CREATING AN AGENCY Why purposes

University of Michigan Law School Administrative Law, Spring 1999 Professor Croley Compiled by Matthew Schneider

Collective Action 1 __If everyone is doing X, my addition wont help anything. 2 __If no one is doing X, my efforts wont help anyway 3 __Either way, I dont act. --Groups do what people cannot do on their own --Groups respond to societal problems on behalf of society --Some people dont participate in the group, but it works for a collective good --Collective action is not common --Political surrogates may not be effective as agent-principal messenger --Groups will overstate the average citizens interests --Are groups Panglossian (really trying to help the public good) or Hobbesian (self-interest) --Critics of administrative state say agency costs are greater than collective action costs. Supporters of state: costs of collective action are worthwhile and less than agency costs. Market failure 1 __Suppliers mislead consumers, and consumers legal remedies are too expensive or impractical, or both. 2 __Consumers cant easily see market runners are scamming them 3 __Market on supply side fails to furnish the needed information to consumers -- scarcity 4 __Excessive competition leads to monopolies and consumers lose 5 __Predatory pricing hurts consumers as well as other businesses 6 __In a perfectly competitive market, we wouldnt have these problems 7 __Unequal bargaining power says it all. Woodrow Wilson The Science of Administration __The field of administration is outside the sphere of politics. Run it like a business. __Dividing out power to the agencies obscures power, and can make it irresponsible. But this problem outweighed because power held by the few can be even more irresponsible. Alternatives to agencies __Nature Dont use government to manage everything __Market Markets regulate risks better than agencies __Common Law Common law tort, nuisance law do what agencies do How Congressional Act Organic Statute APA sections What 1 __ Independent agency (Independent Regulatory Commission)
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__Advisory agency only (Defunct Administrative Conf.) __Rule-making agency (EPA, FTC, CPSC) __ Executive agency __Cabinet status __Non-cabinet status __Regulatory (Council on EQ) __Non-Regulatory (CIA) __Hybrid: Both Executive and Independent (Comptroller of Currency) __Congressional (Congressional Budget Office: non-regulatory)

Argument in favor of Administrative State: __Responds to collective action problems Against: __There are other ways to solve groups problems: nature, markets, common law __Markets should be less regulated. Admin state gets in way of econ development __Entire administrative state is unconstitutional. Violates separation of powers. Arguments in favor of groups: __Group act only when individuals cannot __Groups represent the best interests of society __Groups fight to keep goodness available for society, where enjoyment of a good is joint __Those who cant afford to participate in group litigation still get benefit of victory __Elected reps have other things to do than to act on what groups can do Against: __Groups are not representative __Citizens already have elected representatives to help with these problems __Groups overstate the average citizens interests

How do you determine why an agency passed a certain regulation? Organic statute Congressional intent

CONTROL OVER AGENCY Constitutionality of Delegation All executive agencies are created by Congress, so they must comply with their enabling act. Legislature may delegate its powers to agency only under certain conditions.
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TEST:

Delegation generally allowed under Necessary and Proper Clause: Art. I, 8 But Art. I 1 also says all legislative powers shall be vested in a Congress. (Necessary and Proper prevails over Separation of Powers argument)

When delegation is not allowed: 1 2 3 4 5 6 7 __Delegation must supply standards, rules of conduct, procedures. (Schechter) __Cant delegate to private parties. This is del. in its most obnoxious form. (Carter Coal) __Must delegate with reasonable specificity. In Panama Refining, provision giving president power to prohibit interstate transportation of oil uncon b/c doesnt say when pres was to exercise this power. __Congress can only delegate powers it has. __Congress cant delegate all its powers (cant set up impeachment agency) __No delegation if violates separation of powers __Rhenquist seems to want to bring back the non-delegation doctrine

When delegation is allowed: 1 2 __ Intelligible Factors (based on J.W. Hampton) If Congress shall by legislative act lay down an intelligible principle to which the agency must conform, then the delegation is constitutional. __ Yakus Factors __Delegation allowed as long as agency administrator can determine that in his judgment will be generally fair and equitable and will effectuate the purposes of the Act. This is the standard of review. __Agency administrator is trusted to use his judgment at what is fair and equitable __ Amalgamated Factors __The standards of a statute are not to be tested in isolation and derive meaningful content from the purpose of the Act, its factual background, and statutory text. __Look at purpose and legislative history, not just the Act. __Even if the delegation seems broad, it will still be constitutional because the standards in the act limit it. __ Mistretta Factors (upholds delegation to form sentencing commission) __Separation of powers does not mean the three branches must be entirely separate and distinct. New innovations do not automatically make delegations unconstitutional. __Delegation is uncon only if powers are more appropriately performed by other branches or it undermines the integrity of the judiciary. __ Morrison Factors (Special Prosecutor / Indep. Counsel is ok delegation) __Delegation is ok b/c Special Prosecutor is inferior officer, so Pres. need not appoint. __Limited duration of Special Prosecutor helpful factor in finding this delegation ok.

What we know about the constitutionality of delegation: (Croley) 1 __Congress can do it. 2 __Doesnt matter which power it is.
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__Intelligible principles are now more like intelligible factors __Impermissible delegations are so b/c they violate separation of powers __To whom delegated refers to he who has the power to appoint/dismiss delegatee

Arguments for delegation: (Mashaw) __Rule of law is good, but so is justice in individual cases. __Delegation allows presidents to make policy that voters want him to. Without delegation, he would have to go through Congress, which would be difficult __Cant legislate with specificity. Agencies can. __Its good that accountability is spread around, b/c Congress is already too busy __Courts keep those delegated to in check. If agency is wrong, court can overrule. __If court is wrong, Congress can overrule court. __Courts are kept in check, but legislature is not. Arguments against: __Congress delegates so it can spend more time raising money, running for reelection, constituent services and porkbarreling (Mayhew) __Dilutes legislative accountability. Congress blames poor decisions on agencies. __Congress uses delegation to duck, and hide from its responsibility __Delegation may be unconstitutional, as it violates Art. I and separation of powers

After Delegation: Limits of Congressional Control Veto Power (Legislative Veto) __Chadha: Unicameral legislative veto after delegation to Executive unconstitutional __Once Congress delegates authority, it must abide by it until that delegation is legislatively altered or revoked. __Congress cant have its cake and eat it, too.

Legislative Removal (Bowsher) (Congress cant remove the Comptroller b/c he is Officer) __Once an officer has been appointed with advice and consent of Senate, Congress can remove him only through impeachment __If Congress tries to remove officers without impeachment, it violates separation of powers __If Congress prepares a report to determine how the President must cut the budget, this also violates separation of powers. Instead of removing Officer, such as Comptroller, Congress could: 1 __Make more precise specifications in original legislation 2 __Write general legislation and follow with later, more specific bills 3 __Control Officers by yanking the purse strings Control of Budget What is an Officer? See Executive Appointment.

Executive Control Appointment power TEST: 1 2 President must appoint Officers w/ advice and consent of Senate (Art. II, 2, [2]) __If the appointee has significant authority, he is an Officer and must be appointed (Buckley v. Valeo) __Significant authority includes authority that combines all three branches: __Rulemaking (legislating) __Adjudication (judicial) (Buckley) __Prosecutorial and enforcement power (executive) (Buckley)

__None of these alone is enough to show significant authority. Example is special prosecutor, who has high enforcement power but is still classified as inferior officer
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and doesnt need to be appointed by president. (Morrison) __Presidents choice of inferior officers may be delegated to agencies (Buckley) __Special Prosecutor need not be appointed because: (Morrison) __Can be removed by Attorney General __Performs specific functions __Serves for limited duration (Best Argument)(Unlike agency heads) Removal power TEST: Executive agency: Pres can remove at will (Myers) Independent agency: Pres can remove only for cause (Humphrys Executor)

Myers: __Congress cant take away Presidents power to remove Officers __Congress can limit Presidents power to remove inferior Officers __President may remove under power that laws are to be faithfully executed __Taft says President doesnt need to get approval of Senate to remove Wiener: __President doesnt have any removal power over inferior officers unless Congress authorizes it. Almost always Congress wont interfere with president. White House review of Agency Action: __White House review is allowed __Cost-benefit analysis of Reagan EO still used, with Clinton EO input __OMB cannot use review of Agency action to delay promulgation of regulations beyond date of a statutory deadline. EDF v. Thomas. 4 __OMB has power under Paperwork Reduction Act to review reporting requirements, but not disclosure requirements. Dole v. United Steelworkers. Reagan EO and Clinton EO: Reagan EO: Power to Agency director; White House review; cost-benefit analysis Clinton EO: Cost-benefit analysis still used, but mandates input from the people Arguments for White House review of agency action __Rulemaking is not the only source of expert knowledge let the executive look at it __Regulation has several flaws that White House can oversee: __Excessively risk-adverse __Favors narrow groups at expense of larger public good __Spends too much on idealistic goals without paying attention to others, or to money __OMB staff is more expert than agencies in field of regulation __OMB review is a check on agency power and makes them do a better job __Administrative cost of OMB review is small compared to big social cost of bad regs. Arguments Against: __Review can be a power-grab by Executive. EDF v. Thomas. __OMB staff cannot examine complex regulation as closely as agency staff.
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TEST:

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__OMB review is not public, and may just be a cover-up for Executive power Counter: this cant happen, b/c agency review must be justified on the record __White House review delays promulgation. Counter: usually not much and for good cause Arguments for Cost-Benefit analysis: __Croley supports cost-benefit analysis. __Best solution can be chosen from several options. Ex: In Nova Scotia, agency picked best solution rather than ending the fishing industry. __Takes into account the whole system, not just one part (Chevron - Smokestacks) __Methods; ex ante, ex post, willingness to pay, willingness to accept. Most often measured with ex ante willingness to pay. __Scarcity is really taken into account here, unlike other theories. __Once a tool of Reagan, now cost-benefits embraced by all, and even enviromentalists __Dont judge cost-benefit theory by any one problem, but look at it as a whole __There is nothing unconstitutional here. Engler would call it sound science. Arguments Against: __No principled basis for choosing different methods of measuring __Monetary evaluation of risk cant measure other forms of risk cant translate dollar cost into other types of cost __Data can be easily manipulated by Executive. Even if cost-benefit is done in good faith, there is still much room for spin. Political biases manipulate. __Whose costs and whose benefits may differ between people __Very difficult to assess all the factors, so how can you weigh w/o all of the evidence? __Cost-benefit not necessarily fair to those who lose out Other Executive Powers 1 __Executive Orders __Not legally binding. Legality based on substance of the E.O. __Authority comes from general Art. II powers. 2 __Veto Power: President can veto bills that create agencies 3 __Informal pressures: Presidents personal contact with legislators crafts legislation 4 __Agenda setting: President controls agency priorities; directs when agencies pass regs Limits of Executive Power: __Presidential actions not reviewable for abuse of discretion claim (Franklin) __Presidential actions can be reviewed on Constitutional concerns (Franklin)

ACTIONS OF AN AGENCY Is a regulation needed? Reagan EO: cost-benefit Clinton EO: maybe nothing at all is needed.
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How to make a regulation: Rule or order? TEST: The choice between proceeding by general rule or by litigation is one that lies primarily in the informed discretion of the agency. Chenery II.

-- Orders are deciding administrative law cases / Judicial function -- Rules are legislative functions -- When it is going through the process, its a rule; once published in the federal register, its a regulation Advantages of Rulemaking: __Opens up agency policy making to public criticism and comment __Notice creates more public participation and thus society can help choose its own laws __Usually leads to more consistent treatment of similarly situated individuals. Disadvantages: __Uniform rules may ignore relevant differences and create bureaucratic rigidity __Encourages overly-expansive interpretation of Congress original intent __Public shouldnt participate in scientific decisions as they are not experts Advantages of Adjudication (Orders) __Decisions made in context of a specific situation also clarifies related questions __Allows for case-by-case fine tuning __Adjudication decisions are flexible and open-ended __May be only feasible course if there is lack of knowledge or political disagreements Disadvantages: __General orders may not apply to specific individual cases __Adjudication is reactive, not proactive. Agencies have less control over policy making, since policies are announced only when cases about them happen to come up.

All Rulemaking begins here: TEST: 1 2 __Body must be an agency, authorized to make rules 551(1) __Agency not required to use rulemaking if: __Matter involves military or foreign affairs 553(a)(1) __Matter involves agency management, personnel, public property, loans, grants,
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benefits, or contracts 553(a)(2) __But, agency can still use rulemaking if it wants to (553(a) implication)
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__Notice must be given to affected persons __Personal notice allowed if persons are personally served 553(b) __Publish in Federal Register for general notice: 553(b) 1 __Statement of time, place, and nature of public rulemaking 553(b)(1) 2 __Reference to legal authority by which rule is proposed553(b)(2) 3 __Language of rule, or description of topics / issues covered 553(b)(3) __No notice required if: __No notice needed if agency is promulgating interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice. 553(b) __No notice needed if agency determines, with good cause, that notice is impractical, unnecessary, or contrary to public interest 553(b) __If hearing on the record is required, go to formal rulemaking (adjudication) __If no hearing required, go to informal notice and comment.

Formal Rulemaking If statute (usually agencys organic statute) requires rules to be made on the record, after opportunity for agency hearing, this is formal rulemaking and must look to 556-557. (Directive in 553(c)) 1 2 __Oral hearing is required (Florida East Coast Rail)

__Doesnt need to specifically say hearing to require a hearing. (Fl. East Coast) __Courts like to find that organic statutes require hearings even if they dont contain the magic words. __Lower courts have understood the words on the record and hearing to usually always require a hearing. __But, language from ICCs enabling act authorizing the Commission to act was not enough to require a hearing. Allegheny-Ludlum Steel. __If a new rule applies to only a small number of parties and / or turns on sharply focused and disputed facts, there may be a due process argument that hearing is required. When hearing is required because of a due process matter, it doesnt matter if statute doesnt call for it. Wong Yang Sung. __Persons entitled to hearing must be given notice. 553 (b) __When time, the nature of proceeding, and public interest permit, agency should give all interest parties opportunity for submission and consideration of: 554 (c)(1) 1 __facts 2 __arguments 3 __offers of settlement
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__proposals of adjustment 553(d) 553(d)(1) 553(d)(2) 553(d)(3)

__Rule may go into effect not less than 30 days after publication Exceptions to the 30 day rule: 1 __Substantive rule grants exemption or lifts restriction 2 __Interpretive rule or statement of policy 3 __For good cause by agency

__To the extent that parties cannot resolve controversy by consent, agency shall give opportunity for hearing and decision on notice and in accordance with 556-557. (554(c)(2))

The Hearing itself: Adjudication 1

556

__Hearing shall be presided over by: (b) 1 __The agency 2 __one of more members of the body which compromises the agency, or 3 __a 3105 ALJ 4 __entity specially provided for in statute, as long as they are specifically provided for, and have independence and tenure comparable to an ALJ (Wong Yang Sung disallows prosecutor judges b/c they fail this test.) __Except as otherwise provided for by statute, the proponent of a rule or order has the burden of proof. (d) __Any oral or documentary evidence is admissible, as long as its not irrelevant, immaterial, or unduly repetitious. (d) __The whole record must be examined before an order is issued. The transcript of testimony and exhibits constitutes the exclusive record. __Violation of ex parte rules in 557 may be grounds for adverse decision. __A party may present case or defense by oral or written evidence, offer rebuttal, and conduct cross-ex.

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The Decision 557 1 __Before a decision is reached, parties may submit: 1 __Proposed findings and conclusions 2 __Recommended decision and reasons for it.
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__All decisions are part of the record and must include: 1 __Findings and conclusions on material issues of fact and law 2 __Reasons why 3 __Appropriate rule, order, sanction, relief, or denial thereof.

Informal rulemaking (notice and comment) If no requirement for formal hearing on record, can go to 553(c) for informal rulemaking: 1 __Notice must include invitation to any interested persons to submit comments on rule, including a deadline for submitting comments, with or without an opportunity for presentation 553(c) __Agency must give parties a chance to make meaningful comments, by providing them with the basic scientific or other data on which it is relying. Nova Scotia. __If comments are received, agency must consider them. 553(c) __After all comments are in, agency must publish concise general statement of basis and purpose for final rule553(c) __Statement need not be an exhaustive, detailed account of every aspect of rulemaking proceedings. Just the facts. United Mine Workers __But, terms concise and general in 553 (c) should not be read literally they must be accommodated to the realities of judicial scrutiny. United Mine Workers __Agency must provide some response to vital, material questions. Nova Scotia. __Agency response should enable reviewing court to see what major issues of policy were discussed and why the agency reacted to them as it did. Nova Scotia. __If regulations are based on facts, court will demand sufficient attention to them to find the true meaning of the regulations. Ethyl Corp. __If regulations are based on policy, risk assessment, or scientific knowledge, court will demand reasons and explanations, not just findings. Ethyl Corp. __If regulations based on policy, agency should explain why it followed a certain policy. United Mine Workers. __Rule may go into effect not less than 30 days after publication 553(d) Exceptions to the 30 day rule: 1 __Substantive rule grants exemption or lifts restriction 553(d)(1) 2 __Interpretatice rule or statement of policy 553(d)(2)
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__For good cause by agency

553(d)(3)

Informal rulemaking does not apply to: 1 __Interpretive rules 553 (b)(3)(A) Interpretive rules do not impose any rights and obligations and leave the agency free to exercise discretion, unlike substantive rules which have binding effect. Alaska v. DOT Substantive rules: __Sound mandatory __If it grants exemptions from the rule __If published in CRF, most likely substantive __General statements of policy (b)(3)(A) __Rules of agency organization, procedure, or practice (b)(3)(A)

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Hybrid rulemaking __Combination of both formal and informal rulemaking __Not really used today __Less detailed than 553, less complicated than 556-557 __Example is Magnuson-Moss FTC Act, which requires: 1 2 3 4 5 __Notice of proposed rulemaking __Solicitation and submission of written comments __Informal hearing with the following ingredients: __Oral or written submissions or both __Rebuttal evidence and cross-ex if issues of material fact are in dispute __Promulgation of final rule based on the rulemaking record __Statement of basis and purpose published

Negotiated rulemaking, followed by informal rulemaking 1 2 __Start with pre-meeting negotiation __Go to informal notice and comment

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JUDICIAL REVIEW OF AGENCY ACTION Agency action is usually not reviewed by courts, and courts usually dont set aside agency decisions after review either. TEST for judicial review: 1 2 3 4 701

__ Is this decision reviewable by a court at all? __ Can this party seek review? __ Is this the proper time? __ If so, what role should court have once its in court?

1) REVIEWABILITY: Can the decision be reviewed by a court at all? Requirements for review: 1 __ Jurisdiction To get into court, you need authority under a statute. Statute can be enabling act. If authority is not given there, can use authority found in general USC provision. 1 __Enabling Act may say judicial review is allowed __ 702 allows review within meaning of relevant statute __ APA itself does not allow judicial review, despite 702 (Califano) 2 __Other Statutes may allow judicial review if Congress didnt put in enabling act __ 28 USC 1331 gives general federal question jurisdiction (Califano) __ 28 USC 1337 gives jurisdiction under the commerce clause __ Venue, service __ Under 703, Proper venue and form must be attained to get judicial review. __ 28 USC 1391 disposes of the venue issues __ Sovereign Immunity Waiver __United States is immune from suit if you are suing it for money damages. __If you seek other than money damages (injunction, declaratory relief), then sovereign immunity defense of govt is waived under 702. __ Presumption: Even if its not in the statute, there is a presumption in favor of review __ Old test: If there is no statute, and no clear and convincing evidence on Congress behalf to restrict review, review is presumed (Abbott Labs and Overton Park) __ New test: But, if Congress intent to preclude review is fairly discernible in the
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statutory scheme, judicial review will not be allowed. Look not just at clear and convincing evidence, but look at what Congress fairly had in mind (Block- milk)(This opinion by OConnor cuts back on the broad clear & convincing test) __ In determining whether to grant judicial review, court should look to legislative history of statute to determine if Congress intended to preclude judicial review. If clear and convincing evidence of Congress intent is found, no review. 5 __ Preclusion by statute 701 (a)(1) __ If the statute itself says review is precluded, there can be no review. __ If Congress has an expressed intent to preclude judicial review, there can be no review. Heckler. __ Statute may preclude review even if it doesnt say so expressly. (Block milk case. Also implied in Armstrong.) __When person challenging agency action challenges the constitutionality of the enabling act on its face, preclusion does not apply (Johnson v. Robison denial of VA alternative service benefits) __ Clear and Convincing test is narrowed by fairly discernible test (Block) __ Abbott Labs 6 __ Preclusion by agency discretion 701 (a)(2) Even though Abbott Labs gives a presumption in favor of review, agencies may use their own discretion in making their decisions, and courts may defer to agency discretion, which then precludes judicial review. ***Agency action committed to agency discretion by law (a)(2) 1 __When statute is drawn in broad terms that would provide no meaningful standard of review, there is no law to apply and agency does not need to provide review. (Heckler -- death penalty drugs) __To determine whether there is law to apply, remember that this is a very narrow exception. Overton Park. 2 3 __ Silence by agency does not mean there should be review. Heckler. __ If Agency decides not to pursue a case brought by challengers, the Agencys decision will not be reviewable, because this is part of agency discretion. Heckler. __Agencys decision not to hear a case can be rebutted if statute has provided guidelines for the agency to follow when it uses enforcement powers. Heckler.

If these steps are satisfied, the reviewability test is passed, and the issue can be reviewed in court. Next, must determine if these parties have standing to come to court.

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2)

STANDING: 702

Can these plaintiffs get review of the decision? Standing doctrine rooted in Art. III, 2 cases and controversies

TEST: 1

__ Plaintiff must suffer personal injury in fact, economic or otherwise (Data Pro v. Camp) 1 __Injury must be distinctive, concrete, palpable, obvious injury (Duke Power) 2 __At least one member of group must have personal injury and be directly affected. (Sierra Club) 3 __Cant be injury that has happened only to others (Allen v. Wright discrim) 4 __May be future injury, but must be actual or imminent, not hypothetical. (Wright, Duke Power) 5 __I might go there someday not good enough. (Lujan v. DOW) 6 __Injury only happens to you if you use the area, not just the area around it. (Lujan) But, injury can happen only if you look at crocodiles. (Lujan) 7 __Pure psychological injuries are not palpable, so they are not injuries (Croley) 8 __Injury can be established through a fairly attenuated chain of causal connections. In SCRAP, court had to really connect the dots to find injury from freight rate increases to causing injury of more pollution. 9 __Injury can be one of aesthetic or recreational use. (Sierra Club) __Two-part nexus test must be met: 1 __ There must be a connection between what the agency did and your injury injury must be directly traceable to defendant (SCRAP does this b/c it traces rate increases to freight rates) 2 __ There must be a connection between what you want and what court can give court must be able to base its grant of relief in Constitution (due process), statute, or common law (Duke Power) __In taxpayer cases, there must be 1) a connection b/w taxpayer status and the statute challenged, and 2) a nexus b/w taxpayer status and the constitutional provision invoked. The only case we read on this was Flast v. Cohen, allowing review on 1st Amend. claim.

__ Plaintiff must be arguably within zone of interests protected by statute (Data Processing) 1 __All you need to show is that Pl. is beneficiary of consequences that Congress intended, as opposed to being the intended beneficiary. (Clarke v. Securities) (Data Processing: Competitor is within zone of interests protected by regulation preventing banks from entering its field) 2 __But, zone does not include plaintiffs whose interests are inconsistent with statutes purposes (Clarke) 3 __Zone also does not include plaintiffs only marginally related to statute (Clarke) (Air Courier: statute doesnt really seem to protect postal workers, b/c they are only marginally related to the statute)
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__Zone of interest test not always applied in constitutional cases. (Duke Power)

__ Courts may still deny judicial review even if two-part standing test is met, if Congress intended to deny review (Clark: at bottom the reviewability question turns on Congressional intent, and all indicators helpful in discerning that intent must be weighed.) __Standing can also be granted by statute, and Congress can make anything a case or controversy. Scalia disagrees, says this takes away pres power to faithfully execute law

Arguments for Liberal standing: __Agencies are biased against groups, and groups often have worthy causes __Helps special interests who have enough collective action problems as it is __What is the harm in letting all groups in, and then kicking them out on the merits? __There is no real harm in liberal standing besides resources, which isnt much Against: __Resources: liberal standing burdens courts. Croley; this argument isnt enough alone __Any interest groups can come in and press an issue, despite their real connection to it. This may harm representative democracy __No need to help groups, b/c they arent representative. __Groups such as Sierra Club already has a lot of power, so why make it easier for them? __Groups act in their own best interests, not the real interests of the society __Who will guard the guardians? If these requirements are met, plaintiff has passed the standing test and he is an eligible party to go to court with this issue. But, he must also pass the timing test.

3) TIMING: TEST: 1 2 3 4

Is this the proper time for judicial review? __Primary Jurisdiction __Exhaustion __Ripeness __Waiver

704

__Primary Jurisdiction Court may withhold relief if case involves an issue that might be decided by an administrative agency and court thinks it desirable that agency decides the issue before the court reaches its own decision. This happened in Texas RR v. Abilene __Exhaustion __ 704 itself requires final agency action
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__To achieve exhaustion, Presentment must be fulfilled. Eldridge. See Waiver. __No one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted. Myers v. Bethlehem. __Doesnt matter if claim is of irreparable damage (Brandeis) __But, in criminal cases, exhaustion doctrine is too harsh and should not be applied unless reasons for exhaustion clearly outweigh the severe burden to pl. if denied review. McKart. __Reasons for exhaustion, from McKart: __Want to avoid premature interruption of administrative process more efficient __Let agency develop necessary factual background to base decisions on __Give agency first chance to use expertise and discretion __Complaining party may win in agency, which would save courts time __People may ignore agency procedures if they think they can jump right to court __Executive and administrative autonomy courts should not interfere, trust delegation 3 __Ripeness Prevents courts from entangling themselves in abstract disagreements over admin policies, and protects agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by parties. Abbott Labs Must balance: 1 __Fitness of issues for judicial review. Abbott Labs __Must have been final agency action __If agency action is indefinite, saying only what actions the agency may take, it may not be ripe until agency actually does something. Toilet Goods. __Court looks to whether Congressional intent for agency to hold review is fairly discernable in the statutory scheme. That is, if its fairly discernable that Congress intended agency review, then agency must review. Thunder Basin. __Fairly discernable in statutory scheme is determined by looking at the statutes language, structure, purpose, legislative history, and whether claims can be afforded meaningful judicial review. Thunder Basin. __District Court has jurisdiction if claim is wholly collateral to statutes review provisions and outside of agencys expertise, particularly when a preclusion could end all meaningful judicial review. Thunder Basin. __Agency action that is unreasonably delayed can be ripe for review if agency is under a non-discretionary duty to act. Hardin. 2 __Likeliness of substantial hardship to parties of withholding court review Abbott Labs Serious hardship if: __Regulation requires immediate and significant change in plaintiffs conduct or their affairs with serious penalties for noncompliance __Effect of penalties for noncompliance is to eliminate all access to courts. Ex Parte Young, cited in Thunder Basin But no serious hardship if: __Refusal to comply would lead only to denial of certification, and no harsh immediate consequences. Toilet Goods. __Penalty assessments must be paid before review by appellate court. Thunder Basin.

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__Waiver 1 __For an agency to waive, there must at least be a presentment of the claim. __Without presentment, there can be no review. Eldridge. __Responding to questionnaire and letter is enough for presentment. Eldridge __Presenting claim to insurance company enough for presentment. Kidney Patients __Presentment valid even if made during litigation. Diaz. __Unnamed members of class who didnt actually file for benefits failed this requirement of presentment in Weinberger. You must present. __Only claims with respect to agency decision must be presented, not constitutional claims. Eldridge. 2 __Court can decide that exhaustion requirement is inapplicable or adequately fulfilled. __In Tataranowicz, court waived exhaustion to resolve an issue quickly even though issue was only about statutory interpretation and not important per se. Intensely Practical s. 1. __In Eldridge, claimants interest in having issue resolved quickly was so great that court agreed to waive exhaustion requirement. Intensely Practical s. 2. __In Bowen, claim was purely legal issue, but court waived exhaustion requirement b/c agencys position was fixed and they werent budging. __The "intensely practical" doctrine of Eldridge: __ If agency assesses a completely collateral issue which doesn't short circuit the main decision, exhaustion / presentment can be waived. Eldridge. __If there is a possibility of irrepairable injury and not clear that money will help pl. later, exhaustion / presentment may be waived. Tataranowicz. __Failure to make an argument to an agency precludes its use in court But, this wont always be true. In Sierra Club v. ICC, court allowed Pl. to raise for first time on appeal the adequacy of an environmental impact statement. Court felt that environmental concerns were too important to dismiss

If you have passed reviewability, standing, and timing, you have made it to court. Now you must get a favorable decision. To do this, look at the scope of judicial review court will use to try your case.

4) IN COURT: SCOPE OF JUDICIAL REVIEW 1

706

__To the extent necessary and when presented, reviewing court shall: 706 1 __Decide all relevant questions of law 2 __Interpret constitutional and statutory provisions 3 __Determine meaning or applicability of terms of an agency action __Reviewing court shall compel agency action unlawfully withheld or unreasonably delayed (1), and
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__Reviewing court shall hold unlawful and set aside agency action, findings, and conclusions found to be: (2) (A) __Arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law 1 __Finding of agency must be sustained on the agencys administrative record. If it is not sustainable on the record, finding must be vacated. Vermont Yankee. 2 __Administrative orders are judged by court on the record that agency based its actions upon. Chenery I. __This forces agencies to fill in the blanks rather than the courts __Puts parties on notice of what the issues are before review __Keeps agencies from raising arguments on appeal that werent raised initially 3 __Court must consider whether decision was based on consideration of the relevant factors and whether there has been a clear error of judgment. Overton Park. 4 __Consideration of relevant factors may require court to immerse itself in technical evidence, to see whether decision was rational and based on consideration of relevant factors. Ethyl Corp. (lead gas) __Bazelon: This is bad idea; court should stay out of science __Leventhal: Good idea; courts should plunge in, just like in patent law 5 __Agency must examine the relevant data and articulate a rational connection b/w facts found and choice made. State Farm (seatbelts) __Substantial certainty isnt enough. State Farm. 6 __Agency rule is arbitrary and capricious if agency has: State Farm __Relied on factors which Congress did not intend to consider __Entirely failed to consider an important aspect of the problem __Offered an explanation for the decision that runs counter to the evidence before the agency, or is so implausible that it cant be explained by differing agency expertise __Agency that changes course and rescinds a rule must supply a reasoned analysis for the change beyond that which may be required when an agency does not act in the first place. State Farm. __If there is an obvious response to the agencys mistake, agency must explain why that response was rejected. __Change in Presidents Administration does not justify random change in policy. (Rhenquist, dissenting, thought that it did.) __Agency must consider factors Congress directed it to look at when making decisions, but decision need not be based on this Dole v. Mine Workers. __Court must engage in a substantial inquiry that must be searching and careful. Court must take a hard look at the entire record. This is the LOOK test, explained more in number 4 of this section. Overton Park __Court review must apply rational basis test, not preponderance or substantial evidence test. Ethyl Corp. __Standard of review presumes the validity of agency action, and is highly deferential to agencys judgment. Dole v. United Mine Workers. __Agencys policy choices are a clear error of judgment (Croley)
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8 9 HARD

(B) __Contrary to constitutional right, power, privilege, or immunity If the word constitution is in sight, its a bad argument. (C) __In excess of statutory jurisdiction, authority, limitations, or short of statutory right Chevron two-step: 1 __If Congress has directly spoken to the precise question at issue, and Congress intent is clear, that intent rules. Chevron s. 1 a __Statutory language: if court, employing traditional tools of statutory construction, ascertains that Congress has an intention on the precise question at issue, that intent prevails. Cardoza Fonseca. __Listing of overlapping, illustrative terms may be intended to enlarge, rather than confine, agencys power. Chevron. __An easily resolved ambiguity does not render the clause ambiguous on other grounds its severable. Tataranowicz. __For textual infighting, apply noscitur a sociis ( ) and a dictionary. Babbitt. __Structure / policy of statute: __Tataranowicz court said statute was a grandfathering statute and used this to make inferences about its intended scope. __S. Ct. only does this when literal meaning conflicts with pre-existing pervasive regulatory scheme Tataranowicz __Legislative history: __May be inconclusive. Chevron. __Tataranowicz uses heavily, despide acknowledged clarity of statute __Prior agency construction: __Fact that agency has changed its interpretation from time to time does not mean no deference should be accorded. Chevron __But, Stevens: An Agency interpretation which conflicts with its earlier one is entitled to considerably less deference. Cardoza Fonseca.

c d

__If statute is ambiguous or silent on an issue, there is implicit delegation to the agency. Court may not substitute its own construction as long as the agencys interpretation of the statute is reasonable. Chevron majority really emphasizes that courts must not make policy decisions in this area. All court is to do is to decide if agency decision was reasonable. If not, court can act. Chevron s. 2 a __If Congress has explicitly left a gap for the agency to fill, there is express delegation of authority to agency to interpret a statute. Ethyl Corp. __Such regulations then control unless it they are arbitrary, capricious, or manifestly contrary to the statute __Where application of a statutory standard requires risk assessment, there is delegation to make policy judgments. Infer from findings requirement __How do you determine what is reasonable?
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__Question can be one of pure statutory construction and need not involve application to facts. NLRB v. Food Workers __? c __ Arguments to find for reasonableness and defer to agency: __Democracy: Fed. courts should defer to bureaucrats, who are responsible to elected officials. __Efficiency: If courts interpret Clean Air Act differently, it will mean different standards in different districts. __Expertise: Agencies know better than courts.

__But, if the court finds that the agencys interpretation is unreasonable, the court may substitute what it thinks the agency should have reasonably done.

(D) __Without observance of procedure required by law 1 2 __Courts cannot go beyond APA; no more procedural requirements can be imposed by the court. Vermont Yankee __Agencies are free to grant additional procedural rights, but courts cannot impose them. Vermont Yankee. __But, totally unjustified departure from well-settled judicial precedent may require judicial correction. __If small number of people affected, etc., may have due process claim __Absent constitutional constraints or extremely compelling circumstances, agencies should be free to fashion own rules of procedure. Vermont Yankee __ 553 does not require new notice whenever the agency adopts the suggestions of interested parties. Ethyl Corp.

3 4

(E) __Unsupported by substantial evidence in cases subject to 556 and 557 or otherwise reviewed on the record of an agency hearing provided by statute 1 2 3 __Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Universal Camera. __Measure substantial evidence by looking at the whole record. Court can reject a decision if there isnt enough support. But, court cant then decide on its own. __All findings, even if not adopted by ALJ, are part of the record.

(F) __Unwarranted by the facts to the extent that they are subject to de novo trial by reviewing court 1 __No one knows what this means. Croley says cross it out of the book. 4 __Court shall review the whole record, and should look for prejudicial error. __Court must engage in a substantial inquiry that must be searching and careful. Court must take a HARD LOOK at the entire record. Overton Park __Post-hoc litigation affidavits do not constitute the whole record so court will
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remand to make agency view the whole record. Overton Park. __If no formal findings made, court can require officials who made decision to give testimony explaining their action, such as Volpe was threatened in Overton Park.

Arguments for Chevron __Judges shouldn't decide policy, so the broad holding of Chevron is good. __But, can also argue that Chevron gives courts power to decide policy! So holding is bad! __Courts now have power in the second step, and they can decide what is reasonable or not. __Now, courts can allow the agency to win, even if court would not have adopted its interpretation, b/c all it is doing is deciding reasonableness. Court has more policy control. __Efficiency: it's better for one agency to interpret a decision than all of the Courts of Appeal. Croley says this coordination argument is a good one. Arguments against __Courts now have more power to wield policy, and legislate __How would courts know what is reasonable? They are courts, not agencies. __Now courts can allow interpretations they like for policy reasons, but wouldnt have had the balls to argue for as optimal statutory interpretation. __Chevron would be good if courts stuck to the courts stay out of policy language. But they dont, and they manipulate the second step to do exactly what Chevron majority was against!

Arguments for Judicial Review of Agency Action: __Robinson __Agencies need to be checked. If they arent, they could pass any regulation they wanted __The counter-majoritarian difficulty does not apply to agency action __Bureaucrats may be closely tied to contemporary political thinking, but they are no more closer to the original intent of an organic statute than are the courts. __Protects regulated parties from agencies __Independence of courts insulates them from political pressure, makes better decisions __Protects people from agencies and courts __If court is wrong, Congress can just overturn it. This is a strong argument. __Croley: Judicial review makes agency decisions better because they fear being trumped __ALJs may be biased toward agencies, and judicial review may check ALJ power __Resources argument isnt strong enough on its own __Expertise is not a strong argument, b/c District courts are trained to learn, have special masters __Evidence used in agency becomes part of courts record, so they have enough info __Consistency argument of Right is a poor one, b/c how can we jeopardize consistency by having more judicial review? Review allows us to work it out to remain consistent. Against Judicial Review of Agency Action: __Rabkin
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__Resources: Judicial review burdens courts. Robison: Dont burden courts with VA issues __The power to demand due process is the power to obstruct. __Agencies are better experts. Croley says this is a resource argument also __Judicial review allows courts to make policy decisions __Interest groups win in the judicial arena if they lose at the agency; they act in their own interest __BUT, even conservatives agree that its ok to review constitutional claims __Agencies have more expertise and should be trusted with decisions __Dont allow an unelected body to trump an elected body (but is it? Agencies arent elected) __Even though courts get record, thats not the same as actually viewing a witness __Separation of Powers problems __Arguments that judicial review is necessary belied by the fact that the essential procedures for review did not exist until 25 years after APA was enacted. Judicial Review under Rulemaking: Courts have presumption in favor of review of agency action. Judicial Review under Adjudication: Courts only decide if it was reasonable. If not, apply.

The argument for judicial activism is that judges should be able to make policy, and if they make a bad decision, the legislature can just overrule it. But the legislature doesnt have time to be watching courts all the time to screw up, and then pass corrective legislation. This is like saying we wont check your ID at the bar, and the bar can let in all the people in who are under 21. But if they make a bad decision and drink, then we will prosecute them all individually, which of course is nearly impossible.

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