LEGISLATION & REGULATION: Professor Manning, Fall 2011

PART 1: LEGISLATIVE POWER AND INTERPRETATION OF STATUTES

I. Introduction to Legislation and Statutory Interpretation

TVA v. Hill: Endangered Species Act passed during dam construction; Secretary of Interior finds ESA binding on

TVA, private party sues to enjoin opening of dam (threatens snail darters)

1. Text: majority found plain meaning (text prohibits opening of dam)

a. Text of ESA: “All departments and agencies shall take necessary action to ensure that actions authorized,

funded, or carried out by them do not jeopardize the continued existence of such endangered and threatened

species or result in the destruction or modification of their habitat.”

i. Court lays language is plain and clear

ii. Congress’ plain intent was to halt and reverse the trend toward species extinction, whatever the

cost

b. Inclusion of “authorized funded, and carried” out covers everything – past and present

2. Overall purpose of statute – highly protective; dangerous to reason from overall purpose to specific statutes

3. Legislative History: current version of ESA lacked qualifiers found in earlier statutes, implying broader scope;

reconciled House/Senate version supported majority; Sen. Dingell’s statement

a. Final version of 1973 Act omitted prior reservations in 1966 Act

i. 1966 Act qualified obligation to preserve endangered species “insofar as is practicable and

consistent with their primary purposes.”

ii. Bills introduced in 1973 Act also had this language; omission shows intent

b. Senator Dingell’s explanation as to why language was removed (reliable?)

i. Whooping cranes were being threatened by air Force bombing activities in Texas; implied that

Secretary of Defense would be required to “take proper steps” once legislation was enacted to

eliminate the threat to the endangered species

ii. Floor statements are at the low end of legislative history; not necessarily representative of all of

Congress

c. Separation of powers – if Congress wanted this, it is not the judiciary’s place to change that

4. Substantive Canons: implied repeals are disfavored

a. Retroactivity canon

b. Clear statement rule: Congress cannot alter substantive law through appropriations measures; would have to

explicitly state in bill that TVA is exempt (appropriations canon?)

5. Dissent: absurd consequence; says there are many federal projects and potentially billions of dollars in jeopardy

a. Costs are huge and benefits are small; no reasonable member of Congress would have supported this

b. Absurdity doctrine is about intent; looking at consequences and reading backwards to figure out intent

II. Letter of the Law vs. Spirit of the Law

Rules embedded in a statutory text – letter of the law

General background purpose of the statue – spirit of the law

Enforcing spirit of the law better approximates what the legislator would have done had he or she expressly

dealt with the case at hand

Riggs v. Palmer (1889): grandson poisoned grandfather, would inherit under statute literally construed

1. Will was technically valid and enforceable; made according to the requisite procedures

a. Only things that would invalidate will were fraud, duress, or incapacity

2. Court says Elmer collecting inheritance would be an absurd result

a. Cites common law maxim: you cannot profit by your own wrongdoing

ii. Statues in conflict with common law should be narrowly construed 1. Rational interpretation: the writers of laws do not always express their intention perfectly, but either exceed I or

fall short of it, so that judges are to collect it from probable or rational conjectures only

2. To ascertain legislative intent: suppose the lawmaker present and that you could ask what intent was

a. Reasonable person constructs pervade the law; if this amendment had come across the floor, legislators

would have supported it

3. Rules v. standards

a. Rules – sharp-edges statements of policy; eliminate value judgments and fact determinations from courts

b. Standards – involve more value judgments and fact determinations

6. Dissent: “The matter does not lie within the domain of conscience. We are bound by the rigid rules of law”

a. Legislature has prescribed exactly when and how wills may be made, altered, and revoked

i. Have left no room for the exercise of an equitable jurisdiction by courts over such matters

ii. Rules are rules; some value in valuing predictability/certainty

iii. Rational for legislators to value this

Church of Holy Trinity v. United States: church made contract with pastor to bring him from England to New

York. US claimed K was forbidden by Alien Contract Labor Act, which made it illegal to bring foreigners to the

US “to perform labor or service of any kind”

1. Text: to discern what this encompasses, court looks at other statutes, media, dictionary

a. Labor is defined as “work, toil, expenditure of muscular force”

b. Service – “performance of labor for benefit of another; act of serving another”

c. Makes exceptions for actors, artists, singers, lecturers, domestic servants

d. Court’s arguments lead to counter-textual conclusions

i. Not intended to apply to brain-toilers

ii. Could not have been intended to apply to a minister; US is a Christian nation

e. Can’t know why they chose “labor or service of any kind”

i. May be overinclusive for a reason

ii. Maybe they misspoke

2. Mischief Rule: to discover purpose, look at specific evil legislature was trying to remedy when it enacted

the statute

a. Companies were in-sourcing labor, mainly from southern and eastern Europe

b. Knights of labor – members were being undercut by this influx; mainly in factories and iron/coal

mines; this group lobbied for this act

3. Letter of the law gives way to the spirit

a. Looks at intent; general purpose of statute is to minimize influx of immigrant laborers

4. Look at initial petitions for bill (who was pushing for it)

5. Look at committee reports (education and labor)

a. Senate committee explicitly said it was to address manual labor and manual service

6. Canons: superfluity canon: read language in a statute not to be superfluous; legislators are rational, would

not include extra words

a. Evidence that inclusion of word “service” was not an oversight

i. Drafters made Act comprehensive to avoid disputes about what is considered manual labor

1. Rules are broad, inclusive; take away need to make borderline decisions

ii. Conflict between title and text: one is broader than the other; read text with respect to title

1. Purpose of title is to convey purpose of bill; almost like a preamble

2. Rule: title is relevant to interpretation of an operative provision if the operative provision is ambiguous;

cannot contradict

3. Title is a general statement of purpose; specific governs the general

4. Individual provisions fulfill purpose of title

5. Title is part of cumulative evidence that shows purpose is narrower than language in section

b. Expressio unius est exclusion alterius: inclusion of some things is to exclude others

i. By enumerating exceptions, Congress impliedly includes everything else

7. Legislative History: can’t argue that “Congress didn’t anticipate it” argument

a. Act passed during following session; could have easily added “manual”; didn’t’ because they

didn’t think it would get passed

8. Why didn’t Congress explicitly mention ministers?

a. Violation of separation of church and state

b. People tried to add other exceptions but sponsors rejected them; could have raised more questions;

led to bargaining

c. Could have been debate about what religions to include

d. Bargaining process is more difficult than explaining principles

9. Absurdity doctrine in this case: Can you imagine a legislator voting for this outcome?

a. In Riggs, clear idea of injustice if Elmer got money

b. Here, it’s possible that a legislator could have voted for it

10. Argument: Court spared Congress’ burden that they should have had to bear without this legislation

a. Ugly piece of legislation

b. Directed toward low-wage workers from Southern Europe

c. By making it broad, it doesn’t make it look as ugly; seems to encompass everyone

Modern Incarnation of Holy Trinity: US v. American Trucking Associations (1940)

“No more persuasive evidence to purpose of a statute than the text..”

Questions turn on reading the text

Court once behaved as if texts had intrinsic meanings

o Would say when text is plain, no need for interpretation

o No one believes this position today

Must always read language in context

Important to investigate words and figure out how they’re used in the appropriate communities

III. The New Textualism

Built on premises of legislative supremacy

o Requires courts to enforce clear import of enacted text

Emphasizes that judges must respect the legislative compromise embedded in the statutory text

Criticism of purposivism: statutes embody legislative compromises, so a statute may not have a single

coherent “purpose” – emphasizes respecting the compromise

Inconsistencies reflect inevitable conflict of Congressmen

West Virginia Hospitals v. Casey (1991): federal statute allows for fee shifting of “a reasonable attorney’s fee”

Does this include an expert’s fee?

1. Looks at record of statutory usage: many statutes explicitly shift both expert fees and attorney’s fees

a. These statutes would be redundant if both were included in attorney’s fee

2. WVUH wants to use mischief rule

a. Statute was designed to overturn Alyeska and to allow civil rights plaintiffs to recover all fees

b. Court rejects – employs a textualist interpretation

3. Scalia says: court’s job to create a rational semantic regime; should be able to use language to make

precise judgments about what should and should not be excluded

a. Court now says Congress must say what it means and mean what it says

b. Making language a currency to interpret Congress’ purpose

4. Legislative History proves an arbitrary line born of politics was drawn

a. If they had included expert fees, other members would not have approved it

IV. The New Purposivism: Textually Constrained Purposivism

General Dynamics Land Systems, Inc. v. Cline (SC, 2004): GD made it so that people under 50 would not get the

same benefits as people over 50? Does ADEA protect younger workers from age discrimination?

“Age” has 2 meanings: number of years since birth and old age

Bonafide Occupational Qualifications - legal to differential based on prohibitive characteristic

o BFOQ: if age means old age, then old age is a BFOQ; even if you’ve discriminated against

someone who is younger, you’re excused because its allowed in the statute

Look at statements of purpose and findings

o Stress impediments suffered by older workers/incidence of unemployment among older workers

o Objects were “to promote employment of older persons based on their ability rather than age; to

prohibit arbitrary age discrimination in employment; and to help employers and workers find ways

of meeting problems arising from the impact of age on employment”

“Statutory language must be read in context since a phrase ‘gathers meaning from the words around it”

Social History – connotation that surrounds age discrimination is discrimination against older people

o Record is devoid of any evidence that younger workers were suffering at the expense of their elders

Legislative History – testimony at hearings was all about older people

o Yarborough’s sponsor statement indicating that the statute is meant to protect the old as well as the

young is a single outlying statement that cannot stand against a tide of context and history

Evidence that this colloquy was pre-planned to get into the record

Wanted to show constituents that it protected the young too

V. Judicial Correction of Legislative Mistakes: Absurdity

US v. Kirby (Supreme Court, 1868): Kirby arrests murderous mail carrier and is indicted for obstructing/retarding

the passage of mail.

1. Text of statute: “knowingly and willfully obstruct or retard the passage of the mail”

a. Knowingly and willfully implies consciously stopping the mail

i. Under this definition, Kirby committed the crime

ii. Had the discretion not to; consciously did it when mail as being delivered

iii. Willfully has the connotation of a bad intent/strong will

2. Court holds: spirit of the law prevails over the letter

a. If action is lawful arrest and mail interruption was incidental, it was not a crime

b. Letting a murderer roam free is a greater inconvenience to society than interrupting mail delivery

3. Guiding principle: general terms should be so limited in their application as not to lead to injustice,

oppression, or an absurd consequence

a. Court is assuming that Congress has not adopted an unreasonable result

b. Court can make this assumption if:

i. There’s ambiguity/vagueness in the language

ii. It imposes a reasonableness: court has some authority to impose a reasonable result even if

it can’t be inferred from language

c. Whenever an agency writes a governing text, it must write it in general terms so that it can e read to

include reasonable exceptions

d. Court acts as a faithful agent to Congress

i. Asks – what would Congress have decided?

4. Mala prohibita v. mala in se

a. Mala prohibita – regulatory offenses; something that is banned because costs outweigh benefits

b. Mala in se – something that’s intrinsically bad

5. Bolognian and Plowdien laws (surgeon and prisoner examples) are not direct authority, but they

demonstrate why an absurdity doctrine is necessary

a. Give examples so horrifying we can deduce that no reasonable legislator would have intended this

consequence

6. What if Kirby had been delivering a subpoena for divorce proceedings?

a. Would have committed a crime – public servants are exempt from arrest for civil crimes

b. Gray area: misdemeanor; committing crimes, posing an immediate threat

7. Doctrine of necessity: you can do something that’s a crime if the purpose is to prevent something that’s a

much larger crime

Public Citizen v. United States Department of Justice (Supreme Court, 1989): DOJ regularly seeks advice from

ABA’s Standing Committee on Federal Judiciary in making judicial nominations. Is it “utilized” by the President

such that it constitutes an “advisory committee” under the Federal Advisory Committee Act? N.

1. Absurdity Doctrine: Congress could not have intended this; would discourage candid discussion, as the

advisory committees must publish transcripts of proceedings & go out of business after 2 years

a. Committee is an advisory committee according to the plain sense of the word

b. Court says it’s a “wooly word” – can encompass almost anything

c. Utilization connotes a more formal arrangement – not just getting advice in an incidental way

2. Reasons why a rational policy maker would want ABA committee to be included exist

a. No transparency in the process; imaginable that a rational legislator would want this

b. However, taking away confidentiality would be detrimental

3. Definition: if you can conceive of a rational justification for it, its not absurd

a. Hard to identify a genuine political absurdity; legislative process is chaotic

4. Important questions:

a. Can you conceive of a reasonable legislator adopting the policy?

b. Can it be explained by political compromise?

5. Today’s absurdity doctrine: If something is absurd but can be attributed to political compromise, it can

be sustained

i. Preserves absurdity doctrine but adds an exception to account for political compromise

6. Concurrence: Sees absurdity doctrine as a legitimate tool of the Judiciary but only as long as the Court

acts with self-discipline by limiting the exception to situations where the result of applying the plain

language would be, in a genuine sense, absurd (94)

a. Court’s loose invocation of the “absurd result” canon creates too great a risk that the court is

exercising its own will of judgment & substituting its own pleasure to that of the legislative body

Barnhart v. Sigmon Coal (2002)

Issue: Should the tax set up under the coal industry retiree health benefit act be upheld given a clearly absurd

application?

Holding: YES. Respect the bargaining and compromise process, can see a rational process justification

Facts: Congress set up a tax on coal companies to fuel pensions. Fund required contributions from coal companies

(signatory operators) & other firms ( related persons) who had signed any of the collective bargaining agreements.

Absurdity

Clear anomaly- the act required contributions from a company that was a successor in interest to a related

person but not to a signatory operator. i.e. If a coal company & dairy farm each sold their interest, the

successor of the dairy farm would pay but not the coal company successor

Class example: Acne mining owns a bakery and the bakery sells its assets it has to ay for the pensions of

the mining company but the company that bought the mining company does not.

Holding: “its delicate crafting reflected a compromise of highly interested parties attempting to pull the provisions

in different directions. As such, a change in any individual provision could have unraveled the whole”

→ quite possible that a bill that assigned liability to successors of signatory operators would not have survived the

legislative process

Takeaway: Sustain statute despite absurdity because we can think of a rational reason why the legislative process

would yield such a result

Two questions: (1) would a reasonable legislator adopt it, (2) Can you attribute it to legislative compromise

Reflects new textualist view of legislative history- the drafting question is more complicated than the underlying

policy question- large majority may want to alter or change but the legislative

bargaining necessary may prevent it.

Brings up underlying questions of absurdity: under this doctrine do we relieve legislators of pinning down what

they really mean; do we upset a political compromise- all they could agree on was X language.

NOTE: this new approach would change holy trinity, public citizen

VI. Judicial Correction of Legislative Mistakes: Scrivener’s Error

United States v. Locke (Supreme Court, 1985): mineral claims must be filed prior to Dec. 31…scrivener’s error?

1. “Prior to” by definition means preceding or before

2. Scrivener’s error usually involves punctuation or inclusion/omission of word “not”

a. Typos in text

b. Legislature does not know what “prior to” meant; finds it odd that they would change their

language

c. Must have genuine confidence that its not the result of a compromise

3. Difference between scrivener’s error and absurdity

a. Can it be attributed to a compromise?

b. Is this the type of thing where people make typos?

c. Is there a substantive reason for Congress to pick the day it picked?

4. For it not to be absurd, it has to be imaginable

5. Key Q: can you conceive of a reason why they would have written it this way?

a. Use rubric of scrivener’s error rather than absurdity when you can

b. Framing issue = absurdity = harder sell

6. Clue to scrivener’s error: there’s something senseless about it and I think I know what happened

7. Absurdity: senseless and I can’t imagine Congress doing this

VII. What is “the Text?”

Nix v. Hedden (Supreme Court, 1893): is a tomato a fruit or a vegetable within the meaning of the Tariff Act of

1883?

1. “The ordinary meaning of the statutory language expresses the legislative purpose”

a. Fundamental canon of statutory constructions: words will be interpreted as taking their ordinary,

contemporary, common meaning

b. Assume Congress meant for language to be interpreted in the way its used in everyday speech

i. Usage most likely to give notice

c. Congress could’ve resolved ambiguity: ordinary meaning canon, mischief rule, definition used in

industry

2. Clear statement rule – err on the side of not taxing people

Moskal v. United States (Supreme Court, 1990): are officially registered but “washed” titles “falsely made”?

Majority says yes – if you make a title with false information, it is falsely made

1. Purpose of statute: to stop fraudulent interstate commerce

2. Congress that passed this legislation probably though they were passing a broad anti-fraud statute

a. What would a reasonable person understand this to mean?

b. Could make an argument for technical meaning

3. Takeaway point: if there’s a well-established term of art, if trumps ordinary meaning, if not vice versa

Dissent: “falsely made” is a term of art; narrow technical meaning

1. Emphasizes the manner of making rather than the nature of the product made

Smith v. United States (Supreme Court, 1993): Does the exchange of a gun for narcotics constitute “use” of a

firearm “during and in relation to…a drug trafficking crime?” Yes.

Offensive arguments

o 1. Purpose – preserve, broad, “tough on crime”

o 2. Structure – “use” is used in other parts of statutes to include bartering

o 3. Dictionary definitions of use – “to employ,” “to make use of,” “to derive service from”

Ds handling of the gun falls within those definitions

Dissent: must give nontechnical words and phrases their ordinary meaning

o To speak of “using a firearm” is to speak of using it for distinctive purposes

o Reasonable dichotomy between using a firearm and carrying one, as both are mentioned separately

in the statute

VIII. Legislative History: The New Textualism

History of Legislative History

1940: court says job is to find intent/purpose; no evidence to that effect would be excluded from

consideration

1938: LH cited 19 times. By 1979, LH cited 338 times

This period: not only an increase in usage, change in way court used it

o Certain kinds were particularly authoritative

o Colloquy – between floor manager and other Congress members

o Committee report of committee that framed and drafted legislation

Apex of authority on legislative intent

o Uncontroversial from 50s-80s

Judge Easterbrook and Justice Scalia started a campaign against LH in the 80s; speeches, articles, opinions

o Arguments changed nature of debate

Arguments in favor of legislative history:

Gives insight into purposes and intentions of key actors in the legislative process; acting as agents of the

majority

Look at social problems that led to a piece of legislation; mischief to which it is directed

Judicial restraint argument: if not looking at legislative history, decisions are based on judicial preferences;

constrains judiciary

Textualists say they ask themselves what a reasonable person would’ve understood statute to mean

o If willing to consult dictionaries and other outside sources, should be willing to consult LH

Bait and switch element to the way textualists see LH

o Apply their technique: expectations retroactively disturbed

Majority view today is that LH is acceptable – see Exxon case for details

Arguments against legislative history:

Formalist: Congress writes legislation; mechanisms for identifying what is and isn’t law (bicameralism and

presentment)

o Congress must vote on legislation, and it must be presented to president

o LH does not go through this process

Reliability – committees are unrepresentative of the body as a whole

o Selected by subject-matter interest

o Don’t know if materials are reflective of body as a whole

Public choice element; lobbyists and staffers

Circumvention rationale: argument for LH is that legislation would be too hard to enact if Congress had to

provide for every detail in the legislation

o Can’t anticipate everything

Refutation: if its in the legislative history, then its been anticipated

o Idea that its too cumbersome/costly/difficult to get everything in

Refutation: LH is a way to get things that could not get in through bicameralism into the

record

Process is costly and cumbersome on purpose; rules emphasize consensus/protect

outliers/political minorities

Using LH undermines design of process (well-illustrated by Continental Can)

Incentives argument: if Congress knows that courts are not going to use LH to clarify meaning, they’ll be

obliged to make legislation clearer

o Manning says this argument doesn’t hold much weight

Blanchard v. Bergeron (Supreme Court, 1989): Does a prior contingent fee arrangement limit a “reasonable

attorney’s fee” under 42 USC 1988 (providing that a court “in its discretion, may allow … a reasonable attorney’s

fee” to a prevailing party) No.

Majority relies on House & Senate reports, which cite to 12-factor Johnson test for assessing the

reasonableness of an attorney’s fee award

o Time and labor, novelty and difficulty of questions, skill required, opportunity cost, customary fee,

fixed or contingent, time limitations, result, experience of lawyer, undesirability of case, duration

of case, awards in similar cases

o Fee arrangement is but a single factor; not determinative

o Criterion for the court is not what the parties agree to, but what is reasonable

Johnson case later contradicts itself when it says “in no event should the litigant be awarded a fee greater

than he is contractually bound to pay, if indeed attorneys have contract as to amount”

o Court says Congress didn’t embrace this aspect of case b/c it pointed to 3 DC cases in which

factors are “correctly applied”; fee arrangement is just one factor

Scalia’s Concurrence/Dissent: Congress was elected to enact statutes, not point to cases

o Johnson case is not law; did not go through bicameralism

o Congress probably did not read committee reports; no one knew what was in them, and even if they

did, we don’t know if they agreed

Committee reports: reliable?

o Applicable convention was that they were “the authoritative expression of meaning”

Things placed in it that were expected to be read to ascertain intent

Best argument against Scalia: a reasonable person would have read the reports (in

Blanchard)

Continental Can (US Court of Appeals for the 7th Circuit, 1990): what is the meaning of “substantially all”?

When legislative history shifts level of generality, must be suspicious

People use LH to circumvent the process – put words in history that could’ve been put in the statute

o Cause for suspicion: if they could’ve added it to text and thought it would have passed, they would

have

Floor manager of the House (Thompson): ”substantially all requirements would only be satisfied where at

least 85% of the contributions to the plan are made by employers who are primarily engaged in the

specified industries”

Later comment by Durenberger implies that substantially all means majority (50.1%); criticized floor

manager Thompson’s statement that substantially all meant 85% after bill was passed

Earlier statement and statement by Thompson were the only ones on paper when congress voted

o Congress passed bill without knowing Durenberger’s belief that substantially all means 50.1%

The text of the statute, and not the private intent of the legislators, is the law

Substantially all has a special legal meaning; quantified as 85% or more in all regulations found by court

IX. The New Synthesis

Exxon Mobil Corp. v. Allapattah Services, Inc. (Supreme Court, 2005): does §1367 overrule Zahn (requiring

every class-action π meet amount in controversy requirement)?

Text alone appears to overturn Zahn, but committee report says the purpose is to overturn only Finley and

leave Zahn intact

Kennedy majority: text is not ambiguous; even if it were, LH is itself often “murky, ambiguous, and

contradictory”…“looking over a crowd and picking out your friends” (allows for judicial activism);

relying on LH gives unrepresentative committee members ability to strategically manipulate

Section 1367 is not ambiguous; no need to look at legislative history

Discretion for judges to pick part of legislative history that suits them

LH is murky because subcommittee working paper conflicts with house report

o Tradition is that House Report carries more weight

Judge says they’re on the lookout for murkiness and circumvention

o Low threshold for murkiness

o Court is very sensitive to evidence that LH is being used to circumvent

Court puts a very tight restriction on utility of LH

Most basic holding: (1) only look at LH when statute is ambiguous

o (2) Don’t use LH if it’s murky even if statute is ambiguous

o (3) Look for evidence of circumvention/smoking gun

o LH is now used this way 98% of the time

Corning Glass Works v. Brennan (Supreme Court, 1974): Did Corning Glass Works violate the Equal Pay Act by

paying a higher base wage to male night shift inspectors than it paid to female inspectors performing the same tasks

on the day shift? Yes.

Corning argues that working conditions are not similar, therefore different pay is justifiable

Secretary must show that different sexes are paid different wages “for equal work on jobs the performance

of which requires equal skill, effort, and responsibility, and which are performed under similar working

conditions”

Court uses LH to determine that working conditions = surroundings and hazards

o Tells us that it’s a term of art

o Look to industrial practice that was being used at time statute was enacted (pay scales)

o Congress amended bill’s definition of equal work

Incorporated specific language of job evaluation plan described at hearings; concepts of

skill, effort, responsibility and working conditions

Court says LH is very informative; can tell you things about bill that you can verify

o Look for info that tells if there’s a specialized meaning

o Gives you context for legislation; clues you in

o Valuable because it tells you something about the world at the time the legislation was enacted

X. Semantic Canons

Canons of construction were seen as manipulable tools for judges to justify decisions post-hoc

o For every canon, there’s a counter-canon

Now they’re valued

Most semantic canons are shorthand ways to describe mental processes that are used everyday

Substantive Canons – dice-loading canons; put thumb on scale in favor of a particular value

o Ex: rule of lenity – in favor of the accused

o Most are rooted in constitutional values; some are made up

Silvers v. Sony Pictures Entertainment, Inc. (US Court of Appeals for the Ninth Circuit, 2005): Frank and Bob

assigned the right, title, and interest in and to any claims and causes of action to Silvers for “The Other Woman”;

Silvers filed a complaint against Sony for copyright infringement; they moved to dismiss on the ground that she

lacked standing to bring an action for copyright infringement in the absence of some legal or beneficial ownership

in the underlying copyright; court says no

Right to sue is not listed in exclusive rights listed in Copyright Act

Expressio unius doctrine: “as applied to statutory interpretation creates a presumption that when a statute

designates certain persons, things, or manners of operation, all omissions should be understood as

exclusions”

Legislative history gives context to know why Act was created, and thus insight into whether canons apply

Dissent: statute does not address present question & is therefore ambiguous; court should consult

legislative history

o Plain legislative intent should have guided majority; trumps use of maxims

o Maxim of expression unius is misapplied by majority

People v. Smith (Supreme Court of Michigan, 1975): is an M-1 rifle a “dangerous weapon” for purposes of statute?

Ejusdem generis: in a statute in which general words follow a designation of particular subjects, meaning

of general words will ordinarily be presumed to be and construed as restricted by the particular designation

and as including only things of the same kind, class, character or nature as those specifically enumerated

o Translation: reading catch-all in terms of other things listed

o Assumes we aren’t speaking superfluously

Intuition that drafter uses words to show genus of catch-all

o 2 problems with this canon:

Presupposes catch all is limited by list

Must figure out what salient characteristic is

Phrase “or other dangerous weapon except hunting knives adapted and carried as such” would be limited to

stabbing weapons

o No intent to include firearms of any sort in the phrase “other dangerous weapon” used in statute

Prohibition against carrying long barreled firearms does not reasonably belong in a “concealed weapons”

class of crimes

Noscitur a sociis– involves narrowing the range of meaning of a particular term by reading it in the context

of related terms; words take on the meaning of their associates

McBoyle v. US (1931): Convicted of transporting a stolen airplane from Illinois to Oklahoma. Does Motor Vehicle

Act apply? Uses language “any other self-propelled vehicle not designed for running on rails.”

1. Court holds: airplane does not qualify as a motor vehicle; McBoyle did not violate National Motor Vehicle

Theft Act

2. Reasoning: when people say vehicle, a vehicle running on land is what comes to mind

a. People should be given a fair warning

3. Semantic canons:

a. Canon of negative implication: expression of one thing means exclusion of another

b. Ejusdem generis: when catch-all is in list, read catch-all in light of the rest of the list

4. Substantive canons:

a. Rule of lenity: if there’s a residuum of doubt about a statute’s application, benefit of the doubt goes

to the accused

i. Designed as a constraint on Congress

ii. Inconsistently applied

XI. Substantive Canons: provide Court with a way to invoke the Constitution without striking down statutes

Constitutional avoidance canon: avoid construing statutes in way that leads to constitutional problems

Clear statement rules: if Congress wants to intrude on constitutional values such as federalism or retroactivity, it must

make that explicitly clear

o Criticism: clear statement rules obviate Congress’ will (counter-majoritarian), forces them to use very

explicit language, which might hamstring legislation that often needs vague language to gains support

o Federalism, retroactivity and rule of lenity

o 3 plain statement rules we’re responsible for

o Protect constitutional values – clarity

o Requires Congress to make decision to do that rather than leaving an agency to do so

o Some worry about federalism and retroactivity

o When court enforces these values, its extracting them from the limits

o Constitution doesn’t adopt these values in the abstract

a. Federalism

Gregory v. Ashcroft (Supreme Court, 1991): Does the mandatory retirement provision in the Missouri constitution

violate the federal Age Discrimination in Employment Act of 1967?

o Brief Summary: Ps say judges are not included in ADEA exception, therefore ADEA applies to them

(included in statute); Ds say judges are included in the exception (statute does not cover them); Court says

judges are not included in the statute because Congress doesn’t explicitly say they are (judges are not

protected)

o Congressional interference with state statute would upset usual constitutional balance of fed & state powers

o If Congress intends to alter the usual constitutional balance, it must make its intention to do so

unmistakably clear in the language of the statute

o Plain statement that judges are not employees would seem the most efficient way to exclude judges; odd

that Congress would say “appointee at the policymaking level” to exclude judges

o If there’s any ambiguity, state wins

o Must be plain to anyone reading the Act that it covers judges

o Rule comes from division of power – limits what Congress can do even when they’re acting within

their enumerated powers

o Federalism principles: court says there are premises that underlie our Constitution

o States continue to have sovereignty

o Even if Congress can, we want to be sure they don’t upset state sovereignty unless they’ve done so

explicitly

o Best argument for this case: safeguards of federalism come from the political process

o Implements safeguards by ensuring that Congress has spoken clearly when it interferes with the

power of states

o More on Federalism (not from case): it’s an abstract value; Constitution is made up of rules that embody

this value; value itself wasn’t necessarily adopted

o Gregory is still good law

b. Lenity

o DPC insists on clarity

o Kicks in after statute has been interpreted

o Notice-giving element doesn’t function; doesn’t protect notice

o Real function: protects a theoretical interest in allowing people to ascertain notice if they want

U.S. v. Bass: Bass possessed a firearm; government didn’t prove connection to interstate commerce

o Rare case where rule of lenity is decisive

o Case illustrates how odd rule is

o Rule of the last antecedent: at conclusion of list, there’s an adverbial phrase that only modifies by last

antecedent

o Bottom line: rule of lenity purports to preserve notice

o Always applies at end of process of interpretation

o Makes rule seem toothless as a way of giving notice

o Purpose of rule? DPC requires as a moral matter that it be possible for someone to be able to figure out

what law means

o Non-delegation component: when Congress adopts a statute, it is delegating power

o Rule says if Congress wants to impose a criminal punishment, it must say so clearly

o DPC imposes a special kind of non-delegation on Congress when it comes to criminal matters

o Constitution/DPC require clarity – if no clarity, have violated DPC

V. What is Interpretation?

o The more clarity you have, the more people disagree

o Congress can’t be ambiguous when it comes to clear statement rules

o Court still invents clear statement rules rooted in the Constitution

o Gentler way to enforce constitutional values

United States v. Marshall: federal statute lays out penalty based on weight of mixture or substance containing

detectable amounts of LSD (one dose = 0.05 mg of pure LSD)

o Easterbrook (majority): LSD on blotter paper would be considered a “mixture” according to ordinary

meaning of the term; statutory language regarding PCP indicates Congress was aware of the difference between

mixture and pure weight (expressio unius) removes enough ambiguity such that the rule of lenity does not

apply

o Judges are mere interpreters of positive law, cannot mold statute themselves

o Rationale: predictability/due process; judges should not impose personal values

o Plausible that Congress would include weight of paper in overall weight – don’t want to have to worry

about extracting it form blotter paper

o Says we should stick with language of statute

o Posner (dissent): including weight of carrier leads to grossly disparate results should only count weight of

pure LSD

o Even assuming Easterbrook’s textual meaning is correct, Posner argues that contours of the statute

have no rational basis; judges should adhere to natural law smooth out statutes and make them more

rational (not a purposivist argument, but an appeal to more abstract notions of rationality and justice)

says judges have always ruled this way and understood it to be a function of their Art. III judicial

powers (not a faithful agent model)

o But Posner’s vision arose in England, whose judiciary very different from America’s

o Posner says court’s job is to make law more rational and just – not the norm

o Conventional view: generally judges subscribe to faithful agent view

o Their job should be to implement the law

o Power of equitable interpretation – if a statute encompassed harsh/unjust implications, judges could

eliminate them

PART II: CONSTITUTIONAL STRUCTURE AND THE REGULATORY STATE

I. Introduction to the Modern Administrative State

o Constitution assigns 3 unique powers to 3 unique branches

3 Branches of the SEC:

1. Rule making; open-ended delegations of power; rules bind with force of statutes

2. Enforcement division

3. Adjudicators; hired by agency; decisions are reviewed by agencies; get to review de novo, as if they’re making

decision in the 1st instance

a. Limitations on removability

b. Merit systems protection board must find there’s good reason to fire

c. Act as judges – make evidentiary rulings/decisions of law

Does the Constitution establish a separation of powers? Embedded in the Constitution

o Constitution defines when there’s separation and when there’s blending

o Senate performs a judicial function by presiding over impeachment hearings

o Veto power – president is part of the legislative power

o President appoints Supreme Court justices; Senate must approve

o Article I, Section 8 (18): Congress composes, by express authority, the executive and judicial branches

o Constitution does separate the 3 powers

o Nothing tells us whether its supposed to be strict/exclusive

o Vesting clauses let us know there’s a separation of powers

o Carefully designed to let branches know they have limited control over one another

o President has no control over who’s in House and Senate – each House judges for itself who’s a

member

o Judiciary is 1 exception, but judges have tenure

o Presidential removal is a difficult process – has never succeeded

To be convicted, need 2/3 of Senate

o Very limited inter-branch removability

o Speech and debate clause – explicit protection of legislative discretion from intrusion of other

branches

o Congress sets other branches’ salaries

o Can’t raise president’s pay during office

o Purpose was to limit their influence over other branches

o Article I, Section 6, Paragraph 2: no person holding any office under the US shall be a member of either

House during his continuance in office

Rise of the Administrative State

History: early 1800s, federal government did very little

o Engaged in a few simple but important functions

o Prevented disorder

o Protected borders

o Enlarged boundaries (treaties, land purchases)

o Regulated trade

o Settled disputes among other citizens

o Railroad was hugely important – changed character of economy and posed a tricky set of challenges for

regulators

o Expensive to build competitors could drop ticket prices and make it difficult to enter market

o Government had to regulate monopolies

o Interstate Commerce Commission was created in 1887

o First modern administrative agency

o 5 members, no more than 3 commissioners from the same political party

o Limited removability: inefficiency, neglect of duty, malfeasance in office

o Power to ensure that railroads charged reasonable rates, improve new routs, issue orders to require

railroads to repay reparations if they overcharged

o Marked the launch of the modern administrative state: from this point on, Congress started to set up various

agencies to police/regulate commerce

o ICC served as a model for regulatory agencies

o Took different shapes but served same policing function

o New Deal changes all of this – introduces a new conception fo government

o Agencies are a medium for regulation

o Federal government is regulating economy much more

o Ushers in a revolution in constitutional law

II. The Nondelegation Doctrine

o Right place for this?

o Making rules is not legislating – executive has power to do this

o Congrses has gone too far in authorizing this when it does not give president an intelligible principle to follow

o Court rewrote language in Benzene to avoid a nondelegation problem

o Has only been utilized by SC twice in 1935

o Non-delegation clause stems from structural inferences in Constitution (vesting clauses)

o Authority granted by necessary and proper clause is very broad

o We don’t know how to separate legislative from executive power

o Good tool: history

Consistent delegations of authority to promulgate rules

o Locke endorses delegation

o Bicameralism and presentment served important functions:

o Protected against tyranny

o Resistance to passions of the moment

o Staggered elections – promotes deliberation and caution

Delegation of Legislative Power

1. Advantages

a. Expertise and political insulation (apolitical technocrats)

b. Executive conducive to expert policymaking

i. Crowded legislative agenda; partisan politics

ii. Legislative process is slow and cumbersome

2. Disadvantages

a. Undemocratic; lack of accountability (potential for arbitrary decisions)

b. Enables legislators to avoid accountability (take credit or blame agency)

c. Constitutionally problematic balance of power, enumerated powers

d. Something arbitrary about legislation – does not have to be justified the way execution and adjudication do

i. Job is to be a policy-maker, not policy-implementer

A.L.A. Schechter Poultry Corp. v. United States (Supreme Court, 1935)

NIRA allowed President to approve industry-written codes of fair competition subject to certain restrictions

impermissible delegation of legislative power

o Takeaway: no intelligible principle means impermissible delegation of legislative power

o Too much discretion, not enough procedural controls; scope of delegation matters

o Lack of procedure makes it hard to tell when President has breached boundaries

o Statement of purpose has unranked + potentially conflicting goals: how to resolve?

o Raises concern that president is exercising power that’s reserved to Congress

o Necessary and Proper Clause (Article I, Section 8, Paragraph 18)

o Can argue that its not transferring power, its Congress determining what’s necessary and proper to

govern

o In law, “necessary” is a term of art – means appropriate

o Panama Refining case – example of unconstitutional delegation

o If a statute defines a subject matter, its unconstitutional

o No principle at all; simply defines subject matter

o Why unconstitutional?

o No administrative procedure

o Very broad discretion

o Multiple, broad, unranked goals

o Regulation of the entire economy; broad scope

o In creating code, president is acting as a policy-maker, not a policy implementer

o Ultimate goal of NIRA is to stimulate the economy

o Lots of criteria, unranked; allows president to make a lot of decisions along the way

o Violates nondelegation

o Legislation is arbitrary – execution is procedural; applications of law to fact

o Implementation of decisions of another body

Post-Schechter Application:

Yakus v. United States-

Upheld broad and comprehensive price control regulation, “ given fair and equitable to further purpose of this act”

Act in question- Emergency Price Control Act- wartime measure that gave an executive branch officer, the Price

Administrator, the authority to set maximum commodity prices that “In the administrators judgment will be

generally fair & equitable and will effectuate the purposes of this act ( stabilizing prices, eliminating hoarding, etc)”

CT upheld- congress has stated the legislative objective, prescribed the method (maximum price fixing) and the

particular prices.

Souter- the essentials of the legislative function are the determination of the legislative policy & its formulation and

promulgation as a defined and binding rule of conduct- here the rule with penal sanctions that prices shall not be

grater than those fixed by maximum price regulations which conform to standards and tend to further the policy

congress has established. SOP does not deny congress the power to give an officer latitude- depends not upon the

breadth of the definition of the facts or conditions which the administrative officer is to find but on the

determination whether the definition sufficiently marks the field within which the administrator is to act so that it

may be well known whether he has kept within it in compliance with the legislative will→(1) You must come

VERY close to Schechter to invalidate; (2) court says there is a criteria here- needs to be able to say there is a

principle given to the agency ( Can we apply something to tell if they acted lawfully). (3) Court felt it could figure

out enough to be able to attribute an intelligible principle to congress beyond what was suggested by bare words

Whitman v. American Trucking Associations, Inc. (Supreme Court, 2001): EPA’s revision of the National

Ambient Air Quality standards for certain air pollutants was permissible

o Intelligible principle test – court says principle is definite enough

o Court has taken position that virtually anything is an intelligible principle

o We can’t 2nd guess Congress

o We can’t come up with a good rule about what’s an intelligible principle and what isn’t; vague

standard

Measure against principles court has found to be intelligible in the past

o Judiciary also has to worry about exercise of its own power – if we can’t articulate a line between

an intelligible principle and a transfer of legislative power, we’ll assume that everything is an

intelligible principle unless its blatantly a transfer of power

o Question is where you draw the line between a permissible and impermissible transfer

o Intelligible principle standard = guiding principle in nondelegation clause

o No intelligible principle = transfer of power

o Court said we will almost never say something is not an IP – all laws confer discretion upon

interpreters

Court says its up to Congress to determine how much discretion

o Panama Refining is an exception because there was no principle at all; can’t merely describe a subject

matter; must be some criterion

o This decision does not overturn Schechter

o If there are no administrative procedures, transfer of legislative power

Betrays notion that agency is applying Congress’ criteria to a set of facts

o Very vague standards (ie Schecter – long, vague, unranked list of goals)

o If it regulates the entire economy (Manning says this is least related to the question the court has

defined for itself)

Size of delegation/extent of power doesn’t seem to answer question at and

o Non-delegation doctrine is still alive in the form of a canon of construction

o Modern Trend: will not enforce nondelegation doctrine unless there are literally no criteria to guide exercise

of power; today, indirectly uphold nondelegation by interpreting statutes narrowly

Industrial Union Department, AFL-CIO v. American Petroleum Institute (Supreme Court, 1980): Occupational

Safety and Health Act of 1970 delegates broad authority to Secretary of Labor to promulgate different kinds of

standards

OSHA’s jobs: enforcement and rule-making

Promulgated standard to regulate occupational exposure to benzene

o Set at minimum level - 1 ppm; said it was lowest level economically and technologically feasible

Substance has been shown to cause cancer at high exposure levels

Principal question: whether such a showing is a sufficient basis for a standard that places the most stringent

limitation on exposure to benzene that is technologically and economically possible. Court says no

What does feasible mean? Economically and technologically possible; reasonable

o Costs don’t wildly outweigh benefits

Possible reasons for using vague term “feasible”

o Couldn’t agree on something more specific

o Trying to appease all interest groups

o Complicated subject – needed a flexible standard; better to tell agency to solve problem

o Much easier to adopt a vague statute than it is to adopt a specific one

Plurality construes statute narrowly to avoid a serious constitutional question on nondelegation doctrine

Plurality reads “safe” as “free of significant rules”

Court says if it didn’t read threshold into statute, would give OSHA wide discretion over entire US

economy

o Essentially rewriting statute to narrow its domain

o Avoids problem identified in Whitman; court here says when we’re worried there’s no intelligible

principle, we interpret statute in a way that either broadens or narrows it

Court here supplies intelligible principle instead of relying on Congress

More corrosive to legislative process for a court to rewrite a statute than it is to strike it down

o Much harder for Congress to fix this than it is to rewrite it

Court will construe statutes to avoid a serious constitutional question

Agencies are influenced by industries they regulate

o Rely on industry to supply them with information

o Agency capture – idea that agencies can be captured by those who they regulate

o Often an exchange of personnel between regulates and regulators

o Agencies are overseen by congressional committees; committees are a transmission belt for

influence – get campaign contributions

III. Congressional Control of Agency Lawmaking

1. Advantages:

a. Veto is check on delegated power smoother separation of powers

b. W/o such a safeguard, Congress may face “Hobson’s choice” wherein Congress delegates no authority

(and gets nothing done) or cedes policymaking power to executive branch

2. Disadvantages:

a. Interpretive convention: when lawmakers lay out new authority/body w/ elaborate directions of how to

exercise authority, those directions are exclusive legislature can act legislatively only through

bicameralism and presentment

b. Legislative veto encourages vague, unclear statutes that allow Congress to take credit for agency

success and shift blame to agency for mistakes

c. Delegation w/ strings makes delegation more attractive, giving Congress incentive to avoid legislating

and making difficult decisions

Immigration and Naturalization Service v. Chadha (Supreme Court, 1983): Immigration + Nationality Act lets AG

suspend deportation. If either house of Congress passes veto resolution w/in 60 days, can overturn. Is legislative veto

procedure unconstitutional?

o If something is affecting the legal rights of someone outside of the legislative branch, its legislative

o Attorney general’s power was executive, while Congress’ veto power was legislative

o AG is an executive official – actions are executive

o Same power exercised by Congress is legislative

o Since AG’s power is executive, Congress cannot veto without proper procedure

o Functional reason: bicameralism & presentment (Article I, Section 7)

o When Congress acts, subject to procedural requirements for exercise of its power; executive can flesh it

out, but Congress must go through B&P

o Article I, section 7, paragraph 2: if President doesn’t return bill within 10 days, it’s a law

o Very detailed provision

o Court says when a provision is this detailed, it trumps (canon of construction)

o Meant to be exclusive way of doing it

o Specificity canon – when legislation grants a power and gives a specific means of carrying it out, its

controlling

o Legislative veto can be seen as a way to check power that’s been delegated to the President

o If you delegate power to agencies and allow legislative veto, encourages Congress to circumvent bicameral

process by increasing delegation

o Dissent thinks its senseless to follow this

o If Congress may delegate lawmaking power to independent and executive agencies, difficult to

understand Article I as forbidding Congress from reserving a check on legislative power for itself

o More in keeping with checks and balances to have legislative veto

o To change Chadha’s status, attorney general had to approve and to have implicit assent of both House and

Senate

In reality: backwards (starts with executive and goes to legislature)

o Functional arguments:

o Majority – legislative veto undermines checks and balances by encouraging an end-run by Congress by

increasing delegation and discouraging Congress from taking responsibility for regulations through

bargaining process

o Dissent: encourages checks and balances

IV. Introduction to the Removal Question

Myers v. United States (1926): Does the President have the exclusive power of removing executive officers of

the US whom he has appointed by and with the advice and consent of the Senate? Court says yes – President

has unlimited power to remove executive officers

o Opinion establishes that President must have ability to ensure faithful execution of the law

o President needs as much authority as is required to ensure that executive branch complies with

law

o Form of expresio unius canon – if Congress specifically enumerates something, its taken to be

exclusive

o Any removal power assigned to the President is implied

o From Article II & from the fact that the power to appoint impliedly entails power to remove

o Only way to remove executive officers is impeachment

o Procedure is meant to be exclusive if Congress goes through trouble of spelling it out

o Worried if Congress had too much authority to remove president, president would be complaint

and separation of powers would be compromised

o Negative implication with regard to legislative power, but not executive; functionally wouldn’t

make sense

o No explicit nondelegation, removal, or anti-legislative veto clause in Constitution

o 2 most likely sources of removal power: Article II section 2 (appointments clause) & Article II

section 3 (Take Care clause)

o Complicating features: Opinions Clause – Article II, Section 2, Clause 1 (p. 947)

President has authority to request an opinion in writing of the principle officer in each

of the executive departments

Odd that Congress would specifically enumerate what’s in Opinions Clause if

president has illimitable removal power

o Canon: power of removal runs with the power of appointment

o If president wants to remove someone appointed with the advice and consent of Senate, must

be removed with advice and consent as well

1. Textual/Constitutional Evidence:

a. Art. II, §1: the executive Power shall be vested in a POTUS (vesting clause)

i. Postmaster is exercising piece of President’s executive power

b. Art. II, §3: “shall take care that laws be faithfully executed” POTUS must have “power of removing those

for whom he cannot continue to be responsible” (“Take Care” clause) essentially a functionalist argument

2. Historical Evidence

a. “Decision of 1789”: creation of Dept. of Foreign Affairs

i. Taft relies on First Congress’ decision, which seemed to suggest President has unlimited power to

remove executive officers

ii. Madison says this removal power is inherent in presidential power; should not be explicitly enumerated

iii. Benson makes removal power implied

1. Moves to strike out “to be removable by the President”

iv. Prof. Corwin criticism: Rep. Benson manipulated procedure and factional splits to achieve a vote that

made it appear that Congress supported unlimited presidential power of removal of executive officers

1. Accuracy of Annals of Congress is questionable

b. Drafting history of Constitution

i. Taft’s argument: purpose of advice and consent is to protect small states; not relevant to removal

ii. Looks at legislative history of a bill in 1st Congress

1. Older legislative history may be more reliable than that of today because its not as adulterated

– Congress wasn’t manipulating it the way they do today

iii. Taft’s “original meaning” seems to be bad use of originalism – only a bare majority of Senate approved

iv. Early interpretations of Constitution are capable of settling its meaning

1. We let early courts/Congress settle ambiguous meanings of Constitution

If removal power runs w/ appointment, doesn’t a restriction on appointment also apply to removal; or perhaps removal is

not so qualified because it was not expressly limited

V. The Rise of the Independent Agency

Humphrey’s Executor v. United States (Supreme Court, 1935): Roosevelt removed Federal Trade Commissioner 5

yrs before the end of his term. Court says President’s removal power is limited to causes laid out in FTCA

o Federal Trade Commission Act says that “any commissioner may be removed by the President for

inefficiency, neglect of duty, or malfeasance in office”

o Court says intent of act is to limit executive power of removal to the causes enumerated

o Myers decision only applied to executive powers

o Powers here are quasi-legislative/judicial

o Committee had to make reports to Congress (purely legislative), and adjudicate cases (judicial)

o FTC also has executive functions

o Exercising rule-making authority = executive power

Intelligible principle

o Court says if there’s a mix of executive, judicial, and legislative power, Congress can limit President’s

power to remove for those agencies

o Bottom line: rule-making is quasi-legislative, adjudication is quasi-judicial

o For any agency that serves these functions, removal power is limited because its not purely

executive

o If you’re in a classic agency that is rule-making and adjudicating, agency is quasi-legislative and

quasi-judicial – Congress can limit removal power

o Carrying out Congress’ policies isn’t executive

Bowsher v. Synar (1986): interpreting a law enacted by Congress to implement the legislative mandate is the very

essence of “execution” of the law

o Court says rule-making and adjudication are executive

o Bowsher has same removal provisions as FDCA

o Removal terms don’t seem to authorize removal for insubordination

o Noscitur associas – word is known by it’s associates

o Words have a moral feeling; narrower set of removal provisions

o Permanent disability, inefficiency, neglect of duty, malfeasance, felony or conduct involving moral

turpitude

o Bowsher says same terms that were in Humphrey can justify removal (opposite of what Humphrey’s said)

o “Interpreting a law enacted by Congress to implement the legislative mandate is the very essence of execution”

o Gets rid of categories

VI. Appointment and Removal: The Modern Doctrine

Morrison v. Olson (Supreme Court, 1988): After Watergate, Ethics in Gov’t Act procedure for appointing

independent counsel (IC) for investigation into criminal wrongdoing by high officials: during preliminary

investigation, AG has 90 days to determine if any reasonable grounds to continue investigation if none, case

closed; otherwise, case referred to special division of D.C. Circuit, which appoints IC (given full authority of

AG), removable by AG only “for good cause”

o Ethics in Government act applies only to certain high-ranking government officials and certain federal

crimes

o Defines jurisdiction

o If there’s an appointment by regulation, AG launches preliminary investigation – has 90 days

to investigate whether an offense has been committed

o If no reasonable grounds for further investigation, no investigation (not reviewable)

o If there are reasonable grounds, Special Division court appoints an independent counsel and

defines its jurisdiction

o Morrison was performing an executive function (criminal investigations are executive)

o This case distinguishes Myers:

o No aggrandizement attempt by Senate in this case

o Different framework; question is whether officer is so central to functioning of executive

branch that president’s power should be illimitable

o Central functioning test: to ensure that Congress does not interfere with the president’s exercise of the

executive power and his constitutionally appointed duty to “take care that the laws be faithfully

executed” under Article II

o 1. Whether or not President retains some control

o AG has some control; If AG thinks IC is not complying with mandates of statute, it may

remove

o Statute does not include removal for failure to comply with law, but this is what court says

o Because “President needs to ensure the faithful execution of the laws”

o Court is reading removal statute to avoid a serious constitutional question

o Canon of avoidance (like Benzene)

o Not nondelegation context

o 2. Amount of executive power that is being taken away

o Inferior officers don’t have to be appointed by and with the advice and consent of the Senate.

Qualities:

o Has a supervisor of some kind

o Limited duties – court says IC is not making policy for executive branch and is not exercising

administrative authority

o Limited jurisdiction – in this context, person is investigating a specified set of crimes allegedly

committed by a specified set of people

o Limited tenure – officer goes out of business when investigation is over

o Courts says because of these qualities that make IC an inferior officer, she does not take too

much power away

o 3. Nature of power regulated

o Court says its no longer valid to impose restrictions on agencies because they are purely

executive or quasi-legislative or judicial

o Says per se categories are gone, but not irrelevant

o More likely to get statute invalidated if it interferes with something at the core of

presidential/executive power

Prosecutions are at the core of traditional presidential power

o Factors are incommensurable values – which are important and to what degree?

o Principle that appointment runs with removal is no longer thought to be a governing

canon

o Conventional wisdom: courts will uphold statutes on basis of balancing test because its too

hard to strike down

o 4. Are there good reasons for the scheme?

o Court says an IC is necessary because we can’t trust the president to investigate his own

officials

o Would be a conflict of interest

o New per se rule: congress cannot arrogate to itself the power to remove executive officials (Bowsher)

nor can it require the president to get congressional approval for removal of executive officers (Myers)

o Everything is subject to rule of reason/balancing test

Free Enterprise Fund v. Public Company Accounting Oversight Board (Supreme Court, 2010)

Facts: PCAOB is supervised by SEC; SEC has limited removal power

o 3 conditions for removing board member:

a) Has willfully violated any provision of the act

b) Has willfully abused the authority of that member

c) Has failed to enforce compliance with any provision

o SEC is not subject to removal provisions; can only be removed for inefficiency, neglect of duty, or

malfeasance

o Act withdraws from the President any decision on whether good cause for removing Board members exist

o Commissioners make the decision; not subject to President’s direct control

o If president disagrees with Commission’s determination, he is powerless to intervene unless that

determination is so unreasonable as to constitute inefficiency, neglect of duty, or malfeasance in the office

o President is no longer the judge of the Board’s conduct

o Can neither ensure that the laws are faithfully executed, nor be held responsible for a Board

member’s breach of faith

o Board is not accountable to president, and president is not accountable to board

o Board is performing an executive function – promulgating regulations

Interpreting legislation is a fundamental function of executive power

o Statute says if reasonable people could disagree, PCAOB wins because SEC cannot remove unless there’s a

blatant/one way view that no one would disagree with

o Most government positions are career employees protected by civil service laws

Merit-based selection

Can’t be fired, except for reasons that “promote the efficiency of the civil service”

Removal is reviewed by merit system protector board; review legality of disciple

Independent agency can only be removed for inefficiency, neglect of duty, or malfeasance

o 2 important dimensions in Morrison are in play here:

Classic regulatory agency governing an industry is important enough to warrant invalidation of a

removal restriction that’s too draconian

True even though agency is performing what would’ve been considered quasi-legislative/quasi-

judicial

Humphrey’s per se rule is dead

Court doesn’t ignore justification asserted by Congress for this agency

Justification her was expertise

Dissent says this is a special kind of expertise – important that accounting be supervised

o Need common set of ground rules – too technical/important to be neutral

Court says expertise is not enough of a reason

Humphrey’s rationale: no longer suffices to sustain a removal restriction as draconian as the

one here

o Read into Morrison: at a minimum, must be able to read statute to give president control

Administrative agency can be important enough to warrant invalidation of removal provision even if

there’s a quasi legislative/judicial function

Expertise is not enough to justify

o Balancing test

o 4 Takeaways:

Central importance on draconian nature of removal provision

2-tiered character and strict willfulness requirement went too far

1st factor looms in this case and Morrison

Morrison: b/c IC wasn’t engaged in policy-making; was not taking bite out of executive

power

In Morrison: If removal restriction is not that draconian and agency’s function isn’t so broad, court is

what?

If draconian enough, court is willing to invalidate

In this case, expertise is not sufficient justification

ON EXAM: UNTANGLE HISTORY, SAY WHAT MORRISON FACTORS ARE AND 2 CASES WHERE ITS

BEEN APPLIED; LOOK AT EVERY CASE THAT HAS A PROVISION LIKE THIS

PART III: THE REGULATORY PROCESS

I. Introduction to the Administrative Procedure Act

The Administrative Procedure Act (default framework; minimum; other statutes can add other procedures)

- APA is like the Constitution for the administrative state; provides default procedure

- New Deal marked a change in the philosophy of government; many agencies created in short time

o Government declared its own responsibility for economic reconstruction; moment of unified government

- Growing dissatisfaction w/ agency operation during New Deal (concerns they were biased, going outside their

jurisdiction, deciding cases without evidence.); procedure was not uniform (different statutes, CL, etc.) + impulse to

attack New Deal by making procedure more burdensome

- 2 big proponents of reform of New Deal’s legal framework (administrative reform:

o ABA

o Dean Roscoe Pound

- During war, agencies mobilize society – come out of war seeming less controversial

- APA arose as a compromise: adjudication (formal, trial-like) and rule-making (looks like legislative process; gives type

of power legislature has when it makes laws)

- Adjudication designed to ensure fairness; RM designed to be less burdensome, more efficient

- APA is organized around 4 dimensions:

o Formal & informal rulemaking

o Formal and informal adjudication

o Different procedures for each of the 4

Rulemaking vs. Adjudication:

1. Adjudication is backward looking while rulemaking is forward looking (prospective vs. retrospective)

2. Rulemaking: a rule is “an agency statement of general or particular applicability and future effect…”

a. Formal RM (§§556 and 557): adversarial hearing w/ oral testimony and cross-x, presided over by ALJ, must be

made “on the record after opportunity for agency hearing” rarely used after Florida East Coast Railway

b. Informal RM (§553)- notice and comment RM; does not say proceedings must go on record or that decision

must be based exclusively on proceeding record

i. Public notice in Federal Register terms/substance of proposed rule or terms/description of the issue

(553b)

ii. Public opportunity to comment (in writing; "paper hearing") (553c)

iii. "Concise general statement of basis and purpose"; should be alike a statutory preamble

iv. Notice and comment procedures are meant to bring interested parties into the rulemaking process

3. Adjudication: formulation of an order = any authoritative agency action other than a rule; applies existing rules to set

of facts, retrospective; includes licensing

a. Formal (§§554, 556, 557): trial-like adversarial hearing involving agency seeking to impose penalty or resolve

dispute between parties under regulatory scheme administered by agency; oral presentation + cross-x; all

hearings and decisions must be on the record; all material issues must be explained

b. Informal: APA indicates no specific procedures, but subject to §706 arbitrary/capricious review standard

4. §551(8) defines license – whole or part of an agency permit, certificate, approval, registration, charter, membership,

statutory exemption or other form of permission

a. Licensing – approvals generally

b. Rulemaking – subcategory of approvals

5. At the time, almost all decision-making was through adjudication

a. Most adjudication is informal

6. §554d says if you’re adjudicating a case, you can’t be involved with investigators/prosecutors

7. §556b – people presiding over hearings must be impartial; entitled to impartial adjudicators/decision makers in formal

rulemaking/adjudicating; act as judges

8. §556d & 556e: 2 most important parts of formal proceedings

a. D – presentation of oral evidence/cross-examination

i. If government is trying to adopt a rule that will place burdens on your industry, cross-examination and

oral presentation increase administrative costs for government

b. E – things filed over the course of proceeding = exclusive record

9. On the record requirement is very strict – different from informal rule making

10. §557 – when presiding officer makes a decision, its final

a. C – agency is obligated to respond to all of your statements

b. You are entitled to as full an explanation as an agency can give –extensive requirement

c. Serious limitation on ex parte contact in formal rulemaking

11. Legislative – informal; trial-like – formal

REVIEW 11/17 BRIEF

II. Informal Rule-Making

To announce a new law – 1) initiate rule-making proceeding – notice, comments, hearing; 2) enforcement proceeding;

3) adjudication – action against people who are fixing prices

United States v. Nova Scotia Food Products Corp. (US Court of Appeals, 2nd Circuit, 1977): FDA conducted studies on

whitefish/botulism, adopted T-T-S (time, temperature, salinity) formula; struck down due to insufficient notice + comment

procedure; amounted to arbitrary decision-making

- Most intelligent defense of paper hearings; agency must show how its responded to issues of cogent materiality

- Rule making is about generalizing – always leads to some over-inclusion, sometimes under-inclusion

- Agency violated section §553(c)

- Front-end question: didn’t disclose scientific evidence that they relied on in making rule

o Court says it didn’t give people a meaningful opportunity to comment

o Sensible implication – right to comment includes right to know what evidence agencies relied on

- Back end question: didn’t explain

- Notice requirements in §553b specify what adequate notice consists of

o Doesn’t include material facts on which agency relies

- If you present a material issue of fact, the agency has to respond (§557c)

o Court says they must respond to vital questions raised by comments which are of cogent materiality

- This case explains the paper hearing requirement

o PHR appends more front end notice and more elaborate backend explanation than 553

originally adopted

o For it not to be arbitrary and capricious, agency must engage in reasoned decision-making and take

a hard look at the problem

o Must ensure that agency has considered all the relevant arguments

o In this case, we don’t know if they’re doing that since they’re relying on undisclosed, untested

scientific evidence

- §556e – in formal proceedings, agency has to make decisions on the record

o No such requirement under 554

- DC Circuit takes the lead adopting requirements

o Innovation in way administrative law was done

o Sense that agencies were being captured by industries they were regulating

o Notion that it would be harder for them to do that if there were a clear record

o Raises costs

Vermont Yankee Nuclear v. NRDC: §553 not just a floor on procedure but also a ceiling; Atomic Energy Commission

Facts: Judge Bazelon (D.C. Circuit) struck down two decisions to license nuclear power plants, concluding that the

procedure used to develop the rule authorizing such licenses was inadequate, even though agency had complied with all

notice and comment requirements; essentially imposed an additional cross-examination requirement

Holding: A court cannot impose procedures beyond those required by APA, statute, the Constitution (i.e. DP concerns

imposed oral hearing requirement in Londoner v. Denver), or consistent agency practice

- Supreme Court took case to send a message to DC District Court – can’t 2nd guess an agency’s choice of

procedures

o Agency is expert on procedure it needs

Rehnquist's Over-Proceduralization Concern:

- APA was a compromise designed to facilitate rulemaking; additional, unwarranted procedures would undermine that

goal; hard-fought compromise and it should be adhered to

o Agencies cannot predict what procedures a court will deem appropriate; as a result, agencies will respond

defensively and use overly burdensome procedures to guard against judicial overruling ossification of

rulemaking process

- §553 is not merely a floor; also a ceiling on what agency is required to do

o Can choose to go beyond regulations if they want

- Court says there are 3 circumstances in which additional procedures might be available; court can make an exception:

o 1. When DPC requires it – when proceeding is backward-looking and focused on a small number of people,

DPC imposes procedural requirements

Might kick in and require more than APA

o 2. Accardi Principle – agency is bound by its own regulations until they’re amended

Must follow its own rules prescribed by regulation

Part of reasoned decision-making requirement – agency must adhere to a course of policy or explain its

deviation (otherwise would be the definition of arbitrary)

If agency had provided for cross-examinations in past but not here and didn’t explain deviation

o 3. Extremely compelling circumstances

- Formalistic reading: extra procedures imposed in cases such as Nova Scotia are derived from the APA, whereas the

procedure imposed by Bazelon here had no such basis

- Narrow reading: Vermont Yankee today seems to say courts can't add oral cross-x to §553 requirements

- Supreme Court has never addressed question of whether paper rulemaking is valid

o Doubtful that its consistent with APA rules

o Connection between judicial review and paper rulemaking

III. The Choice Between Rulemaking and Adjudication as a Policymaking Tool

Adjudication results in judicial-like orders, standards, and policies w/ vague contours, whereas rules are fixed and create

bright-lines

- Policymaking through adjudication is easier, flexible, and less subject to political oversight

o Agency can shift position w/ reasoned explanation; cases can be distinguished

o Must apply to present case, but may also have precedential effect (cannot have purely prospective effect,

whereas RM must have purely prospective effect)

SEC v. Chenery Corporation (Supreme Court, 1947): SEC forcibly reorganized public utility companies, compelling

Chenery group to divest preferred stock it had bought up (in anticipation of reorganization such that it would retain

controlling voting power); SEC said Chenery group was violating judicial state fiduciary law SCOTUS struck

decision down (was based on common law cases – misread; later based on statutory grounds, but SC said they could not

invoke statute because it was not the grounds for the decision); SC upheld decision in Chenery II

Rule from this case: Agencies can have discretion to adopt rule-making or adjudication in promotion of its policies

- Can use either or both in conjunction; lots of flexibility

- Only limitation is retroactivity – must balance costs with benefits

Chenery I Principles:

1. Reviewing court can only affirm agency decision on grounds put forth by agency itself

a. Rationale: Court will not encroach on Congress' delegation of authority to agency to makes these sorts of

decisions (if it supplies own rationale, might affirm on grounds agency would never have used)

2. Proper remedy is remand, not reversal

3. Agency's decision cannot be defended/rationalized post-hoc by lawyers

a. Congress’ delegation is to the agency, not the court

4. Consequences:

a. Agency must state its rationale in a way that’s clear enough to make a judgment about whether agency’s

decision is sustainable

b. Actually has to be agency’s decision

c. What happened in this case: remand when agency hasn’t properly justified decision; gives opponents of an

agency’s position enormous leverage

i. Remand delays imposition of new regulation

Chenery II Principles (SEC made same decision on "fair and equitable" grounds; simply changed rationale):

1. Agency can make policy through RM or adjudication (assuming no specific restrictions)

2. Commission was free to come to whatever conclusion it wanted, so long as it were to bring to bear

on the

facts the proper administrative and statutory considerations

3. Court can only disturb commission’s conclusion if it lacks any rational and statutory foundation

4. Adjudication can have retroactive effect unless the harm resulting from retroactivity outweighs the mischief

that would occur if agency didn't have leeway to adopt policy it thinks most appropriate

i. If retroactivity is approved, you can’t impose liability, fines, or damages

ii. Can order to cease and desist

iii. Adjudication is only means of retrospective application (rules are prospective)

5. Whenever there’s an open-ended or ambiguous statute, will have some level of retro-activity

a. Usually a transitional problem

b. When agency announces a policy in adjudication its bound to apply it until it distinguishes or changes its policy

Chenery Principles give agencies flexibility to address unforeseen contingencies, may lead to better, more

sophisticated policies through building of adjudicatory precedent

Jackson (dissent): administration outside the law! Calls it administrative authoritarianism; Must inform parties prior to

application of new policy to them; or, if agency is applying existing law to facts, must explain how it's doing so

- Should have promulgated policy via RM and Chenery group should have been immune

- Manning prefers dissent unfair to punish Chenery for violating policy that had never before been spelled out

o But how to enforce? Various levels of generality how specific would we get?

5 USC §706 – Scope of (Judicial) Review (p. 985)

- 2 extremes: de novo review (start from scratch) vs. enforcement without any review

o Everything we talk about is somewhere in between

- Court will typically give agency deference if you’re in a range where reasonable people could disagree

- §706(2)(a) Arbitrary and Capricious Test

o Questions of fact in informal proceedings

o All policy

o Fall back provision

- Harmless error is not a ground for reversal

- Traditionally questions of law were subject to de novo review

- For mixed questions, court deferred to agencies (accepted agency’s position)

- Over time, dichotomy between the 2 eroded

IV. Judicial Review and Questions of Law

APA §706: Standard of judicial review of agency action (including rules and orders)

1. "Arbitrary and capricious" test is the default test for permissibility of agency action

2. Courts can also overturn unconstitutional actions

3. Non-statutory review (actions totally outside statutory authorization)

a. Rarely invoked arbitrary/capricious test usually covers this

4. Procedural review

5. Substantial evidence test (for factual determinations in formal proceedings)

a. If a record exists, court must examine it during review

Chevron v. NRDC (SC, 1984) *THE DEFINITIVE TEST FOR DEFERENCE TO AGENCY ACTION*

Facts: Clean Air Act imposed new restrictions on "new or modified stationary source" of air pollution (anything that adds

new emissions) must satisfy lowest achievable emissions rate

- Point-source interpretation (one smoke stack counts) vs. "bubble interpretation" (entire plant)

o Bubble: new and cleaner smoke stacks replacing dirtier stacks don't count as "new or modified stationary"

sources

- Issue: Whether the EPA’s decision to allow States to treat all of the pollution-emitting devices within the same

industrial grouping as though they were encased within a single “bubble” is based on a reasonable construction of

the statutory term stationary source

- What does “stationary source” mean?

o Pure question of law

o Court says agency is more expert and more accountable because they answer to the people through the

president

- Marbury v. Madison: holds that Supreme Court can invalidate acts of Congress as unconstitutional

o Emphatically province and duty of judiciary to say what the law is

o Power of law declaration is part of judicial power

- 2 types of statutes:

o 1. Purports to define our rights and responsibilities in a direct way; may be ambiguous, but idea is to define our

rights and responsibilities

o 2. One that tells agency to define our rights and responsibilities within boundaries set by statute; give agency

responsibility of fleshing out statutes

Congress has told agency they’re responsible for deciding what the vague language means

- Court must ask: has agency stayed within the boundaries set by delegation?

o Next question: is it a reasonable interpretation, or is it arbitrary and capricious?

Holding: when a statute is clear (Congress has spoken directly to the issue), agency must implement as written; but when

statute is ambiguous, courts must review not based on how they would have ruled but on whether or not agency

interpretation is a reasonable/permissible one

Chevron Step 1: Has Congress spoken directly to the issue (is text clear or ambiguous)?

Use traditional tools of statutory interpretation

- If statute is clear, that’s the end – Congress wins

Chevron Step 2: If statute is ambiguous, is agency interpretation reasonable? If yes, court must accept interpretation

Arbitrary/capricious standard; Hard Look review

- Assumption: ambiguity in an organic act is an implicit delegation to the courts

- Assuming that Congress delegated power to agencies is the least worst outcome, constitutionally

- Representative democracy is a deeply embedded constitutionally value

o Agencies are accountable to the people through the Chief Executive

- Is the Court abdicating Art. III duty/§706 standard of judicial review?

- Tension between §706 (suggests Congress wanted courts to exercise traditional powers of judicial review) and

delegation, which implies Congress wants agency to interpret statute

o Agencies are accountable to the people but courts aren't, so we will presume Congress would prefer agency

make policy

o Presumption comes at the cost of diminishing separation of powers

o Chevron cuts against Chadha and Bowsher, makes agency delegation more attractive b/c Congress can hand off

ambiguous statutes and still retain levers of control

Chevron Step 1: The Effects of Textualism

MCI v. AT&T (Supreme Court, 1994): how do you resolve whether Congress has spoken directly to the question? What

tools of construction do you use?

- FCC exercised power to “modify” requirements of 47 U.S.C. §203, ruling that all carriers other than AT&T

were exempt from filing rates acceptable interpretation of statute?

Holding: (Scalia) “Modify” does not mean exempting every company other than AT&T from filing requirements; modify

= slight change (dictionary argument)

- Scalia also employs structural/purposive argument: tariff rates are the heart of the statute; surely Congress did not

mean to let the FCC eviscerate the heart of the statute w/ so ambiguous a grant of power as the power to “modify” a

clear-statement rule: if Congress wants to give FTC the power to so substantially alter the statutory framework, it

must say so

- This case typifies an aggressive step 1 approach

o If aggressive step 1, lose lots of benefits of agencies

Dissent: (Stevens) Purpose of the statute is to give FCC the power to control monopoly behavior; in this light, “modify”

can be understood to confer very broad grant of power; alternatively, “modify” can be sufficiently ambiguous to show

Chevron deference to FCC

MCI v. AT&T illustrates the idea that textualists will typically examine statutes more thoroughly by employing all

available methods of statutory interpretation at Chevron Step 1, thus leading to a “clear meaning” more often and

reaching Chevron Step 2 less often

BUT surely Chevron does not mean judges should only move to Step 2 when interpretation at Step 1 leads to literally no

clear answer whatsoever (this would render Chevron meaningless); thus, the relevant question is at what point do we cut

off the Chevron Step 1 inquiry?

MCI v. AT&T may also be driven by concerns over nondelegation in the Chevron doctrine

- If you give a broad reading to “modify,” essentially delegate the power to repeal a statute to the agency

o Court is saying we’re not going to allow Congress to give the agency the power to regulate an agency

this big

Chevron Step 1: The Role of the Nondelegation Doctrine

FDA v. Brown and Williamson Tobacco: does FDA have power to regulate tobacco?

Facts: in 1938, most understood FDCA to not cover tobacco, but FDA claimed tobacco fell under their jurisdiction as

scientific evidence developed; manufacturers’ intent could be inferred from their cognizance of tobacco’s harmful effects

Holding: Tobacco is not a drug

1. According to FDCA and agency’s findings, tobacco would logically have to be banned if classified as a drug

(misbranding argument)

2. Ratification Argument: FDA has testified throughout time that it had no jurisdiction over tobacco Congress’

regulatory statutes passed against this background (6 times), thus ratifying the FDA’s long-standing position (statutes

lend more specific meaning to FDCA)

a. Yet Court relies on FDA congressional hearings for this proposition, which is the weakest form of legislative

history

b. Court also points to fact that Congress tried and failed to pass bills conferring jurisdiction over tobacco to FDA

(not very convincing legislative history)

c. Grasping at straws by invoking weak LH to justify holding?

i. Manning says its almost impossible to conclude that the text of this statute doesn’t apply to tobacco

ii. Indefensible that court is looking at materials that would not otherwise be looked at

iii. Clear that FDA’s reading is what was in the range of what Congress intended; plausible interpretation

d. Court says this is an important industry – has political power

i. Won’t assume Congress implicitly gave agency power to regulate this industry

3. Tobacco ban would directly contradict Congress’ intent to keep tobacco legal

a. Court construes FDCA in light of later statutes

b. Show Congress is regulating industry

i. So elaborate that its read as a ceiling and as a floor

4. LIKE HOLY TRINITY – can’t imagine Congress approving regulating industry – must explicitly say “we’re

regulating tobacco”

a. Statute is designed to give agency flexibility; can change with the world; Court says no

b. Holy Trinity is motivated by the nondelegation clause of Benzene

Dissent: Agency might find ban (instead of regulation) would lead to negative net effect (withdrawal, unsafe black market

cigarettes) ban compulsory only if agency has no way of making tobacco safe (and even so, agency has discretion to

impose conditions instead of ban)

BIG PICTURE: This case, like MCI, is an example of an aggressive step 1

- Show approach court will take when there’s a nondelegation question at issue

- In MCI court uses a textualist reading

- This case is more purposivist/congressional intent

- Chevron is a pro-delegation case

- Court is going out of its way to narrow meanings of statutes in these cases; Benzene cases

BIG PICTURE: Court ruling is a reflection of nondelegation concerns arising from Chevron don’t want to allow FDA

such huge power through mere implication because regulation of tobacco has huge economic and political implications

legislature’s job, not that of agency

- Is the majority invoking a policy rationale (going back to Holy Trinity) by basically stating because tobacco is so

important in America, Congress could not and should not have granted FDA a huge swath of power through an

ambiguous statute?

- When delegation seems unlikely, the Court will use a more aggressive Chevron 1 analysis and read the statute more

narrowly (i.e. the Benzene case) inevitable introduction of individual policy bias and judgment calls

Questions of Policy: The Hard Look Doctrine

MVMA v. State Farm: Arbitrary/Capricious standard applies to any change in policy

Facts: Standard 208 adopted pursuant to federal traffic statute mandated cars be built w/ passive restraints; Dept. of

Transportation revoked this requirement, claimed it would not lead to appreciable increase of seatbelt use or lives saved

- Manufacturers had option of either installing airbags or detachable automatic seatbelts; vast majority would opt for

latter because it’s cheaper

- Agency argues b/c belts are detachable, they would have virtually no positive effect, no conclusive studies suggesting

belts would save lives

Holding: Agency repeal of standard was arbitrary and capricious

- In 1946: arbitrary and capricious test is default standard of review

o Agency’s policy position presumed to be supported by the facts unless challenges prove there’s no reasonable

basis

- By 1983: different understanding of arbitrary and capricious

o Strict standard of review (even though 553 doesn’t require it)

o Agency must supply a record and explain its decision; must explain how it reacted to comments

If it doesn’t, decision is arbitrary and capricious

Substantive analogue to procedural changes we saw in Nova Scotia

o Part of idea that there would be better agency decision-making and less influence by interest groups if court

took a hard look at agency’s decision

Does not interfere with exercise of agency’s delegated power because it simply looks at agency’s

method of reasoning; not second guessing or challenging decision

Courts are not trying to substitute their own decisions, and therefore not undermining

delegation

- Court in this case says scope of review under arbitrary and capricious standard is narrow and a court is not to

substitute its judgment for that of the agency

o Court must consider whether the decision was based on a consideration of the relevant factors and whether

there as been a clear error of judgment

o If decision is unsupported, will remand case to agency

- Agency rule is arbitrary and capricious if:

o Agency has relied on factors which Congress has not intended it to consider

o Entirely failed to consider an important aspect of the problem

o Offered an explanation for its decision that runs counter to the evidence before the agency

o Is so implausible that it could not be ascribed to a difference in view or the product of agency expertise

- Spectrums of Review:

o De novo review: court looks at what agency did/evidence they used and draws its own conclusion; makes an

independent decision

o Clear error: used by appellate courts; firm, definite conviction that error has been made

Must be 60-40 convinced that agency is wrong

o Rationality review: can you imagine a rational person making this decision?

Court doesn’t have to agree, but decision must meet a standard of rationality

- Court says it has to ensure that the agency considered all of the options

o Process-based test, but that inevitably requires a substantive judgment – one of the dangers of the arbitrary and

capricious test

o Supposed to check agency’s reasoning, but court inevitably decides whether it agrees with the agency’s policy

justification

- Hard look doctrine inevitably produces substantive second guessing of agencies; counterproductive

o Informal rulemaking was supposed to be light, easy, and with few procedures

o Now there are many

o §553 notice and comment RM technically doesn’t require compilation of a record, but Hard Look demands

review of relevant facts, so agencies are now essentially compelled to compile evidentiary record to support

their policies

o Best gloss on hard look doctrine: makes agency responsible for the kind of reasoning its engaged in

- Court will apply the same standard of review to repeal of a regulation as it will to the enactment of a regulation; any

change in agency policy must pass arbitrary/capricious test

- Agency completely ignored possibility of changing standard to require airbags

o Is the Court injecting policy bias? Assuming effectiveness of such an option?

- Agency failed to consider effect of inertia; to not use automatic seatbelts, users would have to actively detach the belt

first, and because most people are lazy, at least some extra users will result

- At Chevron Step 2, question of policy judicial review standard: arbitrary or capricious?

o When agency’s decision is more impressionistic and based on a more general balancing of policies, court tends

to be less aggressive in applying arbitrary and capricious test than it is in cases like SF with hard-edged, factual

decisions

- Vermont Yankee struck down idea of using arbitrary/capricious standard to impose additional procedures, but MVMA v.

State Farm blessed the idea that agencies must meet a pretty strict standard for notice and general statement

(substantive review rather than procedural)

Situations in which an agency rule would likely be arbitrary and capricious:

1. If the agency has “entirely failed to consider an important aspect of the problem”

a. Agencies basically only need to respond to public comments that make significant objections or propose

sufficiently concrete and reasonable alternatives; alternatives not proposed by commentators but obvious and

logically relevant based on agencies’ own statements or prior actions must also be considered

b. But how thorough does the agency response have to be (the same concern raised in Nova Scotia regarding what

constitutes an adequate response in general statement)?

2. If the agency has “relied on factors which Congress has not intended it to consider”

a. Even if agency explanation seems reasonable, it is arbitrary/capricious if the explanation is not based on factors

Congress has deemed important or worse, is based off of factors Congress has indicated it does not want the

agency to consider

3. If the agency has “offered an explanation for its decision that runs counter to the evidence before the agency, or

is so implausible that it could not be ascribed to a difference in view or the product of agency expertise”

Advantages and Disadvantages of Hard Look Review

Advantages Disadvantages

1.Ensures broad participation by diverse group

of agency staff members

1.Generalist judges likely to make mistakes +

improperly substitute own judgment; judges more

2.Reduces various cognitive biases like

overconfidence, “tunnel vision” or groupthink

3.Mitigates ability of parochial special interest groups

to exert undue influence over

regulatory policy

4.Meaningful citizen participation b/c greater incentive

to take public comments seriously

likely to make mistake when reviewing broad

regulatory rule, thus incentivizing agencies to rely

on adjudication more often!

2. Costly for agencies to produce elaborate

and thorough records ossification, which

inevitably helps special interest groups who can

take advantage of procedural burden

3. Ossification may lead to better agency

decisions, but the burden imposed runs

counter to the underlying purposes and

compromise of the APA

60-second rundown of the history of Legislation & Regulation- Began with the assumption that judges should construe legislation on the inference that it was written by reasonable

people; enables judges to make sense of the law

- Look at legislative history, mischief, clear statement rules – ask what a reasonable person would have done, all

things considered

- Court now has a different view of the problem – still purposivist; should be interpreted to ascertain purpose

- Different now: court pre-supposes capacity to come up with broad conception of what reasonableness is

- Court today believes society is full of disagreement

o Congress is where people work out disagreements and compromise by enacting statutes that draw

lines of exclusion and inclusion

o Ask how much Congress has resolved and how much is left for courts to resolve

- Focuses on text of statues; looks at legislative history, but prudently

- Concern about whether legislative history deviates from text’s meaning

- Still purposivist interpretation, but not as strong as it once was; would risk substituting something someone slipped

in; focuses on compromise

o Checks to see if absurdity upsets compromise

- Costs to emphasizing text and compromise

o Law is less coherent/not always fair

o Court is now making conscious/well-reasoned choices about how to approach these problems

- Constitution: detailed document, lots of allocation of power

o Many procedures for selecting people; 3 branches, 3 powers

- Rise of administrative state

o Mostly can be reconciled with the Constitution

o Way to get delegation from Constitutional structure

- Congress can determine only through bicameralism and presentment

- Balancing test: president’s need to control agency’s removal is central to function

o Is scheme taking away too much of president’s power?

- When thinking about constitutional structure, what’s the right approach

- Myers v. US rests on historical meaning

- Morrison = more functional approach

- APA – careful compromise

o Rulemaking was supposed to be a political policymaking process that approximated the legislative

process

- Validity was to be judged based on arbitrary and capricious test to show supported by facts unless challenges could

show otherwise

- Judge re-struck a balance: believed agencies were being captured by industries they were regulating

o Ironic because they benefit the most from the ability to delay agency proceedings

- Not clear that courts got it right when they adopted hard look review – against what Congress wanted

§ 551. Definitions

(2)''person'' includes an individual, partnership, corporation, association, or public or private organization other than an agency;

(3) ''party'' includes a person or agency named or admitted as a party, or properly seeking and entitled as of right to be admitted as a party, in an agency proceeding, and a person or agency admitted by an agency as a party for limited purposes;

(4) ''rule'' means the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency and includes the approval or prescription for the future of rates, wages, corporate or financial structures or reorganizations thereof, prices, facilities, appliances, services or allowances therefore or of valuations, costs, or accounting, or practices bearing on any of the foregoing;

(5) ''rule making'' means agency process for formulating, amending, or repealing a rule;

(6) ''order'' means the whole or a part of a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than rule making but including licensing;

(7) ''adjudication'' means agency process for the formulation of an order;

(8) ''license'' includes the whole or a part of an agency permit, certificate, approval, registration, charter, membership, statutory exemption or other form of permission;

(9) ''licensing'' includes agency process respecting the grant, renewal, denial, revocation, suspension, annulment, withdrawal, limitation, amendment, modification, or conditioning of a license;

(10) ''sanction'' includes the whole or a part of an agency -

(A) prohibition, requirement, limitation, or other condition affecting the freedom of a person;

(B) withholding of relief;

(C) imposition of penalty or fine;

(D) destruction, taking, seizure, or withholding of property;

(E) assessment of damages, reimbursement, restitution, compensation, costs, charges, or fees;

(F) requirement, revocation, or suspension of a license; or

(G) taking other compulsory or restrictive action;

(11) ''relief'' includes the whole or a part of an agency -

(A) grant of money, assistance, license, authority, exemption, exception, privilege, or remedy;

(B) recognition of a claim, right, immunity, privilege, exemption, or exception; or

(C) taking of other action on the application or petition of, and beneficial to, a person;

(12) ''agency proceeding'' means an agency process as defined by paragraphs (5), (7), and (9) of this section;

(13) ''agency action'' includes the whole or a part of an agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act; and

(14) ''ex parte communication'' means an oral or written communication not on the public record with respect to which reasonable prior notice to all parties is not given, but it shall not include requests for status reports on any matter or proceeding covered by this subchapter.