Assignment: Chpt 1, esp. 11-14

What is Administrative Law?

- legal control of govt

- legal principles that define the authority and structure of administrative

agencies, specify the procedural formalities that agencies use, determine the

validity of administrative decisions, and outline the role of reviewing courts

and other organs of govt in their relation to administrative agencies

- deals with three basic bodies of law: constitutional law, statutory law and a

form of federal common law

Problems thought to call for administrative regulation:

- (1) Admin regulation as attempt to solve various problems of “market failure”

identified by economists; many market defects fall within one of the following

categories:

o Need to control monopoly power

o Need to compensate for inadequate information, in particular when

Suppliers mislead consumers whose available remedies, such

as court actions, are expensive or impractical

Consumers can’t readily evaluate the info available (drugs)

Market on the supply side fails to furnish needed info

o Collective action problems

Prisoner’s dilemma

o Need to correct for externalities (spillover costs), or existence of

transaction costs that make bargaining difficult

Price of a product may not reflect costs that its production and

use impose on society

- (2) Less conventional economic arguments for admin regulation

o Need to control windfall profits

Goal is to transfer undeserved profits from producers or owners

to consumers

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o Need to eliminate excessive competition

Excessive competition could force out most firms, and the one

firm left can raise prices

Helps industries with large fixed costs and cyclical demand

Against predatory pricing – dominant firm sets prices very low,

with object of driving out competition, and then raises prices to

recoup losses before others can enter market

o Need to alleviate scarcity

TV licenses

o Agency problems

When someone other than the buyer makes purchasing

decisions for the buyer, like medical care

- (3) Redistribution

o regulation is justified as means of redistributing resources from one

group to another

unequal bargaining power is invoked as the rationale

not clear that these efforts work

- (4) Nonmarket or Collective values

o regulation as an effort to promote values on the part of some segments

of society

o govt engages in a degree of preference-shaping

- (5) Disadvantage and Caste

o regulation as attempt to overcome social disadvantage (civil rights

law)

- (6) Planning

o Regulation justified on ground that w/o it firms in an industry would

not produce their products in an economically efficient manner

- (7) Paternalism

o Regulation justified on the grounds that government has a certain

obligation to protect individuals from their own confusion and

irresponsibility

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The Classic Regulatory Tools

- (1) cost-of-service ratemaking

o most commonly used method for regulating prices in a wide variety of

individual industries

- (2) allocation in accordance with a public interest standard

o commonly used when govt wants to hand out a commodity in short

supply

- (3) standard-setting

- (4) historically based price-setting, or allocation

- (5) screening or licensing

- (6) fees or taxes

- (7) provision of information

- (8) subsidies

o used to regulate agricultural prices

- (9) noncoercive efforts to produce cooperation through moral suasion or

political incentives

- These programs operate and are subject to the following four constraints:

o (1) regulator and regulated are likely to have an adversarial

relationship b/c regulator often compels industry to act in ways it

would not choose to act

o (2) regulator is an institutional bureaucracy operated by administrators

who may well prefer to design rules that they can administer with

relative ease

o (3) new regulatory programs usually copy old ones

o (4) regulatory decisions are subject to the requirements of

administrative law, including the APA (Administrative Procedure Act)

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Class Notes – Monday, September 25, 2000

What is ad law?

- Study of the legal control of the structure and process of federal govt

o Includes executive branch, and in particular:

(1) Cabinet levels are where admin agencies are located

(2) Entities w/in cabinets

(3) White House staff

Chief of Staff

(4) Staff of executive office of president

OMB (Office of Management and Budget)

(5) Free-standing executive agencies

EPA (but now it’s a cabinet agency)

(6) Independent commissions and agencies

More distance from president than the above, so

president has less control

NLRB, SEC

Constitutional bases of these are more questionable

than others

(7) Govt chartered corporations

Post Office

Run more like a regular corp

(8) Officials who discharge executive functions

Independent Counsel

Admin Law has very broad coverage

- We’re focusing on just the general framework

Regulators have a number of tools for regulation:

- we think of mandates most often

- taxes and fees

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- subsidies

- license

Agencies have several methods for using these tools:

- adjudication

o AdLaw judges, just like a court case

Disability (SSI)

- Rule-making

o Looks legislative

- Courts are more insulated politically

- Courts don’t have to give reasons for decision like agency heads

- Agencies can use enforcement procedures, use penalties against those

violating agency law

Three unifying themes: (sources of law)

- (1) Constitutional law

o what ought to govern, what’s most efficient

- (2) Statutorily based course

o two sources:

Administrative Procedure Act (APA)

Quasi-constitutional status, provides default structure

for all agencies

Organic statute

Sets up particular regulatory regime involved

Clean Air Act, for example

o Courts are increasingly using cost-benefit analyses when language is

variant among statutes

- (3) Common law

o Courts sometimes ignore what legislatures say and go with common

law

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Other themes:

- (1) Try not to limit focus to Court decisions; also focus on Agencies,

Congress, and the President

- (2) Goals of particular regulatory statutes

- (3) Goals of a modern regulatory state in organizing society

o Start can be with the New Deal, which had these two objectives:

(a) Centralize decision-making in executive branch

attempt to take advantage of technical expertise, and

under a unified entity (the president)

avoids some collective action problems

Institutionalize a different sort of democratic decision-

making

o attenuated political accountability, (it’s under

the president who is accountable, but agency

itself isn’t as accountable)

o allows for wider participation by interested

citizens

o agencies must explain why they chose one

particular route over another

(b) attack on common-law ordering

don’t accept laissez-faire as the natural order

o society must justify its decisions, not just accept

one as the end-all-be-all

common-law is a choice, and it can be assessed against

other systems of regulation

History and Background

- first hundred years, most regulation was through courts, state govt or private

markets

- beginning of administrative state came in the Progressive Era (1890-1915)

o driven by fears of monopolies

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o Interstate Commerce Commission

o Federal Trade Commission

o All these agencies were independent agencies, so president could not

fire heads of the agencies

- Real beginning is with the New Deal

o Many say this brought change in constitutional structure

Reconception of individual rights, federalism, separation of

powers; before New Deal:

There had been fear of giving fed govt too much power

People believed state govt was more democratic

o 1944 FDR promulgated Second Bill of Rights

Right to useful job, to earn enough to eat, to decent home, to

decent medical protection

o Pragmatic readjustment of capitalism in shadow of enormous

economic crisis

o Designed to redistribute wealth, promote confidence in economy, and

regulate people in their social roles (as a consumer, laborer, etc.)

- Rights Revolution (1970s)

o Biggest growth of administrative state, says Garrett

o Shift to expand regulation in three areas:

Civil rights (end of discrimination laws)

Expansion of New Deal focus to redistribute wealth; Johnson’s

war to stamp our poverty

Expansion of risk regulation

OSHA

EPA

National Highway Traffic Safety Admin

- Today’s era of regulation: reconsidering some of the tenets of the New Deal

o Some has been undone in the last decade

Reassertion of old-time rights

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Laissez-faire choices are defended more often now

Reinventing government, using different tools of regulation

Market-mechanisms as regulation

New emphasis on cost-benefit analysis in all regulatory areas

Some in Congress have pushed for a new APA

mandating that every regulatory decision comply with

cost-benefit analysis

Trend toward devolution

Sending things back to state and local levels, like

welfare

Preliminary discussion of State Railroad & Warehouse v. Chicago, M & St. P. Railroad

- Question of whether intrusion is justified in the Railroad industry

o Monopoly problem was main argument for regulation

o Also concerned about allocation of wealth – may want to help farmers

transport their goods; or should we make farmers subsidize the RRs?

o Passengers – should they pay higher rates in order to help farmers?

o Within RR industry, there are various types of RR companies

o Should we directly subsidize?

o Is systematic regulation better as a whole for the RRs?

o Two basic reasons for regulation here:

Redistributive arguments to deal with monopolies

Prevention of excessive competition

Can you have both at same time?

Should we worry about excessive competition?

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Assignment: p35-47

Agency’s Power to Legislate

- Early cases said legislative power which Constitution had delegated to

Congress could not be redelegated to others

o Congress specifically granted this authority in the Hepburn Act of

1906, and courts simply assumed the constitutionality of this

State ex rel. Railroad & Warehouse Commission v. Chicago, Minneapolis & St. P Ry.

- state constitutional challenge to Minnesota legislature’s delegation of rate-

setting authority to an administrative commission

o rates for milk carried on passenger trains were brought down by the

Commission, and they brought a mandamus action in state court t

compel railroad to obey its order

- Court says if just look at plain language, it’s perfectly evident that legislature

wanted the rates decided on by the Commission to be more than just advisory

- Question is whether legislature can confer such powers upon the Commission

- YES

o Public highway can’t be under control of private owners

o Legislature did not delegate power to make the law, but rather

conferred an authority of discretion to be exercised under and in the

pursuance of the law

o Legislature can’t set rates b/c they meet only once every two years for

60 days, and there needs to be someone on top of the situation at all

times

The Nondelegation Doctrine in Federal Law

- Only year Supreme Court used nondelegation to invalidate a statute was 1935

- 1933 FDR passed the National Industrial Recovery Act (NIRA) with objective

to have representatives of management and labor in each industry meet and

develop codes of “fair competition”

o critics feared development of a “corporate state”

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o the codes contained regulations for hours worked, wages paid, devices

of price competition, etc.

o Panama Refining Co. v. Ryan involved challenge to NIRA’s

Petroleum Code; SCt held this section of the NIRA was

unconstitutional b/c it did not provide a standard of governing WHEN

a president was to exercise the authorized power

A.L.A. Schecter Poultry Corp. v. United States

- with Panama Refining, the other 1935 case that used nondelegation to

invalidate a statute

- “Live Poultry Code” provided for hours and wages, and type of chicken that

could be sold

- “The Congress is not permitted to abdicate or transfer to others the essential

legislative functions with which it is vested.”

- The codes try to stamp out “unfair competition”, but this term has a much

broader range and new significance than has been used in other statutes, says

the Court

o Delegation of power to industrial and trade groups for the purpose of

rehabilitating and expansion is unknown to our law and inconsistent

with the duties of Congress

o Actions of agencies have no sanctions beyond the will of the president

o Section 3 gives President unfettered discretion to approve or proscribe

codes for trade and industry, and there are no rules of conduct

prescribed in the code; therefore it’s unconstitutional delegation of

power

- Cardozo concurrence:

o If codes eliminate “unfair” methods of competition, it’s fine

o This code has no reference to standards though, so there is unfettered

discretion; code does much more than just stamp out “unfair”

competition

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Class Notes – Tuesday, September 26, 2000

Railroad Case

- Rational for Regulation:

o deals with monopoly problem

but have to be able to define relative market

what is regulatory strategy?

What kind of profits and costs will be allowed for?

o Redistribution

From whom to whom?

Consumer-producer, opposite, consumer-consumer?

Is it just interest group clout?

Is regulation the best mechanism for redistribution?

Maybe should be transparent subsidies, or higher taxes

- Is too much competition bad?

o Yes: can lead to monopolies

o Yes: can lead to poor quality products, corner-cutting by competing

companies

- Perhaps lack of information (on part of the consumers) is the problem here, so

regulation wouldn’t be the right way to go

- Other rationales for regulation:

o Want to give entire population ability to use rail system

- What institution should implement the regulations?

o Court discusses administrative industry vs. legislators

Election: Legislators can be TOO responsive to constituents

(b/c they’re more accountable politically); also have favored

constituents

Need balance between accountability, arbitrariness

But it may be easier to influence a regulatory

commission (if it has just three people on it, easier to

get to them then to get to the entire legislature); also,

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many regulators go into the business that they regulate

when their terms are up, so they may want to look good

for the Railroads and have sympathies for the industry

Expertise: a commission may have more expertise in the area

But legislators have lots of staff, access to other experts

and outside sources

In Illinois the legislature only met for 60 days every two years

Why not use a Court?

Need expertise

Need progressive legislation

Court would have to decide on case-by-case basis

Delegation (or Nondelegation)

- Federal Constitutional question

o What does the Constitution allow for in regards to delegation of

authority from legislature to agencies?

Constitution does not really allow for delegation b/c it stresses

separation of power

Lockeian notion that powers given to a particular branch

should not be delegated

Constitution gives all legislative powers to the

Congress

But it can delegate power to implement and execute

these decisions

o To satisfy Constitution, need to have:

Political accountability: Initial decisions are made by

legislature, and they are accountable for this decision;

Agency accountability – must show the reasons behind the

actions; we can hold agency responsible for not following the

directives of the legislature

How do we determine what is “reasonable”?

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Question is, has Congress delegated too broadly so that

it has given away legislating power? Or just executive

and implementation power?

J.W.Hampton - Are there intelligible guidelines? Is it

“fair and reasonable”?

- Bleak side of delegation:

o This is just a way for legislatures to kow-tow to a particular industry

- Transactional model:

o Regulation can distribute or narrow costs and benefits to various

groups

o 4 quadrants:

concentrate benefits, distribute costs

concentrate benefits, concentrate costs

people taking the hit (here, farmers) will be upset, so

it’s a zero sum game; will want to delegate to agency so

they can take the abuse for bad parts, but take credit for

good things

o relies on information asymmetry (railroads

know, but farmers don’t)

but these are political-savvy groups, so

it’s not likely

distribute benefits, distribute costs

distribute benefits, concentrate costs

Pollution is good example

o Find polluters to pay, or put excise tax on

particular activities

Will voters remember the benefits? Do they even vote?

And will those harmed come back after you?

Argument is that legislators will do things that are

largely symbolic – don’t want to harm businesses, ones

who take the hit, but want to do good things for voters

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o So here, delegate to regulators the enforcement

problems so you can claim credit for the

benefits, and regulators take blame for problems

When a large number of groups want a change, but can’t

decide on the change, legislators will delegate the choice so the

agency can auction it off

- Delegation:

o Constitution is not very helpful

o There are systematic pathologies in legislative process that show that

delegations can actually be part of a pathology (want credit for good

things, don’t want credit for bad things)

o How important is it to have judicial review of agency decisions?

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Homework – pp.47-70

Amalgamated Meat Cutters v Connally

- Meat Cutters Union challenged Economic Stabilization Act (1970) on grounds

of excessive delegation

o Said it gave president a “blank check” authority

- Court sustained constitutionality of act

o “Concepts of control and accountability define the constitutional

requirements”

o Burden is on party who assails legislature’s choice to prove there is an

absence of standard for the guidance of the Administrator’s action so

that it would be impossible to ascertain whether will of Congress has

been obeyed

o Standards of a statute derive meaningful content from the purpose of

the Act, its factual background, and the statutory context

- “We think there is fairly implicit in the Act the duty to take whatever action is

required in the interest of broad fairness and avoidance of gross inequity”

o The broad equity standard is inherent in a stabilization program

- Also, delegation of power is only for a limited term of months, and the

standard developed by the Executive at the outset limits the latitude if

subsequent Executive action

o Act is also subject to the APA, unlike the NIRA from Schecter

Historically Based Price Regulation

- charge the prices you charged on date X plus Y

o economists disagree whether system ever works, or should be used to

combat inflation

o no simple way to determine what Y is either

when there is a Y, this may be called a price cap b/c prices

aren’t allowed to go above price + Y

system works as long as relative costs remain constant

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o the more time that passes, more likely changes

in relative price occur

Industrial Union Dep’t, AFL-CIO v. American Petroleum Institute (The Benzene Case)

- Industry challenged adoption by Sec of Labor of regulatory standard limiting

occupational exposure to benzene

- 5th Cir said Sec was under duty to do a cost-benefit analysis, and the record

lacked substantial evidence of any discernible benefits

- Stevens delivered opinion

o SCt agrees that as threshold matter Sec must determine the toxic

material poses a significant health risk, and that a new, lower standard

is “reasonably necessary or appropriate to provide safe or healthful

employment and places of employment” (quoting §3(8) of the OSHA)

Unless this finding is made, it is not necessary to address the

further question whether there must be cost-benefit analysis

Agency must also determine what is a “significant risk”

Here, studies failed to show dose-response relations that would

predict cancer incidence at lower exposure levels, so they just

set it as low as possible

Unreasonable to assume Congress gave Sec this unprecedented

power over American industry

Therefore Sec must quantify the risk, or it would be a

“sweeping delegation of legislative power” like in

Schecter (BUT, in Schecter you had industry people

making the regulations, and here there are non-industry

people)

o The benzene standard is “an expensive way of providing some

additional protection for a relatively small number of employees”

Petroleum industry would spend $82,000 per employee, and

petrochemical would spend $39,675

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o Legislative history supports conclusion that Congress was concerned

not with absolute safety, but with elimination of significant harm

- Powell opinion, concurring in part and in judgment

o Agrees with 5th Cir that agency must do a cost-benefits analysis

o “standard-setting process that ignored economic considerations would

result in serious misallocation of resources and a lower effective level

of safety”

- Rehnquist, concurring in judgment

o Believes this legislation fails the nondelegation doctrine

He says there are three functions of the nondelegation doctrine:

Important choices are made by Congress

When Congress does delegate, it provides recipient of

that authority with an intelligible principle to guide the

exercise of the delegated discretion

Gives courts ability to test the exercise of delegated

legislative discretion against ascertainable standards

He says the legislation here fails all three (so is he saying it

should be thrown out? I think so)

- Marshall dissent

o Responsibility to scrutinize does not authorize court to strike its own

balance between costs and benefits (although plurality did not strike it

down on these grounds)

o Language in statute saying “reasonably necessary or appropriate”

should not mean “more likely than not”, as plurality says

Other Delegation Cases

- No SCt case since Schecter has invalidated federal legislation on the grounds

of overly broad delegation

o A number of decisions have upheld other delegations that seem fairly

extreme (p66)

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o Occasional decisions suggest the nondelegation doctrine still lives

(p67)

- Some commentators advocate a return to more stringent version of the

doctrine as a way of preventing the use of agency power fo rnonpublic

purposes and of forcing legislatures to consider legislation more carefully

(p69)

- Others argue the doctrine has met a proper demise (p69)

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Wednesday, September 27, 2000

Choice among institution (courts, legislatures or agencies) – where to locate

responsibility:

- kind of decision (technical)

o agencies probably more technically advanced, have more experts

- ability to make a good decision

- legis. perhaps more accountable b/c elected

o although agencies have to be transparent

- Goal is to minimize sum of decision costs and error costs

o Maybe agency b/c has more expertise, may be cheaper, where

legislature has to find the expertise; also easier to get three people to

agree then 300

- Is this too simplistic a formula (the decision and error costs formula)?

o When we emphasize cost, we may deemphasize other areas

inadvertently

o Hard to measure costs

Better to monitor and make decisions every so often, or to have

progressive (fire-alarm theory – let agency do it, and allow for

alarms (industry complaining) to tell legislature when problems

are occurring)

o Some decision costs are deliberately made, so aren’t really costs but

are legitimate decision making

Reasons some find delegation to be a problem

- legislators avoiding blame perhaps

o assumption of information asymmetry

o assumption that interest groups capture agencies

some institutions resist capture, but which methods work best?

o They want concentrated benefits and distributed costs

- What’s an illegitimate delegation based on Constitution?

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o Hard to decipher

o “It’s a matter of degree,” says Scalia

o Needs to be executing the law, not making the law

o SCt says to look for “Intelligible Principles”, says J.W.Hampton

o Schecter and Panama Refining are the only two cases where SCt has

struck down legislature on nondelegation

However, the nondelegation principle is mentioned quite often

(Benzene case)

Schecter Poultry

- FTC was allowed to do things to halt “unfair competition”

o This has cabining principles that come from the background and

history of what was known as “unfair competition”

- Here, purposes of NIRA are very vague

o But substantive stuff is not really that vague, most things like this are

usually found constitutional

Court knew that they couldn’t base it on substantive grounds,

so went to procedural grounds…

- Court says FTC has procedural safeguards that are not present in NIRA

o Court notes that FTC is a quasi-judicial agency, which may protect

against arbitrary decision-making

- 2 strands in nondelegation doctrine (in general)

o Separation of powers

Credential of legislature

Depends on subject matter who is making the decision,

b/c each branch has special exclusive area where they

may have more discretion

Try to avoid tyranny by dividing power

Substantive concerns mostly address this, separation of powers

o Arbitrariness of decisions

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Legislature has to stand for reelection, so they will probably be

arbitrary

Not as concerned about substance of a statute here, but rather

the procedure involved

One way to police is to make sure the decision-making process

is comported in a way that we believe provides due process

This is usually adjudication is some way

Procedural concerns get at the problem of arbitrariness

- Why treat an agency different than Congress? Why have these concerns of

arbitrariness?

o Congress is more accountable, have to be re-elected

o But under NIRA, power is given to president, who is also elected

President usually redelegates his power

- The industry groups make the codes, and president approves them if they pass

muster; he approved all of them, pretty much just rubber-stamped them

o Delegation was to interest group, whereas in Amalgamated Meat

Cutters delegation was to private, disinterested groups

o Breadth of delegation wasn’t really problem here; problem was

interest groups cut their own deals, and president just signed it

This happens all the time in Congress however – interest

groups get their own stuff passed

- Negotiated Rule Making (RegNeg)

o Get all interested parties in a room and have them work out regulations

o Just expands Schecter so that all interested parties are involved

- Broad delegations are almost always time-limited

o Don’t know who will end up with the power (could be change in

president)

Amalgamated Meat Cutters

- broad power delegated to president to help with inflation problems

o Economic Stabilization Plan

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Trying to deal with labor and wage inflation through wage and

price controls

- Are there substantive guidelines here? If not, are there procedural safeguards

here that deal with arbitrariness problem? Where does the judge find them?

(See p51 for the Act)

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Homework: ATA case

American Trucking Associations v. Environmental Protection Agency

- EPA sets primary and secondary NAAQS (national ambient air quality

standards) for particulate matter and ozone; petitions for review for each rule

have been filed

- Court (DC Cir) finds construction of Clean Air Act on which EPA relied

effects an unconstitutional delegation of legislative power, and remands case

for EPA to develop a construction of the act that satisfies this constitutional

requirement (vacates coarse PM standards, and invites briefing on question of

remedy for fine PM standards)

o EPA has articulated no “intelligible principle” to channel it application

of the factors used in determining the degree of public health concern

§109(b)(1) says EPA must set each standard at the level

“requisite to protect the public health” with an “adequate

margin of safety”; however, there is no determinate criterion

(says court) for drawing lines

EPA used CASAC (Clean Air Scientific Advisory Committee)

number of .08, but this body gave no reasons for its

recommendation

EPA frequently defends decision on basis that there is greater

uncertainty that health effects exist at lower levels, but no

principle reveals how much uncertainty is too much

EPA recognizes that the question is one of degree, but

offers no intelligible principle by which to adopt a

stopping point

They are free to pick any level from zero up to the killer

concentration of London’s Killer Fog

o There are no special conditions that justify a relaxed application of the

nondelegation doctrine either (like a war)

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o Court does not strike down statute, rather remands it so agency can

extract a determinate standard on its own

- Suggestions for how the EPA can change

o Can NOT use cost-benefit analysis b/c EPA not allowed to consider

any factors other than health effects

o In theory, could set all at zero, but that’s not what anyone wants

o Could develop a rough equivalent of a generic unit of harm that takes

into account population affected, severity and probability (Oregon

system)

Must give appropriate weight to persons with disabilities

o If no principle is available, can go to Congress with rationales for its

choice and seek legislation ratifying it

- DISSENT

o §109’s delegation is narrower and more principled than delegations the

SCt has upheld since Schecter

See p6 for list of times that SCt granted broad delegations

o First Circuit upheld constitutionality of Clean Air Act’s “requisite to

protect the public health” language in South Terminal Corp. v. EPA

o Clean Air Act also requires EPA to base standards on criteria that

accurately reflects the latest scientific knowledge

EPA did this by adhering to the CASAC’s recommendations

o .08 was good number b/c levels below this were found in natural

occurring environments

o See p8 for summary of argument

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Class notes – Monday, October 02, 2000

Schecter vs. Amalgamated

- In Schecter, delegation was to industry heads, and it was VERY broad

delegation

- Substantive guideline in Amalgamated was to avoid gross inequity; this

determined by:

o History of wage and price controls

o Look at the times (this one passed in emergency economic period)

Here they had contemplated a three-month freeze in

congressional discussions, so obvious they were looking to

enforce some major regulations

o Also, when the statute was rewritten in 1971, they added that the

president had to give reasons for decisions to show that they would not

result in treating certain industries in a grossly inequitable manner

o Both Shecter and Amalg are time-limited delegations, which goes to

avoiding gross inequity

- Procedural guidelines in Amalgamated were seemingly more important than

the substantive ones to Judge Leventhal

o These don’t seem to flow out of Schecter

Schecter said need to have open decision-making and

intelligible standards from Congress

o Amalg says there needs to be intelligible standards on the part of the

Agency as well as Congress

Does this make sense? It means Congress didn’t make the

decisions for the Agency

Leventhal says Agencies must have transparent policies so that

we don’t have a problem with arbitrariness; concern is not with

the separation of powers

If Congress fails to name standards that give an

intelligible principle, then Agency should be able to

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address these problems on their own; this is a major

departure from past practices

“Blank check” rhetoric is blunted by fact that

subsequent action by Executive must be in accordance

with actions taken in the past; standard developed by

Executive at beginning limits latitude of future

decisions

Canon of constructional doubt: if there is a path that

makes a statute valid constitutionally, then take that

path (this is opposed to the ATA case, where the judge

says it’s NOT constitutional)

- Is Court in best position to decide whether agency made the right decisions?

o Usually can’t find specific intent within legislation, so court has to

reconstruct legislative intent

The Benzene Case

- Industry set standards for OSHA, but they were not rubber-stamped like in

Schecter, they were reviewed closely

o Determined .10 was good level

- NIOSH determined that .01 should be used as emergency standard b/c they

had determined benzene was a carcinogen

- Ct of Appeals refused to adopt this emergency standard

- What are the three visions of what the statute says?

o (1) Marshall and US Govt – any risk requires regulation, up to point

where industry will cave; not accepted by main opinion

o (2) Powell and Industry approach – cost/benefit test; regulate when it

makes sense in a cost/benefit analysis; this leaves a lot of discretion;

not adopted by Stevens either

o (3) Stevens and majority – when there is a significant risk, regulate;

this is a threshold matter (to determine whether there is a significant

risk)

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But how does one determine what is a “significant” risk?

o Rehnquist says there is no standard at all, so it violates the delegation

standard and should be struck down; Stevens uses aggresses Leventhal

approach to put in a standard so that statute is constitutional

- OSHA has since developed a mathematical value of sorts to quantify risk: if

exposure level increases death risk by 1.64 per 1000, they will regulate

o However, we have different assessment of risks based on culture, age,

sex, etc.

o Are there risks we are willing to run? “Selective Fatalism” is a term

for this (from Sunstein)

Examples: Voluntariness (give higher assessment based on

whether risk is taken voluntarily), who the risk affects (some

say it’s ok to value young lives over old lives), dread heuristics

(some risks we simply dread – cancer); people also want to

eliminate a risk rather than reduce it

Regulation usually reflects these beliefs

27

Class Notes – Tuesday, October 03, 2000

Benzene, cont.

- three choices for court:

o Marshall: any risk should trigger regulation

o Powell: cost/benefit analysis

o Stevens: if significant risk is determined, then regulate as far as

technologically and economically feasible

- Does the statute assess risk in a conceptual way where lay assessments should

be included, or does it appear to call for expert determinations

o Many of these assessments turn on value judgments however based on

society’s wants and desires

o Seems Congress wanted experts involved b/c of NIOSH’s involvement

- Stevens is not clear about what constitutes “significant risk”

- Can risk assessment be done in a vacuum, or must cost be taken into account?

o Stevens seems to say it should be cost-independent

o Recent DC Circuit holdings (Michigan v. EPA) have said that

Agencies should assume Congress wants a cost-benefit analysis done,

unless Congress CLEARLY says to ignore costs in determining risk

strategies (Judge Williams, same guy as in ATA); Clean Air Act says

must reduce risks that contribute “significantly to nonattainment”,

which in Williams’ mind means Congress wants to give flexibility to

Agency, but under the rubric of a cost-benefit analysis (“significance”

includes consideration of cost, which is how Williams interprets the

Stevens opinion); basically sets a default rule that ambiguous statutes

include a cost-benefit analysis

o Chevron (post-Benzene, but pre-Michigan v. EPA) is SCt decision that

says when there is an ambiguous statute, it’s up to the Agency to

determine what it means

This means Marshall’s position in Benzene has won out

But Powell’s position is being defended in DC Circuit

28

o Requirement of cost-benefit analysis seems to make regulatory

regimes more rational

o BUT, in past Congress there have been acts requiring cost-benefit

analysis for ALL Agency decisions, but they have failed to pass

- No determination of what must be done when a “significant risk” is

determined, b/c case was sent back to determine what constitutes a

“significant risk”

- So what should be done when significant risk is found? § 3(8) of OSHA

(p.55) says adopt practices “reasonably necessary or appropriate”

o § 6(b)(5) of OSHA (p.55) says “to the extent feasible”

o Cottondust – SCt says Congress would have said directly if they

wanted pure cost-benefit analysis; paramount concern is workers’

safety

o Can always remand it and allow Agency to determine what these terms

mean

- How does the nondelegation doctrine help us in deciding between the three

opinions in Benzene?

o Pushes us in direction that constrains the Agency the most

o Seems that Stevens’ approach gives more discretion than Marshall

perspective, which is an automatic trigger

This regime (Marshall’s) would be very intrusive however b/c

there would be a lot of regulation

This is perhaps Stevens’ point on p.59 (see star)

Also, Stevens’ regime forces a public account of what

constitutes a significant risk (gives more transparency to

decision); Marshall’s plan means they only need to explain

why they did regulate, not why they didn’t

- So what did Congress really want here?

o One canon of construction: interpret statute in way that does not stir

the waters too much (proportional construction, rather than a draconian

construction)

29

Under this, the error costs aren’t as high if a judge gets it

wrong

Also less of a chance that Congress is going to have to get

involved (with draconian regime, more people would freak out

and Congress would be more likely to have to respond); may

be more of a public relations problem for Congress too

- Very broad language in a statute:

o Can strike it down

o Can pour content into it

o Can allow Agency to determine it

Does this take into account the separation of powers aspect of

the nondelegation doctrine? (See the three reasons for

nondelegation, as put forth in ATA; Williams says that the

third reason, separation of powers, is not as important so we

can allow the Agency to determine it)

ATA v. EPA

- Clean Air Act

o § 109 EPA sets standards for national ambient air quality (NAAQS)

o Scientific experts give advice

- Biggest Administrative Law case in this time; both sides have been granted

cert by SCt

- Court ruled cost can not be considered in assessing the standards

- EPA decided to reformulate standards for ozone

o Had been at .09ppm

o Advice was to set standard from .07 to .09ppm, but said it was a policy

decision

o Decision was to set it at .08ppm

Scientific community didn’t prefer .07

Effects at .07 are closer to background levels which can’t be

differentiated from those caused by people

30

o Also redid standards for fine particulate matter

- What are the intelligible principles used here?

o Look at the three principles on p.3 (in my notes above, application of

nondelegation doctrine)

o Must look at statute itself too

o Cost-benefit analysis was off the table b/c of holding in Cottondust

- Court looks for standards that will guide Agency in future (intelligible

standards)

31

Homework assignment: pp70-92

The Executive and the Agencies

- Serious coordination problem exists within federal govt

o In many areas, potential conflicts and overlaps of duties

o Legal Circumstance: many statutes give the legal power to make

regulatory decisions not to president, but to head of agency, cabinet

secretary, commission, etc

o Political circumstance: constituencies affected by a particular

regulatory decision often have ongoing relationships with Congress of

the agency, but not necessarily the White House

o Other groups likely to be better informed about details of a particular

matter than White House

o Problems exacerbated by Congress’s growing tendency to create more

and more subcommittees

- President’s control over administration has been governed by two SCt

decisions for much of the century:

Myers v United States

- Myers was postmaster under statute that said he could be removed by

President with advice and consent of Senate

o Govt claims removal was lawful b/c it’s unconstitutional to limit the

president’s power to remove an executive branch official by requiring

Senate’s agreement

- SCt agrees: power to remove subordinates is inherently part of executive

power in Art II, § 1

o Moment president loses confidence in his subordinates, he must be

able to remove him w/o delay; delay in going to Senate is untenable

o Doesn’t matter what duties the guy was performing

32

But if he’s doing acts that may be quasi-judicial and president

can’t properly control them, pres can let him go only if actor

has not intelligently or wisely exercised his functions (so

president does discharge his own constitutional duty of seeing

that the law be faithfully executed

o Senate CAN limit the power of pres to remove inferior officers, but

they had not given President any particular power here, so Myers

appointment must be considered a major one and hence be left to

discretion of president

Humphrey’s Executor v. United States

- President trying to remove Commissioner of FTC

- Govt says removal provision in § 1 is unconstitutional interference with

power of Pres, a la Myers

o SCt says Myers only applies to purely executive officers; FTC is not

an arm or eye of the executive, and it acts in a quasi-legislative and

quasi-judicial manner

Basically, Congress has power to create “independent”

regulatory agencies

o Power of pres to get rid of commissioner threatens independence of

the commission and infringes on separation of powers

o He could get rid of commissioner only for one or more of the causes

names in the applicable statute

- Future decisions depend on the office in question

Weiner v United States

- Suit for backpay based on alleged illegal removal as member of War Claims

Commission

- Congress made no provisions for removal, and here President did it

- Must look to nature and function that Congress vested in this Commission

33

o Congress did not want Pres to influence Commission in its decisions

on particular claims, so a fortiori we can infer Congress did not want

Pres to fire them for his own reasons

o No power is implied by the lack of specificity in the statute either

Modern Developments

- The Legislative veto

o Clause in a statute that says a particular executive action (by a pres or

agency) will take effect only if Congress does not nullify it w/in

specified period of time

o Three essential elements:

Statutory delegation of power to Executive

Exercise of that power by Executive

Reserved power in Congress to nullify that exercise of

authority

o Advocates say it allows Congress to reclaim some of its original

constitutional responsibilities

Immigration & Naturalization Services v. Chadha

- Atty general suspended Chadha’s deportation, but section of statute allowed

Senate or House to disallow a suspension, and they did so; the decision was

made with no public hearing and no recorded vote

- SCt analyzes the Presentment Clauses of Art I § 7:

o Every Bill, Order, Resolution or Vote shall be presented to the

President for approval

This was uniformly accepted in the records of the

Constitutional Convention

Represents effort to check power of Congress

Also assures that a “national” perspective is grafted on the

legislative process

34

o SCt also looks at Art 1 § 1, which says power consists of House AND

Senate

Bicameral requirement ensures legislation won’t be passed

unless looked over by both groups and debated

- This action by House can only be done in one way: bicameral passage

followed by presentment to President

o This is because it was a legislative action, so it must be subject to

standards in Art I

- There are only four provisions in Constitution where one House can act alone

without review, not subject to veto of president (see p.84)

o This action does not follow within any of these

- DISSENT

o Says court killed off over 200 statutes where Congress has a legislative

veto

o Ct should have rested decision on separation of powers only

o The legislative veto does not give Congress power to write new law,

just undo what an agency or Executive dept has proposed

o Art I § 8 – Necessary and Proper Clause

Power to make all laws necessary and proper, and Congress

can make this decision in its best judgment

o SCt has allowed independent agencies to use a veto power, but now

says Congress can’t have the power itself

o The legislative veto is a necessary check on the unavoidably

expanding power of agencies

- Debate over Chadha reflects two styles of constitutional interpretation, one

stressing text and original understanding, the other broad purposes

- Congress still has some powers that allow it to accomplish some of the veto’s

objectives

o Can require legislation delegating authority expires every so often so

it’s reviewed

35

o Can tailor statutes to limit executive power

o Congress makes the budgets for each agency

o Can condition legal effect of delegated authority on subsequent

enactment of a confirming statute

- Many courts have upheld statutes b/c the veto was “severable” from the rest of

the statute, meaning Congress would have passed the statute w/o the veto

Bowsher v. Synar

- Can Congress constitutionally delegate to comptroller general the power to

review estimates of likely budget deficits, to determine if deficit will exceed

specified amount, and if so, how much money a President must sequester (not

spend) in particular programs

- SCt say Congress can’t reserve for itself the power to remove an officer

charged with execution of the laws except by impeachment

o Statute said Congress could remove him at any time for one of five

reasons (see p.91)

- Congress has attempted to intrude into the executive function b/c this job is

executive in nature, so only president can control

- DISSENT (White)

o SCt being too formalistic here

o “necessary and proper” clause allows for this

o President accepted statute, so it’s ok

o No threat to separation of powers

- DISSENT (Blackmun)

o Sever removal authority and allow rest of statute to stand

36

10/9/00

American Trucking Associations, Inc. v Environmental Protection Agency

The delegation doctrine

No ex ante specifications as in Amalgamated Meat Cutters—goes to arbitrariness concerns—

doesn’t speak to separation of powers concern

There is no safe level here—no intelligible standards by which to chose one level over another

Policy decision

This is a matter of politics

Courts get nervous when they think that decisions are being made because of politics as

opposed to expertise—but this is good because is executive is subject to democratic

control

Expert body couldn’t come to any consensus

Sunstein—process of ceiling and floors

Agency should come forward with regulation and describe more strict and less strict

regulations and describe why those weren’t chosen

Other alternatives for Judge Williams given his view of the statute (wants to leave the EPA with

some flexibility)

Could have decided what the statute requires through aggressive statutory interpretation as in

Benzene

Could have struck the statute down as unconstitutional—make Congress go back and re-

legislate

Could have looked to whether decision was arbitrary and capricious

Doesn’t require ex ante specification

Each decision has to be reasonable and well explained

Some argue that this is ATA is really a arbitrary and capricious decision with a big

hammer\

Pragmatic problems with requiring ex ante standards and holding them to those

Might reduce the agency’s flexibility in ways that the agency may regret

Ossification—procedures for changing ex ante standards may be so arduous that they are

unlikely to change

Error costs—shift costs from the legislature to the agency

Unitary Executive Branch

Three views

Strong—everything that is executive or administrative has to be done in a way that it is in the

domain of the President—everyone who helps the President is under her control

37

Weak—there are some executive or administrative functions that happen under the President

but others are not controlled by the President—this view is mostly concerned with checks and

balances

The President has the ability to fire all the administrative officers at will

Myers v United States

Strong view

Requirement of Senate consent

Constitutional Provisions

Article II, §1—executive powers vested in the president

President to see that laws are faithfully executed

Opinions clause

History—Decision of 1789 (p 78-9)—Departments of War, Treasury and Foreign Affairs

Three possibilities

Fired by President alone

President plus advice and consent of Senate

Congress’s discretion to decide what the procedure should be

The original Congress believed that the Constitution required the President to be wholly in

control of these officers

But legislative history is contradictory—eg Treasury was somewhat insulated from President

(Comptroller—prosecutorial position—was pretty independent) as opposed to War and

Foreign Affairs

Exceptions

Inferior officers—Congress has the ability to vest the appointment in whichever branch they

want—for civil service (comes from Constitution)

Quasi-judicial function—comes from due process concerns

Congress specifically vests the decision in the agency administrator

Humphrey’s Executor

Limits Myers to purely executive officers

This is different because FTC’s powers are quasi-judicial and quasi-legislative—FTC has

adjudicative powers and performs as an arm of Congress for fact-finding, etc.

Translators—faithful to Framer’s principles but adopt structures that didn’t exists because of

change of times (Abner Greene)

The Constitution is not a set of rules but standards which can be altered to effectuate the intent

of the Framers

Larry Lessig—the Weak conception is right but this must be translated into Strong conception

for modern times because of voting

There is no Congressional aggrandizement in this case

38

Notes from Tuesday, October 10, 2000

Myers, cont.

- 4 ways to read the power of a president (see chart in notes)

Weiner

- What are president’s powers when statute is silent on firing?

- Must look at what the job entails

o Agency is involved in pseudo-judicial acts (adjudicatory functions), or

needs to have independent functions, then should read into statute that

president can’t interfere

Independent agencies

- Often have more than one head

- Often have mixed terms of years so they all don’t change at once

- Congress usually feels they have more influence (but Garrett says this isn’t

necessarily true)

Legislative Veto

Chadha

- Atty general can suspend deportation, but there is provision for a one-house

veto, which is exercised by the House here

- I got called on, so get notes from someone

- Very important distinction on whether committees gets veto or if entire House

gets veto

39

- Also shifts preference to sitting Congress, b/c you have to get it past this

Congress, not the enacting Congress; so try to mold bill away from original

intentions, and look to the current Congress

- BUT, maybe this takes account of changes in the political environment

- Congress may want to protect itself from delegating too much power, and this

is the easiest way to keep some of this power

- Congress also wants to keep some powers for itself

o Had delegated power in this case to Atty General so decisions were

made with less political shenanigans; perhaps they were ruing this

decision

- Purpose is to get more control by Congress into the decision-making process

- Court strikes it down based on intrusion on separation of powers

o Delegation cases: some agency is making legislative decisions, and

thus impinges on separation of powers

Courts just want “intelligible principles”

Delegation is a matter of degree, and when it goes too far it

must be overturned

o This case: Congress is trying to legislate without using bicameralism

and presentment to president, so this too impinges on separation of

powers

More formalistic kind of test here and Bowsher and Line-item

veto case (Congressional aggrandizement) than the delegation

cases - why this change?

Is there difference when Congress delegates too much,

versus where Congress continues to use its power

AFTER it delegates?

In over-delegation cases, Congress can constrain

through time limits, can give power to agency not under

president, can influence through budgetary actions;

Congress in effect can protect itself

40

In Chadha, can Executive protect himself? Could veto

bill, but then he has to veto entire bill; Congress

aggrandizes, and Executive has no real way to protect

itself

o Would Congress have given this power to Atty Gen w/o a legislative

veto?

Is it “severable”?

- J. White’s formalistic argument:

o Have to have acquiescence among all actors in order to change status

quo

But does he have the status quo right? If one of the actors

disagrees with agency decision, they can overrule it

Not true for president, b/c he can really only fire Atty

Gen

It takes three entities to change the status quo, and here

they agree with silence

41

Homework Assignment – pp92-102; Clinton in supplement

Mistretta v. United States

- SCt upholds constitutionality of the US Sentencing Commission, a body

composed of 7 members, statutorily located in “judicial branch”, with legal

power to write sentencing guidelines binding on federal judges

- P claims Act violates separation of powers; SCt says no

o Framers did not believe the branches should be entirely separate and

distinct

o Congress’ decision is not unconstitutional unless they vest in the

Commission powers more appropriately performed by other branches

or that undermine the integrity of the Judiciary

o SCt has approved the assumption of other nonadjudicatory activities

by judicial branch

Substantive judgment in field of sentencing is appropriate to

the judicial branch, and the methodology of rulemaking

remains appropriate to that branch

o Service on commission will not interfere w/ judges’ ability to carry out

normal work

o President has power to appoint and remove judges to the commission

Act does not allow president to interfere with status of Art III

judges however; and his removal power is limited

o Congress neither delegated excessive legislative power nor upset the

constitutionally mandated balance of powers

Status of Independent Agencies

- Humphrey’s Executor legitimates existence of independent regulatory

commissions, defined as those agencies whose heads do not serve at the

pleasure of the president

42

o Bowsher and Myers can be read as cases of encroachment and

aggrandizement, whereas Humphrey’s can be read as a case of

independence (and hence, constitutional)

Scalia in Morrison argued in his dissent that Humphrey’s held

Congress could create independent agencies only if

commissioners exercised quasi-judicial and legislative

functions

MWAA – SCt held board was a constitutionally invalid

encroachment by Congress

If board’s powers were executive, Bowsher forbids

vesting of such power in agents of Congress

If board’s powers were legislative, Chadha requires that

such powers be exercised through the normal

legislation process

- Two efforts to reconcile these cases:

o Cases in general suggest Ct will uphold legislation delegating power

when:

The power is at least arguably related to the basic function of

that branch

The specific text of the Constitution does not forbid the

delegation

The delegation of the power to one branch does not

unreasonably interfere with the ability of a different branch to

carry out its constitutionally mandated duties

o Independence is acceptable, encroachment and aggrandizement are not

Key question is whether there is independence (which is

acceptable so long as president can exercise his constitutional

functions) or encroachment and aggrandizement

- The “Independent” Agencies

o For a list, see p100

43

Independent b/c Congress has limited president’s authority to

remove their leaders

o From a strictly legal point of view:

Congress limits presidential removal authority, and this creates

independence

President can’t dictate policy to any unit insofar as that policy

runs counter to the statute under which the unit operates

o From practical point of view

President can often determine who will run agency, despite

what statute says

But there are some executive department officials that

president can’t remove, so the organizational position

does not necessarily correspond with policy

independence

President has other ways to affect policies of independent

agencies

DOJ often intervenes in agency proceedings

President retains control over some selections of certain

agency personnel

Pres controls budgets

Pres can introduce substantive legislation and

reorganize govt

Clinton v City of New York (Line-Item Veto – In Supplement)

- See p9 for background of the veto

- Even though statute says any individual may bring suit, Court says Congress

intended that corporate entities should be able to bring suits too

- President has amended two Acts of Congress by repealing a portion of each,

and there is no provision in Constitution that authorizes President to enact,

amend or repeal statutes

44

o Art I, § 7 allows for president to “return” a bill, but this is different b/c

it occurs before the bill becomes law, where the cancellation occurs

after the bill becomes law

o Constitution is silent on subject of unilateral Presidential action that

either repeals or amends parts of duly enacted statutes

Ct says this silence should be construed as an express

prohibition

- Govt relies on Field v Clark, which gave President power to suspend tariff

exemptions on other nations unilaterally

o Ct says this case is dispositive for three reasons:

Power given to pres then was contingent upon a condition that

did not exist when the Act was passed

Pres had duty to suspend when certain things occurred; here he

has discretion

Pres was not relying on his own policy judgments, like here

- Critical difference between this statute and all predecessors is that this Act

gives pres unilateral power to change the text of duly enacted statutes

- Act’s cancellation provisions violate Art I, § 7 (and hence it’s unnecessary to

address separation of powers)

o Any change in this power must come through a Constitutional

amendment

- Scalia, DISSENTING in part

o Only individuals can bring suit, as statute says, so any the one guy can

bring this suit; but he would hear case on writ of cert

o No difference between Congress authorizing money to be spent on

particular item at president’s discretion and authorizing him to cancel a

spending item

o Presentment clause has been fully complied with here, so does not

violate Art I § 7

- Breyer, DISSENTING

45

o Act is constitutional b/c does not violate any specific textual

constitutional command, nor does it violate any implicit separation of

powers principle

No need to referee dispute between other branches

Pres did not repeal or amend a law, he simply followed the law

as written; he has simply executed a power delegated to him by

Congress

Congress has delegated this type of power before

o No violation of separation of powers; must ask three questions:

Has Congress given Pres non-Executive power? No

Has Congress given pres power to encroach upon Congress’

own constitutionally reserved territory? No

Has Congress given away too much power, violating the

doctrine of nondelegation?

Is there an “intelligible principle”?

o Act creates a principle in 3 ways: procedural,

purposive, and substantive

Court has upheld equally broad delegations

o Admits that Pres need not develop subsidiary rules, as agencies often

do, and pres’ actions aren’t reviewable; but these aren’t determinative

Notes on the case

- Since 1974 pres has been able to rescind federal spending, so in some ways

the Line Item Veto is just a change in way Congress authorizes rescissions

- See p21 (AdLaw) for ways Congress may try to get around this decision

46

Class Notes – Wednesday, October 11, 2000

Legislative Vetoes, cont.

- Are details in committee reports the law? No

o But if Executive branch ignores these reports, appropriations

committees may not give them as much money

- It’s a give and take: allow president some discretion, but still keep a

legislative veto

- There hasn’t been a formal exercise of a legislative veto since Chadha; the

vetoes are put in bills as more of a threat

- Why do you see these in cases of appropriations in particular?

o Legislative branch wields much power in area of appropriations, and is

aware that any giving away of this power dilutes their own power

Bowsher

- OMB had always been under control of the Executive historically

o 1974 Congress took some of this power by saying any appointments

had to be given the advice and consent of Congress

o Structure changed in 80’s to where there were a series of deficit targets

in hopes of eliminating the deficit completely

Delegated sequestration power in hands of comptroller general

(watchdog of Congress – oversees spending), who was seen as

an impartial judge, a third party

Sequestration: cut everything by uniform percentage, as

required to reach target

o Some programs specifically exempted out

(Social Security), and some limited cuts

(Medicaid)

o In general though, a pretty automatic procedure

Hope was that sequestration threat would force

Congress to make the hard decisions; but Congress

47

simply raised the deficit targets so there were no

sequestrations

- Ct does not say it’s too broad a delegation, nor do they say it’s an independent

agency; problem is that it’s a delegation to someone under control of Congress

o Power of removal was limited to five particular factors (p91)

o President could not fire comptroller alone, and could not initiate firing

either

- Holding: Executive power can’t be controlled by Congress

o The sequestration power is an Executive power, so it can’t be

controlled by Congress

o Entangles Congress too much after the lawmaking has already been

done; it’s Congressional aggrandizement

This assumes that President can’t protect himself

Hypothetical

- Commission setting salaries is set up with 2 legislators, 2 judges and 2

executive officers (presidential appointees); is this constitutional?

o The two legislators:

Not if the commission is supposed to be a type of executive

power, b/c there are legislators exercising executive power

(Congressional aggrandizement)

Not if it’s legislative power either, b/c legislators are gone

based on Chadha (legislators are legislating without going

through bicameralism)

o The two judges

Depends on whose salaries we are talking about; under

Mistretta, judges can be involved in areas where their expertise

is warranted

48

Line-Item Veto Case – Clinton v. New York

- Original case brought by Senator Byrd, but SCt said he did not have standing;

only if member of Congress can show his vote was rendered null and void can

he have standing, especially given that private parties could bring suit in the

future

- Garrett thinks this should be analyzed as a delegation case, not under Chadha,

and that under current state of delegation doctrine Act is constitutional

- Line-item veto in state governments allows governor to cut out (usually

appropriations-related) things after a bill is passed

o Here, president has to sign into law the bill, then he has five days to

cancel certain spending provisions and must alert Congress to the

cancellations; if Congress doesn’t like the cancellation, they can enact

a disapproval bill to try and override the cuts, which would need 2/3

majority to override the president’s eventual veto; if Congress does

NOT act, the spending does not occur

Applies to 3 types of spending

Appropriations (defense, for example) – 79 of 82

cancellations were here; most gubernatorial veto acts

only addressed this type of spending, and it’s rather

routine

NEW items of direct spending (entitlement spending –

Social Security, Medicaid, etc)

Tax expenditures

o So it’s NOT an actual line-item veto as we know it from state govts

- Sort of depends on whether we take a pragmatic approach or a formalistic

approach

o Is there specificity, or does it violate delegation doctrine

- Should have called it a cancellation bill instead

o Here, president had more discretion than OMB had in Bowsher; Scalia

and Breyer make it out to be an easier case than it really is

49

- If refusal to spend money is legislative (as majority says), than all

impoundments should be legislative

o How Ct defines cancel – “render without legal effect”; this affects

their outcome

50

Homework pp102-138

Presidential Control of the Regulatory State

- Recently, presidents have agreed that some centralized review of agency

regulatory policies is important, and they have created a review system that

has emphasized both coordination and cost effectiveness

o Review now takes place in OMB, in the Office of Information and

Regulatory Activities (OIRA); the administrator is a high-ranking

politically appointed official

o Major constitutional source for this review consists in article II’s

statements that the “executive power should be vested in a President”,

that “president shall take care that the laws be faithfully executed”, and

that he “may require opinion, in writing, of the principal officer in

each of the executive departments, upon any subject relating to the

duties of their respective offices

- Executive order 12,291

o Under Reagan and Bush, governed regulations issued by federal

executive agencies, expressly excluding “independent” agencies

o Benefits must outweigh costs to society

o Section 3 imposed specific requirements for “major” rules, defined as

those that will have an annual effect of $100 million or more

- Executive Order 12,498

o Order designed to give OMB power to coordinate regulatory planning;

each agency subject to the order shall submit a statement of its

regulatory policies, goals and objectives

- Executive Order 12,866

o Clinton’s order (see p106 for details)

Changes from earlier orders:

Includes same approach to maximize net benefits

o However, seeks to consider qualitative costs as

well (so it’s a somewhat softened form)

51

o Also asks agencies to seek input from local

officials

Changes definition of regulation to exclude interpretive

rules and statements of policy

OIRA’s function is more of a coordination role

o Non-significant regulatory actions need not be

submitted to OIRA

o Same guidelines for “major rules”

o Only administrator of OIRA can receive oral

communication from person outside executive

branch (ensures more disclosure of

commentaries)

o OIRA has said that the executive orders require

the agencies to ask, and answer, the following

question (see p121)

See p121 for criticisms of OIRA

Initiatives have goals of reducing paperwork burden, increasing

flexibility and increasing use of economic incentives in lieu of

control regulation

- 1995 Unfunded Mandate Reform Act

o Federal agencies, before promulgating a rule that includes mandate

which may result in expenditure of more than $100 million, must

prepare a statement (see p117 for the 5 things this statement must

show)

o All agencies must consider reasonable alternatives, and choose the

most cost-effective one

- Paperwork Reduction Act

o Charges OMB with developing uniform policies for efficient

information processing, storage and transmittal systems, both within

and among agencies

o Required to minimize burden on public to the extent practicable

52

o Does not apply to govt regulations that require private persons to

distribute information to other private persons

- Executive Branch Regulatory Management Process (see p120 for rule-writing

process for important regulatory rules)

Agency’s Power to Adjudicate

- Crowell : under what circumstances does article III require a court to decide a

matter? To what extent does it forbid Congress to take a matter away from

courts and give to agency for a decision?

- In Crowell and several other cases, SCt has referred to or used concept of

“public rights” in an effort to determine whether Congress can grant

adjudicatory power to nonjudicial body

- Marathon – Ct in plurality makes distinction between public rights, which are

between the govt and others, and private rights, which involve the liability of

one individual to another; there can be no constitutional objection to

committing public rights to an administrative agency

- Schor – O’Connor repudiated Marathon and reaffirmed Crowell, in a sense,

saying the public-private distinction is not determinative, although danger of

encroaching on the judicial power is less when public rights are involved (so

maintains separation of powers)

53

Class Notes10/23/00

Line Item Veto

Garret’s concern with the court’s analysis is that it throws into some doubt sequestration and other

kinds of impoundments that have been used for several years—eg Antideficiency Act—these have

been taken as being relatively unproblematic

Now, all of these things may be seen as rendering a law without force or effect and thereby

amending legislation—but these things relate to appropriated monies as opposed to that which is

under consideration in the Line Item Veto Act

With respect to tax provisions and entitlements, the cancellations are not considered to be

rescissions which changes the court’s view significantly

The court didn’t take the pragmatic delegation approach—had the court used the delegation

approach and rendered the Act unconstitutional, this decision would have thrown the whole

administrative state into doubt

Bryer and Scalia Analysis—looking at act from delegation perspective

Standards—not overwhelmingly specific

Language has three requirements—the cancellation will (1) reduce the federal budget

deficit, (2) not impair any essential governmental functions, and (3) not harm the national

interest

Legislative history has other requirements—eg want the President to get at special

interest legislation (pork)

Legislative intent is tricky here because the immediate intent is to enact the given

provision but there is also the meta-intent that is to allow the President to cancel certain

provisions—this suggests that Congress’s interest in the Line Item Veto Act is primary

because otherwise Congress could have exempted the particular provision from the Line

Item Veto Act

This is a time-limited delegation

Will the agency itself create some of its own cabining procedures?—the President didn’t

really do this here

The Joint Tax Committee described what it would see targeted provisions to be, gave

examples of targeted provisions, described what 100 affected entities would be, etc—this

was used by lobbyists to created laws that would not fit these descriptions

Bryer’s idea of separate enrollment—you take one bill and then split them into separate

bills and the President can either enact the one big bill or whichever of the separate bills

he wants—Constitutional problem?—One Congress person could seek to unravel the bill

Executive Orders

This is not a partisan issue

54

The main actor is the OMB and in particular of OIRA

A shift from thinking that politicians set policies but administrators are experts who administer

policies in a non-political way to the growing role of the OMB which recognizes that politics is

difficult to sequester and is not illegitimate in regulation—and the politics in regulation should be

done by a politically accountable body

A desire to inject cost-benefit analysis

The President should play a more limited role

There has been overall poor priority-setting (Bryer p 192-93)

There has been a mismatch in the tools of regulation and the problems they aim to solve

There has been insufficient attention paid to the effects of regulatory decisions

This is the way the President is making sure that the laws are being faithfully executed

Clinton includes independent agencies in the ambit of the Executive Order

Humphrey’s Executor says that the independent agencies should be insulated from any other

body

Part of the Take Care clause or faithfully executing the laws means that the President should

have control in this way over independent agency

Ultimately, the decision for how to regulate remains in the agency’s hands—the agency head

can even disagree with the Vice President

The executive orders nevertheless have profound influence over the regulation process

Clinton’s Executive Order

OMB can’t delay agency rule-making—series of deadlines

No judicial review allowed by the request of individuals

55

Homework: 204-18, 221-23, 225-26, 234-38, 240-43

Review of Questions of Fact

- NLRB v. Universal Camera Corp (I) – 2d Cir

o Arises on a petition to enforce an order of the NLRB, whose direction

was to reinstate an employee with back pay

o Examiner found employee was rightfully discharged, but NLRB

overturned this decision

o Question is, how does court treat the reversal by the NLRB?

Ct says it’s impossible to consider the Board’s reversal as a

factor in the court’s own decision (so disregard the Examiner’s

findings)

- NLRB v. Universal Camera Corp – SCt

o Statutes require courts to uphold rulings on “questions of fact, if

supported by substantial evidence on the record considered as a

whole”

o APA and Taft-Hartley Act require courts to assume more

responsibility for the reasonableness of NLRB decisions than some

courts have shown in the past

Board’s findings are entitled to respect, but must be set aside

when unjustified/unreasonable

Plain language of statutes require courts to look at all evidence,

including examiner’s report (remands to 2d Cir for further

deliberation)

o SCt gives examiner’s findings some undefined weight as a relevant

part of the record, and sets aside agency’s decision if it does not meet

the substantial evidence test

- NLRB v. Universal Camera Corp (II) – 2d Cir

o Ct examines record as a whole, and rules that NLRB was incorrect and

should have dismissed complaint

56

o Concurrence makes distinction between primary and secondary

inferences (see p217), which are dependent on witness testifying and

determines what the NLRB must accept and what they need not accept

- Alternative standards of review

o Substantial evidence test is dominant standard for judicial review of

factual determinations by agencies, at least in “on the record”

proceedings

This is specified in the APA, §706(2)(E)

But in informal proceedings, APA calls for arbitrary or

capricious review of agency decisions, including decisions

involving facts

Review of Questions of Law

- United States v. 53 Electus Parrots

o Decision is based on determination of what “wild” means in the

statute; court adopts govt position

- Some (esp legal realists) urge that distinction between questions of law and

fact is manipulable, depending on whether judge wants to exercise control

(question of law) or defer to agency (fact)

- A major question is what standard of review should be used for mixed

questions of law and fact

- NLRB v. Hearst Publications

o Question is whether paperboys are considered employees under the

NLR Act

o Ct looks at history, terms and purpose of legislation to define

employee

o “Questions of statutory interpretation, especially when arising in the

first instance in judicial proceedings, are for courts to resolve, giving

appropriate weight to those whose special duty if to administer the

questioned statute. But where the question is one of specific

application of a broad statutory term in a proceeding in which the

57

agency administering the statute must determine it initially, the

reviewing court’s function is limited.”

Board’s determination is to be accepted if it has warrant in the

record and a reasonable basis in law, as it does here

58

Class Notes – Tuesday, October 24, 2000

Look at T’s notes for early class notes

Proposals for super-mandates in Congress that require cost-benefit analyses

- Executive Orders don’t vary terms of underlying statutes; if statute says don’t

use cost-benefit, don’t use it

- Legislative proposals would affect ALL statutes and force cost-benefit

analyses on all

How to divide power among the branches of government

- JW Hampton: “intelligible standard”

- Amalgamated Meat Cutters – agency restrains itself through ex-anti standards

- Chadha, Bowsher: Congress grabs power

- What makes sense pragmatically? How do we achieve goals?

o Need understanding of institutions

o Need to check ambition with ambition

o Chadha, Bowsher, Line-Item Veto: modern state demands creativity

b/c it’s so complex says Garrett

Crowell v Benson

- Why would Congress want agency to adjudicate disputes under

Longshoremen’s Act?

o Specialization of agency

o More uniformity, better procedures perhaps

o Congress concerned courts hostile to labor

o Commission more affiliated with Congress

o It’s a less formal process, so perhaps people feel they are more

connected to the process; but does this impinge on due process?

- How can Congress delegate this without contravening Constitution?

o Not clear that ALL powers must be within one, single branch (so not

all judicial power must be in judicial branch)

59

o Necessary and proper clause gives Congress ok

o Agency decisions subject to court review, so Art III power not really

infringed

o More flexibility to adjudicate public rights versus private rights (Art

III arguably only applies to private rights)

What’s the difference between the two rights?

Public right: suing federal govt on claim over which

govt has waived sovereign immunity; Govt has ability

to avoid claim completely with sovereign immunity, but

waives this, then they still have ability to put case in a

federal agency

- How does Court come to the outcome in this case and differentiate it from the

Marathon case?

o Private right here is one created by federal statute, not one in common

law

o Greater involvement of Art III courts here

What kind of review must Art III court conduct on questions of

law?

Here they say de novo

What about on questions of fact? Crowell establishes two-tier

system:

Constitutional and jurisdictional facts get de novo

review

o Here, did injury occur on federal waters? This is

constitutional issue that turns of the fact-finding,

as opposed to determining if actor was drunk,

which has no constitutional issue

Otherwise look at whether fact-finding is supported by

“substantial evidence”

Turns out that courts don’t follow this two-tier system, give all

agency fact-findings same standard of review, except for one

60

area: determining whether someone arrested is an alien for

immigrant purposes

Crowell not overruled though, but courts just don’t

really follow it

Brandeis says de novo review not good b/c loses expertness of

agency which increases chance of error (higher error costs);

also increases decision costs (duplicate work)

May want some infusion of political values, so want agencies

On the other hand, what would be problem with having NO

appellate review at all?

Agency won’t have to support decisions as strongly b/c

not subject to review; decision costs are lower b/c less

scrutiny involved

Universal Camera Litigation

- Key facts:

o Question of appropriate standard review of NLRB, an independent

agency, for findings-of-fact that are in a record

o Employee says he was fired b/c of anti-employer testimony he gave at

a hearing; employer says guy got fired b/c he was insubordinate

o Hearing officer finds in favor of employer, NLRB reverses

- Three holdings in Universal Camera:

o In deciding whether there is substantial evidence supporting a finding

of fact, court should look at whole evidence on the record and not just

evidence supporting decision

o What is substantial evidence?

1st decision: very deferential to Board’s decision, and closer to

“no review” than de novo

After SCt decision, move closer towards the de novo side (but

still more deferential than not)

61

Here, organic statute requires substantial evidence, as did APA;

always follow the organic statute, only use APA if statute is

silent on review

How does APA see role of courts vis-à-vis agencies?

Courts must assume more responsibility for

reasonableness and fairness of Labor Board decisions

than some courts have shown in the past (p212); so in

other words, more than the 1st decision but still not de

novo

o What happens when expert (ALJ – hearing examiner) decides one

way, and Board decides another?

Whose fact-finding do we believe more?

1st decision said ignore ALJ’s decision; SCt says no,

can’t do this, need to take account of what ALJ found

o ALJ is closer to the decision, sees witnesses and

hears testimony in person

But Board may have a better feel for the policy as a

whole

Frank, J. says should give more weight to primary inferences

(which depend on testimony on which ALJ was present at) and

less to secondary inferences (facts which ALJ inferred from

oral testimony) – see p217; Garrett likes this

- Substantial evidence, defined in hornbooks: such relevant evidence as a

reasonable mind may accept as adequate; do more than create a suspicion;

must do enough to justify (if it was jury trial) refusal to direct a verdict; assess

not the correctness, but the reasonableness

o Expertise really matters in fact-finding

- What about questions of law, or questions of fact and law mixed together?

o The Benzene case: a question of law

Not a lot of deference to the agency here

62

63

Homework: pp243-260

Legislative Rules versus Agency Interpretations (legislative vs interpretive rules)

- Skidmore v. Swift

o Ct tries to determine whether time spent by firemen constitutes

overtime under the Fair Labor Standards Act

o Administrator has promulgated bulletins, which Ct discusses

General tests point to exclusion of sleeping and eating time and

inclusion of all on-call time

o Skidmore test: rulings, interpretations and opinions of Administrator

under this Act, while not controlling upon the courts by reason of their

authority, do constitute a body of experience and informed judgment

to which courts and litigants may properly resort for guidance; the

weight of such a judgment will depend on the thoroughness evident in

its consideration, the validity of its reasoning, its consistency with

earlier and later pronouncements, and all those factors which give it

power to persuade, if lacking power to control

- Legislative vs. Interpretive rules:

o Legislative: product of an exercise of delegated legislative power to

make law through rules

If constitutional, within the granted power, and properly issued,

is “law” as if it were a statute, and is “controlling upon courts”

Batterton v. Francis : If Congress expressly delegates a power

to prescribe standards, the regulation can only be set aside if

Secretary exceeded his statutory authority, or if regulation is

‘arbitrary and capricious, an abuse of discretion, or otherwise

not in accordance with law’

o Interpretive: any rule an agency issues without exercising delegated

legislative power to make law through rules

Not binding on a court, but may have power to persuade, if

lacking power to control (from Skidmore)

64

o Deciding whether Congress has given agency power to promulgate

rules with the force of law may be difficult

Judge Williams has four questions to ask which determine if

it’s a legislative rule (see p247)

o What determines HOW much deference will be given to a rule,

legislative or not?

Thoroughness evident in its consideration, the validity of its

reasoning, its consistency with earlier and later

pronouncements, and all those factors which give it power to

persuade, if lacking power to control (from Skidmore)

Was agency’s interpretation made near time statute was

enacted, is interpretation long-standing?

Nature of agency’s specialized experience

Sometimes Congress gives instructions as to how much weight

should be given to an agency’s views

o How should a court interpret a Congressional statute?

Legislative history, language, structure, history, purpose of

program, and also factors mentioned directly above

o Two reasons why court might defer to agency:

Statute granted agency discretion to decide issue

Court might accept agency’s resolution as presumptively

correct

Court here will be more reluctant to allow agency to

change a long-standing interpretation, as opposed to

first reason

Chevron: Synthesis or Revolution

- Chevron v. Natural Resources Defense Council

o Case concerns interpretation of “stationary source” in Clean Air Act

65

EPA says rule allows states to treat each plant as if a bubble

were placed over it, so total emissions from the bubble are

measured, not from each particular building in the plant

Ct of Appeals said this definition would undermine Congress’s

goal of speedy compliance with national air quality statndards

SCt reverses

o Chevron 2-step:

(1) If intent of Congress is clear, court and agency must give

effect to the unambiguously expressed intent of Congress

Case is at an end

Courts must use “traditional tools of statutory

construction” to ascertain intention of Congress

(2) If statute is silent or ambiguous, question for the court is

whether agency’s answer is based on a permissible

construction of the statute (is it reasonable?)

If Congress left a gap, there is an express delegation to

agency, and such legislative regulations are given

controlling weight unless they are arbitrary, capricious

or manifestly contrary to the statute

Can not challenge the wisdom of an agency

construction, just its reasonableness

o SCt says Congress did not have a specific intent, and EPA’s use of the

bubble concept is a reasonable policy choice, so it’s ok

Looked to language of statute, legislative history, and policy of

EPA

- Scalia’s defense of Chevron

o Basis is not that agency is simply more competent

o Not separation of powers either, b/c policy evaluation is traditionally

done in judiciary branch too

o He supports across-the board presumption that, in the case of

ambiguity, agency discretion is meant

66

This way, Congress knows if they leave ambiguity in a statute

it will be interpreted by agency, whose policy biases will

ordinarily be known

67

Class Notes – Wednesday, October 25, 2000

Two important lessons of Crowell:

- Despite private v. public rights distinction, as long as there is supervision by

Art III courts private rights will be enforced

- Courts routinely defer to fact-finding results of agency, so de novo review

isn’t that important

Universal Camera

- Substantial evidence standard for review of facts

- Court looks to entire record, which includes findings of ALJ and agency

- ALJ’s determination of credibility should be given weight

Questions of law, and mixed questions of law and fact

- Parrot Case

o What is a “wild animal” under the statute?

This is a question of law, and then apply the facts of the case

Ct adopts government’s interpretation of “wild”

- Hearst Case

o Should newsboys be considered “employees” under National Labor

Relations Act?

Under common law, they are independent contractors, not

employees

Board says newsboys are employees under the Act, and the

Court agrees

This is a pure question of law

o Says in regards to pure issues of law, courts do NOT defer; they may

give appropriate weight to agency, but courts really do the statutory

interpretations; in questions of mixed fact and law, the decision is

more like the fact questions and hence more deference should be given

to the agency

68

This means that there is an important distinction to make

between questions of pure law and ones involving fact

- These cases leave us with a murky situation, where one must make a

distinction between fact and law

o Under Chevron, even pure questions of law should look to agency and

its policy considerations for some guidance

- Skidmore Case

o Whether to define “waiting time” as working time for overtime pay

under Fair Labor Standards Act

o Seems to be a question of law: what constitutes working time? And the

activities that the firemen are doing, so they fit under this definition?

Judiciary will have a free hand here, but they can give

appropriate weight to the agency (as Hearst case orders)

o FLSA gives administrator enforcement powers only, and to courts the

responsibility of legal determinations; so courts have substantial

leeway here, even with mixed questions of law and fact

Court still followed what agency recommended; comes up with

four-part test to determine how much weight to give to agency

(see p246)

Thoroughness of consideration by agency

Validity of its reasoning

Consistency with earlier and later pronouncements

All those factors which give it power to persuade, if

lacking power to control

o Appears to give less deference in mixed-questions, then was given in

Hearst

- Interpretative vs. legislative rules

o See p246-47

o Sometimes agencies with legislative authority choose to issue

interpretative rules instead; these are usually easier to adopt, have less

formal requirements

69

o How can we tell the difference between the two?

Does rule itself provide enforcement action to ensure

performance of duties

Is rule published in Code of Federal Regulations

Agency tells you it’s a legislative rule

Rule effectively amends a prior legislative rule

Chevron Case

- Tax cases had historically deferred to agency (IRS) determinations

- Issue is defining “stationary source” under Clean Air Act

o Under Reagan, this was viewed as a plant-wide source, so could get

permits as long as entire plant went down in pollution, even though

some of the factories within the plant actually increased pollution;

previously under Carter, all individual factories had to get permits

(which applied to the individual factories, not the entire plant)

This gives more attention to new risk rather than old risk

o Seems to be a question of law: what does stationary source mean in

this statute

Under older cases, the court would decide this

But the SCt gives deference to the Agency instead (BIG

CHANGE)

With respect to regulatory statutes, the Ct is changing

so that questions of law are deferred to agency

- The Chevron two-step:

o Has Congress made intent unambiguously clear? If so, case closed,

follow Congressional intent

o If Congress is not clear, Ct does not impose own construction; Ct

should look to see if agency’s definition is a permissible or reasonable

construction under the statute

- Garrett says standard for fact-finding is still more deferential than questions of

law, but they are very close after this case

70

o Is this a big break from Hearst?

Maybe way to reconcile the two is to say that in Hearst

“employee” is ambiguous, and common law definition is NOT

the right answer, so some of constructions have been ruled out

b/c of Congressional intent; however, there is still flexibility

for agency to choose among the other options that have not

been precluded

- But what are the traditional tools of interpreting statutory construction?

(which is necessary to determine in order to satisfy the first step of the two-

part test in Chevron)

o This will be the focus for the next week of class

- Is Chevron limited to legislative rules?

o Case has been applied to other areas

o Scalia says Chevron overrules Skidmore, and this is the only test to be

used

o There are frequent references to Congress’ delegation of authority to

agencies

Skidmore focused on expertise of agencies, but Chevron looks

more at delegation

In some cases, Congress has delegated power to agencies to

interpret ambiguous terms

o Scalia says SCt is simply doing what Congress has told them to do, b/c

Congress has delegated power to interpret ambiguous terms to the

agencies

How do we know Congress has made this delegation? This

may not be obvious in all statutes, but where we don’t know if

Congress has made this delegation, Scalia says Chevron should

apply to all statutes if Congress does not explicitly deny the

delegation has occurred

Expertise of agencies is a compelling reason

71

Homework: pp263-268, 283-89

Post-Chevron cases

- INS v. Cardoza Fonseca

o Question is whether two statutes have the same burden of proof

o SCt says two standards are the same

o This case can be understood as an attempt to cabin the reach of

Chevron

o Scalia concurs, but says Chevron is used incorrectly, b/c Ct implies it

can substitute own interpretation if they are able to reach a conclusion

as to the proper interpretation of the statute using the traditional tools

of statutory construction

- Chemical Manufacturers Assoc v. Natural Resources Defense Council

o “Chevron’s deference requirement is explicitly limited to cases in

which congressional intent cannot be discerned through the use of

traditional techniques of statutory interpretation”

- Young v. Community Nutrition Institute

o Since statute was ambiguous, and given Chevron, court upheld

agency’s interpretation

o Stevens (author of Chevron) dissented: statute was not ambiguous, and

could not support agency’s interpretation; “to say that statute is

susceptible of two meanings,…is not to say that either is acceptable”

- NLRB v United Food Workers Union

o Where statute is ambiguous or silent on specific issue, Chevron-type

deference is appropriate

- Bowen v. Georgetown Univ Hospital

o Secretary’s interpretation was not reasoned, nor was it consistent with

the view he advocated in prior cases; “deference to what appears to be

nothing more than an agency’s convenient litigating position would be

entirely inappropriate”

- Dole v. United Steelworkers

72

o Statute clearly expresses Congress’s intent, so Ct declined to defer to

OMB’s interpretation

o White, dissenting: statute not clear, so defer to OMB; also, no

exception to the deference rule of Chevron for instances where the

agency is highly self-interested

- Maislin Industries, U.S. v. Primary Steel

o Ct said statute forbad ICC from acting in particular way, even though

ICC interpreted the statute to the contrary

o Stevens, dissenting: court can’t dismiss Chevron by asserting

interpretation is inconsistent with the statutory scheme as a whole

- Public Citizen v. Young

o Issue is whether FDA could allow an exemption to the literal language

of the Delaney Clause for trivial or “de minimis” risks

Clause says that any color additive that induces cancer in man

or animal shall be deemed unsafe

Problem is that some dyes have very small risk of cancer, but

still are prohibited

o Govt says the de minimis doctrine should apply (“the law does not

concern itself with trifles”)

Failure to employ this doctrine may lead to regulation that is

absurd and directly contrary to the primary legislative goal

o Ct says de minimis doctrine should be used with a view to

implementing the legislative design

Here, Congress has been extremely rigid due to a great concern

over a specific health risk, the apparently low cost of

protection, and the possibility of remedying mistakes (through

renewed consideration by Congress)

This indicates that Congress did not intend to allow an implicit

de minimis exception here

73

Class Notes – Monday, October 30, 2000

When legislative rule (binding articulation of the law) or interpretive law (which is not

binding)

Chevron

- 2 step process:

o Is intent of Congress specific?

o If not, defer to agency if it’s a reasonable (permissible) interpretation

of the law

- Deals with legislative rules or adjudications

o Would have applied to Hearst

o Had Benzene came after Chevron, possible that Marshall’s position

would have won

- Under Chevron, agencies and Congress determine meaning of the law

- Had Benzene came after Chevron, possible that Marshall’s position would

have won

- Simplifies things, b/c classifications don’t matter as much

o Under Hearst, had to find if it was question of fact or mixed fact and

law, which determined the level of deference

o Now deference is the same

- What is basis for the Chevron rule?

o Some say separation of powers justifies it

If it’s policy, want the experts deciding it

o Congress should be understood to have delegated power to agency to

interpret ambiguous language

J.W. Hampton – intelligible guidelines

Courts should allow agencies to interpret, as long as they do so

reasonably

o Stronger version of Chevron: Scalia

74

Rejects separation of powers argument, says courts make

policy determinations all the time

Says it should be a background presumption – if statute

delegates power, necessarily within that delegation is power to

interpret ambiguous language, IN ALL CASES

Wants to mimick the intention of Congress; but Scalia

is a textualist, looks at the language, not intent behind

the words

2 reasons he says this:

o Having a background presumption ensures that

Congress knows who will interpret statutes (the

agency); clear rule like Chevron is better default

rule

o But should we use the background presumption

for laws enacted prior to Chevron?

Scalia says in these cases, we have a

choice between courts and agencies, and

it’s better to locate these decisions in

democratically appointed agency rather

than in an insulated judiciary (there is

political accountability in an agency)

Scalia is strongest proponent of deference under Chevron

o Weaker version of Chevron: Breyer

Says we should figure it out on a case-by-case basis whether

we should use Chevron deference

Will have higher decision costs, obviously, than Scalia

approach

May make error costs less though, at least in cases prior

to Chevron

Some factors to consider:

p248

75

o Are there indications that Congress likes strong Chevron rule?

There are tensions between Chevron and §711 of APA

(p1011), which seems to defer to court, not to agencies, in

making interpretations

- Can agencies amend rulings?

o Seems like there may be a range of permissible interpretations, so yes

o A tension in Chevron is how inconsistency in an agency is going to be

viewed

Cardoza Fonseca – Scalia in concurrence says that

inconsistency should not affect deference

Maislin – court says stare decisis trumps Chevron; once court

has decided what the law is, don’t go to deference (step 2 of

Chevron)

- How do Hearst and Chevron work together?

o Under Hearst, question of law is determined by court

o Now agency determines all issues, even questions of law; do we want

this?

Congress can monitor agency, so shouldn’t be too concerned

with agency abusing power

Agency is politically accountable through the president

Sometimes it’s hard to determine what is a question of

jurisdiction and what is not

Most cases dealing with jurisdictional matters ignore

and invoke Chevron so agency has deference

Scalia says there should be deference even with

jurisdictional issues, b/c it’s hard to determine exactly

what is a jurisdictional question

Justice White says that is there’s a jurisdictional

question, there should be NO deference given to an

agency

76

In most cases, Chevron deference is applied to

questions of jurisdiction

Sunstein says no deference should be given where a

decision would have huge ramifications for the

jurisdiction of the agency, but in questions that have

minimal affect on jurisdiction, grant deference

- What happens to Skidmore after Chevron?

o Should we still distinguish between interpretive and legislative laws

after Chevron?

o Yes, it still applies – Christiansen case this past term in SCt said that

Skidmore distinguishing still applies

Gives less credence to positions taken in litigation, b/c these

positions don’t go through the same rigorous process

Cardoza Fonseca

- Scalia worried that SCt is backing away from Chevron rule

- Deals with Immigration Act

o Wanted to apply same legal standard for the two statutes in question

o What is “well-founded fear”?

Seems like a question of law

Under Hearst, no deference

Under Chevron, seems like deference

- SCt says agency interpretation was wrong

o Look to Congressional intent, legislative history, and say there should

be different legal standards for the two statutes

o So under step one of Chevron, legislative history is important

- Scalia says that there is language here which seems to imply that with

questions of law there is less deference, so going back towards Hearst; this

language was repudiated in United Food Workers – Cardoza Fonseca has NO

FORCE anymore

77

- This case is a step one AND a step two case – things were ruled out by

looking at the legislative intent (step one), and of the permissible ones left,

agency picked an unreasonable interpretation of the statute (step two)

- Scalia says Chevron is as much a question of law as this case, so no reason to

distinguish; SCt seemed to think that deciding question of burden of proof

should be decided by court, since that’s something they normally do (says

Garrett)

78

Homework: pp269-83, Brown and Williamson from supp, 334-37, Chevron Step one

paper from supp, 295-300, 318-324

Chevron, Textualism, Literalism: Problems in Step One

- This section focuses on step one of Chevron, which requires court to ask if

statute is ambiguous using the traditional tools of statutory interpretation; but

what are these tools?

- Babbitt v. Sweet Home

o Ct attempts to determine what the terms “take” and “harm” mean in

Endangered Species Act

o Ct says text of the Act provides reasons for concluding the Secretary’s

interpretation is reasonable:

Ordinary understanding of the word “harm” supports it

Ct looks at dictionary meaning

Broad purpose of ESA supports decision

Legislative history supports it

o Scalia, dissenting

Looks at other dictionary definitions of “take” and “harm”

which support his side

Makes textual argument that only action directed at living

animals constitutes a “take”

- MCI Telecommunications Corp. v. American Telephone & Telegraph Co.

o Dispute turns on meaning of phrase “modify and requirement” under

1934 Communications Act

Petitioners say it gives FCC authority to make basic and

fundamental changes in the scheme, but SCt says NO

o Ct looks at dictionary definitions of “to modify” and says it means to

change moderately or in minor fashion

It’s a battle of the dictionaries; petitioners found one that says

it means make an important change, but Ct says all other

79

dictionaries do not say that, and focus should be on dictionaries

that were around when the Act became law (1934)

o Since agency’s interpretation of a statute is not entitled to deference

when it goes beyond meaning that the statute can bear, the

Commission’s permissive policy can be justified only if it makes a less

than radical or fundamental change in the Act

Highly unlikely that Congress would leave determination of

whether an industry will be entirely or substantially rate-

regulated to agency discretion

o Stevens, dissenting:

Commission’s reading of statute is not unreasonable, and is

imply a relaxation of a costly regulatory requirement that

recent developments had rendered pointless in a certain class of

cases

Food and Drug Administration v. Brown and Williamson

- Question is whether FDA can regulate tobacco

- SCt says Congress has clearly precluded the FDA from asserting jurisdiction

to regulate tobacco products

o FDCA gives FDA authority to regulate drugs and devices

1996 FDA determined nicotine was a drug and cigarettes were

drug delivery devices, so they believed they had authority to

regulate cigarettes based on its authority to regulate restricted

devices

Act requires FDA to prevent the marketing of any drug or

device where the potential for inflicting death or physical

injury is not offset by the possibility of therapeutic benefit

The findings of the FDA logically imply that FDA

would be required to remove tobacco products from the

market, in effect banning them

80

o Congress however has foreclosed the removal of tobacco products

from the market

Ct looks to recent statutes regulating cigarettes, which clearly

do not order a ban

o FDA also found that a ban may be dangerous to those who are

addicted, which could harm the health care system and create a black

market

If tobacco cannot be used safely for any therapeutic purpose,

yet they cannot be banned, they “simply do not fit” in the

FDCA’s regulatory scheme

o Ct also looks at legislation over the past 35 years

Congress considered and rejected bills that would have given

FDA jurisdiction

FDA disavowed jurisdiction too (so now they are changing

their position)

Congress has precluded a meaningful role for any

administrative agency in making policy on subject of tobacco

and health

o Congress could not have intended to delegate a decision of such

economic and political significance to an agency is so cryptic a fashion

(a la MCI Telecommunications v American Telephone); Congress has

clearly spoken on this issue and precluded FDA from regulating

tobacco products

o Could be looked as a weakening of Chevron doctrine so step one

inquiry operates not as a general presumption applicable to all

regulatory statutes, but as a judicial strategy used only where it appears

that Congress actually intended courts to defer to agency

interpretations of ambiguous statutory text

- Breyer, dissenting:

o Tobacco products do fit within statute

If statute is read literally, it covers tobacco

81

Basic purpose of statute is to protect health, and this supports

inclusion of cigarettes

o Not entirely clear from statute that FDA would have to ban cigarettes

and remove them from market

Congress’s overall desire is to protect health, and this purpose

requires a flexible interpretation that allows FDA to choose

from a number of statutory remedies

o Congress has been unable to give FDA authority, but also has been

unable to deny the FDA authority; these post-1965 statutes only shows

Congress’s general legislative silence

o FDA’s formal denials of its tobacco-related authority are not binding

FDA has new evidence proving tobacco makers intended to

distribute the drug and knew the consequences

New evidence of adverse health effects

o Says there if there is such a canon of construction that requires courts,

when interpreting statutes, should assume in close cases that a decision

with enormous social consequences should be made by Congress, it

does not control the outcome here

Step One of Chevron – Paper by Garrett

- Step One does not dictate that courts use any particular method of statutory

interpretation; most courts, including the Chevron court, view their

interpretive role as requiring them to discern legislative intent; other judges

follow a method called textualism, which focuses on the plain meaning of the

statutory text

- Courts should use the traditional tools of statutory construction in step one,

which includes the text of the statute, the statutory structure, purpose, and

framework, dictionary definitions, and legislative history

o Most courts will consider legislative history at step one

82

o Textualists spurn legislative history for the most part b/c, they argue,

it’s unreliable and strategically used by legislators to influence the

courts

- Textual canons of construction are tools of statutory construction available for

judicial use at step one

o Look to discern plain ordinary meaning of statutory provisions

o Use of dictionaries

- Substantive canons are typically considered traditional tools of statutory

construction available at step one; some courts don’t use the substantive

canons protecting important social values and policies at step one, deferring to

the agency the decision whether to take account of such policies in its

interpretation

o Three sets of substantive canons:

Substantive canons related to values of the democratic process

designed to account for problems in the environment in which

legislation is drafted

Protect underenforced constitutional norms

nondelegation doctrine, for example

Protect important social policies and values

- Court must find at step one clear statutory meaning on the precise issue before

it, or otherwise must defer to a reasonable agency interpretation of the

statutory language

More Chevron puzzles

- The place of legislative history

o First step of Chevron is satisfied when statute on its face is

unambiguous, or when it’s unambiguous using legislative history

Textualism points to it being unambiguous on its face

Courts today do use legislative history though

Scalia criticizes this:

83

o It such a huge bureaucracy, can’t assume

Congressman has read or even knows about

everything he votes for

Breyer supports it:

o Words of a bill or statute are carefully reviewed

by those it affects most

o Allowing courts to look at legislative history

makes it easier for Congress to pass laws, b/c

otherwise bills would be enormous and

everyone would insist their side be represented

in the bill, which would make passage more

difficult

o P337 – 5 circumstances in which a court might

turn to legislative history if help interpreting a

statute

American Textile Manufacturers’ Institute v. Donovan (The Cotton Dust Case)

- Textile manufacturers sought judicial review of OSHA regulation limiting

occupational exposure to cotton dust, contending OSHA must weigh costs and

benefits

- Ct looks to language, structure and legislative history of OSHA

o Ct says cost-benefit analysis is not required b/c a feasibility analysis is

o Ct uses dictionary definitions of “feasible”

Kent v. Dulles

- Concerns applications for passports denied by Secretary of State

- Congress did not give unbridled discretion to the Sec of State to grant or

withhold passports for any substantive reason he chooses

- Where activities natural and necessary to the well-being of an American

citizen, like travel, are involved, we will construe narrowly all delegated

powers that curtail them

84

- Court does NOT address the constitutional issue here, whether the actions are

a constitutional violation

Notes on Kent

- Ct reads agency authority narrowly so as to avoid serious constitutional

question

- Clear statement principle:

o Sometimes courts interpret statutes narrowly so as to avoid invalidity

o Sometimes courts interpret narrowly so as to avoid ruling on a serious

constitutional issue (this allows for more judicial bending of statutes)

Idea is that Congress, not agencies, must make particular

decisions when constitutionally sensitive issues are at stake

- Some cases suggest that the principle of clear statement takes precedence over

Chevron, that an agency may not interpret an ambiguous statute so as to raise

a serious constitutional question

o Rust v Sullivan

Agency not required to establish rules of conduct to last

forever, but rather must be given ample latitude to adapt its

rules and policies to the demands of changing circumstances

(from Chevron)

Chevron deference would be withdrawn only if the constituted

issue were “grave”

85

- Class Notes – Tuesday, October 31, 2000

Discussion of Step One of Chevron, continued

- What tools of statutory interpretation are valid?

o Scalia: relationship exists between whether one is a textualist and how

keen one is on Chevron; one who finds meaning of statute apparent

from text is less often to find that Chevron deference is necessary;

textualist more often solves case at step one, so less often has to defer

to agency; intentionalists look more often to legislative history and

tend to defer to agency more, which means they will more often be

stuck with a decision that they don’t necessarily agree with, but is a

reasonable one so the court must accept agency’s decision

- When is a statute ambiguous, and when is it not?

o Scalia: Ambiguity between 50% vs 50% almost never exists, there is

no such thing as a tie; Congressional statutes must be seen as

ambiguous when there are two or more equally reasonable, but not

necessarily equally valid, statutes

- Delaney Clause Case (p283)

o Deals with color-additives and their safety

o Clause says that nothing which causes cancer in animals can be seen as

safe (p284)

When it was passed, wasn’t seen as rigid b/c really didn’t have

any affect on FDA; but as more things get tested and are

determined to be carcinogenic, FDA’s position is forced by this

clause

Some said there was a de minimis exception, that it

didn’t apply to those additives with very small chance

of causing cancer

Canons of construction

Textual canons – using dictionaries, linguistic

interpretations

86

Substantive canons – have policy considerations behind

them

o De minimis canon – it’s an absurdity canon,

don’t allow statute to be read in any way that

makes it look absurd; more of a social policy

o Delegation principle – Amalgamated Meat

Cutters: interpret statute to restrain agency;

attempt to keep constitutional requirements

o These are “canons for the regulatory state”

Can only use canons where there is ambiguity in the

words, and there is really no ambiguity in the statute

here; if meaning is clear, can’t use canons (canons just

help you pick between reasonable alternatives)

o Since use of canon assumes ambiguity, it really

should be used in Step two, not Step one; but

courts generally use them at step one

o But textual canons could be used at step one, b/c

Congress uses the dictionary meanings too

Cts justify canons as mimicking legislative intent

If Court decides that de minimis canon is inherent in

this statute, that binds agencies b/c stare decisis trumps

Chevron

o Congress amended clause with respect to pesticides, and interpreted

“safe” to mean “reasonably safe after aggregate exposure”

- How much deference must be given under Step two?

o If agency invokes canon (like de minimis), make agency justify the use

of the particular canon (says Garrett)

o Courts already require reasoned explanation for policy choices (it’s a

“hard-look” level of deference)

o Garrett says policy review and Step two review should be the same

- Sweet Home (p270)

87

o Best example of a textual canon says Garrett

o Have to define “harm”

Definition determines whether taking of lands will mean govt

must compensate

o Majority says this is a step two case b/c ambiguity as to what harm and

take mean, so they’ll defer to agency

But Scalia says statute is clear, so they go through a Step one

process first

This becomes a “battle of the dictionary”

Choose dictionary from time of when statute was

written? Or a modern dictionary? Or a legal dictionary?

Or a descriptive dictionary? Or Webster’s 2nd, or 3rd?

Is the use of a dictionary appropriate?

o Textualism is NOT literalism; also look at

structure of statute, the context, etc.

o Also discuss purpose of the statute

o Majority also looks to legislative history – is this legitimate?

Extremely helpful to get at the purpose of the statute

Is it appropriate for use at Step one?

Depends on what kind of interpreter you are

o If you’re an intentionalist, than legislative

history is usually used at step one b/c it’s seen

as giving the purpose (Stevens); aim is to get at

intent of Congress, and legislative history is

seen as credible evidence of this

o If you’re a textualist, don’t use it (Scalia); one

argument against using it stems from separation

of powers – Congress is supposed to determine

what the law is, so using legislative history to

vary from the words of the text makes the

history law itself (response: we’re not using it as

88

“law”, but to determine what the purpose is);

pragmatic argument against it is that those who

lose out in the law will try to get their stuff in

the legislative history, which will perhaps later

be used, so leg. history is unreliable (Vermuelle

says judges can’t themselves determine what

legislative history is good and what has been

added by interest groups)

Does use of legislative history at step one mean more

cases are solved then or less? Does it reduce the number

of possible interpretations, and make step one decision

more likely, or does it expand the number of meanings?

o Scalia says it expands the number of meanings

and encourages judges to support iffy decisions

with a little bit of legislative history

o Garrett says it helps decide more cases at step

one, if legislative history is used correctly

o Here Scalia would have stopped at step one, but Court went to step

two

89

Homework: Iowa Utilities, pp347-49, 353-56

AT&T Corp. v. Iowa Utilities

- Whether FCC has authority to implement certain pricing and nonpricing

provisions of the Telecommunications Act of 1996, as well as whether the

commission’s rules governing unbundled access and “pick and choose”

negotiation are consistent with the statute

- Ct looks at unbundling rules, and term “network element”

o Term is defined very broadly by statute, so FCC’s interpretation is

reasonable

o However, FCC did not adequately consider the “necessary and impair”

standards, so FCC did not interpret terms of the statute in a reasonable

fashion

- Ct looks at “pick and choose” rule

o FCC’s interpretation is reasonable given the pertinent statutory

language

o Congress knew the ambiguities in the statute would be resolved by the

agency after Chevron

- Souter, concurring and dissenting

o Thinks agency reasonably interpreted all of the statutes, and Chevron

deference requires court to accept this interpretation

- Breyer, concurring and dissenting

o Says unbundling rules are inconsistent with Congress’s approach, and

there is no satisfactory explanation for their choice

Scenic Hudson Preservation Conference v. FPC (I)

- ConEd wanted to build hydroelectric project and had to get license from the

FPC; FPC granted it

- Ct says in a case like this where public interest and concern is so great,

Commission’s refusal to receive certain testimony and info on fish protection

90

devices and underground alternatives exhibits a disregard of the statute and of

judicial mandates instructing the Commission to probe all feasible alternatives

o Commission has affirmative duty to inquire into and consider all

relevant facts

Scenic Hudson Preservation Conference v. FPC (II – 5yrs later)

- New proceedings of the Commission and its report meet the objections earlier

expressed, and the evidence supporting the Commission’s conclusions amply

meets the statutory requirement

Notes on Ethyl Corp v. EPA

- A general question involves the competence of the courts to apply a hard look

or adequate consideration approach to review agency policy choices involving

complex technical issues

- Chief Judge Bazelon, DC Cir, in Ethyl Corp:

o Substantive review of mathematical and scientific evidence by

technically illiterate judges is dangerous unreliable

o Better to concentrate on strengthening administrative procedures

- Judge Leventhal in response:

o Congress has assumed judges can both have the important values

secured by generalist judges and rely on them to acquire whatever

technical background is necessary

o Obligation of a judge is not jettisoned b/c technical understanding may

not be as high as in other areas

o Agency’s reasoning and record must be looked at

91

Class Notes – Wednesday, November 01, 2000

Step One, continued

- How is textualism changing the Chevron doctrine?

o Most judges are NOT textualists

Intentionalists use legislative history at step one

o Textualists won’t use legislative history for the most part

Renewed emphasis on text of statutes

Garrett says this is good

Shift in formulation of Chevron to be more consistent with

textualist approach

Focus is more on language, not intent

- MCI opinion

o How to define “modify”; does it include major changes?

o Scalia’s opinion says no, based on dictionary definitions

Also, ability to repeal regulation on all carriers except one is

too broad a delegation (sort of a Chadha problem)

Seems quite unlikely Congress would have delegated such a

broad power in this manner; they would have been much

clearer if that had been the case

- Brown and Williamson

o Is it a step one or two case?

Step one – majority says Congress’s intent in unambiguous

This way the court need not look at whether there is

“intent” on part of tobacco makers

o Tobacco companies said “intent” here means

that they had to have marketed the product

explicitly to “affect the structure or any function

of the body”

92

o Breyer in dissent says it simply means the

product intended to affect the body, and has

nothing to do with marketing

o Majority says tobacco products are a “special”

area, and there must be a specific delegation to

FDA to support their power over tobacco

products

o Textualists will also look at other provisions around the statute, look at

the structure of the act, and look at the entirety of the US Code

Try to make statutes fit together as a whole (coherence)

Less focus on literal terms here, b/c words seems to support

FDA’s regulation

Congress couldn’t have meant to ban cigarettes, based on other

statutes; there are lots of statutes regulating cigarettes, but they

all seem to assume that FDA does not have this power

But more recently, some statutes say that Congress’s

regulations should not have any bearing on FDA’s

jurisdiction

15 bills failed to pass that would have given FDA jurisdiction

over tobacco products

What does this prove though? Can’t be really sure

2 philosophies of interpretation:

o Introducing bills that don’t go anywhere:

positive inaction (Congress has opportunity to

act but failed to do so)

o Subsequent enactments: Congress passed

legislation on basis of their understanding that

FDA did not have jurisdiction

Many of these bills were years after the enactment of

the FDCA however

93

o Court says if tobacco falls under FDA, only policy choice available is

to ban cigarettes, which would be crazy

FDA contests this though, as does Breyer

Hard to separate out questions of law and policy

o Lots of reference to FDA’s consistent position over the years of

refusing jurisdiction

But this is inconsistent with Chevron, which allows agency to

change its position based on new evidence

Majority says it just shows that the FDA position has mirrored

the Congressional intent until now; provides background; this

means that a change in policy can actually be held against an

agency but not go against Chevron

o Ct also says this sort of major delegation would only have been made

more explicitly

Ct cites to MCI case, also to Breyer’s soft view of Chevron

Breyer’s response:

Cites Kent v Dulles and says Congress is not only

choice, that agency is also politically accountable

Both the Congress and the agencies are politically

accountable

o Substantive canons

In regulatory decisions, courts can defer to either Congress or

agency; one canon says close cases with enormous social

consequences should be made by democratically elected

members of Congress, so this canon is not really valid here

- Canons of construction

o Textual canons

Used in step one

o Substantive canons

De minimis, absurdity canons

Garrett says not sure that these should be used in step one

94

o Constitutionally based canon, one closer to the Amalgamated Meat

Cutters version, comes out of Kent v Dulles

Kent Case

Can Secretary of State refuse to issue a passport?

There are constitutional rights to freedom of travel, and

also first amendment rights too

Ct says don’t want to rule on constitutionality, should

allow Congress decide b/c this sort of discretion should

not be assumed to have been given to the secretary

Comes out of Ashwander case: when court can interpret

language narrowly to avoid constitutional issues, court should

do so

This forces Congress to do the thinking

Sounds like the delegation canon: avoid constitutional

problems by narrowly construing delegation powers

Should these canons (Ashwander, Kent) be used in step one or

two?

Step one says Garrett; if want agency to pick narrow

construction, it’s really not up to agency’s discretion

o Most of these canons are applied at step one

Textual, always at step one

Substantive at step one, but they usually aren’t addressed

Step two of Chevron

- Determination of whether agency’s interpretation is reasonable, not whether

it’s the preferred interpretation

- Iowa Utilities

o Telecommunications Act of 1996 introduces competition in local

markets; imposes duties on LECs (guys already in the market)

FCC was delegated authority to determine what types of goods

had to be leased by the LECs

95

FCC says new entrants can determine whatever they want

o Garrett says this opinion is a step two opinion

It’s an ambiguous statute

FCC did not interpret part of statute in a reasonable fashion

o What are the delegation issues?

Lots in common with American Trucking

Discussion of absence of FCC’s providing limiting standards to

indicate how it will use discretion; no limiting standards that

can be rationally related to the act

Requires agency to set standards to limit itself, like

American Trucking

Like Schecter, because delegation is given to private entities to

determine what elements they want (which is main reason Ct

finds delegation unreasonable)

o Two ways to look at this case:

Opinion that draws from the delegation cases

Another way to look at it: problem here is the policy that the

FCC chose, it’s a bad policy (this is Breyer’s point); FCC did

not explain it’s policy decision satisfactorily

Breyer cites State Farm, which is a hard-look case that

looks at policy decisions, not legal problems; it’s a

question of policy, not a question of law

As opposed to legal problem, which would be

interpreting language in an unbalanced way that does

not mesh with the statutes

96

Homework: pp356-63, 369-402

- What is the point of hard look review?

o Courts may be trying to improve the democratic character of the

administrative process

Requirement of adequate consideration might be seen as effort

to ensure a form of interest representation at the agency level

May also be seen as part of judicial effort to ensure process of

democratic deliberation at agency level

o Means judicial review is done to ensure the political process works

o Also can be defended as means of preventing serious errors of analysis

and also the distortion of expertise by narrow political interests

Citizens to Preserve Overton Park v. Volpe

- Statutes prohibit authorization of federal funds for construction of highways

through public parks if there are “feasible and prudent” alternative routes

o Secretary gave funds, but did not indicate why he believed there were

no feasible and prudent alternatives

o SCt says formal findings were not required, but judicial review based

solely on affidavits was not adequate

Legislative language shows there is a plain and explicit bar to

the use of federal funds for highways through parks, except for

the most unusual situations

Congress indicated that protection of parkland was to be given

paramount importance

- Petitioners claim Secretary is subject to either the substantial evidence

standard of §706(2)(E), or in the alternative de novo review under §706(2)(F)

o Ct says no, but generally applicable standards of §706 require a

substantial inquire (arbitrary and capricious)

- Other inquiry is whether Sec followed necessary procedural requirements

- SCt remands to DCt for plenary review of Secretary’s decision

97

o DCt on remand found Secretary had not given serious consideration to

alternative routes

Overton Park structure of judicial review of questions of law:

- (1) Construe statute to determine scope and terms of agency’s authority to

determine whether agency acted within authority conferred

- (2) If agency has discretion, court must decide whether agency exercised its

discretion based on consideration of relevant factors

- (3) Was agency’s weighing of relevant factors “arbitrary, capricious and abuse

of discretion”

Motor Vehicle Manufacturers’ Assoc v. State Farm Mutual Automobile Insurance Co.

- SCt looks at whether NHTSA acted arbitrarily and capriciously in revoking

requirement that cars be equipped with passive restraints

o Determines agency failed to present as adequate basis and explanation

for rescinding the passive restraint requirement, and agency must

either consider the matter further or amend Standard 209 along lines

which its analysis supports

- Agency’s action is subject to the “arbitrary capricious” standard of §706

o An agency changing its course by rescinding a rule is obligated to

supply a reasoned analysis for the change beyond that which may be

required when an agency does not act in the first instance

o An agency rule is arbitrary and capricious if agency relied on factors

which Congress didn’t intend to be relied upon, failed to consider an

important aspect of a problem, offered an explanation for its decision

that runs counter to evidence before agency, or is so implausible that it

can’t be ascribed to a difference in view

SCt says NHTSA’s rescission of passive restraint requirement

of Standard 208 was arbitrary and capricious

NHTSA gave no consideration to requiring airbags

98

Agency was too quick to dismiss safety benefits of

automatic seatbelts

Agency failed to articulate basis for not requiring

nondetachable belts under Standard 208

- State Farm is regarded as having endorsed a relatively intensive version of

“hard look” review

Syracuse Peace Council v. FCC

- FCC has authority to reject “fairness doctrine” if it concludes, without being

arbitrary or capricious, that it no longer serves the public interest

o Ct says they are not arbitrary here

- Wald dissents from Part V

o Decision not supported by record; agency did not articulate a plausible

basis for decision to eliminate first prong

American Dental Association v. Martin

- OSHA promulgated rule on bloodborne pathogens (hepatitis B and AIDS)

o Three employer groups challenge the rule, say it shouldn’t apply to

them b/c it’s too strict

- OSHA did not do cost-benefit analysis, but instead asked whether restrictions

would materially reduce a risk to human health without imperiling the

existence of the health care industry

o OSHA’s evaluation of the effects of the rule can’t be seriously faulted

o OSHA did not disaggregate the risk industry by industry

Ct says it’s OSHA’s responsibility to choose happy medium so

all groups aren’t lumped in to one big group, but also so that

they don’t have to report on every little group out there

- OSHA rule is not one of strict liability

o Without strict liability, rule can’t be said to imperil dentistry through

costs of compliance

99

- Ct says their duty is not to determine if it’s a good rule, just that it’s within the

bounds of reasonableness, which it is

100

Class Notes – Monday, November 06, 2000

Judicial review of questions of law

Chevron – two step test:

- Has Congress unambiguously interpreted statute, using tools of statutory

interpretation

o Is the statute clear?

- Sometimes in step two courts discuss congressional intent as well (like in

Cardoza Fonseca)

- Text and intent may not give clear answer, but they should provide the bounds

for where a decision may be located

o There are some things Congress could NOT have meant (Dulles v

Kent – Congress could not have implicitly given such power)

- Garrett says ok at step one or two, but better ordered if all congressional intent

discussion were done at step one

Would Benzene Case turn out different under Chevron?

- Garrett says yes, b/c statute was ambiguous and then would have deferred to

agency; Stevens picked his own interpretation though, and says it’s required

under Schecter (says Marshall’s interpretation would raise delegation issues)

- Stevens could have said govt’s interpretation was too broad, but then send it

back to agency for an explanation

Hard-look doctrine

- Within range of permissible explanations, agency must pick one and provide a

reasoned explanation for their choice

- Different then Chevron

o If agency’s choice is found impermissible under Chevron, agency must

have new choice; under hard-look, agency can come back with exact

same choice, but just needs to explain it with different reasons that

justify it to the court

101

Synthesize Skidmore with Chevron

- Skidmore: today when talking about informal letters, interpretive rulings, etc,

there is less deference shown, and the amount of deference turns on the

reasons given in Skidmore

- Step one is the same in all universes; it’s the level of deference in step two

that is questioned

o Some say in a Skidmore-like case, just give less deference, ask for

greater explanation

Legal vs policy determinations

- Difficult to tell between the two

o May depend on what Congress wanted in the statute

- Modes of operation for agencies

o (1) Agency can act through formal adjudication

Hearst case

Trial-like proceedings with particular parties

o (2) Formal rule-making

Very trial-like features; agency goes through very formal

process (Sec. 556-57 of APA)

Very infrequent

o (3) Informal rule-making, or “notice and comment” rule-making

Sec 553 of APA

What most agencies use to promulgate legislative rules

Chevron, Benzene

o (4) Informal adjudication

Overton Park case

Any other way agency uses that doesn’t fit into other three

(catchall section)

o (5) Other informal actions

Policy statements, letters agency send out

Outside scope of APA

102

Won’t discuss most of these

Informal Rule-making

- Goal is have process be participatory, rational and comprehensive

o Executive orders require listing of goals at beginning of year

o APA § 553

Publication in Federal Register

Must give time for responses

“A concise general statement of their basis and purpose”

o APA § 706 – scope of review

Seems to be in conflict with Chevron

Always look at organic statute first, it may determine the scope

of review itself

APA seems to combine questions of policy with questions of

law

Seems like a different review for informal rule-making

(“arbitrary and capricious”) vs. §556-57 review (“substantial

evidence”)

But Scenic Hudson’s review looks a lot like Overton

Park’s and they were done under the two different

scopes of review

o 1960s and 70’s: Era of rule-making

Shift to using informal rule-making

Didn’t seem to think much would be done under informal rule-

making

Framers of APA didn’t want courts to give a blank check to

agencies; arguably an arbitrary and capricious review does this

o People begin to distrust agencies

Felt they were captured by special interests

Judges became independent, non-partisan check

o Agencies begin to focus on “new-property” programs

103

Judges act as check again

Scenic Hudson Case

- Statute required “substantial evidence” review by courts

o No better alternatives could exist either

- Agency did not look at gas turbine alternative

o Garrett says this is an aggressive interpretation of statute for the side of

conservationalists

Maybe interest groups are involved, and court decision is

taking the middle road between the various interest groups

Maybe it’s the court updating an older statute, infusing current

policy decisions into an older statute

Maybe the personal preferences of the judges are driving this

o Ct remands it back to agency to reconsider

Opinion says nothing about the substance of the decision

though – this is a procedural hard-look

Some say this has led to ossification of agency

procedures; agency has to go through tons of bells and

whistles to get stuff done, so they get a lot less done

- Agency comes back 5 years later with lots more explanation, and agency

adopts virtually the same rule

o Were these 5 years spent in vain, given it was the same outcome?

Procedures themselves provide some use though as well

o Plant was never built

- Soft-procedural hard-look

o No requirement of additional particular procedures

o Just give an appropriate explanation

- Hard-procedural hard-look, court says what procedures to look at and what

kind of testimony they want

- When read with Overton Park, very little difference between the two levels of

review (substantial evidence v. capricious)

104

Ethyl Corp v EPA

- Bazelon (procedural hard-look argument)

o Why courts should look at procedures themselves, either as hard

procedure or soft procedure hard-look

o Doesn’t think courts should second-guess agency on substantive issues

o Questions:

Where in APA do you find support for this searching-review?

Doesn’t really exist

What are costs of this type of review?

Systematic effects of turning §553 into more formal procedure?

Will it lead to ossification?

Is procedural hard-look a way to input substantive values

through the backdoor?

- Leventhal (substantive hard-look argument)

o There is role to play for judges in substantive decisions as well

o Absence of specialized courts proves this, he says

o But where in the APA is this review authorized?

Overton Park

- THE hard-look case in the SCt

- Federal funds for building of highway that was going through a park

105

Homework: pp424-31, 552-57, 561-71

K. Davis excerpt

- Courts should not say delegations are unlawful, but instead assert that they are

lawful and desirable as long as the broad legislative purpose is discernible and

as long as protections against arbitrary power are provided

o This change is necessary b/c underlying problem is broader than

control of delegation, it’s to provide effective protection against

administrative arbitrariness; this requires protection against

undelegated power and discriminatory enforcement

- Criterion for determining the validity of a delegation should be the totality of

the protection against arbitrariness

- Crucial consideration is not what statute says, but what administrators do

o Thus, must provide administrative safeguards and standards, not

statutory safeguards and standards

- Davis hopes the nondelegation doctrine will evolve into a broad spectrum of

judicial protection against unnecessary and uncontrolled discretionary power

Various cases

- Soglin v. Kauffman

o Expulsion and prolonged suspension may not be imposed on students

by a university simply on the basis of allegations of “misconduct” w/o

reference to any preexisting rule which supplies an adequate guide

- Hornsby v. Allen

o Woman was not afforded opportunity to know, through reasonable

regulations promulgated by board, of the objective standards which

has to be met to obtain a license

o If no ascertainable standards have been established by which an

applicant can intelligently seek to qualify for a license, then court must

enjoin the denial of licenses until a legal standard is established and

procedural due process provided

106

- Holmes v. New York City Housing Authority

o Due process requires that selections among applicants be made in

accordance with “ascertainable standards”

- Fook Hong Mak v. INS

o There is no rule which requires a case by case approach; AttyGen may

proceed by regulation

It was reasonable for AttyGen to conclude that aliens admitted

as transits w/o visas were not within spirit of §245 and thus

could not deserve favorable exercise of his discretion

- Asimakopoulos v. INS

o Reliance on a test that prevents the exercise of discretion is reversible

error

Rulemaking and Adjudication: The Constitutional Distinction

- Londoner v. Denver

o Council’s action in authorizing improvements without notice and

opportunity for hearing did not violate due process, b/c the

proceedings did not include or necessitate any assessments

o Due process of law requires that at some stage of the proceedings

before the tax becomes irrevocably fixed, the taxpayer shall have an

opportunity to be heard

Something more that submitting written objections is needed

Here there was no hearing, so assessment is void

o This was an administrative arm of the state assessing a state tax; SCt

implicitly conceded that no notice or hearing is required if state

legislature directly assessed tax

- Bi-Metallic Investment Co. v. State Board of Equalization

o Plaintiff says it was not given opportunity to be heard

o Question is whether all individuals have a constitutional right to be

heard before a matter can be decided in which all are equally

concerned

107

SCt says where a rule of conduct applies to more than a few

people it is impracticable that every one should have a direct

voice in its adoption

Disagreement should be registered at the polls

Londoner decision dealt with only a small number of people

who were exceptionally concerned

- Professor Davis says key in determining whether a trial-type hearing is

required is whether controversy turns on “adjudicative facts” or “legislative

facts”

o Adjudicative facts pertain to the parties and their businesses and

activities; these are intrinsically the kind of facts that ordinarily ought

not be determined w/o giving parties a chance to address unfavorable

evidence, b/c the parties know more about the facts than others

o Parties may often have little or nothing to contribute to development of

legislative facts though

- O’Connor in Minnesota Bd. for Community Colleges v. Knight

o Constitution does not grant to members of public generally a right to

be heard by public bodies making decisions of policy

o Inherent in republican form of govt that direct public participation is

limited

The Procedural Requirements of the APA and the Interplay between Rulemaking and

Adjudication

- Procedural provisions of the APA

o Provide basic structure of procedures for federal administrative

agencies

Although APA may be overridden by organic statute

o Requirements are geared to the fundamental distinction between

rulemaking and adjudication

APA §551(5)-(9) determine what constitutes rulemaking and

adjudication

108

Adjudication involves almost every variety of administrative

decision other than issuance of rules and regulations; includes

resolution of specific litigation controversies, but also broad

array of other administrative decisions (so it’s not really

adjudication in a conventional sense)

- 4 basic categories of administrative procedures:

o (1) Formal On-the-record adjudication

If statute governing agency’s action in an adjudication requires

that decision be made on the record after opportunity for

agency hearing, requirements of §554 apply, which in turn

invoke §556-57

These three sections establish a set of trial-type

procedures for formal adjudication

Normally conducted by an administrative law judge

who prepares an initial decision, which then may be

appealed to agency head, based on the record and

submission at the hearing

§706(2)(E) provides for judicial review of agency fact-

finding under substantial evidence standard

Courts tend to interpret the statute as providing for a hearing on

the record in cases where the agency is imposing a sanction or

liability on a party

o (2) Formal On-the-record rulemaking

In cases where relevant statute provides that rules be made on

the record after opportunity for an agency hearing, §553(c)

requires that an agency engaged in rulemaking use the

procedures of §556 and §557

Traditional understanding was that formal rulemaking was

generally required in setting rates and similar requirements that

determined revenues and profits of regulated firms

109

This was restricted by SCt in Florida East Coast, when

they said statute must explicitly provide for a hearing

on the record

o (3) Informal Notice and Comment Rulemaking

In a case of rulemaking where the applicable statute does not

provide for a hearing on the record, the basic procedures for

rulemaking is the notice and comment procedure provided in

§553, which calls for:

General notice of proposed rulemaking in the Federal

Register

o Doesn’t apply to interpretative rules or general

statements of policy

Opportunity for interested persons to comment

Concise general statement of basis and purpose once

rule is promulgated

Shall not be effective in less than 30 days after

promulgation

§553 does provide for exceptions though where agency

may avoid these requirements

Purpose is to enlighten decision-maker by exposure to

viewpoints of interested persons

Substantial evidence standard of review does NOT apply

Agencies have increasingly turned from adjudication to

rulemaking in order to decide basic issues or regulatory policy

o (4) Informal adjudication

In instances where relevant statute does not require

adjudicatory decisions be made on the record after opportunity

for agency hearing, there are no APA standards to follow

Overton Park stated that review should be based on

administrative record under an “arbitrary and capricious”

standard

110

- Rulemaking v. adjudicative procedures for setting agency policy

o Traditionally, most major regulatory agencies relied on adjudication

o More recently there has been a change to rulemaking

o National Petroleum Refiners Assoc. v. FTC

Whether FTC is empowered to promulgate substantive rules of

business conduct (Trade Regulation Rules)

Specifically, commission’s rule declaring that failure to

post octane rating numbers on gas pumps was unfair

method of competition and deceptive practice

Ct sustained FTC’s claim to substantive rulemaking

Commission will be able to proceed more expeditiously, give

greater certainty to businesses subject to the Act, and deploy its

internal resources more efficiently with a mixed system of rule-

making and adjudication than with adjudication alone

Rules, as contrasted with case-by-case adjudication

holdings, are more specific as to their scope, and

industry compliance is more likely simply b/c each

company is on clearer notice whether or not specific

rules apply to it

111

Class Notes – Tuesday, November 07, 2000

Overton Park

- Delineates hard-look doctrine

o Has been softened by DC Circuit (Syracuse Peace Council)

- This case is classified as informal adjudication

o There were a series of hearings however, but they weren’t “formal”

o Marshall tries to determine what the standard of review should be,

which is the “arbitrary and capricious” standard

§553 is arbitrary and capricious; only if 556 and 557 are

triggered do you move to substantial-evidence (so Marshall

was wrong on p360)

§706 de novo review has very limited reach

language in this case determines scope of de novo

review, which is authorized when formal adjudication

has been faulty, when new facts are alleged in

proceeding to enforce nonadjudicatory action, or when

organic statute calls for it (organic statute trumps APA)

o Ct must determine if actions are within scope of statutory authority

Also must determine if decision was arbitrary, capricious or

abuse of discretion

Review is narrow, but searching and thorough

Chenery – only thing court can use for explanation is

what agency used for its explanation

APA says that in informal rulemaking agency must put

out general statement of rules; but to pass the searching

review of Overton Park and Scenic Hudson, need much

more than this (need extensive and formal findings)

o This court does not require any particular

findings though; however, there’s a de facto

112

requirement of much more than is required

under APA

So Ct can reverse and remand decision that is in scope of

agency’s authority if agency was arbitrary, didn’t look to

alternatives; looks like hard-look in Scenic Hudson, even

though that was substantial evidence test (so these two tests are

really the same)

o Hard-look review is a procedural requirement of additional findings

and evidence

State Farm Case

- Standard 208 (passive restraint standard)

o NHTSA requires objective standards, but leaves flexibility among

automakers on how to meet the objective standards

o Standard 208 was repealed under Reagan, and this is the resulting case

- What’s the standard of review?

o Ct says arbitrary and capricious standard

This is more deferential with administrative agencies than with

legislatures, Ct says

This is informal rule-making under §553

o Lower court said there should be higher standard of review b/c this

was a rescission of a standard

o The standard of review for a rescission is arbitrary and capricious, as

determined by this court and now is the accepted position; thus we

apply an Overton Park thorough and searching analysis

Ct wants something more than just a better explanation (in part

VB (p373) of the opinion) for the agency’s decision

If there is uncertainty, shouldn’t be sacrificed on side of

safety; safety is of paramount importance

There’s a “common sense” approach to this part of the

opinion; it goes beyond the procedural hard-look in

113

some ways (White seems to say he doesn’t believe the

studies); this is more of a substantive hard-look, close

to Leventhal’s position (but Garrett says this is NOT

ordinary – the normal approach is in the next two cases,

where more deference is given)

At the most, there was uncertainty about the decision

- Rehnquist dissent admits that these decisions were shaped by politics, but he

says this is ok

- Agency did not explain why it did what it did in the rule, and SCt said there

must be explanation; this too has been softened by the next two cases

Syracuse Peace

- Agency relied on comments of broadcasters (and the agency decision was in

favor of the broadcasters), but DC Cir goes with agency anyways

- Also, agency had not explained its decision in detail, but J. Williams says it’s

obvious and remanding to force an explanation would be a waste

- Softening of

- Also, agency had not explained its decision in detail, but J. Williams says it’s

obvious and remanding to force an explanation would be a waste

o Softening of Overton Park and State Farm

American Dental

- Posner opinion; says judges shouldn’t take decisions from agencies on

medical health-care issues where judges don’t have the expertise, which the

agency does have

- Here, alternative is disaggregating the regulation industry by industry

o Posner says they did a good enough job

o Garrett says Posner’s review is searching enough, but as much as State

Farm; perhaps he is taking a more deferential view of the agency

Posner thinks the regulation is not the best one, but given that

Congress has spoken, he’s going to be deferential

114

- So what alternatives does an agency have to consider in making a rule?

o Unfunded Mandates Refund Act – do cost/benefit analysis

o Can be a substantial burden on an agency

May have to look at a lot of unreasonable alternatives to cover

their asses

May ex-anti make an agency less likely to regulate

115

Homework: pp439-52; 576-85

SEC v. Chenery Corp. (I)

- Commission determined that it could not approve proposal plan so long as the

preferred stock acquired by respondents would be permitted to share on an

equal parity with other preferred stock (so didn’t fall within the “fair and

equitable” standard of § 7 of the Act)

- Opinion of Commission shows they purported to be acting only as it assumed

a court of equity would have acted

o *** The grounds upon which an administrative order must be judged

are those upon which the record discloses that its action was based

o Here, judicial precedent does not support the decision made by the

SEC, and since they relied on judicial precedent, that’s what the Court

looks at

Record must be measured by what the Commission did, not

what it could have done

Administrative order cannot be upheld unless the grounds upon

which the agency acted in exercising its powers were those

upon which its action can be sustained

- DISSENT:

o Court relied on its expertise, as well as case law that supported its

decision

SEC Decision on remand (to the SEC)

- SEC does not rely on cases this time, but their general expertise, in stating that

the incentive to misuse the fiduciary power must be removed so potentialities

of harm to investors and public will be eliminated

SEC v. Chenery Corp. (II)

- Latest SEC order avoids fatal error of relying on judicial precedent that does

not sustain the decision

116

- Administrative agency can act either by general rule or individual order, as

they did here

o Statutory language precludes a reversal of the Commission’s judgment

save where it has plainly abused its discretion, and such abuse is not

present here

- DISSENT

o Ct is approving administrative authoritarianism, power to decide

without law

Chenery requirement that agencies explain their exercise of discretion is an important

foundation of the hard look approach; case also requires agencies to explain their

decisions on the quality of agency deliberations and decisions

Formal On-the-Record Rulemaking

- United States v. Florida East Coast Railway

o Ps want to set aside the incentive per diem rates established by ICC in

a rulemaking proceeding

o SCt says Commission’s proceeding was governed by only §553 of

APA, and that appellees received the hearing required under the ICC

Act

o SCt recognized in Allegheny-Ludlum that the actual words “on the

record” and “after…hearing” used in §553 were not words of art, and

that other statutory language having the same meaning could trigger

the provisions of §556 and 557 in rulemaking proceedings; however,

the phrase “after hearing” in the Interstate Commerce Act does not

have such effect

Commission was making a basically legislative-type judgment

rather than adjudicating a particular set of disputed facts

o Lower courts have understood this case as making the terms “on the

record” and “hearing” virtually a touchstone test of formal rulemaking

requirements; explicit statutory provision for formal rulemaking is rare

117

however, so in other words formal rulemaking is becoming rare as

well

In cases of adjudication however, courts are readier to find that

an organic statute triggers formal hearing procedures even

without the magic words (see p584 for why); this may impede

effective administration however

o DISSENT:

No within due process to allow agency to impose new rate or

fee without a full hearing that includes right to cross-examine

and present oral argument, as required under §556 of APA

- This case is example of the increased use in rulemaking procedures

o Desire to escape long delays and resource burdens in formulating

policy through formal adjudication

o Many began to believe that the formal procedures in rulemaking were

cumbersome and time-consuming and offered few advantages over

more informal notice and comment rulemaking procedures

118

Class Notes – Wednesday, November 08, 2000

Hard-look review

- Applies to rescission as well as regulation

o Through State Farm, review under arbitrary and capricious seems

same as substantial evidence review under Scenic Hudson (searching

and thorough review)

Cts don’t ask for anything in specific, but it must be more than

the general statement required in APA

- Politics do play a role in agency decisions

o Still must have justification, participation by many affected powers

o Must also comply with statutory directives

- Alternatives must be assessed, agency must justify why they chose particular

route

o But how many alternatives? Which ones?

Salient ones that had been involved in past decisions

Plausible better cost-effective and less burdensome alternatives

Alternatives brought up in comments

o More the court requires, more it burdens agencies and arguably leads

to agency ossification

- State Farm Case: best hard-look example, and high-water mark of the doctrine

o Agency must examine: (1) all relevant evidence, (2) explain decision

in detail, (3) show connection between means and ends, (4) justify

departures from past practice, (5) consider all reasonable alternatives

o Williams and Posner are the norm today though; gives more deference

to agencies

Cts shouldn’t apply own views

- As arbitrary and capricious review becomes less stringent, there WILL be a

difference between this standard and the substantial evidence standard of

review

o Substantial evidence standard will like Overton Park and State Farm

119

- State Farm, cont.

o Case was remanded for further study

o New rule required passive restraints unless there were mandatory seat

belt laws (which were adopted by majority of states)

Dole could have just issued same decision with further

explanation, but she issued new rule

o Very successful regulation (see p158)

- Breyer: contrast Chevron with hard-look review

o As long as there is some ambiguity, should be deferential to agency

(Chevron)

o Hard-look review is much more in depth; when there are policy

questions, Ct seems to be more aggressive, even though cts seems to

be less adept in this area

o Breyer says courts have it backwards, should be more aggressive with

statutory interpretation than with policy

Same core concerns for each though – ensuring democratic

process exists; the two just go about it in different manners

Londoner and Bi-Metallic: adjudicatory hearings

- Londoner

o Citizens wanted notice and ability to be heard

o Hearing granted

- Bi-Metallic

o Decision to increase property values across the board, but no hearings

were provided again

o Hearing not granted

- Whether to have a hearing

o People feel they have a right to a hearing; more likely to obey things

they don’t agree with if the process is open to participation by all

o Increases legitimacy and accuracy as well

120

- How to distinguish between the two cases

o Lots of people affected in Bi-Metallic

So as matter of practicality difficult to do hearing

o Garrett says one can be heard more in the legislative process b/c there

are more people affect, so they can band together to get people to

listen; in Londoner, only a few people were affected, so they are

unlikely in a majoritarian system to have influence in legislature

Proxy of this is how many people are affected

Disagreement is to be registered at the polls (with large groups)

o Need to show some special circumstances too (like Davis says on 555-

56)

Need individual hearings with adjudicative facts (particular

facts about particular instances), not legislative facts (more

general issues of policy – don’t need individualized facts)

Also need hearing when adjudicating on a specific set of facts

In Bi-Metallic, particularized facts not necessary to increase

the tax; each property owner can make statement at the polls

May need hearings when tax is applied to each person

though, to determine what each person owes

- Benzene case

o Notice and comment case; should they have had hearings?

Garrett says they were still at a legislative level; when they

start applying to individual industries, then may need particular

facts and thus hearings (with enforcement proceedings, need a

more adjudicatory hearing)

- Does it look like a court or a legislature? This can help determine whether

hearings are necessary

o Hypotheticals

State decides to cut all welfare benefits

Sounds legislative

121

But perhaps we’re more concerned with those who are

relatively voiceless in legislature (so we have to be

more careful in cases like these, says Garrett)

Anaconda

Rule limiting sulfur-content; Anaconda says they

should get individual hearing b/c they are the only plant

that was affected

Sounds more like Londoner, but Ct said NO

o It’s an industry-wide standard, so there are

enough people threatened to be hurt that don’t

need to hear from one particular party

- Cases under due process clause, not delegation, although they sound very

similar (p427-31)

o Concern in these cases is that there has been too much discretion, and

agencies must set out how they are going to use their discretion

(promulgate rules ex-anti)

o Most of these are brought against state agencies, so delegation is not

an option

o What are problems of forcing ex-anti clarification?

Sometimes impossible to be more specific

Reduces flexibility of agencies to deal with unexpected

circumstances; rules give more notice, but less flexibility

o Fook Hong Mak and Asimakopoulos

Garrett says these cases can’t be reconciled

FHK says ok to limit discretion and apply one rule to all

Asim says people are entitled to individual hearing in these

cases, don’t want to subject everyone to one rule

How far can ex-anti specifications go? At some point it

becomes so rigid that agency gives away too much discretion

- Requirements for hearings

122

o If you are singled out, and can produce adjudicatory facts that will

affect outcome, you have a constitutional right to a hearing

Chenery (I)

- Forced reorganization of public utility companies

o SEC had to determine if companies’ plans were fair; did this in a

hearing

o Chenery purchased a bunch of new stock in the company

No allegation that they were fraudulent

123

Homework: pp607-629

Halting Judicial Transformation: The Vermont Yankee Litigation

- Vermont Yankee Nuclear Power Corp v. Natural Resources Defense Council

o SCt interprets §553 of APA as establishing the maximum procedural

requirements which Congress was willing to have courts impose upon

agencies in conducting rulemaking procedures

o Administrative agencies should be free to fashion their own rules of

procedure and to pursue methods of inquiry capable of permitting

them to discharge their multitudinous duties

If court had to decide which procedure was “best”, judicial

review would become totally unpredictable

Agencies would adopt full adjudicatory procedures to get out

of court’s shadow, and this would lose the inherent advantages

of informal rulemaking

o When there is a contemporaneous explanation of the agency decision,

validity of that action must stand or fall on the propriety of that

finding, judged of course by the appropriate standard of review

Courts should not explore the procedural format or impose its

own notion of which procedures are “best”

Administrative decisions should be set aside only for

substantial procedural or substantive reasons, not b/c court is

unhappy with result reached

o Opinion basically precludes judicial requirements (absent unspecified

exceptional circumstances) that agencies use additional or hybrid

procedures beyond those specified in APA and other relevant statutes

Otherwise agencies will be uncertain as to what procedures

reviewing courts may find necessary, and will adopt an

elaborate panoply of procedural requirements to that will

cripple administrative process

124

Courts will manipulate procedural requirements to control

policy decisions that should be left to agencies

o Most courts have read this case as imposing strict limits on their ability

to impose new or additional procedural requirements beyond those

required by APA and the organic statute

Informal Notice and Comment Rulemaking: the Exceptions

- §553 requirement of opportunity for notice and comment does not apply to (1)

interpretative rules, (2) general statements of policy, or (3) rules of agency

organization, procedure or practice

- §553(b) also dispenses with the requirements when it for good cause finds it

to be impracticable, unnecessary or contrary to the public interest

o Courts have often found it difficult to determine just when these

exceptions apply

- American Hospital Assoc. v. Bowen

o The exemptions of §553 accommodate situations where policies

promoted by public participation in rulemaking are outweighed by the

countervailing considerations of effectiveness, efficiency, expedition,

and reduction in expense

o Function of interpretive rule exemption (first §553 exemption) is to

allow agencies to explain ambiguous terms in legislative enactments

without having to undertake cumbersome proceedings

Interpretive rules do not create law, but are statements as to

what an administrative officer thinks the statute or regulation

means; they are essentially instructional

Cabais : where agency activity reminds parties of

existing duties, it is interpretive, not legislative

American Postal Workers : mere fact a rule may have a

substantial impact does not transform it into a

legislative rule

125

Substantive (or legislative) rules grant rights, impose

obligations, or produce other significant effects on private

interests, or which effect a change in existing law or policy

o Function of second §553 exemption for general policy statements is to

allow agencies to announce their tentative intentions for the future

without binding themselves

Two-criteria test set forth in American Bus Assoc:

Statement of policy may not have a present effect

Whether purported policy statement genuinely leaves

the agency and its decision makers free to exercise

discretion

o Purpose of third §553 exemption for rules of agency organization,

procedure or practice, is to ensure that agencies retain latitude in

organizing their internal operations

Covers agency actions that do no themselves alter the rights or

interests of parties, although it may alter the manner in which

parties present themselves or their viewpoints to the agency

Focus has shifted from asking whether given procedure has

substantial impact on parties to inquiring more broadly whether

the agency action also encodes substantive value judgments or

puts a stamp of approval or disapproval on a given type of

behavior

- Community Nutrition Institute v. Young

o FDA established through a regulation adopted without notice and

comment action levels informing food producers of the maximum

amount of contaminants it would permit

FDA said notice and comment requirements do not apply b/c of

exception for interpretative rules and general statements of

policy

126

o Ct says these actions have a present effect and are binding, so these

aren’t interpretative rules and thus agency must utilize notice-and-

comment procedures

- Professionals Patients for Customized Care v. Shalala

o FDA issued without notice and comment CPG regulations describing

when FDA would initiate enforcement actions against pharmacy

actions; listed circumstances when FDA will enforce

o Ct said these circumstances did not establish that CPG was a

legislative rule, b/c CPG did not draw a line in the sand that, once

crossed, removes all discretion from the agency and its enforcement

personnel

- United States Telephone Asso. v. FCC

o FCC adopted order without notice and comment to adopt specific

standards for assessing penalties

o Ct says this was not a general statement of policy

Hard to imagine that agency would publish such an exhaustive

list of sanctions if it did not intend to use that framework to

cabin its discretion

- American Mining Congress v. Dept of Labor

o Ct held that PPLs were interpretive and not subject to notice and

comment requirements

o Formulated test to distinguish between legislative and interpretive

rules:

Whether the purported interpretive rule has legal effect is the

key, and this can be answered by asking:

Whether in absence of the rule there would not be an

adequate legislative basis for enforcement action or

other agency actions to confer benefits or ensure the

performance of duties

Whether the agency has published in the Code of

Federal Regulations

127

Whether the agency has explicitly invoked its general

legislative authority

Whether the rule effectively amends a prior legislative

rule

o If answer is YES to any of these questions, it’s a

legislative rule, not interpretive

- Agency’s interpretation of its prior substantive regulations

o Agency first adopts rule through notice and comment rulemaking, and

subsequently issues interpretation of the rule by issuing second rule

When an agency promulgates legislative regulation by notice

and comment, it may not subsequently repudiate the announced

meaning and substitute for it a totally different meaning

without using notice and comment rulemaking normally

required for amendments of a rule

Where guidelines don’t make a substantive change in existing

regulations however, it’s ok

o Jerri’s Ceramic Arts v. Consumer Product Safety Commission

The interpretation has a clear intent of eliminating a former

exemption and providing Commission with power to enforce

violations of a new rule; it thus make substantive changes and

must be done through the notice and comment requirements

See two other cases on p625-26

- Rules of Procedure

o Air Transport Assoc of America v. Dept of Transportation

FAA implemented penalty rules program without notice and

opportunity for comment

Where nominally procedural rules encode a substantial value

judgment or substantially alter the rights or interest of

regulated parties, rules must be preceded by notice and

comment

128

Penalty rules substantially affect defendant’s right to an

administrative adjudication, so there should have been

notice and comment

- The Good Cause Exception

o §553(b)(B) exception

One situation where this is successfully invoked is where the

agency is imposing new requirements that might be evaded if

advance notice were provided

Also used sometimes where agency must act pursuant to a

statutory deadline, and agency wants to skip notice and

comment on account of the delay involved

Sometimes this doesn’t work though

129

Class Notes – Thursday, November 09, 2000

Londoner and Bi-Metallic

- Objectives of hearings:

o Ensure accuracy to some extent

o Restrain against arbitrary decisions

These two are important with adjudicative facts as opposed to

legislative

Raising taxes in general is a policy question (Bi-Metallic), but

applying them in individual cases though necessitate particular

facts (Londoner)

o Dignatory component

People obey if they feel they’ve participated in process

- Bi-Metallic does not say no hearings at all, just no individual hearing; it has to

be through the legislative process

- When large group affected, don’t worry as much about people being singled

out (another distinction between the two cases)

- These cases are both due process cases

- Different Paradigms

o Bi-Metallic is legislative paradigm

o Londoner paradigm is adjudicatory, looks more like a trial

- Sometimes worry when group of people can’t act through legislature

Chenery (I)

- SEC made decision on basis of equity law principles

o Ct says this is wrong, equity principles do not support the SEC’s

position

o No deference is given here b/c cts usually decide equity principles

o Ct says if SEC reached same decision through structure of statute and

own expertise, they would be fine with that, as long as the SEC

explained the decision

130

- Ct will look at decision only in regards to what the agency looked at

o Agency has special competence to make determinations under statute

in a particular way that allows for political accountability and nobody

can substitute for this process

o Agency will be assessed only on findings that it uses

- Consistent with Overton Park and Scenic Hudson

o Don’t require any particular requirements; it’s a hard-look without

requirement of particular procedures

o Gives SEC lots of leeway

Here, SEC made same decision but based it on their expertise

under the statute; created brightline rule that reorganizers can’t

buy stock in company when reorganization is going on, and

SCt accepted this in Chenery (II)

But problem is they reached this decision on the rule in

an adjudicative procedure; Ct defers, but thinks

rulemaking would have been better

Requiring specific procedures – the harder hard-look procedure

- Florida East Coast Railway

o Ratemaking case

ICC decides to increase per diem charge, and wants to do it

quickly with informal comment and rulemaking

Formal adjudication

o APA § 554, 556, 557

o ALJ acts like trial judge, proceeding is like a

trial

o Must be a finding with reasons, and appeal is on

the record

Formal rulemaking

o §553(c), 556, 557

131

o Same as formal adjudication for the most part,

except no need to have separation between

adjudicator and prosecutor as there is in formal

adjudication

o Envisions testimony in written form

Notice and comment rulemaking (informal rulemaking)

o §553

Informal adjudication

o §555 – ancillary matters

o Overton Park

o Very few provisions in APA deal with this

ICC here wants to be in third category (informal rulemaking)

o §553(c)

Were 556 and 557 triggered by ICC statute?

Ct says no; what’s required in organic statute is “after a

hearing” with a decision to be made “on the record”

o These are MAGIC words; statute must have this

to trigger 553(c)’s last sentence

553(c) is also triggered for constitutional reasons (due

process), like in Londoner where only a few people are

exceptionally affected

o Majority says this is a Bi-Metallic situation

though; can have hearings on enforcement, but

not on overall rate; dissent says this is more

Londoner

Question is whether you get heard, but in what manner

Enforcement procedures necessitate adjudicative facts, so

probably need individualized hearings then

o Does Act itself require more formality?

132

“After hearing” probably did not mean purely formal

rulemaking, and resonates of a judicial requirement

This case rules out reading ambiguous statutes to require

formal rulemaking

But hard to envision that writers of statute envisioned

notice and comment rulemaking

Ct requires a very clear statement before formal

rulemaking will apply

Ct is updating the Interstate Commerce Act to fit w/in the new

predominant method of rulemaking

But shouldn’t we require Congress to go back and

update on their own? Or to change the APA?

Is presumption that there is informal adjudication?

Black-letter law is that when you use word

“adjudication” in a statute, it means formal adjudication

Presumption to informal rulemaking applies only to

rulemaking, not to adjudication

In some cases though word adjudication is translated to

a more Overton Park, legislative hearing type, when the

statute seems to point in that direction

o What happens after this case?

Very few formal rulemaking b/c very few statutes have the

magic words to trigger formal rulemaking

Gives agencies ability to proceed almost exclusively through

informal rulemaking

Formal rulemaking is very unusual today

And Cts have decided to be tougher on hard-look doctrine and

scrutinize b/c of use of informal rulemaking

Some, especially in DC Cir, have ordered particular

procedures – birth of hybrid rulemaking, or on-the-

record §553 rulemaking (because ct requires a record)

133

o Require second round of notice and comment,

increased testimony, etc.

o Want something more than §553 but less than

formal rulemaking

Vermont Yankee

- Puts abrupt stop to ordering particular procedures

- How to license nuclear power plants

o Agency said disposal problem was trivial, didn’t give much weight to

it

o DC Cir says it doesn’t work

Provides hard-look, says there is no adequate explanation for

their decision

Bazelon, J. could be read as requiring other procedures (list on

p608)

- SCt read it as requiring particular procedures

o SCt didn’t like hybrid rulemaking

o Main holding: Courts cannot impose additional procedures beyond the

APA

Bazelon’s approach of hybrid rule-making is illegitimate

Procedures in APA are only legitimate requirements (other

than those in organic statute)

- Did SCt get this right?

o Cts can’t impose additional requirements? Or does APA simply

provide a floor?

There is legislative history that implies APA is just a minimum

expectation

But this doesn’t tell us WHO can impose the additional

procedures; SCt says it’s not courts, rather agencies can impose

additional requirements

134

Hard-look doctrine will require some additional procedures in

itself

- What about the policy? Does it make sense to rule out court imposed

procedures in world of informal rulemaking and hard-look doctrine?

o The move to informal rulemaking caused this problem

o Hybrid rulemaking was a way to adapt to the new Florida East Coast

world

o Hard-look makes agency guess more, while hybrid rulemaking gives

agencies more guidelines

o This case has been criticized a lot for not giving cts ability to adapt to

the new Florida East Coast world

135

Homework: pp633-43; 519-23

Consequences of the transformation of notice and comment rulemaking

- Practical consequences

o Increased procedural requirements imposed on informal rulemaking

have probably created a fairer system, on that will lead to rules based

on info contained in a public record, and a system that permits courts

to review the rationality of the resulting rules

o However, have created more cumbersome and legalistic system, which

means delay

On average it takes EPA 3.5 yrs to promulgate a major rule

85% chance of court litigation

- Framework for Analysis

o Florida East Coast

Created rule for reading federal statutes narrowly so very few

imposed formal rulemaking requirements

o To control and regularize the power given to administrators, courts

began to read the language specifying procedural content of notice and

comment rulemaking as imposing fairly strict procedural requirements

Vermont Yankee eventually halted this development

o Courts have begun to read the §553 notice and comment exceptions

more broadly, thereby reserving the more elaborate notice and

comment procedures for more important legislative rules

- Assessments of current arrangements and possible alternatives

o Some say hardlook review and paper hearing requirements have

improved decisionmaking b/c agency must be prepared to exposthe

factual and methodological basis for its decision and face judicial

review on a record that encompasses the contentions and evidence of

the agency of its opponents

The procedures promote the flow of information and, arguably,

the democratic accountability of agency decisionmaking

136

o Others say the delays and costs of formalized rulemaking outweigh the

benefits, and doubt whether these procedures have improved agency

decisions

Ossification argument: the rulemaking gauntlet has caused

agencies to switch from rulemaking to adjudicatory techniques

that are less effective in furthering regulatory goals

Burden of notice and comment rulemaking has led agencies to

make policy through interpretive rules, policy statements,

guidelines, and other informal arrangements

o One suggestion is to relax the rigor of hardlook review and

accompanying demand for extensive records and elaborate

explanations

o Other suggestions:

Eliminate ability of litigants to challenge a rule immediately;

referral of major rules to Congress for adoption through fast-

track legislation; greater reliance on executive oversight and

control

- Negotiated Rulemaking

o Some agencies have tried to develop rules through process of

negotiation

Reduces average time for a major rule to about 2.25 yrs, and

likelihood of subsequent litigation is far lower than 85%

Has been tried with only a few major rules however

See p638 for when it works best, and problems too

See 639 for discussion of the Negotiated Rulemaking

Act, passed in 1990, and when it authorizes negotiated

rulemaking

o Wald excerpt

Attempt to model regulatory process on political process has

been troubled by three problems:

Which interest groups should be represented

137

What kind of participation is appropriate

What procedural rules govern the process of coming up

with a consensus

Subsequent History of the Arizona Grocery Procedural Principle

- General proposition of case: an administrative ruling until changed binds both

the outside world and the agency, and the agency is obliged to adhere to its

existing regulations when adjudicating and may not make ad hoc exceptions

or departures

o Exceptions to general rule have sometimes been permitted where the

regs in question concern internal agency procedures or where a rule is

waived to permit more lenient treatment of a person

- United States v. Caceres

o SCt says defendant may not exclude evidence obtained as result of a

violation of IRS rules

The Executive has provided for internal sanctions in cases of

knowing violations

To go beyond that and require exclusion in every case would

take away from Executive’s responsibility for fashioning

appropriate remedies for the violation of its regulations

o Requirement that agencies follow their own regulations is enforced

only in cases falling under the APA

- Ways an agency may adopt and then change a policy

o Adopt policy through adjudication, then change policy through second

adjudication

Courts in limited situations invalidate as arbitrary, but general

rule is it’s ok

o Adopt policy through rulemaking, then change through adjudication

Arizona Grocery holds such changes are per se invalid

o Adopt policy through rulemaking, then change through rulemaking

138

Consider this later, book says, in context of retroactive

application of new policy

139

Class Notes – Monday, November 13, 2000

1970’s – Era of Rulemaking

- Florida East Coast

o Congress must use “decision on the record” and “hearing” before

formal rulemaking requirements of APA are required

o Transforms agencies to §553 notice and comment agencies for the

most part (informal rulemaking)

o Must have clear statement, even in organic statute; this updates old

statutes to today’s standards

o But how can judicial review be meaningful when all there is is the

record required by §553

Growth of hybrid rulemaking is the response

Developed by DC Circuit, who exerts a lot of control

over administrative law

Congress seemed to allow for the hybrid rulemaking in

some statutes

- Vermont Yankee

o SCt says no hybrid rulemaking, can’t provide for additional procedures

o §553 sets forth the procedures

Agencies can add to these procedures, and Congress can too,

but courts can NOT add to them

o Also applies to informal adjudication

Courts can’t add procedures in informal adjudications either

(like in Overton Park)

Can we reconcile Vermont Yankee with Overton Park, State Farm, Scenic Hudson etc.?

- Overall reconciliation of hardlook review plus Vermont’s requirement that

decision be made on the record only (what’s required by §553)

o Cases admit that additional procedures may be needed, but question is

where to put the responsibility for choosing the procedures

140

Vermont puts responsibility on agency, takes it away from the

DC Circuit

Under hardlook review, agencies don’t know what specific

procedures are needed; may force agencies to undertake extra

procedures to avoid courts (ossification)

DC Circuit has come up with some procedures though

that allows flawed agency decisions as long as they

don’t have substantial affects

On the other hand, courts work with procedures all the time,

this is their area of expertise

o Substantive hardlook survives Vermont however; if agency makes

decision in arbitrary and capricious manner, can still be overturned

- Where is APA’s sanction of hardlook review?

o §706 – scope of review

Agency’s decision to promulgate decisions between rulemaking and adjudication

- Chenery (II)

o Some agencies like to make policy through case by case adjudication,

through precedent

- Excelsior

o Ct says a rule must be promulgated through rule-making, not

adjudication

o Under the APA, can Union use adjudication to promulgate a rule?

It was formal adjudication, so satisfies §556 and 557

However, adjudication leads to orders, while rulemaking leads

to rules, under the definitions of §551

This here sounds like a rule, so need to have

rulemaking

Rules have prospective, orders have retroactive, effects

But this is hard to determine, because orders seem to

have proactive effect at times too

141

Rules are more binding in future

- Wyman-Gordon

o They reached result by relying on rule that was overturned in

Excelsior, so had to be remanded

o 6 justices said not ok to use adjudication for prospective laws

Ct will usually defer to agency in its choice between rules and

adjudication though, except for in prospective adjudication like

here

Garrett says one time court will strike down adjudication is

when it substantially affects other parties prospectively

Rulemaking is prospective, while adjudication is

retroactive

- Transparency issue:

o Adjudication can regulate in less accountable ways; hard to figure out

exactly what the rule is, and how it became so, by looking at a bunch

of cases

o Bias for preferring rulemaking to promulgate policies, even for those

with prospective effects

- Exceptions to Rulemakings

o §553(a)

o §553(b)(3)(A) and (B)

Rules of agency organization, procedure or practice

Don’t substantially affect people’s rights

Good cause exception

Time constraints; concern is with strategic behavior

Has been narrowly interpreted

Interpretive rules

Under Skidmore, cts are less deferential

Fall outside of §553, so no need for notice and

comment

142

Homework: Pp524-34, 536-49

Estoppel and Res Judicata

- Law governing estoppel of govt has undergone many twist; in recent past rule

has gone from hardly no estoppel, to some, back to hardly none

o Doctrine of equitable estoppel: one who makes a representation to

another who reasonably relies to his detriment is estopped to deny the

truth of the representation or to gain by taking a position inconsistent

with the representation

4 factors: (1) actions by the defendant, (2) that lead plaintiff to

rely, (3) reasonably, (4) to his detriment

o By 1976, Professor Davis states the doctrine of equitable estoppel does

apply to the government; but in 1982 SCt decided Schweiker, which

started process back toward rule of rare or no estoppel of the govt

- Schweiker v. Hansen

o Social Security representative erroneously told woman she was not

eligible for insurance benefits, so woman left without filing a written

application; by Act’s terms, benefits are available only to one who has

filed a written application

o SCt says if this minor breach of a 13-volume handbook suffices to

estop petitioner, the govt is put at risk that every alleged failure by an

agent to follow instructions to the last detail in one of a thousand cases

will deprive it of the benefit of the written application requirement

which experience has taught to be essential to the honest and effective

administration of Social Security Laws

- Defining what constitutes the “affirmative misconduct” element of an estoppel

against the govt:

o Mukherjee – statement that an alien would not be subject to an INS

regulation was negligent but not a deliberate lie so not affirmative

misconduct

143

o Fano v. O’Neill – plaintiff’s claim that INS had willfully delayed

processing his application, singling him out for unjust discrimination,

would, if proven, establish affirmative misconduct

- Officer of Personnel Management v. Richmond

o Respondent got bad advice from employee relations specialist who

relied on a pre-1982 statute which had been changed

o SCt says, “from our earliest cases we have recognized that equitable

estoppel will not lie against the govt as against private litigatnts”

But SCt does not embrace a rule that no estoppel will be

against the govt in any case

o Appropriations Clause says no money can be paid out of Treasury

unless appropriated by Congress; since Congress changed the statute,

money can’t be appropriated under pre-1982 statute, and use of

judicial estoppel cannot grant a money remedy that Congress has not

authorized

This assures money will be spent according to the difficult

judgments made by Congress

Congress employs private legislation to provide remedies in

individual cases of hardship

o Opening door to estoppel claims would invite endless litigation over

claims of misinformation by disgruntled citizens

Natural consequence of rule that made govt liable for

statements of its agents would be a decision to cut back and

impose strict controls upon govt provision of info in order to

limit liability

Holding: No estoppel against govt by a claimant seeking public

funds

- After Schweicker and Richmond there is little space for successful estoppel

claims against govt, at lest where it does not involve an award of money

o Possible estoppel where license or land is at stake

- United States v. Mendoza

144

o Collateral estoppel: once court has decided an issue of fact or law

necessary to its judgment, that decision is conclusive in a subsequent

suit based on a different cause of action involving a party to the prior

litigation

No mutuality of parties needed

Approves of offensive use of collateral estoppel by nonparty to

a prior lawsuit

However, these doctrines come out of cases involving disputes

over private rights between private litigants

o Law allowing nonmutual estoppel against govt would substantially

thwart development of important questions of law by freezing the first

and final decision rendered on a particular legal issue

Application of nonmutual estoppel against govt would force

Solicitor General to appeal every adverse decision in order to

avoid foreclosing further review

Govt is not bound in a case involving a litigant who was not a

party to the earlier litigation

Requiring Consistency to Safeguard Expectations – Problems of Retroactivity

- Adjudication

o Agency evolution of policy through case-by-case adjudication creates

a danger that the governing legal rules will be altered after the relevant

events occurred, creating potentially harsh and inequitable defeat of

expectations generated by the preexisting law

o Should courts attempt to evaluate and balance the justifications for an

adjudicatory policy change against the harm to expectation interests

that it would cause? Chenery (II) suggests that such a balancing

approach is appropriate

In some cases courts have invalidated the practice of

retroactive adjudication (thereby requiring an agency to use

rulemaking or some other prospective method to change

145

policy); in some cases, they have sustained it; SCt has not

spoken to the issue since Chenery, but there are some old

Circuit cases that address the issue

NLRB v. Guy F. Atkinson Co

o Inequity of the impact that retroactive policy

makes upon a respondent innocent of any

conscious violation of the act, and who was

unable to know, when it acted, that it was guilty

of any conduct of which the Board would take

cognizance, is manifest

NLRB v. E & B Brewing Co

o NLRB’s new policy found impermissibly

retroactive in that it worked hardship altogether

out of proportion to the public ends to be

accomplished

Leedom v. IBEW

o Periodic adjustments in the contract bar rules

are necessary to achieve statutory objectives,

and immediate application of its revised rule

was necessary to prevent an administrative

monstrosity

NLRB v. Majestic Weaving Co

o Decision branding as ‘unfair’ conduct stamped

‘fair’ at the time the party acted raises judicial

hackles considerably more than a determination

that merely brings within the agency’s

jurisdiction an employer previously left without,

or shortens the period in which a collective

bargaining agreement may bar a new election,

or imposes a more severe remedy for conduct

already prohibited

146

H&F Binch Co Plant of Native Laces & Textile

Division of Indian Head, Inc v. NLRB

o Court found it appropriate to weigh the hardship

in imposing liability on the employer for

conduct that had not previously been proscribed

against denial to employees of important rights

that are now recognized to have been properly

theirs

- Rulemaking

o Can agency apply new policy to prior behavior?

In a retroactivity challenge, a critical question is how the

challenger’s conduct, or the conduct of others in its class,

would have differed if the rule in issue had applied from the

start

Severe impact on finances may outweigh negligible public

interest in applying new provision retroactively

o Bowen v. Georgetown University Hospital

Whether Secretary may exercise this rulemaking authority to

promulgate cost limits that are retroactive

Threshold question is whether the Medicare Act

authorized retroactive rulemaking

Retroactivity is not favored in the law, so congressional

enactments will not be construed as retroactive unless

their language requires this result

o Here, provision provides for some retroactivity

in case-by-case adjudication, but not in

rulemaking

o Statute does not expressly give retroactivity to

rulemaking power, and legislative intent

indicates that no such authority was

contemplated

147

Scalia, concurring

APA’s definition of “rule” shows that rules have legal

consequences for the future only

o A rule can affect past transactions however

But a rule that has unreasonable

secondary retroactivity may be

overturned as “arbitrary or capricious”

This standard does not apply to rules that

change what the law was in the past,

because these rules are per se invalid

Adjudication has future as well as past legal

consequences

148

Class Notes – Tuesday, November 14, 2000

Difference between interpretive and legislative rules

- Distinction is important for the exceptions of §553

- Look at functional affects of rule

o Definition of plant as an example

Can’t attack legislative rules in later enforcement action b/c

already had chance to attack previously

- Is it published in Federal Register?

- Judge Williams:

o Interpretive rules don’t have §553 notice and comment, so in

enforcement procedures their validity must be subject to attack

Otherwise (if can’t attack them) these rules will become

legislative w/o the scrutiny that we want for legislative rules

Can attack interpretive rule as being “goofy”

o Also see Posner case and 6 foot fence case

o Will agency still use interpretive rules if they can be attacked in any

enforcement procedure?

Trick is getting right mix of legislative and interpretive rules to

shape behavior of those being regulated

- Community Nutrition

o Interpretive and legislative rules are binding, legislative just is more

binding; review of legislative takes place in §553 procedures while

interpretive review takes place in the enforcement proceedings

- Garrett says focus on Starr opinion in Community Nutrition and the Williams

opinion

- Agency gets more deference in legislative rule, less deference in interpretive

rule; this is why the distinction between the two is important

o This is because it’s harder to get legislative rule passed due to

requirements of §553

149

Consistency of agencies

- Negotiated rule-making (or RegNeg); takes place BEFORE §553

o Hasn’t had much effect says Garrett, and may not achieve the goals we

think it does

o Advocates say:

Negotiation by direct stake-holders would add legitimacy to

rulemaking process

Reduce delay and judicial challenges, which would hopefully

end problems with ossification that were brought on by the

hardlook doctrine

o 1990 Negotiated Rule-making Act

This supplements the APA

Takes place before the §553 requirements

Must put notice in Federal Register that lists possible affected

interests and proposals

No judicial review over decision of who takes part in the

committee

Hardlook doctrine still takes place, but looks at §553 procedure

Need unanimous support for a rule, which is then sent to

agency who provides basis for §553 review process

Under USA Group, agency can’t just adopt the

consensus; agency has to conduct independent review,

and can change rule if it wants

o This looks a little like Schecter Poultry

But here all interests must be accounted for, although this

doesn’t always work out

And there is also review by the agency after the rule comes out

of the negotiated rulemaking

- Reduce judicial challenges, and reduce delay of rules: two main goals

o Cognilazi: negotiated rulemaking does NOT satisfy these goals

150

Saves only about 3 months time on average, but may actually

take up more staff time

6 of 12 rules were challenged in court; so the gains hoped for

didn’t happen

But should we have hoped for big gains? Garrett says

no – court challenge can come from anyone, not just

those involved in the negotiations

His final thought – regular rulemaking isn’t as bad as we think,

there really isn’t ossification

Consistency and Estoppel

- Hypothetical: Sarah sues from 1958-60 saying she was overcharged; brought

one claim and won, but now bringing second claim she deserves more

o NO – res judicata

o Can Mike bring the second suit?

Yes - Res judicata doesn’t bind someone who wasn’t party to

first suit

o Can Sarah bring suit for 1960-62?

Maybe issue preclusion, but could bring case and argue

different grounds

- 1955 agency makes rule that says rates over .80 are unreasonable

o Now Sarah says anything above .60 is unreasonable

No – can’t change result of rulemaking in an adjudication

This is what Arizona Grocery stands for

Something more binding about a rule than there is

about an adjudication

Comes out of belief that is it reasonable for rules to

have a binding effect

If you want to change 1955 rule, must go through rulemaking

process again

General rule about rules – they are prospective only

151

- Agencies must apply their rules consistently

o True for interpretive rules as well

o Extremely informal and private decisions won’t always need

consistency, but usually consistency is required

o Caceres

Clear violation of IRS rules, but defendant seeks to exclude

evidence gotten in violation of these rules

Marshall says should have consistency to protect due process

of defendant

Majority says if this was APA case, might well require

consistency; but here it’s a criminal proceeding

This is a very limited holding

Even in some criminal cases consistency will be

required too SCt says, where there is evidence of

reasonable reliance

SCt didn’t want it to become a due process issue when

there isn’t consistency, b/c any lack of consistency

would federalize a great deal of state regulatory practice

o General rule is consistency

- But when it comes to representations that employees make, the rule is the

opposite – agencies can’t be estopped by representations of their agents

o Schweiker

Effect of adopting opposite rule would be to handcuff the govt,

and may not give out any advice at all given repercussions of

poor advice; we want govt to give advice

Garrett says there wouldn’t be less advice, just better advice,

b/c govt would be held accountable

But black-letter law is that agency won’t be estopped absent a

showing of affirmative misconduct

Garrett says there has never been a finding of

affirmative action, as far as she knows

152

Would probably need to have representation in writing

153

Homework: pp751-60, 769-72, 783-84, 786-91

Separation of Function within the Agency Staff

- Separation of Functions in Adjudication

o Potential source of unfairness is that same organization that initiates

complaint judges the resulting case; two aspects to this problem:

Unfairness arising from the vesting of conflicting powers in

commissioners

Can be difficult to resolve

Unfairness resulting from conflicting duties within the staff

Can be relieved somewhat by intra-agency separation

of those who prosecute a case from those who decide it

o Plans to separate functions at both commission and staff levels have

been proposed

NLRB is only agency that has near total separation of general

counsel (who issues complaints) from rest of agency

Compromise is embodied in APA, which attempts to make

hearing examiners (ALJs) independent within the agency

o Wong Yang Sung v. McGrath

Administrative hearing was not conducted in conformity with

the separation of functions requirements of §554 of APA

Problem of commingling functions has been addressed before:

Should be avoided by internal division of labor

Need to isolate those who engage in the activity

APA adopts creation of independent hearing

commission insulated from all phases of a case

Here, the practices exemplify the practices so unanimously

condemned

Govt says §554 doesn’t cover deportation hearings

§554 is limited to hearings required by statute, but

Court says this only applies to those that the agency

154

holds by regulation, rule, custom or special

dispensation

Limits do NOT apply to requirements of a hearing

which have been read into a statute by the Court in

order to save the statute from invalidity

No basis for declaring an exemption in favor of

deportation proceedings from procedural safeguards of

APA

o Separation of Functions in APA §554(d)

Normally applies to adjudications when a hearing examiner

presides at a hearing that the underlying substantive statute

requires to be held “on the record” (does not apply to “on the

record” rulemaking)

See p756-57 for details on §554

Does not apply in determining applications for initial licenses,

or proceedings involving rates, facilities or practices of public

utilities or carriers

The separation of functions provisions of APA apply only

when an adjudication is required by statute, or given Wong

Yang Sung, by the Constitution, to be determined on the record

after opportunity for an agency hearing

When defendant in adjudication has complained of lack

of independent hearing examiner, SCt has been willing

to infer statutory requirement of an on-the-record

proceeding without the magic words of Florida East

Coast

- Combination of Functions and Bias at the Agency Head Level

o No easy way to divide functions among commissioners; most

commissioners issue the complaint and decide the resulting case

o Withrow v. Larkin

155

Larkin obtained injunction against a “contested hearing” on the

ground that it was unfair and unconstitutional to have the

investigator make the final decision – SCt reverses

Combination of investigative and adjudicative functions

creates an unconstitutional risk or bias which has a

much more difficult burden of persuasion to carry

However, case law does not support DCt’s proposition

that agency members who participate in an

investigation are disqualified from adjudicating

o Here, no specific foundation has been presented

for suspecting that the Board had been

prejudiced by its investigation or would be

disabled from hearing and deciding on the basis

of evidence to be presented at the contested

hearing

o Without showing to the contrary, state

administrators are assumed to be men of

conscience

o Judges do it all the time – they grant arrest

warrants, and then preside over the trial

Combination of investigative and adjudicative functions does

not, without more, constitute a due process violation

- Other forms of bias

o Gibson v. Berryhill

Board of Optometry in Alabama was composed solely of

optometrists in private practice; they brought case against

members of Lee Optical, a large business corporation that

accounted for nearly ½ of all the optometrists practicing in

Alabama

156

SCt affirms DCt decision that Board is constitutionally

disqualified from hearing the case on the ground of possible

personal interest

Those with substantial pecuniary interest in legal

proceedings should not adjudicate these disputes

Here, private optometrists stand to gain a lot of business

- Who Decides?

o One of major problems in large agencies is for commissioner to find

time to decide the numerous cases that reach him while also deciding

major policy issues

Commissioners thus rely heavily on staff assistance in deciding

a case

o Morgan v. United States (I)

Ps allege Secretary delegated determination of issues with

respect to the reasonableness of the rates involved

If Secretary had assigned to Assistant Secretary duty of

receiving evidence, hearing argument, and making order upon

findings, this would be a question of delegation; however, here

the Assistant heard argument but did not make the decision – it

was left up to the Secretary, who according to the allegation

(which was thrown out by DCt) had neither heard nor read

evidence or argument

If one who determines the facts which underlie the

order has not considered evidence or argument, it is

manifest that the hearing has not been given

Doesn’t matter if evidence supports the decision

reached; the one who decides must hear

o Weight ascribed by the law to the findings rests

upon assumption that the officer who makes the

findings has addressed himself to the evidence

157

o Must be a hearing in a substantial sense, and

officer who makes the determinations must

consider and appraise the evidence which

justifies them

o Defendants must answer the allegations to

determine if proper hearing was granted

o How can commissioner have enough time, given last case?

(1) Agency head can formally delegate decisionmaking to a

different official

This depends on the wording in the statute

(2) Agency head can informally delegate the decision to others

who will brief the agency head on issues, leaving the agency

head to make the decision

o The Ash Council Report

Made specific recommendations designed to free

commissioners’ time for policymaking

See p789

o Agency head’s job is primarily one of reviewing decisions made by

ALJs

158

Class Notes – Wednesday, November 15, 2000

Rule of Consistency

- May depend on reliance, but consistency is generally a requirement

- Can change in adjudication something made in earlier adjudication

- Subsequent rulemaking can change prior rulemaking (Chevron, State Farm)

- Can’t change rule in adjudication however (Arizona Grocer)

- Estoppel

o Some say rule of consistency is inconsistent with consistency rule

But estoppel is applied to employees of agency who

mischaracterize policy, but with consistency it’s the agency

itself held to prior standards

o Fear that agency will be bound by all mistakes made by employees;

could be huge amount of liability, which means agency will be less

likely to give advice

This is seen in cases like Schweiker

o OPM v. Richmond

Possible constitutional problem with estoppel

Appropriations clause – Congress must authorize any

appropriation of money

o Here, citizen would get money that had not been

appropriated by Congress, so unconstitutional

o Fear that this would become way agencies could

get out from under congressional spending

power

Stevens, concurrence

If there were intentionally bad actions by agency, Ct

would have given plaintiff money, so maybe this really

isn’t a constitutional issue

Also says should not look at individual appropriation,

but appropriations as a whole

159

o How does this case affect outcome of Schweiker?

Law is can’t give money to individual not included in terms of

appropriation statute; it’s unconstitutional; Act itself precludes

payment of benefit

In Schweiker, woman was covered under the Act, she just

didn’t comply with the regulations of the law

So no constitutional problem as long as she fits under

the statute

Here, agency action precludes payment

o If there is affirmative misconduct, could still get

the money

o Equitable estoppel does not work usually

But one recent case may breathe life into the doctrine

US v Winstar

o Doesn’t mention estoppel, but facts sound a lot

like estoppel

o Govt was held responsible for damages on

account of representations made by agency

o But here the representation was very formal and

binding; wasn’t an oral representation, like in

Schweiker; also, there was an express

delegation by Congress to agency to make these

promises, so when Congress changed law they

were partly responsible based on this delegation

o Collateral Estoppel (issue preclusion)

United States v. Mendoza

Govt lost case of 68 Philipinos, and Mendoza wants to

use this decision offensively b/c here US already got to

defend itself against the first suit which was the same

issue

160

Rule is that nonmutual offensive issue preclusion is

possible for private litigation, but not against the

government; rationals for the Mendoza rule:

o Could impose huge liability on govt, so scope

of govt renders them different

o Want to have percolation through circuit courts

so SCt gets to see all sides of the issue

Issues would be frozen by first case

otherwise

o Separation of powers

Govt has reasons not to appeal based on

political considerations, policy,

resources, etc, and issue preclusion

would force govt to appeal all decisions

as aggressively as possible to protect

itself in the future, so it would impose on

Executive decision-makers

o When govt acts as a landowner though, or as a

private party, issue preclusion may apply

Agency non-acquiescence

Normally inter-circuit non-acquiescence, where agency

abides in one circuit but goes about its business in other

circuits as if the decision didn’t happen (if it hasn’t

been addressed in other circuits); problem is people will

be treated differently based on where they live

Doesn’t happen often

When the inter-circuit non-acquiescence situation may

be good:

o Agency at issue must have national jurisdiction

over program

161

o Agency must have justifiable belief that its

policy is within its range of discretion

o Agency has to be aggressively seeking review in

other circuits and Supreme Court

Retroactivity

- 2 contexts

o Adjudication

Chenery II

Excelsior and Wyman-Gordon

Agency announced prospective only adjudication,

which is odd, seen as problematic (Wyman-Gordon)

Retroactivity is seen as accepted

But sometimes it’s thought courts can act prospectively;

however, SCt is not likely to agree today, they think

prospective laws are more legislative

Agencies aren’t courts, so maybe there should be more

flexibility with the temporal aspect of their decisions

There is a strand that indicates that retroactivity is not

acceptable in some situations though

Atkinson

o Does employer have to follow law at the time of

the discharge, or at time case comes to

adjudication?

There was a change in substantive law,

where employer thought he was acting

lawfully, but law changed after, so he’d

have to pay penalty

This sort of retroactivity is seen

as especially bad

162

When there’s just an increase in a fine

already there, or a change in jurisdiction

or other procedural law, then we’re not

as concerned about retroactivity

Also look at importance of policy being

vindicated by new law

If new law is vast improvement,

is necessary to protect

employees, this may overcome

negative feelings about reliance

o So look at 4 things:

Substantive vs. procedural

Importance of right being vindicated

What is the remedy?

What will happen to employer –

big fine, big penalty, more

worried here (See NLRB v.

Local 176, p541)

How much of a surprise is the new law?

o Retroactivity in adjudication is a matter of

balancing these four

o Rulemaking

Defined in APA as being prospective

When an agency acts like a legislature, which normally acts in

a prospective way

Bowen v. Georgetown Univ Hospital

Original rules were prospective only, but later were

applied retroactively as well

SCt says legislative history shows that rulemaking

power should be exercised proactively

163

o Statute itself is silent on the issue, so Ct uses

canon of construction that says when legislature

delegates to agency a rulemaking ability, this is

for prospective rulemaking only b/c that’s the

power the legislature normally has

Can be overcome by specific language in

statute, or by legislative history

There is a strong presumption against

retroactivity for rulemaking

Protects due process concerns;

people make decisions based on

the rules at the time

Scalia, concurring

o Doesn’t like canons of construction, so finds

different reason to come to same conclusion

o Uses definition of “rule” from APA, which he

says requires rules to have prospective effects

only

164

Homework: pp662-76; 694-701

The Evolution of the New Due Process: The Definition of Interests Entitled to Procedural

Protection

Goldberg v. Kelly

- Unambiguously extended constitutional safeguards to advantageous relation

with government (‘privileges’) and ordered a government welfare agency to

provide welfare recipients with extensive administrative hearing rights prior to

termination of benefits on grounds of ineligibility

- Complaint alleged NY City officials administering aid programs terminated

aid without prior notice and hearing, thereby denying them due process of law

o Constitutional issue is whether Due Process clause requires recipient

be afforded an evidentiary hearing before termination of benefits

o Extent to which procedural due process must be afforded the recipient

is influenced by the extent to which he may be “condemned to suffer

grievous loss”, and depends upon whether the recipient’s interest in

avoiding that loss outweighs the governmental interest in summary

adjudication

Here important governmental interests are promoted by

affording a pre-termination hearing b/c public assistance is a

means to promote the general welfare

Interest of eligible recipient in uninterrupted receipt of public

assistance, couple w/ State’s interest that his payments not be

erroneously terminated, clearly outweigh the State’s competing

concern to prevent any increase in its fiscal and administrative

burdens

- Pre-termination hearing need not take form of judicial or quasi-judicial trial

o Comprehensive record and opinion need not be provided

o Due process only requires that recipient have timely and adequate

notice detailing reasons for proposed termination, and an effective

165

opportunity to defend by confronting any adverse witnesses and by

presenting his own arguments and evidence orally

Current procedures didn’t allow recipient to present evidence

orally or to cross-examine adverse witnesses

o Decision-makers conclusion must rest solely on the legal rules and

evidence adduced at the hearing

- Black, DISSENTING

o Says this decision paralyzed govt’s efforts to protect itself against

making payments t people who aren’t entitled to them

o Govt will be more careful when it first gives benefits b/c of the hassle

involved in terminating them

- The Ct adopts a two-step approach to due process protection that has been

followed ever since:

o (1) Does due process apply at all to this area (here, welfare benefit

termination)?

Interest must be of a certain type, rather than a certain weight

(it’s a category, not a balancing test), in order to qualify for due

process protection

o (2) If so, what process is due?

This is defined in balancing terms

- Charles Reich, The New Property

o In modern society much wealth consists of advantageous opportunities

conferred by govt; when statutes provide that govt benefits shall be

afforded to qualifying individuals, those individuals should be

recognized as having property rights in such benefits, whose

deprivation should be protected by procedural safeguards similar to

those utilized to protect “old” property, such as land, from

governmental deprivation

- Board of Regents of State College v. Roth

166

o Roth had one-year contract, and at end of contract it was not renewed

and no reason was given

Roth says this violates 14th amendment

(1) Asserts failure to rehire was retribution for his

exercise of free speech rights

(2) Says failure to give him reasons or opportunity for

hearing on the decision violated procedural due process

DCt denied summary judgment on first claim, granted

on second, so SCt is addressing second claim (due

process claim)

o Ct says range of interests protected by procedural due process is not

infinite

To determine whether due process requirements apply at all,

must look not to “weight” but to nature of the interest at stake

to see if the interest is w/in 14th Amendment’s protection of

liberty and property

The liberty guaranteed by 14th amendment denotes

freedom from bodily restraint, right to contract, to

engage in common occupations of life, to acquire useful

knowledge, to marry, establish a home and raise

children, worship God, and generally enjoy the

privileges long recognized as essential to the orderly

pursuit of happiness by free men

This case does not implicate such interests

o State did not damage his standing and

associations in the community

If they had, may be a different case, b/c

where a person’s good name, reputation,

honor or integrity is at stake b/c of what

govt is doing to him, notice and

opportunity to be heard are essential

167

But state did not hinder Roth’s ability to

pursue employment elsewhere

It simply stretches concept of

liberty too far to suggest a person

has been deprived of it simply

b/c he’s not rehired in one job

but remains free as before to seek

another

o 14th amendment’s procedural protection of property is safeguard of the

security of interests that a person has already acquired in specific

benefits

To have property interest in a benefit, person must clearly have

more than an abstract need or desire for it; he must have more

than a unilateral expectation; he must have a legitimate claim

of entitlement

Terms of respondent’s appointment secured absolutely

no interest in re-employment for the next year, so no

possible claim of entitlement to re-employment

Also, no state statute or University rule created an

entitlement

Thus, he did not have a property interest sufficient to

require University to give him a hearing

o Marshall, DISSENTING

Employment is very valuable, so govt must demonstrate its

actions are fair and equitable

- Perry v. Sindermann

o Teacher employed for ten years under series of one-year contracts

When contract not renewed (and no hearing provided), brought

suit claiming board’s action was in retaliation for his exercise

of first amendment rights

168

o Ct says if failure to renew contract was in retaliation for exercise of

first amendment rights, action would be infringement of

constitutionally protected “liberty” regardless of fact that Sindermann

lacked contractual right to renew

There are some reasons upon which govt cannot deny benefits,

including any basis that infringes on constitutionally protected

interests

Sindermann entitled to hearing before DCt to prove his

allegations that failure to renew was based on exercise of free

speech

o Sindermann also must be given opportunity to prove legitimacy of his

claim that, despite absence of formal tenure system, there was an

informal system that gave him a ‘property’ interest in continued

employment, in light of the policies and practices of the institution

Proof of the property interest would obligate officials to give

him a hearing to explain grounds for nonretention

- The Mathews v Eldridge Balancing Test

o Mathews v. Eldridge

Identification of the specific dictates of due process requires

consideration of three distinct factors:

(1) Private interest that will be affected by the official

action

(2) Risk of an erroneous deprivation of such interest

through the procedures used, and the probable value, if

any, of additional or substitute procedural safeguards

(3) Government’s interest, including the function

involved and the fiscal and administrative burdens that

the additional or substitute procedural requirements

would entail

169

Here, in light of private and governmental interests and nature

of existing procedures, administrative procedures already

provided are sufficient

o Goss v. Lopez

Before school could suspend student for less than ten days, had

to provide student with the rudiments of due process

o University of Missouri v. Horowitz

Academic evaluations of a student do not need full hearing b/c

nature of decision is more subjective and evaluative than the

typical factual questions presented in average disciplinary

decisions

o Schweiker v. McClure

Focused on second Eldridge factor to decide that procedures

already in place were sufficient

o Gray Panthers v. Schweiker

DC Circuit held that statute, in light of due process, required

some kind of further oral procedure

Oral hearing requirement has number of benefits:

o Provides a way to ensure accuracy where facts

are in dispute

o Ensures that decision-makers recognize their

decisions affect lives of human beings

o No other procedure so effectively fosters a

belief that one has been dealt with fairly, even if

there remains disagreement with the result

o Cleveland Bd of Edu v. Loudermill

Due process requires some kind of hearing prior to discharge of

an employee who has constitutionally protected interest in his

employment

170

Affording employee opportunity to respond prior to

termination would impose neither a significant administrative

burden nor intolerable delay

The tenured public employee is entitled to oral or

written notice of the charges against him, explanation

of the employer’s evidence, and opportunity to present

his side of the story

o Winegar v. Des Moines Independent Community School District

Injury to the teacher’s reputation, in conjunction with the

suspension and transfer, implicated “liberty interests”

Teacher should have been afforded opportunity for oral

evidentiary hearing, including presentation and cross-

examination

o Gilbert v. Homar

Court rejected claim that due process required some form of

hearing

Distinguished this case from Loudermill on ground that that

case involved termination, not suspension

Also, here plaintiff’s arrest provided an objective, reasonable

basis for suspension

However, due process requires a prompt postsuspension

hearing

171

No class on Monday, November 20, 2000

Class Notes – Tuesday, November 21, 2000

Bowen

- indicates there is presumption against delegation of rulemaking that has

retroactive affects; APA only allows prospective rules; organic statute and

legislative history must show specific intent to allow for promulgation of rules

with retroactive effect

- Adjudication has retroactive effects, so agencies will use it when they want to

do something retroactively

- Scalia is uncomfortable with use of legislative history

o He reads APA to preclude retroactive rules

o Breyer’s response: APA need not be read this way; in some ways

retroactive effect may be justified

Miriam case

- Retroactive effect here is secondary effect

- Often see grandfather provisions in statutes to protect people against

secondary retroactive effects

- Garrett says Miriam won b/c the statute’s goal wasn’t to catch people like

these

Separation of Functions

- When you have adjudication or rulemaking, have right to a neutral

decisionmaker

- What is bias?

o Easiest cases are pecuniary interests, where people regulate

competitors, or stand to make money on decision

o Concern that if adjudicator has also been prosecutor, there may be

some bias

But mere familiarity with the facts does not disqualify person

from judging on the merits (there’s a case that said this)

172

- §554 provisions try to separate functions

o 3 models of how “separate” they can be

Can have agency separate from prosecutor and adjudicator

Ash commission

General Counsel separately appointed by president, has a lot of

autonomy from board (this is how NRLB works, and they’re

the only one to use this model); less complete than first, but

still some separation

Internal separation; everyone works for same agency, but ALJs

have some autonomy (not hired, fired by agency, but housed in

the agency)

This is what is required by §554

o §554, 556, 557 – set up formal adjudication functions, including

separation; when are these implicated?

Organic statute requires formal adjudication, or where

constitution requires a hearing (Londoner situation)

Wong Yang Sung – constitutional requirement like Londoner;

Ct said requirements of APA would suffice

In Londoner situation, does due process require at least

the formality of APA, or can you have less?

o Garrett says you could have less formality in

separation than APA where the constitution, not

the statute, requires hearings

o Where statute requires hearing, must use APA

- Want to allow ALJs to use expertise of agency, but also want enough

separation to satisfy due process concerns

Due Process

- What process is due before termination of benefits?

o Two-prong inquiry:

173

(1) Does he have constitutionally protected interest?

(2) If yes, what kind of process is he due?

- What are constitutionally protected interests?

o Constitution says one can’t be deprived of life, liberty or property w/o

due process of law

o Goldberg – welfare benefits are property

Footnote 51 shows that these benefits are now going to be

viewed as property interests (citing to the Reich article)

Areas where liberty is implicated instead of property

(only these two ways):

o Incarcerated people

o Winegar – employment termination done in a

public manner

Almost never is life implicated, so almost always look

at property interests for due process concerns

Reich said it’s good idea to think of govt benefits not as

privileges, but as property interests

o This would protect beneficiaries

o Said there should be constitutional limits on

new property; can’t use award or deprivation of

new property to pressure people against use of

their constitutional rights

o Should be substantive limits on govt in handing

out benefits; factors considered by govt must be

directly relevant to the program

o Also wanted procedural safeguards before one

can take away or change new property rights,

like hearing, oral testimony, representation by

counsel, etc

o These rights protect those at lower end of socio-

economic levels

174

o So must answer this question using the modern view of property rights

as discussed in Reich

- What kind of process is due?

o Problem with earlier procedures was that there were no oral hearings

(and chance to cross-examine), and no pretermination hearings

Want procedure to allow people to feel like they participated,

and was in a dignified way (Brennan emphasized these – also

see Gray Panthers), not just focus on accuracy

Difficulty of people surviving without the benefits (so peculiar

nature of new property interests) was one reason

pretermination hearings were needed

Why did agencies not want pretermination?

o Less expensive to have post-termination

hearings for the agency b/c fewer people will

appeal

o Mostly procedural reasons

Black’s dissent in Goldberg:

He’s worried about the costs imposed on govt in having

these pretermination hearings, which will lead to

reduction in benefits, and govt will be much stricter

with eligibility b/c it’s harder to kick people out once

they get in

Studies show the results have been mixed however

Question should be, what are the tradeoffs?

- After Goldberg, people got worried about scope of case

o Roth and Sindermann should be seen as trying to cut back on the first

prong of the test

o Trying to define what’s a property right for protection

o Roth

Positivist track: property interests are created by existing rules

or understandings that stem form an independent source, such

175

as state law or a contract; it’s not a constitutional issue, but can

be by common law (see p673)

In Sindermann, there was something in the faculty guide that

created legal interest and property right; Roth didn’t have a

similar expectation

So what hearings are triggered depends on how the

contract is structured, whether it gives rise to

expectations of entitlement

In Roth, lots of discretion, but no entitlement

Horowitz – no property interest b/c it’s a subjective

decision

This is the positivist trap of Goldberg, Roth and

Sindermann – determination of whether there are

property interests rests completely in the statute itself

Blackletter law is clear – whether source creates

property interest depends on full factual context; must

show as part of statute or contract an intent to create a

substantive entitlement

- Once you determine what the entitlement is, look at what process is due

o Mathews v Eldridge tries to flesh out second prong of Goldberg

Balancing test with three factors:

(1) Importance of interest affected

(2) Procedural cost-benefit analysis

o Risks and flaws of current procedures, and what

benefits do additional procedures provide

(3) What’s government’s interest

Interest affected

More than just interest in getting property; additional

interest of getting them in between time terminated and

time given due process; weighed more heavily with

things like welfare, less with social security

176

Mathews – ct assumes there are other sources of

income coming in

Procedural cost-benefit analysis

Accuracy is main concern; how would new plan

increase it?

o Goldberg ’s requirement of oral hearing is based

on increase in accuracy

o Mathews – hearing won’t have much value b/c

won’t increase accuracy

o Garrett says oral hearing increases costs, may

not increase accuracy; we may be disregarding

other effects; so is a court the right institution to

be making these calls?

o Lowdermill – constitutional objective is

accuracy

o Some people call this a model of competence

Dignitary rights are subsidiary here

(Gray Panther)

Garrett says there has been movement away from court

deciding that what is needed was what was granted in

Goldberg, a big trial-like hearing

o Costs of that are expensive; trial type hearing

isn’t always best way to get at truth; people may

feel better going through a less-formal process

177

Homework: pp872-75, 879-81

Federal Law of Standing Prior to Data Processing

(also prior to the APA)

- Alabama Power Co v. Ickes

o Petitioner brought suit challenging grants by federal energy

administrator of financial aid to municipal electric power companies as

part of a federal public works program

o No standing for petitioner

Will not sustain a legal injury

Fact that they are taxpayers doesn’t help; interest of taxpayer in

moneys of federal treasury is no basis for an appeal

o Municipalities have right under state law to engage in the business in

competition with petitioner, and if petitioner’s business is curtailed or

destroyed by operations of municipality, it will be by lawful

competition

- Perkins v. Lukens Steel Co

o No standing b/c no showing of an invasion of recognized legal rights

of their own, as distinguished from the public’s interest in the

administration of the law

o Govt enjoys unrestricted power to determine with whom it will deal,

and to fix the terms and conditions

- The Chicago Junction Case

o The loss here is not the incident of more effective competition, it’s

injury inflicted by denying to plaintiffs equality of treatment which is

guaranteed under the Interstate Commerce Act

Transportation Act made provision for securing joint use of

terminals

o Dissent

178

Loss of business, or opportunities to get business, attributable

to activity on part of competitor is not enough for standing

- FCC v. Sanders Brothers Radio Station

o Communications Act not designed to supplant free competition or

create fair shares for industry members

o Economic injury to an existing station is not a separate and

independent element to be taken into consideration by the Commission

in determining whether to grant or withhold a license

o However, does not follow from this that there is no standing, b/c §

402(b)(2) of the Act provides for appeals “by any other person

aggrieved or whose interests are adversely affected by any decision of

the Commission granting or refusing any such application”

Congress has the power to confer such standing

Association of Data Processing Service Org v. Camp

- First question in standing issue is whether plaintiff alleges that challenged

action has caused him injury in fact, economic or otherwise

o Future loss of profits is enough

o Question is whether the interest sought to be protected or regulated by

complainant is arguably within the zone of interests to be protected or

regulated by the statute or constitutional guarantee in question

APA grants standing to a person “aggrieved by agency action

within the meaning of a relevant statute” (§ 702)

This interest may reflect aesthetic, conservational and

recreational as well as economic values

o Where statutes are concerned, trend is toward enlargement of the class

of people who may protest administrative action

- Here, petitioners have standing

- Under Data Processing, anyone harmed is entitled to bring suit; however, it

departs from lower court cases in that it jettisons idea of “legal wrong”

179

o Following this case, courts broke down standing into two parts:

(1) Constitutional requirements

Showing of “injury in fact”

(2) Prudential requirements

Injury is arguably within the zone of interests protected

or regulated by the statute

180

Class Notes – Wednesday, November 22, 2000

Does interest at interest rise to level of constitutionally protected interest?

- (Life, liberty (Weinegar) and property (“new”))

o Justice Douglass argued that due process should be triggered whenever

there is an “important” right, which is more expansive

- This turns on positive law; must determine if it gives rise to a legally protected

entitlement

o It’s ironic b/c the less delegated statutes may more imply due process

concerns

What procedure is required if there is an interest?

- There will already be procedures involved, either by the APA or the organic

statute; so question is whether we have to do something more, additional

o Goldberg – pre-termination rather than post, oral rather than written

- Use Mathews balancing test

o Interest of beneficiary

o Cost-benefit test

Problem of current, added benefit of new procedures

Baseline is typically accuracy, but it’s not the only factor

o Interest of the government

Saves money in Goldberg not to have pre-termination hearing

Pragmatic assessment; can govt recoup benefits that were

improperly paid? And can govt pay back funds that should

have been paid before?

- Arnett v. Kennedy (not assigned)

o Sounds like Sindermann, it was at-will employment

o So were procedures adequate to protect the interest?

Ct says yes, but there’s a split in WHY they say yes

Rehnquist (and positivists) – adequate b/c they were

what the statute provided; due process can’t be read to

force agencies to adhere to regulations more stringent

181

than those already provided for by Congress; but

limited this holding to where statute was focused on

both substantive rights and also provided for procedure

to vindicate this substantive right (the “bitter with the

sweet” argument – Congress drafted statute so you have

property right, but you have to accept the procedures

given by Congress in the statute, which here don’t

provide for pre-termination hearing)

Other justices said these procedures work under the

Mathews balancing test

o Focus on Rehnquist (which is NOT the law)

Seems to flow naturally from Roth and Sindermann, that

positive law determines substatntive rights

Statute defines the substantive right, the property

interest, so why not also the procedures that vindicate

this right?

Sounds like Crowell case, when you can get into an Art

III court, says Garrett (private v. public rights)

Element of state being able to control use of proceeds

Robust Goldberg will force spending of money, takes

money from beneficiaries

Loudermill opinion shows most justices don’t agree with this

approach

Cts feel like they have ability to determine procedural

rights; it’s what they normally do

Need to use Mathews test

Easterbrook excerpt

Procedural rules are measure of how much the

substantive interest is worth, shows how much

legislature is willing to give up to vindicate the right

182

Unfair for courts to change the emphasis given to the

right by the legislature; changes balance worked out by

legislature

Would Goldberg case under Rehnquist method have reached a

different outcome?

If yes, then we have another trap for the unwary

legislator

Would Rehnquist have applied same rational to “old” property?

Doesn’t work as well, says Garrett

o What’s the argument against using the positivist approach in

procedure? (Rehnquist approach)

Congress is more focused on substantive rights, as are

interested groups; less salient are the procedures devised by

Congress – people don’t focus on these as much, and they have

less visibility

- Legislature can give property interest, but once they do, they can’t deprive

someone of due process to protect this interest

STANDING

- Who can get into court?

o Standing tries to identify parties who can get judicial review

- Constitutional aspects

o Art III

Cases and controversies

Interpreted to include standing requirement: need

adverse parties with personal interest in the matter in

order to have a “case and controversy”

- 1970’s, SCt broadened concept of standing; in 1990’s, SCt has tried to narrow

standing; Why this trend of restriction?

o (1) Art II is playing a role

183

Broad standing is seen as compromising executive power to

execute the law

So perhaps broadening of Executive power in various

agencies results in decrease in standing

Want to allow executive to control agency power

o (2) Increasing emphasis distinction between objects of regulation and

the beneficiaries

1970’s, easier for beneficiaries to get in

Now less likely for beneficiaries to get standing

See Scalia in Lujan

o Easy cases:

Govt sues to enforce rule, defendant has standing to object to

rule

Govt enforces new reg that forces people to change their

behavior; those forced to change behavior can sue

Govt refuses to grant license or a benefit; those denied can sue

o Hard cases:

Employees want to sue OSHA for failing to adopt asbestos regs

Trying to force govt to take action on 3rd party; they are

the beneficiaries

Law students sue govt over plan to change Grant Park

- 4 things we’ll discuss:

o Injury in fact

o Zone of interest

o Redressability

o Informational harms

Made important recently in Akins

- History

o Pre-1910: notion of cause of action determined who could sue

No constitutional element of standing was used

184

Currie says we should still look at whether we have a cause of

action, and not focus on standing

Today, standing is a separate inquiry than cause of action

o 1910-1930

Standing doctrine emerged

Helped keep court out of the regulatory state and empower

agencies

“Legal interests” were the important issue

Alabama Power Co

Injury to plaintiff is a competitive one

Ct says plaintiff is injured, but it’s not a legal injury; no

common law right to compete without these subsidies

Chicago Junction

Movement from common law standing into more

expansive standing

Sounds like same facts as Alabama, but here there is

standing

o Reason is b/c here there is the Interstate

Commerce Act which includes legal right to

equality of treatment; so statute has changed

standing

o Common law catalog is not exclusive, statutes

can provide standing too

Here, statute defines legal interest

But is the standing determination the same as

determining the merits? They ought to be different

determinations

o Here we can see that they are indeed different

determinations

This really isn’t a big jump from Alabama

Sanders Bros

185

This IS a big jump from Alabama, says Garrett

It’s a competitive injury

o Ct says Act isn’t designed to protect against this

o However, Act grants standing to “any other

person aggrieved or whose interests are

adversely affected”; the plaintiff was injured, so

he gets in

o You can get into court b/c you’ve been harmed

in a way that isn’t necessarily part of the

statutory scheme

APA § 702

Probably meant to just codify the earlier cases

Legal wrong can be common law, or statute

“Adversely affected” language picks up Sanders Bros

o 1970’s

Cts start to put a lot more meaning into § 702 than probably

was necessary given the earlier case law; it was a broadening

of standing

Data Processing

It was a unanimous opinion

Why the move to broader standing?

(1) Around this time that people become increasingly

concerned about capture

o Objects of agency will probably be captured by

the agencies and will be doing fine, so giving

ability to beneficiaries too is probably better

(2) Catching up to other areas of the regulatory state

o Other stuff wasn’t rooted in common law, like

‘new’ property for example

o Time of “rights-revolution”

New enthusiasm for regulatory state

186

(3) Belief that objectives of regulatory state can be

undermined as much by regulatory inaction as by

regulatory action

o Want third parties to force action

187

Homework: pp882-894, 896-901, 905-922

“Arguably within the Zone”

- Clarke v. Securities Industry Assoc

o Ps suing over bank laws (see p 884)

o Presumption in favor of judicial review of agency action, but it’s

overcome whenever the congressional intent to preclude judicial

review is fairly discernible in the statutory scheme; thus the essential

inquiry is whether Congress intended for a particular class of plaintiffs

to be relied upon to challenge agency disregard of the law

In cases where plaintiff is not itself subject of the contested

regulatory action, the zone of interest test denies a right of

review if P’s interests are so marginally related to or

inconsistent with the purposes implicit in the statute that it

cannot reasonably be assumed Congress intended to permit suit

This turns on congressional intent, and all indicators

helpful in discerning that intent must be weighed

Here, Congress rejected attempts to allow national

banks to branch without regard to state law

o Interest respondent asserts has plausible

relationship to policies underlying particular

statutes of National Bank Act, so he has

standing

- Air Courier Conference v. American Postal Workers

o Union lacked standing; although employment opportunities if postal

workers might be injured, they don’t fall into the zone of interest

protected by the Private Express Statutes, which was designed not to

protect postal workers’ jobs but to protect postal revenues from “cream

skimming” by competitors on highly profitable routes

- National Credit Union Admin v. First National Bank & Trust Co

188

o Ct says respondents’ interest in limiting the markets that federal credit

unions can serve is arguably within the zone of interests to be

protected by the particular statute

There does not need to an indication of congressional purpose

to benefit the would-be plaintiff; proper inquiry is simply

whether the interest sought to be protected by the complainant

is arguably within the zone of interests to be protected by the

statute

So don’t ask if Congress specifically intended to benefit

plaintiff; instead discern the interest arguably to be

protected by the statute, and then inquire whether the

plaintiff’s interests affected by the agency action in

question were among them

Here, there is standing; also, agency’s regulation was

impermissible under Chevron (see p890)

o O’Connor, DISSENTING

Respondents don’t fall within the zone of interest to be

protected by the statute

Simply requiring that litigant have an interest in enforcing the

relevant statute is not a test at all; should be looking at the

interests that the statute seeks to protect, and commercial

interests of respondent here don’t satisfy it

Neither the terms of the statute, nor the way which it

operates, nor the circumstances surrounding its

enactment, evince a congressional desire to legislate

against competition

What’s an “Injury in Fact”?

189

- Constitutional requirement of hearing only “cases or controversies” has three

parts:

o (1) Plaintiff must show injury in fact

o (2) P’s injury must be caused by the challenged governmental action

o (3) Must be possible for a victory on the merits to “redress” P’s injury

- Injury immediately after Data Processing:

o Sierra Club v. Morton

Sierra Club brought suit to stop building of ski resort in

Mineral King Valley

Sierra Club alleges injury will result from the changes to the

valley (increased people and pollution)

Ct says injury in fact test requires more than an injury to a

cognizable interest; it requires that the party seeking review by

himself among the injured

Here, the injury will be felt directly only by those who

use the area, and Sierra Club failed to allege that it or

its members would be affected in any way

Organization whose members are injured may represent

those members, but a mere “interest in a problem” is

not sufficient

Douglas, DISSENTING

Would grant standing to hikers, fishermen, or others

with a meaningful relation to a natural object

Blackmun, DISSENTING

Would allow expansion of standing concepts to enable

organization like Sierra Club to litigate environmental

issues

Residents of the Mineral King area are likely to benefit

economically from the resort, so probably won’t sue to

protect environment

- Injury in fact now

190

o Lujan v. Defenders of Wildlife

Suit under Endangered Species Act

When P is not himself the object of government action or

inaction standing is substantially more difficult to establish

Ct says affidavits contain no facts showing how damage to the

species will produce imminent injury to the two members of

the Defenders of Wildlife

Profession of an intent to return is simply not enough

P claiming injury from environmental damage must use

the area affected by the challenged activity and not an

area roughly in the vicinity of it

Also, even if injury was established, there was no

showing that it would be redressed by victory on the

merits

Ct of Appeals granted standing because of a procedural injury

in that the injury-in-fact had been satisfied by congressional

conferral upon all persons of an abstract, self-contained,

noninstrumental right to have the Executive observe the

procedures required by law

SCt says NO; P raising only a generally available

grievance about government (claiming only harm to his

and every citizen’s interest in proper application of the

Constitution and laws, and seeking relief that no more

directly and tangibly benefits him than it does the

public at large) does not state an Art III case or

controversy

Vindicating the public interest is a function of the

Congress and Executive

Otherwise it would permit Congress to transfer from

President to courts the Chief Executive’s most

191

important constitutional duty, to “take care that the laws

be faithfully executed”

Kennedy, Concurring in part

Won’t foreclose that a nexus theory could support a

claim in the future

Congress must identify the injury it seeks to vindicate

and relate the injury to the class of person entitled to

bring suit; the Endangered Species Act fails to do this

Blackmun, DISSENTING

Respondents should survive summary judgment

Whether these people are definitely going back (have

plane tickets already) to Sri Lanka should not affect the

outcome

Some breaches of procedural duties should indeed be

enough for standing

o Allen v. Wright

Parents of black school children brought suit against IRS,

contending IRS had not carried out its obligation to deny tax-

exempt status to private schools that discriminate on basis of

race

No standing b/c Ps didn’t show they had personally been

denied equal treatment by the conduct

It’s entirely speculative whether withdrawal of tax

exemption from any particular school would lead

school to change its policies

Idea of separation of powers counsels against

recognizing standing in a case brought, not to enforce

specific legal obligations whose violation works a

direct harm, but to seek a restructuring of the apparatus

established by the Executive Branch to fulfill its legal

duties

192

o Northeastern Florida Chapter of Associated General Contractors v.

Jacksonville

Suit claiming set-aside for minority businesses violated the

equal protection clause

When government erects barrier that makes it more difficult for

members of one group to obtain a benefit than members of

another group, member of the former group need not allege

that he would have obtained the benefit but for the barrier in

order to establish standing; the injury in fact in an equal

protection case of this variety is the denial of equal treatment

resulting from the imposition of the barrier, not the ultimate

inability to obtain the benefit (the injury-in-fact is the inability

to compete on an equal footing in the bidding process, not the

loss of a contract, so only must show that it is ready and able to

bid on contracts and that a discriminatory policy prevents it

from doing so on an equal basis)

Nexus, Redressability and Causation

- Linda R.S. v. Richard D.

o Denied standing on ground that it was unclear whether a decree in P’s

favor would remedy P’s injury; prospect that prosecution will result in

payment of child support can be termed only speculative

o Any injury must be a result of the defendant’s action AND likely to be

remedies by a decree in P’s favor (general rule)

- Simon v. Eastern Kentucky Welfare Rights Org.

o Debate over IRS modification of what hospitals qualified as

“charitable” organizations

o Injury at the hands of the hospital is insufficient by itself to establish a

case or controversy, b/c no hospital is a defendant

193

o Art III case or controversy requires that a federal court act only to

redress injury that can fairly be traced to the challenged action of the

defendant, and not injury that results from the independent action of

some third party not before the court

It’s purely speculative whether the denials of service specified

in the complaint fairly can be traced to petitioners’

encouragement or instead result from the decisions made by

the hospitals without regard to tax implications

o Stewart, concurring

Can’t imagine a case, at least outside First Amendment area,

where a person whose own tax liability was not affected ever

could have standing to litigate the federal tax liability of

someone else

o Brennan, concurring

Ps failed to allege that the ruling would affect them

He’s concerned about the holding be overly broad (see p920)

- Duke Power Co v. Carolina Environmental Study Group

o Act limits liability of privately owned nuclear plants in case of

accidents

o Ct found injury-in-fact b/c Ps suffered from the environmental and

aesthetic consequences of the thermal pollution of the two lakes in the

vicinity of the plants

Causal connection existed b/c without the Act the plants may

not have been built b/c of cost

Redressability found in that were the courts to declare the Act

unconstitutional, the plants would not be built and the lakes not

harmed

194

Class Notes – Monday, November 27, 2000

Standing, continued

Data Processing

- Foundation for modern standing doctrine

- What’s the plaintiff’s interest?

o Interest in avoiding competitive injury that would have resulted form

allowing banks to get involved

o Is this the kind of injury the statute is designed to protect?

Banking Act not interested in competition like Alabama

Junction cases and ICC; interest more on keeping a stable

banking system

o Ct says they are departing from old legal interest test, now using zone

of interest test, in which you need not show the statute was designed to

benefit the plaintiff

Ct thought old test was too closely tied to the merits

Is P arguably within the zone of interest?

Two-pronged test:

(1) Injury in fact must be demonstrated

o Differentiated from old test in that it’s separate

from the merits inquiry

(2) Zone of interest

o How does it differ from the legal interest test?

Ct not specific about how to satisfy this

test; if there’s plausibility to the

argument then you’re within the zone of

interest (is it plausible that competitors

were among the zone of interest to be

protected here?)

195

Do not go into the merits to determine

zone of interest; also, look at entire

statutory scheme, not just the statute in

question

This is easily satisfied for competitors

- Ct sites to Art III “cases and controversies” for constitutional aspect, and also

to prudential requirements

o Art III requirement must be satisfied

o Prudential concerns may lead court not to hear case even if it satisfies

Art III

o Congress can get around prudential doctrine, but not constitutional

doctrine

- Garrett says we can read this case as an interpretation of § 702 of APA

o Courts feel they have a lot of power to interpret § 702; this statute has

changed meaning as the notion of standing has changed

Clark v. SIA

- Discusses scope of zone of interest

o Was quite lenient test around this time

Test: in cases where plaintiff is not itself subject of the

contested regulatory action, the zone of interest test denies a

right of review if P’s interests are so marginally related to or

inconsistent with the purposes implicit in the statute that it

cannot reasonably be assumed Congress intended to permit suit

Garrett says there were almost no interests that would NOT fit

under this test (it was so broad and lenient)

We art starting to have a tightening of the zone of interest test, says Garrett

- Most modern cases address injury-in-fact and other constitutional

requirements, not the zone of interest test, which is a prudential requirement

- Air Courier v. American Postal Workers Union

196

o Union sues, says workers will be affected by allowing competition

o Ct says workers aren’t within zone of interest of particular statute

It was concerned with competition, but not particular

competitive interest

o Garrett says this has a different feel than Data Processing and Clark

However, this case was not conducted under § 702 like the

others

But this case is not really an outlier (see Immigration Reform

v. Reno, p894)

- 2 important notes:

o Zone of interest is becoming increasingly important

o Need for good lawyering, to link interest more tightly with clear

interest served by statute (see Air Traffic Controllers v. Pena, p895) –

this shows it’s becoming more like Sanders Bros; more emphasis on

how the lawyer frames the interests involved

- Garrett says Air Courier is the way the courts are heading

o Don’t think that National Credit Union cabins Air Courier though b/c

it’s a banking case, and generally banking cases allow for competitors

(like Data Processing and Clark)

- Zone of interest is prudential

o Congress can explicitly indicate how broad it should be, or how

narrow

See Block, p885, where the statute explicitly forbade

consumers from filing suit

Injury-in-fact

- Sierra Club v. Morton

o No question about zone of interest, but rather injury-in-fact

197

o No standing here, b/c Sierra Club failed to allege that any of its

members were actually using this land, so they had only an abstract

injury (not a concrete injury, as required by constitution)

o Sierra Club thought there should be different standards for groups like

itself, and they purposefully framed the suit so that it didn’t allege any

of its members had used the area; on remand, they changed the

complaint to include people who used it;

o Associational standing

Rule is there aren’t any different standards; association has

standing only if it’s members would have standing under the

traditional test; requirements of associational standing:

(1) Members must have standing in their own right

(2) Interest group seeks to protect is germane to its

purposes

(3) Litigation doesn’t require individual members in

order for there to be relief

Blackmun argues that associations should have different

standing requirements

- Garrett says injury-in-fact is not really the limit, because many times those

won’t injuries can’t sue; we want a legally cognizable injury, not an injury-in-

fact

o Justifications for the restrictive standing doctrine:

Want real “cases and controversies”

Want real adversarial situation who have something at stake,

and standing helps ensure this

Decision that courts aren’t the right place for this type of

dispute; legislation is the way to go to protect environment

Bi-Metallic and Londoner – political remedies are

available to members of extremely large groups

This is what happened in Allen v. Wright, says Garrett

198

o Racist schools still get tax-exemption, so black

parents bring suit, and they’re denied standing

But in many cases these people have already been to the

legislature, and problem is more in how the Executive

enforces the law

o Scalia says once you have statute passed,

Executive enforces it with limited resources; we

should give leeway to executive branch in its

decisions to enforce statutes; having tighter

standing requirements gives executive more

power to enforce (it’s an Art II argument)

o Response to this argument: Executive decision-

making still must be reviewed; sometimes

Congress allows for judicial involvement and

that courts should respect what Congress has

decided is the right level of judicial involvement

o Justification for injury-in-fact

It’s a constitutional requirement

This turns a lot on what is legally cognizable, and

statutes can be drafted so as to create a legally

cognizable interest

Redressability and Causation

- Also constitutional requirements, along with injury-in-fact

o Redressability and causation are separate issues however; they are

often linked, but don’t necessarily need to be linked

- Linda R.S. v. Richard D.

o There is injury-in-fact, but is it redressable? What happens if she wins

suit? We don’t know if she’ll get the money or not

Incarceration of the father may not equal payment

- Allen v. Wright

199

o Public schools suffered parents said; but Ct said no way to determine if

denying the exemption will in any way affect the public schools

- Two things two notice

o (1) Where there is no redressability, it usually turns on how the issues

are framed by lawyer; the longer the chain between the two issues,

harder to prove redressability

o Saying there is no redressability is also saying that you doubt the

government’s ability to redress the problem (???)

200

Homework: pp935-47, 825-41, 855-58

Federal Election Commission v. Akins

- Suit over whether AIPAC (an Israeli group) should be considered a political

committee by the FEC and hence be forced to make disclosures about

membership and who they contribute to

o FEC ruled no, and the suit is being brought by a group of voters who

often are opposed to the views of the AIPAC

- Ct says the respondents have standing

o Given the language of the statute and the nature of the injury,

concluded that Congress, intending to protect voters such as

respondents from suffering the kind of injury here at issue, intended to

authorize this kind of suit, so respondents satisfy prudential standing

requirements

o Respondents have also suffered a genuine injury in fact in their

inability to obtain information

- Richardson case is distinguishable because here statute seeks to protect

individuals such as respondent from the kind of harm they have suffered

- Fact that interest is widely shared does not necessarily mean it’s abstract

o Here, the informational injury at issue, directly related to voting, is

sufficiently concrete and specific that the fact that it is widely shared

does not deprive Congress of constitutional power to authorize its

vindication in the federal courts

- Also, harm is fairly traceable to the FEC’s decision (causation), and injury can

be redressed

- Scalia, DISSENTING

o These provisions reduce the role of the Executive branch and expands

that of the judiciary

Respondents complain not about the refusal to provide

information, but rather the refusal to commence an agency

enforcement action against a third party

201

Allowance of this suit would give judiciary primary

responsibility to see that the laws are faithfully executed

o Injury must be particularized (injury must affect the plaintiff in a

personal and individual way) and not undifferentiated (common to all

members of the public)

- Procedural injury – agency’s failure to follow the required procedures

- In several of the post 1980s standing cases, SCt has referred not only to article

III but also article II, especially in Akins, Allen v Wright, and Lujan

- In several cases, court has explicitly or implicitly drawn distinction between

the objects of regulation (those against whom an agency is proceeding) and

the beneficiaries (those for whom a statute was created)

o Distinction is most explicit in Lujan, where SCt said that an object

ordinarily has standing, but much more is needed for standing when

the asserted injury arises from govt’s allegedly unlawful regulation of

someone else

Reviewability

- Presumption of reviewability and the New Deal

o Generally a narrow approach toward reviewability early

Decatur v. Paulding (1840)

Interference of the courts with the performance of the

ordinary duties of the executive departments of the

government would be productive of nothing but

mischief

American School of Magnetic Healing v. McAnnulty

Claim of complainants that the mail-order business here

was a fraud cannot be proved as fact

Postmaster General’s determination that those admitted

facts do authorize his action is a clear mistake of law,

202

and the courts must have power to grant relief because

he is violating the property rights of others

o There is no adequate remedy at law, so an

injunction to prohibit the further withholding of

the mail from complainants is the only adequate

remedy

Switchmen’s Union v. National Mediation Board

Two groups disagreed about how yardmen should be

classified for purposes of voting in a union election

SCt says DCt did not have power to review the action

of the National Mediation Board

Where Congress has not expressly authorized judicial

review, the type of problems involved and the history of

the statute in question become highly relevant in

determining if judicial review may nonetheless be

supplied

o The Railway Labor Act was made to strengthen

the process of collective bargaining

o Where Congress took such great pains to protect

the Board in its handling of an explosive

situation, can’t help but believe that Congress

would have been explicit if it wanted judiciary

involved

o Intent was to have dispute reach its last point

when administrative finding was made, not drag

on in courts

o Congress specifically provided for judicial

review of two types in other areas of the Act,

but omitted it here, so they clearly drew a line of

distinction

203

o Switchmen’s reflects New Deal’s enthusiasm for administrative

autonomy

Despite a discernible pro-Switchmen’s trend, attitude

expressed in McAnnulty more often prevails today (i.e.,

recognition of a presumption of reviewability)

- The Modern Presumption

o Abbott Laboratories v. Gardner

Judicial review will not be cut off unless there is a persuasive

reason to believe that was purpose of Congress

Rejected Switchmen’s logic that selective review provisions in

an organic statute impliedly preclude review under general

jurisdictional statutes

o Debates over the strength of the presumption of review can be seen as

debates over whether judicial involvement is (a) an indispensable

safeguard against administrative illegality or arbitrariness, or instead

(b) a way of producing delay and allowing the displacement of

administrative judgment by judicial judgment

- Two Key Exceptions

o Abbott Labs notes that the general rule of reviewability has two

exemptions codified in APA

The APA’s review provisions do NOT apply to the extent that:

(1) Statutes preclude judicial review, or

(2) Agency action is committed to agency discretion by

law

Thus, the sort of claim you are making will have much to do

with whether courts review your case

- Preclusion by statute

o APA 701(a)(1) says judicial review provisions do not apply to the

extent that statutes preclude review

204

Suggests that review of the legality of govt action may be made

unavailable b/c statute other than the APA provides that review

is not to be had

But courts start with presumption of reviewability, and implicit

preclusion is rare

Abbott Labs – only upon a showing of clear and

convincing evidence of a contrary legislative intent

should the courts restrict access to judicial review

Occasionally, courts do read in a preclusion though:

o Block v. Community Nutrition Institute

Whether statute precludes judicial review is determined not

only from express language, but also from structure of the

statutory scheme, its objectives, its legislative history, and

nature of the administrative action involved

Here, no provision relating to review

Statutory scheme however makes clear Congress’

intention to limit the classes entitled to participate;

structure of Act indicates Congress intended only

producers and handlers, and not consumers, to ensure

that the statutory objectives would be met

o Handlers have same interests as consumers

Presumption favoring judicial review can be overcome

whenever the congressional intent to preclude judicial review is

fairly discernible in the statutory scheme

o Bowen v. Michigan Academy of Family Physicians

Congress ordinarily intends there to be judicial review

To preclude judicial review, statute must upon its face

give clear and convincing evidence of an intent to

withhold it; mere failure to provide specially by statute

for review is no evidence of intent to withhold review

205

Here, governing statutory provisions and legislative history

show Congress intended to bar judicial review only of

determinations of the amount of benefits to be awarded under

part B, but those matters not included are not impliedly

insulated from review

Uses expresio unius est exclusio alterius (to express one thing

is to exclude another)

- Webster v. Doe

o Case over whether termination decisions of Director of CIA under §

102(c) of the NSA are judicially reviewable

Statute says he can terminate employee “whenever he shall

deem it necessary”

Ct said this standard exudes deference to the Director,

and appears to foreclose application of meaningful

judicial standard of review

So too does the overall structure of the National

Security Act (NSA)

Thus, language and structure of § 102(c) indicates that

Congress meant to commit individual employee discharges to

the Director’s discretion, and §701(a)(2) of APA precludes

judicial review of these decisions

- Lincoln v. Vigil

o No review b/c allocation of funds from a lump-sum appropriation is an

administrative decision traditionally regarded as committed to agency

discretion; this is to give agency capacity to adapt to changing

circumstances and meet its statutory responsibilities in what it see as

the most effective or desirable way

206

Class Notes – Tuesday, November 28, 2000

Standing, continued

Varitey of requirements

- Constitutional

o Injury-in-fact

Concrete, actual and imminent

Can’t be abstract

Lujan – had to have plane ticket to show injury was imminent

o Causation

Injury to P must be caused by D

o Redressability

Lujan – look at chain of causation

Good lawyering can change this – make chain shorter, so what

you’re asking for is directly related to and will directly redress

the injury

Associated General Contractors – didn’t argue that they

aren’t getting contracts, but that they aren’t getting

equal treatment

R.S. – maybe they should have argued mother wasn’t

getting equal treatment compared to married mothers

- Prudential

o Arguably w/in zone of interest

Air Courier – test is becoming stricter

o Whether injury is widely generalized

Abstract injuries are usually widely generalized, but Akins

indicates that this isn’t always the case

Idea is that injuries harming large groups don’t need to go to

courts, can go to legislature

207

Scalia in Lujan says this is a constitutional requirement, but in

Akins they say it’s constitutional

This is important b/c Congress cannot get around

constitutional requirements, but can get around or

change prudential requirements

o Congress can exclude people w/in the zone of

interest, but can’t include someone who doesn’t

have an injury-in-fact

Informational Cases

- Look at Kennedy’s concurrence in Lujan for hint as to what court would do

with these informational cases

o He says problem is that majority engrafts common law notions onto

the administrative state

o Doesn’t rule out possibility that Congress could draft statute that

would make this injury concrete

o 2 points he makes:

(1) Fact that a lot of people share injury doesn’t mean it can’t

be concrete enough to be an injury-in-fact

(2) Says flaw is in how Congress drafted the statute

o These show that standing may indeed be granted in later cases like

Akins despite the holding in Lujan

Solutions after Lujan to get around the holding:

Adopt the nexus argument by statute

Give people property rights in animals

Give people bounties for bringing successful suits,

which would create a concrete interest

But Scalia in Lujan doesn’t say injury from procedural rights

will never be enough for standing, just that it must be a

concrete injury (see FN23, p908)

- Steel Company v. Citizens for a Better Environment

208

o Suit was continued even after Steel Co had filed their reports

Lower courts said statutes didn’t provide for cause of action

after reports were filed

o Case turns on redressability

Can’t get declaratory judgment, b/c company admitted they

were late

Can’t get injunction, b/c it’s an abstract injury

Just because there’s cost in litigation, can’t have

standing; bounty is something given by Congress, and

can provide standing, but the costs simply associated

with litigation don’t provide for standing

So no standing; but majority says it would have been different

case if statute had given a bounty

- There is no guarantee that your grievance will be redressed though, is there? If

they look at another environmental report, they can still go about doing the

same things they did before

o Akins says yes, you still have a redressable injury despite this

2 arguments that come out of this:

Injury-in-fact isn’t what happens later, but whether the

proper procedures were followed from the beginning;

the injury is not following the proper procedures, and it

can be redressed by going through the procedures

properly; OR

We require these procedures b/c we think they’ll have

an impact on the ultimate decision

o This is in tension with Allen v. Wright, where

court said there isn’t enough evidence that

taking away benefits would change the results

Garrett says this was incorrectly decided,

that we should think when tax deduction

is taken away things will change

209

- Akins

o Most important standing case in recent history

Clarifies that problems of generalized interests is a prudential

concern, not constitutional

o Question is, does denial of information give someone standing?

Very important for things like the Freedom of Information Act;

after Lujan, there was concern that there was no standing

Court says no prudential concerns here b/c Congress has told

us they want people to be able to sue who have these

generalized grievances (from reading of FECA)

But what about injury-in-fact?

Ct says there is a concrete harm suffered by these

people as voters when they can’t get this information

o Information would help them determine who

they want to vote for and support

Statute gives voters the interest here, creates an injury-

in-fact where there wasn’t one before (just like

Kennedy said in Lujan concurrence)

o Discusses Richardson case where plaintiff wanted information about

CIA spending

No standing in this case, said it was abstract injury

Garrett says without FECA, same result would have been

reached here; but FECA gave the voters the right to sue here

o Scalia is outraged in dissent; makes Bi-Metallic and Londoner

arguments

o This case makes informational standing much easier

But to make sure, Congress should include bounties in the

statute; otherwise, once agency gives the information, you have

no suit (like in Steel Co)

o Has this case opened the door for generalized citizen suits?

Garrett says NO:

210

It was important that they were seeking information as

voters, in a special capacity

There are going to be redressability issues in other

similar cases, and these can’t be fixed other than by

giving the plaintiff a bounty (which isn’t in many

statutes)

May still have prudential problems too, as generalized

interests

This may be why zone of interest test is tightening

If Akins makes injury-in-fact much broader, there’s

broader standing under constitutional requirements; so

to cut back on standing, they’ll used the procedural

requirements: general grievances and zone of interest

arguments (like Air Courier)

Other Justiciabilty doctrines

- Reviewability

o McAnnulty

Whether there was fraud sufficient for Postmaster General to

deny mail delivery

Here, no APA in effect (b/c 1902 case)

Could have used common law approach to justify

review – letters are property, so should be reviewable

But language on 828 suggests courts have real role in

making sure agency people don’t act arbitrarily

This case inaugurates the presumption of reviewability

Overton Park is the modern case which also supports

this presumption of reviewability

o Where does this presumption come from?

APA § 701 – broad review, with only

two exceptions

211

Other statutory language in APA

supports this too

Legislative history also – see p837 for

excerpts

Constitution provides strong

presumption too

Crowell v. Benson

Madison v. Marbury

Art III

o Exceptions in § 701

Talking about review of claims under APA

If claim is a constitutional one, then there is almost

unrebuttable presumption of reviewability

Exception number one: when statute precludes review

Straight-forward: statute explicitly says there is no

review

o But this is very rare, and it MUST be explicitly

said in the statute

o And can’t reason from silence that there’s no

review – silence or unclarity means there is

review

Switchmen’s Union

o Look at this case as an outlier; there was a lot of

distrust of courts in labor area at this time

212

Homework: pp849-55, 955-63, 968-73

Heckler v. Chaney

- Presents question of the extent to which a decision of an administrative

agency to exercise its “discretion” not to undertake certain enforcement

actions is subject to judicial review under the APA

o Secretary’s decision does not fall under the exception for action

“committed to agency discretion” (§701(a)(2))

Legislative history of APA shows that it’s applicable only

where statutes are drawn in such broad terms that in a given

case there is no law to apply

No review if statute is drawn so that a court would have no

meaningful standard against which to judge the agency’s

exercise of discretion; in such a case, the statute can be taken to

have committed the decision-making to the agency’s judgment

absolutely

o Refusals to take enforcement steps have a presumption that judicial

review is not available

Agency decision not to enforce often involves a complicated

balancing of a number of factors peculiarly within its expertise

Refusal to act generally means agency does not exercise

coercive power over individual’s liberty or property rights

Presumption may be rebutted where substantive statute has

provided guidelines for agency to follow in exercising its

enforcement powers

o Congress may limit an agency’s exercise of enforcement power

- Marshall, concurring

o Argues that refusals to enforce are reviewable in the absence of a clear

and convincing congressional intent to the contrary, but that such

refusals warrant deference when there is nothing to suggest that an

agency with enforcement discretion has abused that discretion

213

Ripeness

Abbott Laboratories v. Gardner

- FDA issued regulations requiring the established name of a drug to

accompany each appearance of the drug’s proprietary name in all labels and

advertisements

o Suit brought against FDA said this exceeded FDA’s authority

- First question is whether Congress intended to forbid pre-enforcement review

of this sort by the Food, Drug and Cosmetic Act

o Only upon a showing of clear and convincing evidence of a contrary

legislative intent should the courts restrict access to judicial review

o Mere fact that some acts are made reviewable should not suffice to

support an implication of exclusion as to others, and nothing in the Act

itself precludes it

- Court also looks at ripeness issue

o Rationale is to prevent courts, through avoidance of premature

adjudication, from entangling themselves in abstract disagreements

over administrative policies, and also to protect the agencies from

judicial interference until an administrative decision has been

formalized and its effects felt in a concrete way

It’s a twofold aspect requiring courts to evaluate both the

fitness of the issues for judicial decisions and the hardship to

the parties of withholding court consideration

As for fitness, court says this issue is appropriate for

resolution now

o All parties agree the issue is purely a legal one

o Regulations are a final agency action, as defined

in the APA

Impact of regulations on petitioners is sufficiently

direct and immediate as to render the issue appropriate

214

for judicial review at this stage; it would require an

immediate and significant change in plaintiffs’ conduct

with serious penalties attached to noncompliance

Toilet Goods Assn v. Gardner

- Ct concluded issues on access regulations were not ripe, even though

regulation represented FDA’s considered view and also presented a pure issue

of law under the statute:

o Regulation serves notice that commissioner MAY order inspections,

and further certification MAY be refused to those who decline to

permit an inspection

o Ct says judicial appraisal is surer in the context of a specific

application of this regulation than could be the case in the framework

of the generalized challenge made here

Gardner v. Toilet Goods Assn

- Ct concluded issues definitional regulations were indeed ripe:

o Regulations represented FDA’s considered view, validity involved a

pure question of statutory construction, and issuance of the regulations

placed manufacturers in dilemma of acquiescing in the regulations at

substantial expense, or defying the regulations at risk of incurring

serious sanctions

- Before Abbott Labs, courts typically reviewed lawfulness of an agency’s rule

when agency enforced the rule, not when agency promulgated it

o After though, courts typically find agency rules ripe for review when it

is promulgated

o Congress has in the past 50 years enacted many statutes authorizing

agencies to use rulemaking to implement programs that provide

specifically for judicial review of rules on promulgation

215

- Arguments for preenforcement review of regulations:

o Costs of compliance with invalid rules are saved

o Uncertainty about legality of regs are more quickly removed

o All affected parties receive similar treatment

o Regulators are held strictly accountable

- Arguments against:

o Tends to promote manufacturer incentives for noncompliance

o See p962 for more

- Pierce argues that preenforcement review has contributed to ossification of the

rulemaking process by promoting hard look judicial review and giving

agencies and other interested industries incentives to load the rulemaking with

massive analysis and data about the cost, feasibility, and appropriateness of a

rule whose validity is contested and resolved before it is ever applied

National Automatic Laundry & Cleaning Council v. Shultz (D.C. Circuit)

- NALCC brought suit against secretary of labor contending his interpretation

that their employees were subject to certain provisions of the Fair Labor

Standards Act was erroneous

- Judicial review at too early a stage may remove the process of agency

refinement, including give-and-take with the regulated interests, which is an

important part of the life of the agency process

o Affidavit by the agency head that a matter is still under meaningful

refinement and development should negative finality/ripeness

- NRDC v. EPA (D.C. Cir)

o Test is whether the agency views its deliberative process as

sufficiently final to demand compliance with its announced position

o Absence of a formal statement of the agency’s position is not

dispositive

- Reno v. Catholic Social Services

o Claims found not to be ripe

216

Individuals would have to file applications and challenge their

denial by the INS before obtaining judicial review

o Rule is that would-be beneficiaries cannot challenge benefit-conferring

regulations until they apply for benefits

217

Class Notes – Wednesday, November 29, 2000

Presumption of Reviewability

- Comes from older cases like McAnnulty, and legislative history of APA

- Exceptions in APA:

o (1) Statute denies reviewability

But strong presumption for constitutional issues

Statute must be explicit; silence can’t be extrapolated to mean

no review

Switchmen’s Union – Court said review was denied in statute

because of it’s silence; Garrett says this is bad law in this

sense; but where court got denial from it’s reading of

legislative history, this is more debatable

Block v. Community Nutrition Institute

Listing certain groups for review meant that groups left

out did NOT have review

It was important that some groups who could get

review would be likely to raise issues that consumers

would have brought up

Line-Item Veto Act

President not covered by APA, his actions are never

within the coverage of the APA; but did Act preclude

review of President’s actions?

Garrett says there could have been review, but it was

not clear

o (2) Agency action is committed to agency discretion by law

This is odd; three puzzles in particular:

(a) How is it different from the first exception?

o Canon of construction that don’t want to

interpret two statutes as saying the same thing;

assume that they didn’t repeat themselves

218

o Webster v. Doe

Is discretion so unbounded that no

review is possible?

Looking more for a sense that there is no

standard to apply in assessing agency’s

actions

(b) How can it be that we can’t review something here?

o Don’t we always do this when we apply an

abuse of discretion test?

(c) If something is so broad that there are no

meaningful standards to apply, doesn’t that necessarily

violate the delegation principle?

o Calls for intelligible standards, which apparently

are lacking here

Overton Park

Marshall says this is a very narrow exception; only

applies if there is no law to apply; here there is

definitely law to apply

6 characteristics where courts tend to find that no law applies:

(a) Statute is ambiguous about whether there is any

ability for courts to review at all; seems that Congress

didn’t anticipate review would be needed

(b) Tend to implicate decisions where there would be

tons of decisions to be reviewed by courts

(c) Areas where there are very imprecise standards

given for agency action

(d) Issue involved are extremely complex and difficult

for courts to rule on; this is least important

characteristic

(e) Tend to deal with managerial decisions, or with

foreign relations/military decisions/national security

219

o Managerial – statute allows administrator to

give bonuses; usually courts won’t get involved

here

o National security, military, foreign relations

Webster v. Doe

- CIA fires gay employee; statute allows director to terminate employee

whenever necessary or advisable to interests of US

- Was this decision arbitrary and capricious (under the APA)?

- Also made a Goldberg claim, that he had a property claim in his employment

- Said it violated his privacy right and right to equal protection (substantive

rights)

- Ct says there is judicial review for the constitutional questions, but not for

APA; this was an agency action committed to discretion by law

- Rehnquist says there are no meaningful standards to review; it’s the director’s

belief that counts, not the facts; in other words, no law to apply

o Scalia disagrees, says just because it’s broad discretion doesn’t mean

that there are not things still outside one’s discretion

There can still be review, the broad discretion just dictates the

review

Says there are issues that have always been sheltered from

judicial review, such as the hiring and firing of spies, like here;

this is vested entirely within Executive Branch

“By law” means things outside the realm of judicial review,

like political questions; this is also why military/national

security/foreign relations is involved, b/c these are the areas

courts rarely get involved in

Garrett says Scalia is correct; just because it’s a broad

discretion doesn’t mean there aren’t things outside that

discretion

Also, Scalia’s interpretation gives the second exception

a much different meaning than the first exception

220

(f) Refusal to act

Heckler v. Chaney

- Agency decision not to act is not something courts are apt to review

o This is an arguable issue, b/c a decision not to act is still a value

judgment and may not be in accordance with a statute

o But presumption is against review in these cases nonetheless

- APA however defines failure to act as still an action by agency

- Ct says inaction is an agency action committed to agency discretion by law

- FDA here gave reasons for it’s decision not to act

o Rehnquist ignores them, says Ct can’t review the decision of the FDA

2 strains of his argument:

Art II issue – agency decides how to allocate its

resources, just as how prosecutors decide who to

prosecute, and the court shouldn’t play a role in this

allocation; Executive has power “to take care that the

law are faithfully executed”

Should be more involved in decisions to regulate,

which implicate property interests and liberty interests;

inaction is just leaving everyone alone

o Marshall takes a better approach says Garrett

Says they can review it, but there has been no abuse of

discretion so it’s ok

This is consistent with his Overton Park discussion; says the

exception in APA doesn’t apply here

Marshall says there are limited resources, but we can still

review using abuse of discretion standards

221

He’s very concerned about the second strain of Rehnquist;

decision not to act can be just as upsetting as decision to act;

failure to act can have profound consequences

- How broad a holding is this?

o It’s a one-shot enforcement action

o FN13 on p853 seems to limit decision to facts of this case

o Garrett says presumption of reviewability can still be applied to

wholesale inaction, despite this case; this is a narrow holding

D.C. Circuit has agreed with this

So if you have standing, and it’s reviewable (not under the two exceptions of APA), next

question is, is the controversy RIPE?

- Is it hypothetical, too abstract, does it make sense for court to get involved

now; these are the issues involved in ripeness

- Abbott Labs

o Issue over pre-enforcement review of a rule

FDA says rule isn’t effective, so court shouldn’t be involved

o Court goes through three steps:

(1) Have presumption of reviewability, but look to statute to

see if there’s any explicit denial of review

Here, there was nothing denying OR permitting review

(2) Look to APA, which is the default standard

§ 704

o Review for final agency actions (which includes

promulgation of rules) for which there are no

other adequate remedies

Garrett says this should have been the end of the case

o APA says there is review here, so they should

stop

o But court went one step further – ripeness

222

Garrett says it’s inappropriate to apply

ripeness doctrine to APA cases

(3) Look at prudential and equitable doctrine of ripeness

This can overcome the first two steps

o Two factors in ripeness test:

Fitness of issue for judicial resolution

It is a purely legal question, or does it term on facts that

we don’t have now

o Here, it’s a question of interpretation of the

statute, so it’s a question of law that doesn’t

need any further facts

What’s the harm to the parties in delay

Look at everyone’s interests

o The regulated, the government and the public

o Sucks for the drug companies, b/c they’ll have

to spend lots of money to comply

Fortas, dissenting on p960, addressed this issue

o He says this cuts off the administrative process

of give and take

o Abbott Labs is the norm; pre-enforcement review is common

223

Homework: pp976-988

Exhaustion

Myers v. Bethlehem Shipbuilding Corp

- Sct says DCt was without power to enjoin the NLRB from holding hearing

o Otherwise the DCt in effect would substitute itself as the tribunal to

hear and determine what Congress declared the Board exclusively

should hear and determine in the first instance

o Long settled rule of judicial administration that no one is entitled to

judicial relief for a supposed or threatened injury until the prescribed

administrative remedy has been exhausted

o Also, NLR Act vests exclusive jurisdiction in the courts of appeals to

review board decisions, so a DCt action to enjoin NLRB proceedings

is thereby precluded by the Act

o Basically, the relevant statute provided that certain administrative

procedures shall be exclusive

Interlocutory Review

- A litigant who has presented one claim to an agency and had it rejected but

has other claims pending may assert that an immediate ruling in her favor as

the decided claim will moot the entire controversy and relieve her of the

burden of participating in further proceedings

- Review may nonetheless be refused for reasons the traditionally apply where

interlocutory review by appellate courts:

o Piecemeal appeals will delay trial court resolution of the case

o In their absence, a trial court may reach a decision on other grounds in

favor of the person seeking interlocutory review, eliminating the need

for any review

FTC v. Standard Oil Co of CA

224

- SCt held commission’s denial of the motion to dismiss was not “final agency

action” and was accordingly not subject to judicial review

o Socal does not contend that the issuance of the complaint had any legal

or practical effect, except to impose the burden of answering the

charges

o Effect of review sought by Socal is likely to be interference with the

proper functioning of the agency and a burden for the courts

Summary of relevant considerations for requiring exhaustion:

- From court’s perspective, premature review involves judges deciding issues

not sufficiently concrete, and can involve then in deciding issues

unnecessarily, wasting time and effort

- From agency’s perspective, can deprive agency of opportunity to refine, revise

or clarify the particular rule, and can deprive of opportunity to resolve the

underlying controversy on other grounds

Exceptions to the “rule” that administrative procedures with respect to remaining claims

must first be exhausted before any review is available:

- Social security claims

o Exemplified by Mathews v. Eldridge

o Judge Becker argues the following requirements must be met:

Unexhausted claim must be at least substantially collateral to

the question whether plaintiffs should continue to receive

disability benefits

Agency must have taken a fixed and final position on the

unexhausted claim, thereby rendering exhaustion futile

Requiring exhaustion must impose substantial hardship on, or

cause irreparable harm to, the plaintiffs

Mathews met all three requirements

- Issues of jurisdiction and procedure

225

o Courts, in waiving exhaustion, sometimes stress the jurisdictional

nature of the claim at issue

o SCt has said that immediate review is available when the agency

plainly exceeds its statutory or constitutional authority

- Pragmatism

o When courts don’t require exhaustion, they typically refer to factors

such as:

Is the agency’s mind closed in respect to this issue?

Is the question legal in nature, that is, is the agency

comparatively less expert in answering it than the court?

Is the plaintiff likely to suffer serious injury in the absence of

prompt judicial intervention?

Waiver of Unpresented or Unexhausted Claims

- Ct of appeals typically will not address as issue that the appellant did not raise

in the Dct below

o Exceptions will be made in the interest of justice, to prevent serious

hardship or injustice

- Similar considerations have led courts to refuse to hear issues that the parties

did not raise or that they did not exhaust before administrative agencies

- McKart v. United States

o SCt rejected govt’s claim that petitioner was precluded from raising

defense of erroneous classification in his criminal prosecution b/c he

had failed to exhaust administrative remedies on the reclassification

issue

o Primary purpose of exhaustion doctrine is avoidance of premature

interruption of administrative process

Judicial review may be hindered by failure of litigant to allow

agency to make a factual record, or to exercise its discretion or

apply its expertise

Practical notions of judicial efficiency come into play as well

226

Possible that frequent and deliberate flouting of administrative

processes could weaken the effectiveness of an agency by

encouraging people to ignore its procedures

o Question is whether governmental interest here outweighs burden on

petitioner – Ct says NO

Presence of criminal sanction will ensure that the great

majority of registrants will exhaust all administrative remedies

before deciding to continue the challenge

227

Class Notes – Thursday, November 30, 2000

Timing doctrines

- Abbott Labs

o General rule that you can get judicial review of regulation before it has

been enforced

o They are final orders

- Cts have also engrafted ripeness doctrine, and they look at 2 factors:

o Suitability for review

o Hardship through further delay on litigants

- Toilet Goods

o Definitely a final action, and definitely standing, but not ripeness

o Ct had problem with suitability requirement

A lot of things have to happen before we worry about

enforcement; too many interim steps

Garrett says this is weak argument; question is a legal one, and

don’t really need more facts to determine outcome

o Ct also looked at hardship

Didn’t think it was a huge penalty

Garrett says suspension could indeed be big problem

- Cts shouldn’t apply ripeness doctrine to APA cases

o Duffy argument:

Once APA enacted, that became the rule for timing

APA only requires standing under 702, a final agency

action, and one where there is not as adequate remedy

at law

Finality is a jurisdictional aspect (it’s required in the

APA), but ripeness is a prudential concern

o NALCC v. Shultz

Is this a final agency action?

228

Must have something that imposes obligation, denies a

right, fixes a legal relationship, has a binding effect

Press releases don’t usually pass this test

Here, letter was signed by head of agency; no indication

of tentativeness, so seemed like a final agency action

- Doctrine of exhaustion

o 3 phases:

(1) Agency hasn’t acted at all and citizen goes directly to court

(2) Agency has entered preliminary order and citizen wants

interlocutory review

Socal

Gone through administrative procedures, didn’t make

particular argument, and now trying to make argument in court

McKart

o Ripeness vs Exhaustion

Ripeness: question is, is agency supposed to do more before

they go to court; are there more steps in the agency process

Exhaustion: citizen is supposed to do something more, not the

agency

o Agency should have first crack at things, should have chance to

remedy it itself

Justifications given in McKart case

Want agency to use its expertise

Want agency to have ability to come up with consistent

policies

Will reduce decision costs if agency can deal with it

Autonomy

o Delegation was from Congress to agency, so

should respect this delegation

o Myers v. Bethlehem

Shows exhaustion was doctrine from pre-APA times

229

o Because it’s a judicial doctrine, has been flexible and pragmatic

Exhaustion hasn’t been required where pragmatically it doesn’t

make any sense:

If requiring further proceedings will cause injury b/c of

delay

o Myers deals with what we mean by injury

Expense and inconveneice of litigation

does not equal harm that can get you

around exhaustion

Just like standing – costs of litigation

can’t give you standing

Where case falls clearly outside the jurisdiction of the

agency

o Extremely rare situation

Don’t have to exhaust procedures that are

constitutionally deficient

o Eldridge v. Mathews

o Can go directly to court to allege

unconstitutionality

Agencies can waive exhaustion, agree to go to court

early

o § 704 of APA has explicit exhaustion provision

What Duffy argues, and Darby v. Cisneros says, is that courts

can only require additional procedures if statute requires it, or

if agency by rule has required additional procedures (and this is

what § 704 says)

If all you have are possible additional procedures, not

mandatory ones, it doesn’t necessarily undermine the finality

of a decision

So courts should abandon ripeness concerns as well and only

apply § 702-04 (says Duffy)

230

o Socal decision

Second phase of exhaustion – can you take interlocutory

appeals

Issuance of complaint isn’t a final action says court

No interlocutory appeal here (basically means no

review of this decision at all)

Socal has to go forward with the adjudication

o Third phase

McKart and waiver

Why no waiver here, that he didn’t fully litigate before

in administrative proceeding?

o It’s a criminal proceeding

o No facts in dispute, so bigger record from below

wouldn’t help much

o Allowing defense here will not encourage

people to do the same thing later on b/c the

penalties are so severe

Review for Exam:

- Reviewable case?

o Standing (APA allows for wider standing than regular courts)

Constitutional

Injury in fact

Causation

redressability

Prudential

Widely generalized interest usually no good, but

Congress can say yes

231

Zone of interest

o Presumption of reviewability

Overton Park

Exceptions

Statute denies review

Given to agency discretion by law

o Ripeness/Finality

Abbot Labs test

o Exhaustion

If it’s APA case, only those mandated by statute or agency

rules and regulations

- Constitutional Problems

o Delegation

Schecter – no intelligible guidelines, or delegation to purely

private entities, or will be struck down (doesn’t happen often)

Great deal to do with statutory interpretation

Amalgamated Meat Cutters

o Ct has aggressive interpretation to protect

delegation concerns

ATA case

Requires agency ex-anti to announce rules to constrain

their own discretion

Gets at problem of arbitrariness, to see if agency has

acted arbitrary or capricious

o Chadha issues

Separation of power problems other than delegation

Bowsher

Question of agency overreaching

Question of independent agencies

Line-Item Veto Case

o Article III

232

Private rights - must be some judicial review of the process

- Has agency adhered to law, interpreted its statute correctly?

o Skidmore

Non-legislative rules

Cts somewhat deferential

o Chevron – applies to legislative rules, or adjudication pursuant to

delegated powers

Step 1

Ascertain whether congress has spoken unambiguously

on this issue

Is statutory meaning clear and unambiguous

Canons of construction

o Legislative history

If there is ambiguity, then go to step two

Step 2

Is agency’s interpretation permissible

Some step 1 issues here

o May find stuff that is clearly outside the statute

o Cardoza Fonseca case

o Deal with interpretation of the law

o See ABA Ad-law project

o Once you understand the law, agency has lots of discretion in policy

- Policy (how are we going to review policy determinations)

o From § 706

§ 553 rulemaking – arbitrary and capricious

Overton Park and State Farm

Formal rulemaking – substantial evidence to support

determination

Scenic Hudson

o Hard look

233

This is what the courts are doing in both of the above

situations, it’s really the same review

o Softer procedural hard look – just need better explanation, need to

show you looked at possible alternatives

Need to do a lot more than is required under § 553 to satisfy

this

Seems there is a softening of the hard look doctrine, at least

with arbitrary and capricious review

o Temporal reach of agency action

Adjudications typically are retroactive

There is a balancing test from NLRB cases

Rulemaking is either prospective only (Scalia) or there is clear

indication from Congress that it can be retroactive – Bowen

case

o Equitable estoppel

Schweiker – have to prove affirmative misconduct by agency

- Facts – Universal Camera

o Cts can review facts, but usually give extraordinary deference to

agency

- Have appropriate procedures been followed?

o Rulemaking v. adjudication

Chenery II, Excelsior

Courts usually defer to choice of agency

o Does due process require rules ex-anti?

Hornsby , Soglin

Like the ATA case in a way

o Due process requires hearing?

Londoner

Adjudicative facts require hearing

Bi-Metallic

Legislative facts don’t need hearing

234

Goldberg

Property, liberty, or life interest means hearing

o Formal procedures triggered?

Use APA procedures if hearing is required by constitution, but

usually statutes will give one

Can object under Mathews v. Eldridge

If constitution doesn’t require, statute might

Florida east Coast Railway case

Must say “hearing on the record”

o Hybrid procedures?

Vermont Yankee – courts can’t require additional procedures,

but Congress can and agencies can

o Exemption from § 553?

Good cause, interpretive rules, agency procedures, etc

o Internal agency rules that require procedures?

Consistency

o Evidence of bias

Pecuniary

o Separation of functions

Investigation and prosecution

235