SEC

cannot apply to this specific case a standard which has never

been promulgated, either by agency regulation or the legislature,and which the SEC says cannot fairly be generally applied.

a. Court says Commission can’t just up & say to Chenery,

“You can’t do this thing, even though it’s legal.”

iv. SEC v. Chenery Corp. (Chenery II) (1947: the dissenting judges inChenery I write the opinion in Chenery II)

1. Reverses & holds for the SEC, saying this is the type of

judgment that agencies, not courts, are best equipped to make.Basically, the court just defers to the SEC in this terrible opinion,

although under the APA, this is probably what people wanted the

court to do (this type of review).

2. Dissent (Jackson):

a. The decision puts most admin orders over & above the law.

39



b. Both the Commission and the Court admit that these

purchases were not forbidden by any law, judicial

precedent, regulation or rule of the Commission.c. It literally takes valuable property away from its lawful

owners for the benefit of other private parties without full

compensation and the Court expressly approves the taking.d. The Court’s reasoning adds up to this: the Commission

must be sustained b/c of its accumulated experience in

solving a problem w/ which it had never before beenconfronted!

v. The Law of Chenery I

1. “Chenery I Principle”

a. Difference between judicial review of lower court & judicial review of agencies:

i. Lower court judgments can be sustained on any

grounds properly supported by the record, even if the

lower court expressly rejected those groundsii. Agency decisions, however, can be sustained only on

the grounds specifically relied upon by the agencies.(*The reasoning has to come from the agency, not the

court.*)

1. If there are grounds that could support theagency’s decision but were not in fact relied

on by the agency, courts ordinarily give the

agency the option of relying on those grounds

(by remanding, not outright reversing).2. Courts must understand the agency’s reasons

for action before they can decide whether

those reasons are adequate (this corollary isnot enforced w/ much rigor).

vi. The Law of Chenery II

1. Too much adjudication?a. Rule: **the choice between rulemaking & adjudication lies

primarily in the informed discretion of the agency. I.E., the

agency CAN create a new principle of law other than thru

rulemaking & courts won’t second guess. b. Caselaw clearly supports a very wide agency power to

choose its mode of proceeding.

2. Too much rulemaking?a. Example: if an organic statute guarantees you the right to a

formal adjudicatory hearing on application for a broadcast

license, then the FCC adopts a rule that says no one whoalready owns more than 5 stations will receive any further

licenses, and you own more than 5 stations, can the agency

summarily dismiss your application w/out hearing?

i. Absolutely.

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3. Adjudication permits flexibility, but it also allows the agency to

be arbitrary. A rulemaking approach would limit the scope for

arbitrariness.vii. A Note on Retroactivity

1. When an agency substitutes new law for old law, court should

deny retroactive effect.2. When there are new applications of existing law, clarifications,

& additions, the courts start w/ a presumption in favor of

retroactivity.3. However, retroactivity will be denied when applying the new

rule to past conduct/prior events would work a manifest injustice.

II. Scope of Judicial Review of Agency Action

a. Introi. Degrees of Difference

1. Four standards of judicial review (from most deferential to least)

a. Jury standard: only overturn jury’s factual conclusions

when no reasonable person could have possibly reachedsame result

b. Abuse of discretion: highly deferential standard for reviewof procedural matters (admissibility of evidence, etc.)

c. Clearly erroneous: only overturn judge’s findings of fact if

clearly erroneousd. De Novo: no weight given to the lower court’s legal

findings

2. Judicial review of agencies employ NONE of the benchmarks

familiar from appellate review of lower court decisionmaking; allconclusions are basically just reviewed deferentially... even

decisions of law!

ii. Is this for real?1. The rules governing judicial review have no more substance at

the core than a seedless grape. However, in practice, judges do

try (or at least think that they try) to use these standards.iii. Is there a better way?

1. Alternative approach: legal process/institutional competence

approach—on this view, scope of review doctrine should self-

consciously seek to determine whether, and to what degree,courts or agencies are best suited to decide the specific issue

under review.

b. Review of Findings of Fact in Formal Proceedingsi. In reviewing formal proceedings, reviewing court shall review the

whole record & shall reverse decisions not supported by substantial

evidence.

ii. Universal Camera Corp. v. NLRB

1. Law

a. Substantial Evidence Test-- The overall level of deference

required by the substantial evidence test is less deferential

41



than the jury standard but more than the clearly erroneous

standard.

i. The Court uses this standards when the agency actionwas formal rulemaking or formal adjudication.

ii. “Such relevant evidence as a reasonable mind might

accept as adequate to support a conclusion.”iii. Prior to this case, the jury standard was the level of

deference.

b. Under the APA, reviewing courts must consult the “wholerecord,” not merely those parts of it that tend to support the

agency’s decision.

c. The findings of initial adjudicators are part of the record,

and agencies & reviewing courts must give them dueconsideration.

2. Congress expressed “a mood.” Basically, judges should be in a

nastier mood than the jury standard & a kinder, gentler mood

than the clearly erroneous standard. (So why not just call it abuseof discretion standard?)

3. New formulas attempting to rephrase the old aren’t going tochange the way judges operate. It won’t be perfectly

implemented, but it will still be better than nothing, says the

judge.

iii. Kimm v. Department of the Treasury

1. Facts: Kimm was suspended for willfully using a gov’t owned

vehicle for other than official purposes. Reviewing court

reversed agency’s decision.a. AJ found in favor of Kimm, a highly decorated,

experienced investigator, who used the vehicle to take his

son to day care while he was on call & his wife was bedridden. Board overturned AJ, but reviewing court

deferred to AJ.

2. Holding: The finding of the board that Kimm willfully used aGOV for other than an official purpose is not supported by

substantial evidence Held that if a board reverses AJ’s finding of

a witness’s credibility, court will reverse the board on appeal

unless board gives sound reasons for its contrary evaluation of the testimonial evidence.

3. Significance: *This case illustrates how credibility findings of

initial adjudicators can count for a great deal. So, appellate courtis going to usually give determinative weight to the demeanor

evidence that the ALJ had access to.

a. Demeanor Evidence—What did the person look like? Washe believable? AJ buys the story here

b. The demand for reasoned agency explanation is a hallmark

of modern admin law.

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4. Substantial Evidence Standard: This and the next case in to

show the substantial evidence standard. This is laid out on page

387. This is in the organic statute, so it controls over the APA.a. Under this standard, “we will reverse the board’s decision

if it is not supported by “such relevant evidence as a

reasonable mind might accept as adequate to support aconclusion.”

i. Debow says this does not really help too much—

vague.5. As related to Univ. Camera: Court puts more weight here on

the fact that the judge found in favor of the employee in the first

instance. Agencies are not formally bound to refer to the

decisions of ALJ. In Universal Camera, the court said it countedfor something, and this case says it counts for a great deal.

Moral of story is you want the initial fact-finder on your side

iv. Laro Maintenance Corp. v. NLRB

1. Facts: : Fight b/t which union workers will be hired to aworksite. Workers of Prompt clean govt building. Laro is then

hired to do the job. Laro is asked to hire the old Promptemployees. Laro observes some of them sleeping on the job. Do

however, end up hiring 14 of them. Laro will have unionized

workers, but ends up not hiring any workers from one of theunions. ALJ finds him to be in violation of statute Court upheld

ALJ/Board’s decision to find Laro in violation of the NLRA by

discriminating against certain applicants for employment based

on their union membership. Laro hired “only” 10 people fromthe union (he needed to hire 18), and apparently, this was

discriminatory (regardless of the fact that the ones he didn’t want

to hire had a reputation for sleeping on the job). What?????2. Holding: The Court’s review of the board’s factual conclusions

is highly deferential, upholding a decision if it is supported by

substantial evidence considering the record as a whole.a. So long as the board’s findings are reasonable, they may

not be displaced on review, even if the court might have

reached a different result had the matter been before it de

novo. b. The courts review of the board’s determination w/ respect

to [Laro’s] motive [for not hiring the applicants] is even

more deferential. So, give the board even more deferenceto inferences the board makes than to factual evidence.

What??????

3. Dissent said there was no substantial evidence: “My colleaguesdeeply bow in deference to the Board when they should be

furrowing their brows at what the Board offered.” Dissent

definitely got it right.

43



a. This case is in opposition of Kimm w/ regard to the

substantial evidence standard (although the court does

affirm the ALJ in both cases). Basically, when theappellate court wants to affirm the board, they’ll pull out

the “expertise of the board” defense, but when the want to

reverse (like in Kimm), they won’t look to that expert4. Significance: : Reviewing courts are very deferential to ALJ

inferences drawn from findings of fact. In most cases, these

inferences don’t have to be very good under the substantialevidence standard

c. Review of Findings of Fact in Informal Proceedings (not much difference

from formal)

i. Ass’n of Data Processing Service Orgs., Inc. v. Board of Governors

of the Fed Reserve (DC Circuit)

1. Facts: Board of Governors run the Federal Reserve. They have

regulatory power over federal banking system. Citicorp wants to

develop a subsidiary and want to ask permission from FederalReserve. This is a hangover from the New Deal. One of

criticisms from 30s was bank was engaging in non-bank business. Data processing sells their services to banks. If the

bank doesn’t need them anymore, they will be out of business;

thus the conflict.2. Scalia’s whole opinion as presented in the text is dicta, b/c the

APA wouldn’t apply to this situation (it’s an informal proceeding

& the standard of review is set forth in the organic statute).

3. The “substantial evidence” test and the “arbitrary & capricious”test, in their application, are one and the same.

a. Though 5th Circuit says they are not.

4. Sometimes, the agency’s organic statute will prescribe a standardof review

a. Scalia notes the possibility that substantial evidence

provisions in some organic statutes may call for a different —either more or less deferential—standard of review than

is found in the APA.

d. Review of Agency Legal Conclusions

i. Theory and History1. Intro

a. Not an issue till after the New Deal.

b. Congress has punted the issue of interpretation to theagency.

i. How much deference should the court give these

decisions.c. Two lines of decisions. Gray, Hearst and O’Leary ruled

similarly. And then Packard and Skidmore were held

differently

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d. Anything Pre-1984 might not be good law in these

situations.

e. Basically these cases lead into Chevron. If Chevron isoverruled, it will return back to some of this caselaw.

Under Chevron there is a high degree of deference.

2. One Line of Reasoning: Gray v. Powell; NLRB v. Hearst Publications, Inc. (the “Newsies” case); O’Leary v. Brown-

Pacific-Maxon, Inc. (See Pages 428-430 ).

a. (Note: New Deal Economic philosophy: prop up prices toget out of the depression. What in the world were they

thinking?)

b. In each of these cases, the court gave deference to

the agency on one kind of legal question, but no deferenceat all on the other

c. **In each of the three cases, the issues on which the court

gave deference to the agency were issues involving the

specific application of a statutory term to a particular set of facts. On the other hand, the issues that the court reviewed

de novo were abstract legal questions that one could ask &answer w/out knowing anything about the facts of any

particular case.

i. Spectrum—at one end, abstractly framed questions of law—then less deference to agency. More that

application of term to a specific amount of facts, the

more deference will be given. (Newsies)

ii. *Under pre-Chevron case law, the more abstract thelegal question, the less deference the agency gets. If

the question is bound up w/ the facts of a particular

case, the courts are more deferential (when applying avague statutory term to a specific set of facts).

d. The same reasons that justify deference to agency

factfinding also, at least to some extent, justify deference toagency lawfinding when the legal analysis necessarily

involves attention to particular circumstances w/in the

agency’s area of expertise

e. When the issue is one of pure interpretation, the courts areat least as well situated as are the agencies to determine the

correct meaning of statutory terms, so agencies get no

deferencei. When, however, the issue is one of law application,

and one must determine whether an ambiguous statute

should be extended to cover a specific fact pattern,then the twin considerations of agency expertise and

probably congressional intent justify giving agency

decisions a level of deference comparable to the level

afforded to agency factfinding

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1. I.E., instead of the court asking whether the

agency interpreted the statute correctly, they’ll

look at whether the agency interpreted it plausibly or reasonably

f. Separation of powers applied here too.

g. Gray v. Powell i. Railroad is looking for a tax exemption.

Supreme Ct. had invalidated a coal statute, and

then Congress rewrites it. Congress is trying to prop up the coal industry by pegging prices at a

higher level than market will dictate. While this

is going on, the Railroads are trying to cap the

prices. Railroad (Seaboard) seeks exemption fromcoal statute since it is both producer and

consumer.

ii. Seaboard not held to be producer largely b/c

agency had already made this determination.iii. Note pg. 415—Courts fulfill their

obligations on review “when they determine thatthere has been a fair hearing, with notice and

opportunity to present the circumstances and

arguments to the decisive body, and anapplication of the statute in a just and reasoned

matter.”

iv. Agency is the expert—not the courts, unless

the court can say that a set of circumstancesdenies a sensible exercise of judgment…

v. First question—was railroad a producer

within the act?1. Question of law. Rely on expertise. (specific

statutory question)

2. Second Question—has there been a salewithout a transfer of title? (abstract)

a. Question of law—but use different

grounds for decision.

h. Hearst Publications1. Musical called “Newsies”—are news boys

employees? Exclusions in statute, but

newsboys is not an exclusion. Paper extendscredit to them and they sell what they can.

2. Question of law—are newsboys employees.

Also a fact question involved as well however involving their work.

a. Two questions

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i. Did Congress want to rely on

old common law definition of

employee?ii. Court says no—does not refer

to expertise of agency however.

Use Congressional intent.(abstract)

iii. What about these particular

newsboys—are theyemployees?

iv. This time they defer to the

agencies, saying they are the

experts. (specific application)i. O’Leary (Post-APA)

1. Question is scope of the longshoremans act.

Employee drowns trying to save someone in

Guam near recreation scene provided by theemployer.

a. Is this in the course of employment? Company says no.

b. Deputy commissioner treats it as a

question of fact. Debow questionsthis—aren’t we trying to decide

what Congressional intent was?

c. If this was a normal appellate court

review and not review of anagency, it would be a de novo

review.

i. Court here is satisfied with theDeputy Commissioner’s

findings.

ii. Treated as specific application.2. Dissent (Jackson): He writes Packard

3. Packard Motor Car Co. v. NLRB (Jackson writes)

a. Facts: Unionizing question—foreman are in between

management and labor. If you let foremen unionize, theywon’t be in management anymore. Congress addresses this

in the Taft-Hartley act, which excluded Foremen from

unionizing. b. The court frames the question as a matter of pure, abstract

question of law (whether foremen are employees or

employers) (this would fit with Gray, Hearst, etc).However, the real question was one of legal application that

requires careful attention to the facts (what level of

supervisory authority is enough to place persons in the

employer rather than employee category).

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i. The court had plausible normative justifications for

declining to give deference to the agency’s decision

(more so than Hearst) (the importance of the issue,the bad rep of the agency, and the agency’s

consistency).

ii. However, now every case involving judicial review of an agency legal interpretation becomes an invitation

for a many-factored inquiry into the appropriateness

of deference (see pg. 439 note 95)iii. This and Skidmore open up possibility of courts

taking a lot of things into account before giving

deference (case-by-case standard of review)

c. Dissent: Notes that agency does not give its degree of deference.

4. Skidmore v. Swift & Co.

a. The court said that deference can be appropriate even when

an agency does not have formal responsibility for administering a statute.

b. The court expressly articulates a sliding scale for theamount of deference to which an agency might be entitled.

i. Thus, not only are we faced w/ an indeterminate list

of factors that can affect whether we defer to agencylegal conclusions, but the same factors can affect, in

an indeterminate way, the level of deference that is

appropriate in any given case

c. Leads to Chevron….5. Chevron USA v. Natural Resources Defense Council, Inc. 441

US Supreme

a. Clean Air Act as amended in 1977 is at issue. “such (statecompliance) plan provisions shall require permits for the

construction and operation of new or modified major

stationary sources anywhere in the nonattainment area.”Each state must draw up implementation plan. EPA sets

targets for compliance with regard to major air pollutants.

State must have permitting program for operation of new or

modified major stationary sources. Can EPA read this toinclude multiple smokestacks in a single plant as a single

stationary source? Pre 1981, each smokestack is a

stationary source. In 1981, EPA comes up with “bubbleconcept” where they measure the entire plant as a whole—

as one stationary source. Congress did this because it is

cheaper to work on newer equipment than old equipment.Point is, if you hit the target, who cares how you do it.

i. Congress did not define the term “stationary source”

ii. National Resources is upset about bubble concept—

Debow does not know why.

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iii. So EPA has read its own statute to define stationary

source under a bubble concept

b. Holding: Reverses the DC Circuit 6-0.

c. Rationale: The Chevron Two Step (VERY

IMPORTANT)

1. Has Congress spoken to the precise questionat issue?

a. In this step, the Court uses

traditional tools of statutoryinstruction.

b. If intent of Congress is clear, that

is the end of the matter.

c. If intent is not clear, proceed tostep two

2. If the statute is silent or ambiguous with

respect to the specific issue, the question for

the court is whether the agency’s answer is based on a permissible (reasonable)

construction of the statute.a. BUT is this the rationale that the

court intended?

b. See notes below.d. Two lines of cases—

i. Gray,OLeary and Hearst did not grant much

deference on pure questions of law but did in specific

situations (rather than abstract)1. What is this case? Debow says very abstract,

so according to Gray, etc. should not grant

deference.ii. Under other line of cases, (Skidmore, etc.)

1. See page 447 first paragraph—it sounds like

Skidmore.2. So maybe can read Chevron as an extension of

Skidmore.

e. Court probably saw this as a case of DC Circuit

overreaching in its control over agencies.

f. Notes

i. Lawson says that “there is little doubt that the Court

in 1984 intended the second, or weak, reading of Chevron.

1. Court did not realize the nature of the decision

that they were making.2. Possible to read the case as a straight forward

application of settled principles (Skidmore) of

judicial review of agency legal conclusions,

with the case presenting one of the unusual

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but not unheard of situations in which the

traditional panoply of factors warranted

granting an agency deference on a purequestion of law.

ii. After this case, the DC Circuit begins to fashion the

Chevron opinion itself. The strong reading of thecase, which is the two step, is the one that the DC

Circuit focuses on.

1. This is partly Scalia’s fault—giving the courtsless of a role in review. See essay page 529

iii. Amazing how important this case is when considering

what Stevens intended through the case.

6. INS v. Cardoza-Fonseca (US Supreme)a. P was an illegal alien who requested w/holding of

deportation pursuant to one INS statute & asylum as a

refugee pursuant to another statute. She dropped the

former claim, but held the latter. She argued on appeal thatthe agency should applied the “well-founded fear” standard

(which is more generous & subjective) rather than the“more likely than not” standard. Court agreed.

b. Holding: Court finds that agency interpretation does not

match up with plain meaning of statute.c. RationaleThus, in accord with Chevron, the agency failed

the first step. Court looks at legislative history, saying the

history is consistent w/ the plain language of the statute

(which actually sets the “well-founded fear” standardi. However, Court goes on to discuss deference (under

Chevron, there would be no need for this) “the

question of whether Congress intended the twostandards to be identical is a pure question of

statutory construction for the courts to decide. (This

is Gray/Oleary , Hearst line). See also indented quote pg. 453

1. He is trying to de-emphasize Chevron.

d. Scalia’s concurrence says part four of Stevens is dicta

because Scalia wants to protect Chevron.i. Scalia says in Chevron we showed deference because

it was a pure question of law. Says it is a new

standard.ii. Says court misinterprets Chevron. Says since the

Court quite rightly concludes that the INS’s

interpretation is clearly inconsistent w/ the plainmeaning of that phrase and the structure of the Act,

there is simply no need and thus no justification for a

discussion of whether the interpretation is entitled to

deference.

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7. Summary of these cases….

a. Courts are deferring to others for interpretations of statutes

—this is generally not the norm. b. Chevron states new rule of deference on matters of law to

agencies.

e. Dancing the Chevron Two Stepi. United States v. Mead

1. Statute that Congress passed that provides for the existence of

tariff classifications for particular imports. What is a day planner? Is it a diary/notebook? Initially it was categorized

under the “other” category. Then it was moved to the diary,

notebooks, etc. category. Now Mead must pay an import tax on

their day planners. This customs decision was entered pursuantto “ruling letters” that are entered at customs offices. Mead

protests the ruling letter, the customs people reject it, and so

Mead files appeal in a specialized court (court of international

trade). Appeal from this goes to Federal Circuit Court of Appeals.

2. Issue: Does Chevron deference apply?a. Fed. Circuit gives no deference to the treasury dept.

because was not subject to notice and comment—it was an

interpretive rule. The rule did not apply to anyone else andthis decision did not carry the force of law (someone else

could bring in a planner and customs could decide

differently).

3. Holding: Resurrects Skidmore by remanding back to court toconsider Skidmore.

a. Makes a dictinction b/t application and construction.

b. “The Court’s choice has been to tailor deference tovariety.” Basically Skidmore

i. Debow says it is this tailoring that makes it difficult

for Congress.4. Scalia Dissent: All authoritative agency interpretations of

statutes that are charged with administering deserve deference.

Does not matter if legally binding. Chevron sets forth an across-

the board presumption, which operates as a background rule of law against which Congress legislates: Ambiguity means

Congress intended agency discretion. By dragging back in the

Skidmore approach, the majority has clouded up the clarity of Chevron.

a. Scalia wants Chevron to be applied consistently so that

Congress can use it as a background rule of law. If leftambiguous, agency will fill in this gap.

b. Scalia Law Review Essay —“If the Chevron rule is not a

100% accurate estimation of modern congressional intent,

the prior case-by-case evalution was not so either. In vast

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majority of cases Congress either 1) intended a single result

2) meant to confer jurisdiction on the agency or 3) didn’t

think about the matter at all.i. Chevron could clarify things—Congressmen need to

know what is going to happen in the event of an

ambiguity. “Congress now knows that the ambiguityit creates, whether intentionally or unintentionally,

will be resolved, within the bounds of permissible

interpretation, not by the courts but by a particular agency, whose policy biases will ordinarily be known.

Ideally, the background rule of interpretation tells

Congress if you write with ambiguity, we will assume

that you want the agency to fill in the gaps. If theydon’t like the fact that the agency will be decided,

they should step up to the plate and write a clearer

statute.

5. Overton Park Example: In legislature, water down your bill sothat you get just enough to win. This is one reason why statutes

are vague. May hope that agency will define terms in a way thatthe supporters intended. However, you never know about the

courts. By following Scalia’s view, you take the gamble of the

courts out of it. Under Skidmore, who knows what will happen?6. Decision may show that Chevron is not that important anymore

and that the court is headed in a different direction, at least for

interpretive rules. Does not undermine Chevron’s deference to

legislative rules.ii. How Clear is Clear?

1. FDA v. Brown & Williamson Tobacco Corp pg. 500

a. FDA claims that nicotine is a drug according to FDCAfrom 1938. After having disavowed since its inception

jurisdiction over tobacco products, the FDA claimed just

that in 1996. Court held that Congress has clearly precluded the FDA from asserting this jrd. Under the

original statutes ’06 and ‘38, drugs were therapeutic—

Congress was thinking about medicine.

b. Holding: “We believe that Congress has clearly precludedthe FDA from asserting jurisdiction to regulate tobacco

products.” : In keeping w/ the first step of Chevron, court

is obliged to defer not to the agency’s expansiveconstruction of the statute, but to Congress’ consistent

judgment to deny the FDA this power

c. Rationale:i. First Step of Chevron, there are two possible

meanings of “directly spoken” (though court does not

directly address their form)

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1. On its face —Breyer’s dissent says it is

obvious from the statute, and that they have

spoken directly to this because nicotine affectsthe body. (cursory)

2. Thorough statutory construction --After you go

through statute and use all tools of statutoryconstruction, are you convinced that Congress

has directly spoken to the issue. (intensive)

a. O’Connor’s majority reading usesthis approach.

i. Court uses the “whole act” rule

—reads the statute as a whole

in interpreting it.ii. Reading this to allow jurisdiction would require them

to remove it from the market entirely.

iii. Ban would contradict Congress’ clear intent as

expressed in its more recent tobacco-specificlegislation. (since 65 Congress has passed 6 statutes

on cigarettes but have not banned them.)1. Problem with this is that Congress from 38

was not around in 65 when these statutes were

being passed, so still don’t know intent.iv. The inescapable conclusion is that there is no room

for tobacco products w/in the FDCA’s regulatory

scheme. If they cannot be used safely for any

therapeutic purpose, and yet they cannot be banned,they simply do not fit.

d. Dissent: FDA does have jrd.

1. Tobacco products fall w/in the scope of thestatutory definition, read literally.

2. The statute’s basic purpose—the protection of

public health—supports the inclusion of cigsw/in its scope.

3. The statute’s language permits the agency to

choose remedies consistent w/ its basic

purpose (the overall protection of publichealth). So, the FDA was reasonable in

concluding it had jrd, then refusing to

immediately ban cigs, b/c of the health problems that would lead to (even less safe

cigs being sold on the black market).

4. Notes problems with using statutes from 65for interpreting 38 statute.

5. Purposivism —as backstop for plain meaning

—purpose is to protect public health.

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III. Timing and Availability of Judicial Review

a. “Whom” : The Problem of Standing

i. Constitutional Element1. Standing is a doctrine that comes from the construction of the

Constitution, in particular, the Separation of Powers Doctrine. It

keeps cases out of the judicial branch that ought to be decided bythe political branches.

2. We don’t want disputes over policy in the court system. Courts

were originally designed to address “cases and controversies”3. Frothingham v. Mellon

a. Sup. Ct. said there is no such thing as taxpayer standing.

There has to be a case brought before the court for it to

decide (must be a “case or controversy”).i. Party must be able to show that he has sustained or

will immediate sustain some direct injury as a result

of the enforcement. Can’t sue gov. over some

regulatory issue just because you are a taxpayer.ii. The theory behind this case has been superceded by

an elaborate multi-part analysis for determiningwhich claims are cognizable in the federal court.

4. Lujan v. Defenders of Wildlife (Scalia)

a. Alleges environmental harm to endangered species.Endangered Species Act. Interior dept. sets out regulation

in 1978. Question is does this apply overseas. AID is

building a dam on the Nile in Egypt and developing in Sri

Lanka. American Agencies thus are helping. Statute onlysays “any action”. No exclusion for overseas. During

Carter admin. Agencies said is does extend but in Reagan it

said it does not. b. Issue: Do these agencies have to consult with Dept. of

Interior regarding environmental impacts of their projects?

(Why didn’t Congress address this?)c. Holding: No standing. Scalia says they 1)have not shown

injury and 2)that they have failed to demonstrate

redressability.

d. Rationale:

i. Can’t have associational standing unless members

have personal standing. Respondents here claim to

have standing because they have been to these placesand that they plan to visit again. This is not enough.

ii. If you have a party affected directly, there is no

problem. But, as here, when government regulationaffects someone else, it is a different story. Though

standing is not precluded, it is more difficult to

establish.

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e. Questioning of Citizen Suits: Scalia questions the

constitutionality of citizen suits b/c quoting Marbury, “the

province of the court is solely to decide on individuals.”Vindicating the public interest is the province of Congress

and Executive.

5. Friends of the Earth, Inc. v. Laidlaw Environmental Services(Ginsberg)

a. Clean Water Act. Waste water treatment plant license is

repeatedly violated (489 times). Friends files citizen suitand seek attorneys fees.

b. Holding: Standing. May be brought by any citizen:

defined as a person having an interest which is or may be

adversely affected.

c. Rationale:

i. Ginsberg notes the deterrent effect as a remedy for

citizens, and this supports standing.

ii. Notes that they have proven redressability as well asinjury.

d. Constitutional Issue: If P is bringing suit sort on behalf of government, recovery should go to the government. Thus,

there is no standing according to Laidlaw

e. Dissent (Scalia): Says allowing standing raises separationof powers problems.

f. Can you reconcile this case with Lujan?

g. Should people be able to sue due to agency inaction?

b. Statutory Standing and the Zone of Interests Test

i. Section 702 APA—A person suffering legal wrong because of the

agency action, or adversely affected or aggrieved by agency action

within the meaning of a relevant statute, is entitled to judicial reviewthereof.

1. In 1946, a legal wrong was simply any kind of injury that was

traditionally cognizable by courts. A person whose freedom of movement was restricted, or whose contract was breached, or

whose chickesn were seized and destroyed could assert a legal

wrong. This was the injury in fact test.

2. Thus, at common law, if competitor functioned under a faultylicense, you would not have standing simply because of that.

(Competitive injury was not a legal wrong unless the

competitive acts were illegal themselves.3. Prior to 1970, we stuck to the standing definition of 702, which

relied on the common law…then these cases came along…

ii. Bringing Down the House1. Association of Data Processing Service Organizations v. Camp

a. Douglas invents phrase “zone of interests” in this decision.

This upends the standing analysis up to this point. Data

Processing objects to the decision to allow banks (in two

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separate acts) to tap into data processing services. Data

Processing’s concern was that companies they worked for

would take their business to banks. Under the prior standing analysis, they would not have standing b/c not

covered under common law injury and fact, and the acts

here do not extend standing. b. Rationale: The question of standing…concerns…the

question whether the interest sought to be protected by the

complainant is arguably within the zone of interest to be protected or regulated by the statute or constitutional

guarantee in question.

i. Did Congress consider the competitive impacts of

these two acts? Perhaps—must look at text andlegislative history. Did Congress seek to protect the

people of the class in which the plaintiff here falls?

ii. Rejection of legal effects test.

iii. This creates more of a judicial presence in review because more plaintiffs are allowed. Beginning in the 1960’s judges started taking

back power from the agencies.1. Clarke v. Securities Industry Ass’n (1987)

a. Banks want to open stock brokerage offices for less than

old line firms. Controller of currency approves this byconcluding this does not violate branching provisions.

Stock brokerages sue.

b. Holding: Standing.

c. Rationale:

i. Should not construe zone of interest narrowly, but to

serve a broad remedial purpose.

ii. Zone of interest test is a guide for deciding whether,in view of Congress evident intent to make agency

action presumptively reviewable, a particular plaintiff

should be heard to complain of a particular agencydecision (This is not what common law says remarks

Debow)

iii. The test is not meant to be especially demanding, in

particular, there need be no indication of congressional purpose to benefit the would-be

plaintiff. (What? Debow says this is messy and

horrible)1. Thus don’t even need Congressional purpose.

2. Thinks don’t need more than the case or

controversy requirement.iv. Expert agency does not get deference (what about

Chevron?)

v. Lower courts ignore this ruling.

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2. Air Courier Conference of America v. American Postal Workers

Union

a. First time in history a zone of interests P does not havestanding. Postal workers do not want postal service to

compete with private courier services.

b. Distinguishes Clarke on the facts.

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