Chapter 1: An Introduction to Administrative Law

Each branch of the government (Legislative, Executive, and Judicial), is generally required to remain within its respective
sphere of authority. Congress creates authority, the President enforces that authority, and the courts confine/discipline
the exercise of that authority. Agencies govern.

Administrative Law is the study of governance. The starting point for many admin law cases is an act of Congress that
allows an administrative agency to function. Agencies are executive, even though created by congress. Agencies are
directed and organized by the President, subject to judicial review by the courts.
 Exec. branch can appoint/remove actors within agencies
 Executive establishes enforcement priorities and can control the level of vigor with which an agency proceeds
 Judicial review of and deference to agency action is an assessment of congressional delegation of administrative
authority and considers whether the will of Congress has been obeyed.

There are two types of agency functions:

Rulemaking: whereby the agency acts like a legislature—makes mini “laws” that apply prospectively to many/all in the
future. Rulemaking is based on proactive facts [generalized factual propositions].
 Aided by demographical data or stats that help agencies make policy decisions
 Evidentiary hearings ARE NOT constitutionally required [the electorate acts as a check/safeguard, and specific
applications of general rules can ALWAYS be contested]
 Agency goal when determining facts: distinguished from adjudication; agency isn’t trying to figure out what
happened in the past but waht to do in the future

Adjudication: like a court proceeding whereby an Agency/ALJ decides actual disputes between a few parties regarding
past events. Adjudication is based on reactive facts [individualized; what happened in the past to a particular set of
parties]. It can be formal or informal.

I. Traditional Arguments Favoring Agency Governance

A. Continuity/Reliability
 Congress and the President are not a constant force in everyday life, so agencies serve to provide
every presence and governance, making the government “reliable.” This also allows for long term
planning.
 Admin agencies promote continuity of policy from administration to administration; independent
agencies are bound to perform their statutory functions in good faith regardless of whether they
become politically unpalatable to the current administration. As such, continuity is at odds with a
responsive government.

B. Flexibility
 Agencies have the flexibility to respond to market and political changes. See Chevron v. NRDC
(holding that the primary responsibility for change rests with the agency). Under Chevron, agencies
should be able to review policies and make changes.
 Some agencies are created with limited regulation and this provides for a broad range of powers,
while others have a strict mandate.

C. Specialization and Expertise

Agencies retain a permanent staff of experts so that the agency can be both aware of developments in the
field and able to respond to technical changes as they occur, which is not the case in Article 3 courts.

D. Essential Values
Agencies are often required and uniquely positioned to implement unpopular and controversial legislative
(or constitutional) imperatives regarding equal protection and fairness. Unencumbered by the necessity of
1
 reelection, agencies are capable of protecting non-majoritarian interests, a phenomenon that can be almost
impossible in a politically-charged environment such as Congress

E. Emergencies
Agencies are capable of functioning quickly and aggressively in an emergency, but ineptitude on part of the
agency can lead to problems.

F. Volume
Agencies can process millions of claims annually, These kinds of hearings use a relaxed standard of evidence
to speed the process along.

G. Ongoing Supervision
Agencies can often devote themselves to ongoing supervision for years, unlike Article 3 courts.

H. Economic Justification
Agencies play a role in creating a “level playing field” in various markets. Agencies can address unfair
business practices that could lead to distorted market power, including monopoly power, suppression of
innovation, or creation of artificial barriers to market entry.

I. Public Safety
Agencies can use regulatory force to mandate increased levels of safety and efficiency in goods & services;
this can trump Due Process.

J. Dissemination of Info [FOIA]

Agencies are the primary vehicle for implementing FOIA requests.

II. Traditional Arguments Disfavoring Agency Governance

A. Incompetence
Whether it’s valid criticism, lack of competence is a standing criticism of every agency.

B. Favoritism
Political and economic power play a role in regulation—only some benefit and promotes unfairness.

C. Capture
Extended exposure to a regulated industry brings those who regulate in constant contact with those who
are regulated. Over time, objectivity can be lost as the regulator and the regulated become aligned. For a
broad range of reasons, those charged with the responsibility of regulation may become too identified with
those they regulate and in that moment they are said to be “captured.” Closely related to favoritism.

D. Loss of Market Forces

Aggressive regulation is seen as a counter-force to the free market. A properly functioning market will
achieve greater measures of success, including safety and efficiency, than a marketplace that is controlled by
non-participants performing a regulatory role.

E. Compromised Privacy
An administrative decision maker will function most effectively when there is optimal access to
comprehensive information about all aspects of the problem, which can be in conflict with the goal of
protecting privacy. In fact, agencies do not need probable cause to secure information. As long as the agency
has a reasonable basis for the information it seeks, the chances are the agency will get what it is after

2
III. Beyond the Pros and Cons: Privatization and Re-regulation
Because of the inherently political nature of admin law, debate regarding the efficacy of the administrative state is
relentless and difficult to pin down. Programs that were once de-regulated have since been re-regulated.
A. Re-regulation
Re-regulation of various markets is almost inevitable. Consider the housing market crash, airline industry,
auto industry, etc.

B. Privatization
Privatization is far more prevalent than direct re-regulation because there are so many people working in
the private sector in positions funded by the fed. govt. OMB Circular A-76 requires govt agencies to
undertake activities that are “inherently governmental functions.”

IV. The Process of Regulation—The Introductory Cases

Londoner v. City and County of Denver
Rule: Due Process requires notice and an opportunity to be heard before a rule becomes a law.
Facts/PH: The City of Denver, under the powers granted it by its charter, imposed a tax on the plaintiff’s land for
paving land that crossed into his land. Landowner was not afforded the opportunity to have his complaints and
objections to the regulation be heard.
Issue: whether the filing of the law itself was enough to satisfy due process?
Holding: No, a hearing was necessary.
 This case holds that there is, generally, a right to an adjudicatory hearing; if each person has a unique
interest, they have a right to a hearing
 Londoner is the starting point for the study of agency adjudication
 Courts have interpreted Londoner to mean that a legislative fact is not an individualized fact; the
Constitution does not mandate that legislative facts be found through a process of individualized fact-
finding.
o Adjudicative facts are the facts of a case
o Legislative facts are those which have relevance to legal reasoning and the lawmaking process

Bi-Metallic Investment Company v. State Board of Equalization of Colorado

Rule: Where an agency rule applies to a large number of people, the Due Process Clause does not require that each
person have an opportunity to be heard regarding the rule’s adoption
Facts/PH: P owned real estate in Denver and brought the case on the ground that P was not given the opportunity
to be heard and that was without due process. Suit to enjoin an order to prevent the increase of all taxable
property in Denver 40%.
Issue: whether all individuals have a constitutional right to be heard before a matter can be decided in which all are
equally concerned
Holding: No, granting every interested person an opportunity to argue for or against such an order would be
impracticable
Common Cause of PA v. Commonwealth of PA
Even were one or more Plaintiffs able to modify their claims to allege individualized harm, they must state a
cognizable constitutional claim that would entitle them to relief. Plaintiffs are not entitled to receive notice and
procedural safeguards before a law is even enacted. When their representatives are misguided, unresponsive, or
ineffectual, they are directly answerable to the people.

Distinguishing Londoner and Bi-Metallic:

 L imposed limits on gov action
 B expanded the range and nature of actions a governmental entity could undertake

3
V. Independent or Executive?
There’s a distinction between executive regulatory agencies and independent regulatory agencies: their location in
the administrative architecture and their type of leadership.

A. Executive
Executive agencies are under the most direct control of the President and are Cabinet level agencies, e.g., Dept.
of Commerce, Dept. of Transportation, Dept. of Defense, Justice Dept., Dept. of Homeland Security, Dept. of
Agriculture, and Dept. of Interior. Agency head (single administrator, a Secretary) serves at the pleasure of the
President. These agencies house smaller sub-agencies.

Myers v. United States

Rule: The Constitution grants the President the sole power to remove executive officers
Facts/PH: Plaintiff was appointed by the president to be Post-Master general of Portland, OR; president
demanded his resignation and he refused. Plaintiff was fired by Post-Master General.
Issue: Under the Constitution, whether the President has the exclusive power of removing executive officers
of the US whom he has appointed by and with the advice and consent of the senate?
Holding: The power of removal is incident to the power of appointment; if the POTUS appoints you, he can fire
you.
 Act requiring congressional consent to remove postmasters of the first class is unconstitutional
 The Constitution does not grant Congress the right to participate in the removal of inferior officers; it
only grants Congress the power to delegate the power to remove inferior officers

B. Independent
Independent agencies are structurally independent and in contrast with executive agencies. They are collegial
decision-making bodies; decisions are made after deliberation and a vote by their commissioners.
Commissioners serve for a period of years that exceeds the President’s term and can only be removed for good
cause. Independent agencies cannot be dominated by one political party. Independent agencies are focused on
specific areas of commerce, e.g., SEC, FCC, Nuclear Regulatory Commissions, etc. Independent agencies function
pursuant to APA.

Humphrey’s Executor v. United States

Rule: The president’s power to remove an executive branch official is not applicable to official with legislative
or judicial functions (anyone with the title Commissioner/Administrator/Regulator/etc.).
Facts/PH: President FDR asked Mr. Humphrey, an FCC commissioner, to resign so that he could appoint
someone who thinks and acts with him and he declined. FDR fired Mr. Humphrey in violation of a statute that
said that a commissioner could only be removed for “inefficiency, neglect of duty or malfeasance in office.”
Issue: Under the Federal Trade Commission Act, Whether the President’s power to remove an FTC officer is
limited?
Holding: Yes, it is limited because of the limiting nature of the Act itself.
 Even though the FTC is technically under the executive, they are carrying out quasi-legislative and
quasi-judicial functions, not executive functions.
 The role of the commissioner was to be free from political domination or control, and not to be
subject to the orders of the President
 Myers only applies to executive office positions, not legislative & judicial positions

4
 Weiner v. United States
Rule: Congress may limit the president’s removal power over executive appointees to independent, quasi-
judicial tribunals in the executive branch
Facts/PH: Plaintiff was appointed (by Pres. Truman) as a Commissioner to the War Claim Commission for a set
period of time. The Act that allowed for his appointment had nothing on how officers were to be removed
from office. Under President Eisenhower, P refused to resign, so Eisenhower removed him on the ground that
staffing the commission w/ his own appointees was in the national interest. P filed suit, seeking back pay for
his salary
Issue: Whether Congress can limit the President’s removal power over executive appointees to independent
agencies in the executive branch?
Holding: Yes.
 Without provision for removal in the Act, the court implied intent to limit Presidential removal power
 Ike didn’t have the power to remove Plaintiff but for cause

Dominique Custos, The Rulemaking Power of Independent Regulatory Agencies.

Constitution has no provision dealing with independent regulatory agencies; its “necessary and proper
clause” merely confers the authority to create the authority to create the government on Congress. Thus,
the establishment of these agencies results from legislation.

VI. The APA: A Brief Historical Perspective

The starting point for the study of admin processes is the Administrative Procedure Act, 5 U.S.C. §551 (APA). The
APA is the Constitution of the administrative state. It provides both a basic structure for agency action (how
agencies do their work) as well as fundamental precepts regarding judicial review of agency action (when and how
courts review legal challenges to that work).

Motivations to Pass APA: compromise between those who believed that important issues should be addressed and
rules promulgated by experienced experts shielded from political influence vs. those who saw such agency action
as unduly insulated and un-democratic.

George B. Shepherd, Fierce Compromise: The Administrative Procedure Act Emerges from
New Deal Politics
The APA, when introduced, was the “bill of rights” for the new regulatory state. APA established the
fundamental relationship between regulatory agencies and those whom they regulate—between government,
private citizens, business, and the economy. The APA has provided agencies with broad freedom, limited only by
procedural requirements and judicial review, to create and implement policies in many areas.

5
Chapter 2: Rulemaking at the Agency
When federal, state, or local governments proceed without notice, initiating enforcement without first providing clarity
regarding the rules and standards to be implemented, criticism is both hard and justified.

I. The Need for Rules

Agencies are designed to create standards with which the public must comply. They use rulemaking to address
advances in technology evolves and changes in resources shift.

II. The Nature and Substance of Rules

Rules affect classes of individuals and are prospective in nature. Rules promulgated by formal rulemaking or notice-
and-comment rulemaking are binding and have the force of law. These rules are sometimes called legislative rules
to reinforce their binding nature. Rules change, establish, or limit rights and obligations. They amend existing rules
and articulate enforceable norms.

A. Formal Rulemaking
Formal rulemaking is an expensive, trial like process. Evidentiary rules are important, and the standard is
“substantial evidence.”

Formal rulemaking is required when: Procedurally, formal rulemaking requires:

a) Congressional Mandate [explicit/implicit] 1. Notice
b) “on the record” 2. An opportunity to be heard, cross-examine,
c) “formal” confront, and challenge expertise
d) “explicit process directed” 3. Fair and impartial decision-maker

Pension benefit Guarantee Corp. v. LTV Corp. set out the basic requirements for formal processes.
Parties must be given notice of the matters of fact and law asserted in §554(b)(3), an opportunity for the
submission and consideration of facts and arguments §554(c)(1), and an opportunity to submit proposed
findings and conclusions or exceptions.

B. Informal Rulemaking
Informal rulemaking is a participatory process predicated on providing the public notice of proposed rules and
an opportunity to comment on those proposed rules before final rules issue. Notice-and-comment Rulemaking
process governed by APA § 533(c): “the agency shall incorporate in the rules adopted a concise general
statement of their basis and purpose.”

The standard by which a court evaluates N&C rulemaking is “arbitrary and capricious” or “abuse of discretion.”

Procedurally, informal rulemaking requires:

1. Opportunity for interested parties to comment on the proposed rule
2. Agency statement of basis and purpose justifying the rule
3. Standards of review applied by courts

C. Rulemaking exempt from process

Rulemaking exempt from process is a non-participatory system by which agencies issues interpretative rules,
policy statements, guidelines, or other standards that do not have the force of law

6
 D. Presidential Control
Lisa Schultz Bressman, Procedures as Politics in Administrative Law
Administrative law has transition to presidential control of agency decisionmaking as a principal mechanism for
legitimating such decisionmaking. A presidential control model enables the White House to monitor and
influence agency action as it unfolds.

Executive Order 12,291 requires agencies to consider cost-benefit analysis to the extent permitted by law and to
submit their proposed major rules, along with a regulatory impact analysis of the rule, for centralized White
House review by the Office of Management and Budget.
 Expanded by EO 12866, which requires agencies to consider not only the cost-effectiveness of their
proposal but heir distributional effects as well.
 Expanded by EO 13422, which requires a presidential political appointee in each agency to oversee the
development of regulatory policy, including guidance documents.

Admin law reflects the presidential control model by increasing judicial deference to agency decisions. Chevron is
responsible for anchoring the presidential control model.
 Under Chevron, agencies are entitled to judicial deference for interpretations of ambiguous statutory
provisions in large part because they are subject to presidential control.
 Chevron recognized that politics is a permissible basis for agency policymaking

III. The Primary Sections of the APA Pertaining to Rulemaking

§ 551: “Rule” is the whole or part of an agency statement designed to implement, interpret, or prescribe law or
policy; or to describe the organization, procedure, or practice requirements of the agency. Rulemaking is the
agency process for formulating, amending, or repealing rules.

§ 553: Notice-and-comment rulemaking

§ 553(b) Publish general notice of proposed rule-making in Federal Register. Unless interpretative rule, general
statement of policy, or rule of agency organization, procedure, or practice, notice requires:
 Statement of time, place, & nature of rulemaking proceedings
 Reference to the legal authority under which rule is proposed
 Terms or substance of the proposed rule, or a description of the subjects & issues involved
§ 553(c) N&C rulemaking requirements
§ 553(e) Right of petition: each agency shall give an interested person the right to petition for the issuance,
amendment, or repeal of a rule
§ 554: informal rulemaking process
§§ 556-557: formal rulemaking (trial-like process)
§ 702: aggrieved persons entitled to judicial review
§ 706: Courts may hold unlawful and set aside agency actions that:
 Are arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law
 Violate constitutional rights
 Exceed statutory authority
 Did not observe proper legal procedures

7
IV. Formal Rulemaking
Unless Congress says or unless the statute mandates a decision on the record, you don’t need a formal hearing.
Must use the magic words “after notice and opportunity for a hearing on the record.” MUST HAVE “RECORD”
LANGUAGE. Statement that rules must be promulgated “after a hearing” are not sufficient to indicate
Congressional intent for formal rulemaking.
There are two instances where formal hearings MUST be held:
1. Some congressional mandates that compel unambiguously a trial like process prior to issuance of rules.
a. FTC, FCC, Dept. of Interior, EPA, and DEA all have formal rulemaking requirements in certain areas
within their jurisdiction.
2. Areas where Congress has delegated power to an agency to issue rules only after conducting a proceeding
on the record after an opportunity for a hearing.

When to use Formal Rulemaking

Rule will affect small number of people/small number of parties are involved
1. Relevant parties affected by regulation is so small can imagine them in the courtroom arguing their case
(think opposite of class action suit)
2. Government efficiency argument – don’t want formal rulemaking process for rule affecting large number of
people because Agency courts will be clogged

Procedurally, formal rulemaking requires:

1. Notice
2. An opportunity to be heard, cross-examine, confront, and challenge expertise
3. Fair and impartial decision-maker

Rulemaking done in a judicial-type setting, with judicial-type rules and procedures (governed by §§ 556 & 557
which look like the section about adjudication and not rulemaking).

Pros/Cons: Expensive, time-consuming, and cumbersome (impractical to use where there are hundreds or
thousands of interested parties), but permits extensive public participation and complete transparency in agency
decision-making (including regarding evidence).

United States v. Florida East Coast Railway Company

Rule: There is no constitutional right to an oral hearing in administrative proceedings.
Facts/PH: Interstate Commerce Commission (ICC) wants to incentivize buying instead of renting railroad cars by
charging a higher rental rate. ICC would only receive written comments. Plaintiffs request oral hearing, but ICC
overrules.
Issue: whether the ICC was justified in only receiving written comments?
Holding: Yes, the phrase “after a hearing” is not enough to require formal rulemaking.
 There is a presumption in favor of informal rulemaking.
 What does “after hearing” mean?
o “After hearing” means something less than formal hearing
o If statute calls for “hearing on the record” in the case of rulemaking, agency must use “formal
rulemaking process,” which is highly inefficient.
o Because of its inefficiency, when agency engages in rulemaking rather than adjudicating, courts will
construe ‘hearing’ as not needing a formal record (Florida East Coast Railway – industrywide
ratemaking proceeding; ‘hearing’ in statute doesn’t mean ‘hearing on the record).

8
  Substantial Impact Test: if the rule has a substantial impact on the parties regulated, then they need more
protection than they are getting
o Rational nexus: requirement for rulemaking
o Correlation: no requirement in rulemaking

City of West Chicago, IL v. United States Nuclear Regulatory Commission

Rule: Courts defer to the agency’s decision on process if the question is unresolved by statute so long as its a
reasonable interpretation of the statute.
Facts/PH: NRC granted Kerr-McGee Corp. (KM)’s license amendment authorizing KM to demolish buildings & store
contaminated material at the site. West Chicago challenged the issuance of the amendment w/o providing notice &
an opportunity for City to request a hearing, and it argued that the NRC’s procedures violated its own regulations,
the Atomic Energy Act (AEA), due process, and the National Environmental Policy Act (NEPA).
Issue: Whether courts should defer to an agency’s reasonable interpretation of its own regulations and the relevant
statutes when determining whether a formal adjudicative hearing is required?
Holding: Yes, so long as the interpretation is reasonable.
 If the choice of the government agency is arbitrary, at odds with the statute, or on its face unconstitutional
(as was the case in Londoner), it is the role of the courts to correct the problem.

Hemp Industries Association v. DEA

Facts/PH: P imports & distributes sterilized hemp seed & oil & cake derived from hemp seed, but would not be
allowed to after DEA amended its regulations to list natural & synthetic THC in Schedule I. P argues that DEA did
not follow the correct procedures to do so.
RULE: Courts will not defer to an agency if it is trying to regulate something it has no authority to regulate &
does not follow the correct procedures in place to have the authority to regulate it
• DEA has no authority to regulate drugs that are not scheduled & should have followed procedures required
to schedule a substance.
• Reinforcing idea of on the record requirement. Logical interpretation of an existing statute. Would ordinarily
get Chevron deference but in this case it does not.

V. Notice and Comment Rulemaking [Informal Rulemaking]

§ 553 provides a structure for the timing, content, and other requirements for the publication of proposal and
issuance of final. Requires agencies provide a “statement of basis and purpose” with the final rule which
demonstrates (1) how the rule fits in the existing regulatory scheme and (2) how it aligns with the legal authority
underlying the rule
Notice: notice of proposed rulemaking (NOPR) published in Fed Reg.
• Terms/substance of proposed rule OR description of subjects/issues involved in rulemaking
• Must provide sufficient clarity & specificity to allow meaningful public participation
• Accessing data: through FOIA or court ordered disclosure only- no right to discovery
Comment period: agency must provide public with opportunity to comment on proposed rule
• Time, place, and nature of rule
• Reference to authority/evidence, substance and issues
Final rule: agency must provide “concise and general statement of basis and purpose”
• Must publish final rule in Fed Reg.
• Must demonstrate how rule fits into existing regulatory structure
§ 706 provides opportunity to seek judicial review. It further provides that neither the content of the rule nor the
process used to adopt the rule may be arbitrary, capricious, or an abuse of discretion. The rule must be a logical
outgrowth of the Notice of Proposed Rulemaking (NOPR). The notice must have adequately predicted or
foreshadowed the final rule.

9
 Requirements for Final Rule:
1. A logical outgrowth from the proposed rule
2. Not substantially depart from the original scheme
3. Not materially alter the original scheme
4. Be in character with the original scheme

Chocolate Manufacturers Association of the US v. Block

Facts/PH: Chocolate milk case. CMA protests the rule proposed by USDA. WIC program: Food stamps. Chocolate
flavored milk – Proposed rule does not say anything about chocolate milk but only mentions sugar content. Final
rule did. Went to court to challenge the final rule.
Rule: Agencies have the right to significantly alter a rule from the proposed to final as long as they have provided all
interested parties with the opportunity to comment. Notice is considered adequate if “changes in the original plan
are in character with the original scheme” and the final rule is a “logical outgrowth” of the comments
recommended.
 Logical Outgrowth Rule.
 If the final rule “substantially departs from the terms or substance of the proposed rule, notice is
inadequate”
 An interested party must have been alerted by the notice to the possibility of the changed eventually
adopted from the comments.
 Agencies need to re-notice a rule when there is not a logical outgrowth from what was original presented in
the proposed rulemaking and the final rule.
 A final promulgated rule must be in character with the original scheme and the logical outgrowth of the
preceding notice and comment process

Emily’s List v. Federal Election Commission (2005)

Facts/PH: Emily’s List recruits & funds pro-choice women candidates for political office. Fed Election Comm.
issued regulations trying to stop nonfederal funds from being used to improperly influence federal elections. EL
did not submit comments during the comment period, and requested a new comment period for the draft final
rule.
RULE: parties must get involved early in the notice and comment process (if you don’t participate in the N&C
process, then you can’t complain later)
• There are no standing or ripeness requirements in a rulemaking. Anyone can comment and, at least in
theory, the agency responsible for issuing the rule will consider those comments before issuing the final
rule.

VI. Notice and Comment Process Derived from Other Statutes

Tripoli Rocketry Association v. US ATF
Rule: Interpretative rules do not require notice and comment. You can’t issue a rule without a notice and comment
rulemaking process.
Facts/PH: Agency [ATF] made a rule [regarding specific types of sport motor rocket APCP usage] without any
rulemaking procedures – statements had future effect. Ps argue that ATF failed to provide notice & comment &
violated APA requirements. Agency argues announcements were either informal adjudication, or interpretative rule
and did not require notice and comment. Decision to implement rule came from top of agency, the rule affected
future behavior, and it established likelihood of sanctions.
Issue: Whether an agency, by labeling a rule as interpretive, avoid N&C rulemaking?
Holding: An agency cannot avoid its statutory notice and comment rulemaking requirements by labeling them
interpretive rules

10
  In assessing whether an agency’s action amounts to rulemaking, consider:
o Generalized nature and applicability
o Prospective applicability of the action
o Policy orientation
o Substantive criteria that have practical and legal effects
 Whether an agency characterizes its own actions as rulemaking is not determinative. Rather, “it is the
substance of what the agency has purported to do and has done which is decisive.

Sugar Cane Growers Cooperative of Florida v. Veneman

Facts/PH: Food Security Act gives Dept. authority to implement a payment-in-kind (PIK) program for sugar, which it
did for sugar beet farmers in August 2000, but did not proceed by notice & comment. In 2001, announced it would
do it again in 2001 in a press release, then a week later posted a “Notice of Program Implementation” in the federal
register, without allowing for comments.
Rule: An agency cannot issue a rule as a press release to avoid N& C rulemaking requirements
 A press release; definitely a notice of program implementation triggered N&C procedures
 Press release=informal adjudication.
 Not harmless error b/c uncertainty as to the effect of that failure

US v. Dean
Rule: A federal agency may bypass N&C provisions if the agency has good cause to find that applying the provisions
is impracticable, unnecessary, or contrary to the public interest
Facts/PH: P was found guilty of a sex offense in 1994, & in 1994, failed to register as a sex offender as required by
Sex Offender Registration & Notification Act (SORNA), which gave AG option of enforcing SORNA retroactively
against persons who had been convicted of sex offenses prior to SORNA. In 2007, AG enforced SORNA retroactively
by issuing an interim rule without applying N&C procedures. Asserted good cause exception to bypass the time-
consuming procedures because need to immediately protect children from sex crimes
Issue: whether there’s a good cause exception to N&C rulemaking?
Holding: Yes, for an agency to appropriately use the good cause exception to the APA, there need not be a real
emergency situation, but rather the agency must believe that delay in promulgating the rule would do real harm.
 In practical terms, the retroactive rule reduced the risk of additional sexual assaults and sexual abuse by sex
offenders by allowing federal authorities to apprehend and prosecute them. The retroactive application of
SORNA also removes a barrier to timely apprehension of sex offenders
 Public safety is improved by federal law that allows the federal government to pursue sex offenders
regardless of existing state laws providing for state prosecution.

Morton v. Ruiz et UX
Rule: An agency cannot make internal rules that affect individual benefits without publishing eligibility
requirements and complying with rulemaking requirements under the APA
Facts/PH: P Papago Indian & US Citizen left Papago reservation in AZ to seek employment at a mine 15 miles away
in a town. When mine closed because of strike, P applied for assistance benefits provided by the Snyder Act with
the Bureau of Indian Affairs (BIA), who denied benefits because P resided outside the Papago reservation. A BIA
policy limited eligibility for benefits to Indians living on reservations.
Issue: whether the BIA was required to promulgate eligibility requirements for its general assistance benefits
program?
Holding: Yes
 While the Bureau may deny benefits, they must first publish the eligibility requirements for general
assistance

11
 o Here, they merely had an internal-operations brochure
o Agency erred in failing to put this through N & C process
o Responsibility to fill the gaps left by Congress [Agencies need to create gap-filling rules, but APA
rulemaking requirements apply]
 Standard: If an agency is using adjudication on an ad hoc basis to promulgate standards, it is acting outside
of its realm of authority [gives agency unbridled discretion]

VII. Rulemaking, Records, and Review

Any agency action that negatively impacts a party is subject to judicial review. APA provides the scope and
standards for judicial review of federal agency action. Parties injured as a result of agency action may ask a court to
review that action, and potentially hold it unlawful:

Three main categories of agency action are subject to review:

1. Policy-making: arbitrary and capricious standard
An agency rule is arbitrary and capricious if the agency:
• Relied on factors that Congress did not intend it to consider
• Entirely fails to consider an important aspect of the problem
• Makes a decision counter to the problem/evidence
• OR so implausibly decided that it could not be due to a difference in view or product of agency
expertise
2. Legal interpretation: Chevron
3. Adjudication: Substantial evidence test

Motor Vehicle Manufacturers Association of the US v. State Farm

Rule: When an agency rescinds a regulation, it must explain the evidence underlying its decision, and offer a
rational connection between the facts found and the choice made.
Facts/PH: NHTSA issued Modified Standard 208, which mandated the phasing in one of two types of passive
restraints in cars: airbags & passive seatbelts. Later NHTSA rescinded the Modified Standard 208’s passive restraint
requirement because it could no longer find that it would produce significant safety benefits. Not because of
change of opinion regarding effectiveness of the technology, but a change in plans by car industry because they
were already planning to install automatic seatbelts in 99% of new cars. Agency argued that the regulation couldn’t
be justified by the costs it placed on the automobile industry.
Issue: Whether the decision to rescind 208 was arbitrary and capricious?
Holding: Yes; by rescinding Modified Standard 208 without considering alternatives and consequences, the NHTSA
did not provide evidence for its decision and therefore acted arbitrarily and capriciously.
 Analyzing if agency action is arbitrary and capricious: “The agency must examine the relevant data and
articulate a satisfactory explanation for its action. There must be a rational connection between the facts
found and the choice made.”
 A court CANNOT substitute its own judgment for that of the agency (if the agency itself has not given one)
 HOWEVER agency MUST articulate a satisfactory explanation, and a court must consider whether there was
a “clear error in judgment”
 Because the removal of a standard often entails the same level of policy changes as the promulgation of a
law, it should be reviewed under the same tests

12
 US v. Nova Scotia Food Products Corp
Rule: An agency must provide a statement of basis & purpose that reveals data and methodology used to make
proposed rule (especially if scientific decision)
Facts/PH: FDA adopted time-temperature-salinity (TTS) regulations to address several cases of botulism that was
traced to consumption of fish taken from inland waters. These regulations were adopted pursuant to informal N&C
procedures. FDA received comments from the fishing industry & the Bureau of Commercial Fisheries (DOI)
objecting to the TTS requirements applying to all species of fish, as it would destroy some species. FDA ignored
comments & adopted the rule. FDA found D was in violation of TTS requirements, so AG sued after D failed to
comply after several warnings. Nova Scotia argues that the regulation was not based on any sound science, nor was
it reasonable, and refused to comply.
Issue: whether agencies are required to provide a statement of basis and purpose revealing what the agency
considered and why it came to its final decision regarding a rule?
Holding: Yes. FDA didn’t have an adequate N&C period because it didn’t provide a truly full record for the court to
review – it didn’t provide the scientific material to support their proposed rule
 When the basis for a proposed rule is a scientific decision, the scientific material believed to support the rule
should be exposed to the view of interested parties during N&C for their comment
o Concise, statement of basis means basis and purpose that allows us to see the issues of the policy
(including from the comments) and why agency reacted the way they did
 Essentially, an agency must provide a full record during N&C rulemaking.
o If you put an agency engaging in an N&C rulemaking, you must provide interested parties notice of
what you’re going to do, and explain what you’re considering, and provide evidence you’re
considering in promulgating a new rule

VIII. A Concise General Statement of Basis and Purpose

The overall issue is how a court can determine whether an agency acted arbitrary and capricious if the court does
not know the data on which the agency relied. Therefore, the APA § 553 requires issuance of a “concise and
general statement of basis and purpose.”

Concise, general statement of basis and purpose should include:

1. The information and data on which the agency relied, set forth clearly and thoroughly
2. The Statutory authority that allows the agency to issue the particular rule
3. The place the rule fits in the existing regulatory structure
4. External demands for the rule
5. Legislative history
6. Purpose or goal of the rule

Effective Statement of Basis and Purpose:

a) Reflects the factual, legal, and policy foundations for the action taken
b) Shows the order adopted is reasonably supported by the material gathered by or presented to the
commission & is reasonably related to the purpose of the enabling statute

Benefits to concise general statement; role and importance:

1. Gives meaning to public participation aspect of informal rulemaking
2. Provides transparency for other interested parties (Congress, exec., etc.)
3. Provides judicial review of the agency’s decision making/action

13
Analyzing the Statement of Basis
If the determination turns on factual issues → The statement must demonstrate reasonable support in the
record for the factual determinations
If the order turns on policy choices → An assessment of risks or alternatives, or predictions of economic
consequences, the Statement of Basis must show how the commission resolved conflicting interests and how
that resolution led to the order chosen
If an order differentiates among classes of industries → The SoB must show that the distinctions drawn are
reasonably supported by the record and are reasonably related to the purposes of the enabling statute

There is no judicial review available for a party without standing, when a statute precludes judicial review, and
when agency action is subject to agency law.

California Hotel and Motel Association v. Industrial Welfare Commission

Rule: A statement of basis should reflect the factual, legal, and policy foundations for the action taken
Facts/PH: Agency issued an order fixing wages, hours, and employment conditions in the public housekeeping
industry. P petitioned to invalidate the order because there wasn’t a sufficient statement of basis in the order. CA
law stated that agency order “shall include a statement as to the basis” of decision. Association argued that the
order was invalid because the agency didn’t include an adequate statement of basis to support the order.
Issue: whether the order’s statement of basis was adequate?
Holding: Agency action invalid b/c agency did not include adequate statement of basis to support action (order)
 If statute mandates agency to publish statement of basis for rule changes, agency must comply
 Statement of basis must:
o Demonstrate reasonable support in admin record for any factual determinations
o Show how the commission resolved conflicting interests & how that resolution led to the order
chosen
o Show that the distinctions drawn are reasonably supported by the admin record and are
reasonably related to the purposes of the enabling statute

United Mine Workers of America v. Elizabeth H Dole

Rule: a statement of basis and purpose is patently inadequate and the rulemaking is arbitrary and capricious if
an agency fails to take account of any statutory limitation on its authority to promulgate regulations
Facts/PH: In 1988 the Secretary of Labor acting through the Mine Safety and Health Administration promulgated
new standards. Secretary is authorized to replace existing mandatory health and safety standards only if new
standards provide at least the same level of protection to miners. United Mine Workers of America challenges
the standards because they do not satisfy the no-less protection rule (reduced miner protection)
Issue: whether an agency must take into account statutory limitations on its authority to promulgate rules?
Holding: Yes. The Secretary failed to take account of this statutory limitation on her authority. The statement of
bias and purpose is arbitrary and capricious.
 Secretary’s statement was silent on the issue and did not discuss how protective the old regulations
were nor how the new regulations maintain or improve upon this level of protection.
 Didn’t discuss how protective old regulations were or how the new regulations maintain or improve the
level of protection

14
IX. Ex Parte Communication in Rulemaking
Ex Parte Communication → administrative actions, off-record communication from one side proceeding to decision
makers.
 Enabling statutes can be ex parte communications
 Courts encourage ex parte communications in informal rulemaking, but do not encourage them in formal
rulemaking or adjudication
o Encourage so long as they record discussions that have an impact on the promulgation of the final
rule
o Promotes openness and allows an agency to win public support through discussion
 If the information from an ex parte communication is not required to provide basis of rule, it’s harmless
error

Ex Parte in Rule-Making is problematic when the decision maker...

Unalterably closed mind  If the ex parte communication leaves the decision maker with an unalterably closed
mind, there is an improper EPC

Substantial prejudice  If in the end you can show the EPC prejudiced the outcome, you can get it set aside

Irrevocable Taint  if the discussion is so bad that it taints it irrevocably, it can be set aside

Sierra Club v. Costle

Rule: To overturn an administrative rule on the grounds of pressure via ex parte communications: (1) The content
of the pressure upon the Secretary must be designed to force him to decide upon factors not made relevant by
Congress in the applicable statute (outcome determinative), AND (2) The Secretary’s determination must be
affected by those extraneous considerations.
Facts/PH: EPA adopted a rule to govern emissions from coal burning plants pursuant to the Clean Air Act. After the
comment period was closed, the EPA received almost 300 late comment submissions, which it accepted and
entered into the administrative docket. In the post-comment period, the EPA also engaged in ex-parte
communications with interested parties, legislators, and the President’s staff. The EPA inadvertently failed to
docket one meeting with Senate staff and a meeting with White House officials. P challenged the final regulation on
the ground that the EPA would have adopted a stricter standard for emissions had it not engaged in such
communications after the close of the comment period
Issue: whether ex parte communication is permissible during informal rulemaking proceedings?
Holding: Yes. Ex parte communications are permitted in informal rulemaking
 EPA did not exceed its statutory authority under Clean Air Act in promulgating regulations; standards are
valid
 EPA has discretion to not include EPC in its record
o it does not have to “docket” (present) all oral communications
o Failure to docket these meetings did not violate rulemaking procedures or DP

15
Chapter 3: Judicial review of Legislative Rulemaking: Deference to
Agency Action
I. The Basic Limitation on Judicial Review
A court can set aside agency action that:
1. Violates Due Process
2. Violates APA demands;
3. Is simply wrong (clearly erroneous standard)

Vermont Yankee v. Natural Resources Defense Council

Rule: Agencies do not have to establish more stringent procedures beyond what is statutorily required.
Facts/PH: NRDC challenged a rule promulgated by the Atomic Energy Commission (AEC), arguing that the AEC
denied it a meaningful opportunity to participate in rulemaking proceedings. The lower court found that employing
full formal adjudicatory procedures during rulemaking hearings would create a more adequate record and would
give interested parties a better opportunity to participate in the proceedings. Such procedural requirements were
not included in the AEC's existing rulemaking processes.
Issue: whether reviewing courts can impose additional procedural requirements on admin agencies’ rulemaking
procedures
Holding: No. The question of whether an agency proceeding affords participants adequate safeguards does not
turn on a court’s independent review of the record, but rather on whether the proceeding complied with the
procedural requirements of the Administrative Procedure Act (APA).
 Absent constitutional constraints or extremely compelling circumstances the administrative agencies
should be free to fashion their own rules of procedure and methods of inquiry permitting them to
discharge their multitudinous duties.
 This limits judicial review, but doesn’t cap it

Baltimore Gas & Electric Co. v. Natural Resources Defense Council, Inc.
APA requires agencies to employ reasoned decision-making. An agency’s decision will be overturned if it is
arbitrary and capricious. But a court cannot vacate an agency action simply because the court disagrees with
the decision. On review, courts must view an agency’s decision in context. In this case, the commission
considered all factors relevant to its no-leakage assumption and articulated a rational connection to the facts
found. The commission’s assumption cannot be reviewed in a vacuum but must be viewed in the context of how
it is used.

City of Alexandria v. Slater

Agencies aren’t required to look at every alternative, just reasonable alternatives. Political or popular support
isn’t dispositive.

II. Deference and Judicial Review

Chevron Deference [how an agency interprets its statute]
A court's deference to an agency's statutory interpretation, based on the court's finding that: (1) Congress either
did not address the issue in question directly, or addressed the issue ambiguously and (2) the agency is responsible
for implementing the statute, and it has interpreted the statute reasonably.

The scope of the Chevron deference doctrine is that when a legislative delegation to an administrative agency on a
particular issue or question is not explicit but rather implicit, a court may not substitute its own interpretation of
the statute for a reasonable interpretation made by the administrative agency.

16
 Arbitrary and Capricious Challenge §701(2)(A) Chevron Challenge 701(2)(C)
When it Agency policymaking (creating and enforcing Agency legal interpretation (determining
applies regulations): meaning of statutes):
 Agency application of law is wrong  Agency got the law wrong [formal
rulemaking, formal adjudication policy,
adjudication, N&C rulemaking]
What it is  Parties or court agree with the agency’s The issue is whether the agency
interpretation of the relevant statutory properly interpreted the statutory language in
provision the first place
 BUT disagree on how the agency applied Misinterpreting meaning of statutory
interpretation in the course of a particular language – incorrect definitional interpretation
rulemaking of statute
“Hard look” review - Court will not substitute its
view for that of the agency, but agency must take “Chevron” review (Skidmore, Chevron, Mead)
a “hard look” – it must apply its expertise and
demonstrate why it reached the decision it did
Similarities  Court system expects agency expertise – agencies are experts and the courts are not
 Both involve court saying “we would kind of like to change this” but they don’t because the
agency is the expert and the court is not

Chevron v. Natural Resources Defense Council

Rule: A court may not impose its own interpretation of a statute when an agency permissibly interprets a silent or
ambiguous statute.
Facts/PH: The EPA promulgated a rule interpreting the term “stationary source” to include what the agency called a
“bubble policy.” The NRDC challenged the EPA’s interpretation of the word “source” as impermissible under the
Clean Air Act. Specifically, the NDRC argued that the word referred to each individual pollution-emitting piece of
equipment, which meant that a plant would need to obtain a permit any time it created a new source of pollution
or modified an existing source if the effect were to increase the pollution from the source
Issue: whether the EPA’s interpretation of the statute was permissible?
Holding: Yes. The Clean Air Act was silent as to the applicability of the bubble policy, so it was permissible for the
EPA to interpret the statute to include it.
 Considerable weight is given to an agency’s construction of a statutory scheme.
 Agencies were created to fill in the gap [Morton v. Ruiz]

17
 Step 0:
Delegation
Consider first...
Does the action carry the force of law
(is it binding)?
If no, STOP. See Skidmore.
If yes, continue...
Then consider...
Has the agency acted within its
statutory authority? Is the agency in choice. The court does not have to
the area they're allowed to be?
If no, STOP.
If yes, continue...
Step 1: Ambiguity
Court asks...
Did Congress answer the precise
question in the statute or
legislative history?
If yes, STOP.
It is impermissible to defer to
agency interpretation even if it's
grounded in reasonable policy
defer to what the agency did.
If no, the court will interpret the
statute.
Step 2:
Permissibility
Finally, courts ask...
Is the agency's answer based on a
permissible and reasonable
construction of the statute?
If yes, rule stands.
If no, the Court will find that the
Agency's interpretation is
impermissible.

Also consider... If the court determines that the

statute is silent or ambiguous on
Is the action the agency took within the question, continue to Step 2....
the delegated area from Congress?
Does it conform to the APA and with
Due Process?

If no, STOP. If yes, continue....

If yes, continue to Step 1....

A. Delegation [Step 0]
Congressional delegation may be either explicit or implicit.
 Explicit delegation  typically specifies that the interpretation is left to the agency to define through
regulation
 Implicit delegation  may be inadvertently or intentionally ambiguous

What if what the agency is interpreting is NOT a statute?

Auer v. Robbins
Rule: When the agency is interpreting its own prior ambiguous regulation (as opposed to a statute)
deference is given to the agency interpretation UNLESS that interpretation is plainly erroneous or
inconsistent with the regulation.
Facts/PH: The Fair Labor Standards Act exempts bona-fide executive administrative, or professional
employees from overtime pay. Police officers sought payment from the police commissioners’ board for
overtime under FLSA. The regulation states that in order to be exempt from the act the salary cannot
change because of variations in the quality or quantity of the work performed, though this was not the
practice of the department. For police, salary could be reduced because of disciplinary infractions.
18
 Issue: whether the Chevron test applies when an agency interprets its own regulation.
Holding: No, instead deference is given UNLESS its interpretation is plainly erroneous or inconsistent
with the regulation.

See Skidmore v. Swift & Co..

Christopher v. Smithkline Beecham Corp.

RULE: Criteria for deference: (1) thoroughness evident in agency consideration; (2) validity of reasoning;
(3) consistency with earlier and later action.
Facts: Π, travelling salespeople, sued Δ for overtime pay under the Fair Labor Standards Act. Π
challenged the final interpretation of the rule. DOL filed a brief in support of Π and said that their
interpretation deserved deference.
Holding: No, the Court disagrees with the DOL.
 To defer to the agencies interpretation in this circumstance would seriously undermine the
principle that agencies should provide regulated parties “fair warnings of the conduct prohibited
in the regulation.”
 Although Auer deference ordinarily calls for deference to an agency’s interpretation of its own
ambiguous regulations…deference is inappropriate when agency’s interpretation is plainly
erroneous or inconsistent with the regulation

Christensen v. Harris County

Rule: Interpretations such as those in opinion letters – like interpretations contained in policy
statements, agency manuals, and enforcement guidelines – all of which lack the force of law do not
warrant Chevron style deference.
Facts/PH: FLSA and cash pay-out of accumulated off comp. time. Harris County, Texas, found that too
many of its deputy sheriffs had too many hours of accrued compensatory time. County adopted a policy
where its employees could be ordered to schedule compensatory time at specified times to reduce the
amount of accrued time that would otherwise require cash payment. DOL wrote a letter stating that a
preexisting agreement should be made before forcing employees to use their comp. time and limiting
the amount that could accumulate. Harris county ignored the content in the DOL’s letter and made
people go on vacation. Petitioners (127 sheriffs employed by the county) wanted the DOL letter to be
given Chevron deference.
Issue: whether the DOL’s letter permits Chevron deference?
Holding: No. Employees win. Opinion Letter didn’t go through formal adjudication process, the court
said letter did not suffice.
 Policy statements after this case, are not entitled as a matter of right to Chevron deference.
 No Chevron deference for interpretations contained in policy statements, agency manuals, and
enforcement guidelines because they lack the force of law; no Auer deference because
regulation unambiguously said employers could include compelled use of comp time in
employment agreements.
 Internal guideline or statement is entitled to something, but not Chevron, respect is based on
power to persuade, validity, takes you to Skidmore v. Swift & Co..

B. Ambiguity [Step 1]
 It is very hard to find statutory language without ambiguity
 This is where an agency is most likely to lose—it’s rare for them to lose at step 3

19
 Arnett v. Commissioner of Internal Revenue
Facts/PH: Π filled out a tax form based on his understanding that Antarctica is a foreign country. IRS said
that Antarctica is not a foreign country.
Issue: whether the term “foreign country” is unambiguous?
Holding: No. Examining § 911, foreign country is inherently ambiguous, which permitted the IRS to define
foreign country as to exclude Antarctica.
 The legislative purpose of the foreign income exclusion was to account for tax burdens imposed by
foreign countries
 As the United States did not recognize any claims of sovereignty over Antarctica, it was not a foreign
country for purposes of the income exclusion under 26 U.S.C.S. § 911.

C. Permissibility [Step 2]
Courts determine permissibility by considering whether the agency’s interpretation of the rule was
reasonable.
 Court considers Congress’s intentions, goals, and policies, considering whether the agency’s actions
were consistent with Congress’s intent.
 Could a reasonable agency looking at this statutory language come to this interpretive conclusion?
o Court does not have to find that agency’s construction was the only interpretation, or the
one that the court would have reached, just a reasonable one

US v. Ward
Facts/PH: Criminal case, involving a crime that is defined by the misuse, careless or negligent use of
explosive chemical. Defendant Ward was in control of housing this explosive chemical and the facility blew
up and killed people.
Rule: Chevron and Auer DO NOT apply in criminal cases.
 Need clarity in a criminal case where liberty is at stake
 Ambiguity cannot be the basis for a criminal charge
 If a rule is unclear, it doesn’t give notice—void for vagueness; due process critique in criminal
context

III. Deference or Respect?

Agency interpretations are NOT conclusive and are NOT binding on reviewing courts. That raises the question,
when does a court give respect to that agency interpretation?

Skidmore v. Swift & Co.

Rule: Ambivalent Deference Standard – agency interpretations that DON’T have the force of law are entitled to
respect based on these factors:
1. Thoroughness of its conclusion
2. Validity of its reasoning (considering prior agency decisions and existing statutory authority)
3. Consistency with earlier and later actions (stare decisis substantially supported)
4. Persuasiveness
Facts/PH: Firemen sue their employer for overtime under FLSA maintaining that their waiting time between
responding to fires was working time; the employees were not required to perform any specific tasks during the
evening except for answering fire alarms. Employer claimed that it was not working time as noted in an internal
agency bulletin.
Issue: whether courts must defer to a federal agency’s interpretation without the force of law?

20
 Holding: No, a court is not required to defer to a federal agency’s interpretive rule that doesn’t have the force of
law. In this case, there was nothing in the statute or court decisions that precluded waiting time from being
working time.
 Agency expertise and experience justifies giving some agency interpretations “considerable” or even
“decisive” weight in the course of judicial review.
 Agency statutory interpretations “while not controlling…do constitute a body of experience and informed
judgment to which courts and litigants may properly resort for guidance”

Chevron Deference Skidmore Respect

 Most N&C rules  Usually not N&C [policy/guidance]
 When there is express Congressional  Circumstances demonstrate Congress did not
authorization to produce regulations/ruling intend for the rulings to have the force of law
 When Congress contemplates administrative  Only people bound by rulings are parties
actions with the effect of law and gives agency involved, thus no legal effect
a formal administrative procedure fostering  The rulings can be overruled by court
fairness and deliberation.
If an agency is acting on behalf of congressional authority, Chevron applies. If not, Skidmore applies.

Jim Rossi, Respecting Deference: Conceptualizing Skidmore Within the Architecture of

Chevron
Skidmore: an agency administrator’s rulings are entitled to some respect because they are made in pursuance of
official duty, based upon more specialized experience and broader investigations and info than is likely to come
to a judge in a particular case.
Christensen v. Harris County majority’s application of Skidmore: a court makes its own interpretation of the
statute, comparing it to the interpretation of the litigants. Court determines whether it is persuaded that the
agency’s interpretation is better without presumption of validity. If the agency’s interpretation is unpersuasive,
no deference is due under Skidmore.

United States v. Mead Corp

Rule: Force of Law determination – totality of the circumstances rule. Agency statutory interpretation that comes
from a part of agency rulemaking (formal or informal) receives Chevron deference because the agency action has
the force of law. Agency interpretation that comes through a different agency action might get Chevron deference
if it too carries the force of law. Otherwise, the interpretation might (but might not) get Skidmore deference.
Facts/PH: The Mead Corporation’s imported “day planners,” which were classified as duty-free until the Customs
Headquarters issued a ruling letter classifying them as “‘bound diaries’” subject to 4% tariff”. They used to be
classified as other which was duty free. Fed circuit rejected Customs’ invocation of Chevron.
Issue: whether the court should give deference to Customs’s policy?
Holding: No deference given because there’s no indication that Congress intended them to carry the force of law.
This is more of a policy statement/guidance. Skidmore deference may apply. A claim under Skidmore may be
unavailable given the highly detailed nature of the regulatory scheme at issue though.
Dissent [Scalia]: Court has replaced Chevron with an analysis that is not logically sound and not sustainable in
practice. It will create confusion, an increase in informal rulemaking, & inefficiencies based on analytical difficulties-
judges shouldn’t be in such legislative roles

21
 Two Outcomes from Mead
I. In Mead, Court sets aside the expertise justification (for deference) and goes toward only giving deference in
the legislation
 Two things have the force of law  legislative action and judicial action. What they were assessing
in Mead was neither of these
 Absent a situation where the agency is given the authority to have the rule of law, you are given
Skidmore deference
II. Is Skidmore deference really deference?
 Mead Steps [creates a threshold inquiry to Chevron]:
1. Did congress delegate that authority?
2. Was the agency’s decision made in the exercise of that delegated authority?
3. Is the statute at issue one that the agency was charged by Congress to issue? (Or is the
agency being a busy body?)

De La Mota v. US Dept. of Ed. [Skidmore example]

Rule: Skidmore respect depends on the interpretation “thoroughness,” “validity,” “consistency,” and “power to
persuade.”
 Thoroughness Does the staff member report to the Secretary? Does the staff member bear law-making
authority? Does the staff member have political accountability?
 Validity  is the agency pronouncement well-reasoned, substantiated, and logical?
 Persuasiveness  Does the authority seem appropriate?
Facts/PH: DOE gives financial aid to schools, but schools decide eligibility; Congress amended to do loan
forgiveness if person works as a full-time employee of a nonprofit whose focus is high-risk children who are from
low-income families. In DOE handbook given to schools, the wording is slightly changed of law by saying that they
can service ONLY high-risk children. Student, De La Mota (who litigates paternity tests and child support cases for a
nonprofit) was receiving a loan forgiveness, but in her third year the law school rejected the loan because she was
not DIRECTLY working with high-risk kids.
Issue: whether deference can be given to the DOE handbook?
Holding: Deference is not given to the agency’s handbook because it does not have force of law (See Christensen v.
Harris County). However, the court looks at the case through the Skidmore lens. Here, the DOE handbook does
NOT get Skidmore respect.
 Consistency: did not adhere to internal practice
 Thoroughness: specialist did not have law-making authority; “thoroughness is impossible for an agency
staff member to demonstrate when the staff member does not report to the Secretary, bears no law-
making authority”
 Validity: Whether an agency pronouncement is well-reasoned, substantiated, and logical (here, doesn’t
seem like a correct interpretation)
 Persuasiveness: Agency is not in charge of who gets the loan, so the authority does not seem appropriate

IV. Improving or Maturing Deference?

Agencies have lawmaking power except:
1. When a judicial precedent holding that the statute unambiguously forecloses the agency’s interpretation
and therefore does not contain gaps for the agency to fill, displaces a conflicting agency construction
2. Agencies are not bound internally by their own precedent
3. Agencies are not bound by judicial precedent [except judicial precedent holding that a statute is
unambiguous binds the agency]

22
Use of N&C rulemaking increases likelihood that a court will not interefere with an agency’s action, provided that
the action survives Chevron

A couple of cases complicate Christensen v. Harris County and United States v. Mead Corp, redefining the
relationship between courts and agencies.
Brand X: federal agencies have power to overturn federal court decisions. Theoretically, this points toward
Chevron, granting agencies a lot of deference
Long Island Care at Home: assessed agency determination that seemed to conflict with congressional intent but
still finds agency action entitled to deference in part because there was an expedited N&C

National Cable & Telecomm Ass’n v. Brand X Internet Services

Rule: Agencies are bound by judicial precedent only if precedent finds that the statute is unambiguous, thus
foreclosing a different agency interpretation (as there’s no gap for agency to fill)
Facts/PH: Telephone companies providing DSL services challenged FCC ruling as arbitrary and capricious because
of differing treatment of DSL and cable modem services.
Issue: whether an agency must follow a court’s interpretation of a statute?
Holding: It depends. In this case, FCC’s interpretation of “offering” in the Communications Act as preventing
internet companies from bundling services was a reasonable construction & statute was ambiguous, so FCC didn’t
have to follow.
 Chevron Principles: Chevron’s premise is to allow agencies not courts to fill in the gaps of the statutory
language.
 A federal agency is not bound to prior federal court precedent unless the precedent involves an
interpretation of an unambiguous statute.

King v. Burwell
Rule: RE Step 1 of Chevron: Courts can determine that seemingly unambiguous statutory phrasing can be
interpreted as ambiguous when considering the context in which it is used.
Facts/PH: The Affordable Care Act (ACA) provided tax credits to lower-income individuals for use in purchasing
health insurance. The ACA stated that individuals would be entitled to the tax credits for insurance plans “enrolled
in through an Exchange established by the State.” The ACA directed the Internal Revenue Service (IRS) to
promulgate rules and regulations to implement the tax-credit program. The IRS promulgated a regulation stating
that individuals enrolled in exchange insurance plans established either by a state or HHS were entitled to the tax
credits. Πsbrought suit, challenging the IRS’s regulation on the ground that it was contrary to the terms of the ACA,
which provided that only individuals enrolled through a state-created exchange would be entitled to tax credits.
Issue: whether the phrase “established by the state” is ambiguous?
Holding: yes; ACA/IRS permissible application of the statute because it was consistent with congressional intent.
 Chevron Analysis
o Step 0: Deference is not owed to the IRS (so maybe someone deserves deference, but it is not the
IRS so the Chevron analysis ends here for Roberts).
o Roberts makes a shift in Chevron understanding with express or implied delegation when a statute
is vague.
 Court proceeds to interpreting the language of the statute to determine its meaning
 What really matters is what Congress is trying to do. Rule is upheld.
o “In extraordinary cases, there may be reason to hesitate before concluding that Congress has
intended such an implicit delegation.”
o Because the tax credits are so impactful and have national political and economic impact, Congress
would have delegated the power to regulate them expressly

23
 Long Island Care at Home v. Coke
Rule: When an agency fills a statutory “gap” reasonably, and in accordance with other applicable requirements, the
courts accept the result as legally binding. Courts will assume congressional intent to defer to an agency:
 Where the rule sets forth important individual rights and duties,
 Where the agency focuses fully and directly upon the issue,
 Where the agency uses full notice-and-comment procedures to promulgate a rule,
 Where the resulting rule falls within the statutory grant of authority, and
 Where the rule is reasonable
Facts/PH: Provision in FLSA exempts from statute’s minimum wage “any employee employed in domestic service
employment for individuals who can’t take care of themselves.”
Issue: whether exemption does apply is company/service employing these people vs. an individual who hires
directly
Holding: FLDS’s language was ambiguous (Chevron Stage 1) and the third-party exemption was a reasonable
exercise of the broad rule-making authority Congress granted to the DOL (Chevron Stage 2)
 SCOTUS considered the regulation a normal instance of an agency “filling a statutory gap,” and that the
regulation was intended to be legally binding even though it was under a section titled “Interpretations”
 STRONG CHEVRON CASE: This is a counter example to Mead and De La Mota and more like Chevron and
Morton v. Ruiz because the DOL used their agency expertise to come to the decision on why those who
work for companies should not get exemption.

City of Arlington v. FCC

Facts/PH: FCC was asked to define what a “reasonable period of wait time is.” FCC responded with a declaratory
ruling that reasonable wait time is 90 days to 150.
Issue: whether an agency’s interpretation of a statutory ambiguity that concerns the scope of its regulatory
authority (that is, its jurisdiction) is entitled to deference under Chevron.
Rule: Agency interpretation of the scope of its own authority is entitled to Chevron deference.
 The question in every case is, simply, whether the statutory text forecloses the agency’s assertion of
authority, or not.
 Doesn’t matter if agency action is jurisdictional or not.

V. Interpretative Rules, Guidances, and Beyond

Interpretive Rules Substantive/Legislative Rules
 Merely clarify/explain existing law or regulations, are instructional  Create new laws that
explanation of particular terms articulate rights/interests
 Require little or no public process  Grant rights, impose
 Exempt from § 553 N&C rulemaking requirements. § 553(b) exempts from obligations, or produce
rulemaking requirements: other significant effects on
o “interpretative rules, general statements of policy, or rules of agency private interests, or which
organization, procedure, or practice.” effect a change in existing
o general policy statements announcing tentative intentions for the law
future without binding the agency  Informal/formal
o “for good cause” – when N&C is impracticable, unnecessary, or rulemaking, adjudication
contrary to the public interest  Force of law
 Do not carry force of law  Judicial review
 Judicial review is not bound by notions of Chevron deference; Skidmore
review

24
 Pacific Gas & Electric v. Fed Power Commission
Facts/PH: Natural gas shortage created need to curtail supplies to certain customers during peak demand periods.
The Federal Power Commission promulgated “Statement of Policy” w/o N&C, which expressed the FPC’s position
that the national interest would be best served by curtailing on the basis of end use rather than prior contractual
agreements.
Issue: whether the FPC’s statement of policy required N&C rulemaking?
Holding/Rule: No. A general statement of policy is the outcome of neither a rulemaking nor an adjudication; it is
neither a [substantive] rule nor a precedent[al opinion] but is merely an announcement to the public of the policy
which the agency hopes to implement in future rulemakings or adjudications.

American Hospital Association v. Bowen

Facts/PH: American Hospital Assoc. brought suit against HHS arguing that agency circumvented APA’s N&C
requirements & asked court to declare “transmittals and directives” invalid under APA
Rule: Rules of agency organization, procedure, or practice are exempt from N&C requirements under APA
 Notice and comment is not required when the new standard does no more than “advise the public of the
agency’s construction of the statutes and rules which it administers.”
 Agencies should be given latitude to issue interpretive rules.

VI. A Second Look at Judicial Review

Dismas Charities v. US BOP
Rule: Agency’s pure legal interpretations of federal statutes do not require N&C because they are interpretive,
which do not create but clarify the law
Facts/PH: Dismas is a nonprofit that owns and operates 18 CCCs in 7 states. Majority of Dismas CCCs house only
federal inmates and provide an alternative to traditional incarceration. BOP chooses which inmates are sent to
Dismas facilities. Congress grants BOP discretion to designate prisoner’s place. OLC changed its interpretation of
the statute and the new interpretation changed front end eligibility saying front end placements are not
authorized. Thereafter, two memos sent out instructing any inmate with more than 150 days left in sentence to be
transferred to traditional prison facility.
Issue: whether the memo clarifications should have been subject to N&C rulemaking?
Holding: No
 No point in doing notice and comment b/c memo pointed out that this was based on a legal definition and
legal principle not anything notice and comment can do anything about.
 At its core a legal analysis -- don’t need others to tell you what law is. Would not get anything from notice
and comment process.

An agency action is “final” under APA § 705 if it marks the consummation of the agency’s decision-making process
and either (1) determines rights or obligations or (2) results in legal consequences

Center for Auto Safety v. National Highway Traffic Safety Administration

Rule: Policy guidelines cannot be viewed as final agency action under APA § 704 unless they mark the
consummation of the agency's decision making process AND either determine rights or obligations or result in legal
consequences
Facts/PH: Safety Act allows automakers to initiate voluntary recalls when cars contain a safety defect or does not
comply with applicable safety standards. Car owners then entitled to free remedy from manufacturer. Regional
recalls became a thing in the mid 80’s and in 1998 a letter was sent outlining policy guidelines for regional recalls. In
2004 Center for Auto Safety filed lawsuit claiming policy guidelines constitute a de facto legislative rule.
Issue: whether the voluntary has the effect of a legislative rule, thereby having required N&C rulemaking?

25
Holding: No, the regional recall rule was interpretive. The guidelines did not reflect final agency action and did not
constitute binding rules.
 Not been published in Code of Federal Regulations.
 They do not define rights or obligations
 Consequences they mention are practical NOT legal.
 Labeled as policy guidelines not rules or binding regulations

Crowley’s Yacht Yard, Inc. v. Pena

Case concerning the validity of a temporary regulation restricting the movement of recreational vessels through
the drawbridge crossing the Chicago River during specific times. The Coast Guard published notice of a
proposed temporary rule in the federal register, but failed to publish its administrative record in support of its
rule. Therefore, the rule is revoked as arbitrary and capricious.

Gonzales v. Oregon
Rule: An agency does not acquire special authority (like under Auer or Chevron) to interpret its own words when,
instead of using its expertise and experience to formulate a regulation, it has elected merely to parrot/paraphrase
the statutory language. Skidmore analysis for interpretive rules that “parrot” or merely repeat a statute.
Facts/PH: AG promulgates an Interpretive Rule finding that assisting suicide is not a legitimate medical purpose and
that physicians dispensing/prescribing federally controlled substances to assist suicide violate the Controlled
Substances Act (CSA). Rule criminalizes conduct; would take away medical licenses. CSA regulates the drugs that OR
physicians are dispensing/prescribing to patients for assisted-suicide in compliance with OR Death with Dignity Act.
Issue: whether the Controlled Substances Act permits the AG from prescribing regulated drugs for the use of
physician-assisted suicide.
Holding: No, under Skidmore, the CSA’s prescription requirement does not authorize the AG to bar dispensing
controlled substances for assisted suicide contrary to state regime allowing such conduct
 When a statute shares authority between agencies, deference should be given to the agency that has the
relevant expertise
 AG’s power was limited to registering & deregistering physicians, & not entitled to Skidmore respect
because the rule was not persuasive
 Auer is inapplicable here. In Auer underlying regulations gave specificity to a statutory scheme
 HERE underlying regulation does little more than restate the terms of the statute itself.
o Existence of parroting regulation does not change the fact that the question here is not the meaning
of the regulation but the meaning of the statute.
o At best, Skidmore protection but AG has no expertise, does not consult with agencies, etc.

FCC v. Fox
Rule: Agencies do not have to demonstrate that the reasons for a new policy are better than the reasons for an old
one; requirements include: statement of basis, statutorily permissible/unambiguous, and rationale
Facts/PH: Statutory prohibition against indecent language on TV.

Connecticut State Medical Society v. Connecticut Board of Examiners in Podiatry

Rule: If the statutory language is clear, there’s no room for agency interpretation. Legislative intent can restrict the
scope of an agency’s power: If statute is clear → legislative history is inadmissible; If statute is ambiguous →
legislative history matters.
Facts/PH: Case about whether the ankle is part of the foot.
Holding: Board’s interpretation is not entitled to any special deference; Legislative intent did not empower agency
to expand its power to define scope of podiatry.

26
Chapter 4: Basic Reviewability Concern
Judicial review of adjudication is based on the fairness of the process and the sustainability of the evidence submitted.
Judicial review of rulemaking is based on the fairness of the process and the existence of an adequate record to support
the agency’s decision.

APA allows any aggrieved person to seek out judicial review, but it neither guarantees that aggrieved persons will secure
judicial review nor defines what aggrieved is. The individual must have standing, and the agency matter must be final
and ripe.

I. Review and Basic Jurisdictional Requirements: Standing

Standing requires: (1) injury-in-fact [invasion of legally protected interest that is (a) concrete and particularized,
and (b) actual or imminent, not conjectural or hypothetical]; (2) causal connection between the injury and the
conduct complained of [must be fairly traceable to the challenged action of D and not the result of independent
action by some third party not before the court]; and, (3) redressability must be likely [not merely speculative, that
the injury will be redressed by a favorable decision from the court].

If the plaintiff is not the object of the agency’s action, but rather a third-party interested in using the court system
to critique the work of the agency, the party will have a very difficult time obtaining standing.

Prudential standing: Additional limitations on constitutional standing created by the courts, requiring that the
plaintiff be asserting his own right that is within the zone of interest protected by the law and not merely a
generalized grievance and, in most cases, not be a third-party plaintiff.
Association of Data Processing Service Orgs v. Camp
Rule: Plaintiff has standing to challenge agency ruling when challenged action has caused him injury-in-fact and the
interest is arguably within the zone of interests that the statute sets out to protect. [legal rights test]
 Injury-in-fact: [con law] concrete and particularized injury
 Zone of interest: anyone directly affected under interpretation of APA § 702 (narrowly or broadly). APA
grants standing to individual aggrieved by agency action within the meaning of relevant statute. [Zone of
Interest test is an interpretation of APA language]. [Bennett v. Spear establishes the zone of interest test].
Facts/PH: P challenging ruling by Comptroller of Currency allowing national banks to participate in data processing
services. District Court dismissed for lack of standing and Cir. Affirmed.
Issue: whether the Π has standing to sue the Comptroller even if the Acts involved don’t protect a specific group of
people.
Holding: Yes. P falls within the class of “aggrieved” persons deserving judicial review of agency action: APA grants
standing to individual aggrieved by agency action w/i the meaning of relevant statute.

Barlow v. Collins
 Decided with Data Processing; Brennan and White dissent and argue that the only element that should
be required for standing is injury-in-fact, urging that the zone of interest is not constitutionally required
 Main point here is that courts should hear cases, APA §702 provides a “right of review” to anyone
suffering a legal wrong b/c of an agency action within meaning of relevant statute”  agency must show
clear and convincing evidence of non-reviewability

Difference between zone of interest test and injury in fact test: ZOI test is an interpretation of APA language and
thus could be abolished by Congress

Match-E-BE-NASH_SHE-WISH Band of Pottawatomi Indians v. Patchak

Rule: Prudential standing is satisfied when the injury asserted arguably falls within the zone of interests to be
protected or regulated by the statute in question.

27
Facts/PH: Provision of the Indian Reorganization Act (IRA) authorized Secretary of Interior to acquire property for
the purpose of providing land to Indians; secretary took land in a trust to give to Indians that was going to be used
for a casino.
Issue: whether Δ has prudential standing to challenge the Secretary’s land acquisition where he lived by the land
that was being acquired.
Holding: Yes, there was a sufficient relationship even though the statute focuses on land acquisition and Δ’s claim is
based on land use; falls within the zone of interest regulated by IRA.
 Zone of interests standard is not supposed be particularly demanding, here the court just required that
there be a recognizable relationship to the acquisition or use of territory for Indian tribes.
 There is no requirement of indication of congressional purpose to benefit the would-be plaintiff.
 D had sufficient standing to proceed because the Secretary had to consider the purposes of the land use
when determining whether to acquire land under the statute.

Lujan v. Defenders of Wildlife [standing analysis]

Facts/PH: Endangered Species Act instructs Sec. of Interior to make a list of endangered species and define their
critical habitat and requires fed. agencies to consult w/ Interior to ensure that their actions are not likely to
jeopardize continued existence of the species. Applied to actions taken in foreign nations, then Interior changed
interpretation: only required consultation for actions taken in within US or on high seas. Respondents sued.
Rule: Congressional statutes cannot confer standing to Πs without any actual suffered injury-in-fact. Injury requires
more than just an injury to a cognizable interest; injuries can’t be a generalized grievance or harm suffered by all
citizens.
Holding: Π didn’t have standing.
 [Injury-in-fact] Ps asserted that they would not be able to visit Egypt and Sri Lanka again, though they did
not have any concrete plans to visit
o This was not an imminent injury, just an intent to visit: insufficient
 [Causation] Ps assert three nexuses that the court rejects because none of them show “perceptible harm:”
o Ecosystem nexus: argue that anyone who uses an ecosystem and is negatively affected by funded
activity has standing despite how far away they are
 P must actually use the area affected by the challenged activity, can’t just be w/i vicinity of
it
o Animal nexus: anyone with an interest in studying or seeing the endangered animals has standing
o Vocational nexus: anyone with a professional interest in animals can sue
 [Redressability] Ps request would not necessarily remedy the alleged injury

Standing: Redressability
Simon v. Eastern KY Welfare Rights Org
Rule: Article III’s case or controversy limitation requires that injury be traced to a challenged action of a party to
case that can redress problem, not to an independent action by a third party that is not before the court
Facts/PH: 12 Ps and indigent organizations brought action alleging that IRS violated Internal Revenue Code and APA
by giving favorable tax treatment to non-profit hospitals that only offered non-ER services.
Holding: No standing. Ps alleged specific instances where they were denied medical treatment but failed to name
any hospitals as Defendants: insufficient to establish injury for standing purposes. Only hospitals could redress their
concerns about denial of service
Frank Krasner Enterprises v. Montgomery County Md
Facts: P put on gun shows in MD, leasing space at Ag. Center. City council amended county code: restrict funding
to organizations that allow for display and sale of guns. Ag. Center sent letter to P explaining that they were
going to stop leasing due to amendment.

28
 Holding: P doesn’t have standing because he could not establish redressability or causation.
 Ag. Center not completely prohibited from leasing to P, just makes it more expensive to do so.
 No redressability: favorable court decision wouldn’t compel Center to rent to P.

Duke Power v. Carolina Environmental Study Group

Facts/PH: D began constructing nuclear power plants in NC and SC, Carolina Env. (Ps) challenged this under the
Price Anderson Act (PAA), which established liability limits operators of nuclear powerplants would face if there
was an accident. D Duke began to construct nuclear plants, and P challenged its constitutionality.
Holding: Ps had standing: causal connection b/t government action (passing PAA) and injury of Ps (exposure to
radiation and pollution of waterways, b/c plants never could have been built w/o PAA) was sufficient to prove
standing causation and redressability requirements
 Injury: Ps would suffer immediate injury from the building of plants: granting requested relief would
remedy that injury: ripeness
 Casual connection: PAA’s cap on liability increased likelihood that power plant operators were going to
misbehave: relationship b/t government action and alleged injury not too speculative
 Redressability: if gov. invalidated PAA, Ds could not construct plants: more imminent than Lujan.
White Tail Park Inc v. Straube
Amended VA law now requires teens to bring guardian to nudist camp. P juvenile nudist camp claims law
infringes on First Amend speech by limiting its audience. P has standing because law invades P’s legally
cognizable interest, and injury is causally connected. Generally, if injury is economic, it’s a competitive injury
not an injury in fact. This is an unusual case where making a loss of business argument works: normally when
someone loses business because of gov. reg. the answer is we are not going to be successful in suing.

II. Ripeness
Ripe: ready for judicial review
Ripeness doctrine: cases where injury is speculative and/or may never occur are premature for review, but if P has
actually been injured, the case is ripe for review.
Constitutional Ripeness: source of case or controversy clause in Article III
 Similar to standing: limits power of judiciary
 Prevents courts from declaring meaning of law and construing generalized rules, unless the resolution of the
actual dispute requires
Prudential Ripeness: more flexible, just b/c jurisdiction exists, does not mean a court needs to hear a case
 Enhances the accuracy of court decisions and avoids adjudication that
o May later be unnecessary OR
o May require premature examination of constitutional issues that time may make easier or less
controversial
RIPENESS ANALYSIS:
 Is it a legal question?
o Yes? RIPE
 Is it a final rule?
o Yes? If so, party may be smminent harm
 Is there definitive or immediate harm?
o No? NOT RIPE

Ripeness requires:
 Fitness of the issues for judicial decision and appropriate for judicial resolution
o Issue must be legal
o Final agency action

29
  Hardship to parties of withholding court consideration
 Courts should only restrict access to judicial review with clear & convincing evidence of contrary leg. intent

Abbott Labs v. Gardner

Rule: Access to courts under APA must be allowed absent statutory bar or unusual circumstances if: (1) legal issue
presented is fit for judicial resolution or (2) regulation requires immediate/significant change in P’s conduct with
serious penalties for noncompliance
Facts/PH: Congress amended Food Drug and Cosmetic Act (FDCA) requiring manufacturers to print established
name of prescription drug on labels in large letters along w/ trade name. P and 37 other labs sued FDA
commissioner alleging that he exceeded authority with regulation.
Holding: Issue is ripe here even though FDA had not instigated enforcement actions because rule was final and has
the force of law, would have an immediate impact on manufacturer’s business whether they complied or not.
 Pre-enforcement review of regulation is a “purely legal” issue and Ps are suffering immediate and
irreparable injury

Toilet Goods Ass’n v. Gardner

Rule: A challenge is not ripe if a new regulation does not require an agency to act a certain way that would harm
the challenger
Facts/PH: P sued Sec. of HHS (supervised FDA) about four regulations under the Color Additive Amendments
claiming they exceeded his statutory authority. HHS promulgated rule through N&C: if company uses color
additives and refuses inspector access, they will suspend certification service until they take corrective action
Holding: Generalized challenge to the pre-enforcement review: regulation provided that Commissioner may order
inspection under certain circumstances, b/c Ps are not actually challenging his actions, just his authority to act: will
depend on the context in which commissioner exercises his authority: not ripe

III. Finality
Finality: consummation of agency action, fixed, set, has legal consequences, and carries force of law

APA § 704: permits review of “final agency action”

 Consummation of agency action
 Rights and obligations are determined
 Force of law

Two types of finality:

Decision: definitive decision resulting in inaction—a vote not to act (final, reviewable) (SEC v. MCHR); OR,
Prosecutorial Discretion: exercise of agency discretion to not investigate or enforce any action—not an agency
order (not final, not reviewable) (Kixmiller v. SEC)

SEC v. Medical Committee for Human Rights

Facts/PH: MCHR owned shares of stock in Dow Chem. Co. D wanted to prohibit sale of napalm unless assured that
it wasn’t being used against humans. Dow omitted MCHR’s proposal based on SEC law. MCHR asked SEC to review.
SEC concluded that Dow was not required to take action, MCHR submitted to Commissioners of SEC to review and
they affirmed. CoA held that SEC decision was reviewable and that the case should be remanded for
reconsideration. MCHR resubmitted proposal and it was supported by less than 3% of shareholders, so Dow can
exclude proposal for the next 3 years – moot.
Holding: Head of SEC’s inaction is considered reviewable agency action: Commission’s decision not to act
constituted reviewable action.
Rule: Head of agency inaction can be reviewable agency action.

30
 Kixmiller v. SEC
Facts/PH: SEC decided to not investigate a division director’s decision to not take enforce action against Wash Post
for omitting shareholder proposals from proxy statement at annual shareholder meeting. Because inaction wasn’t
act of head of agency: couldn’t be inaction
Rule: Agency’s decision to refrain from an investigation or an enforcement action is generally unreviewable. Only
head of agency inaction can be reviewable agency action.

IV. Preclusion of Judicial Review

APA § 701(a): Types of Judicial Review Preclusion
Judicial review of final agency action is available in federal court except to the extent that (1) statutes preclude
judicial review, or (2) agency action is committed to agency discretion by law

Strong presumption that judicial review of administrative action will be available, but presumption is overcome if
there is a “persuasive reason” to believe that Congress meant to limit judicial review or prohibit it entirely.
 Agency must show by clear and convincing evidence if judicial review is precluded
 If not clear and convincing, at least put forth a “persuasive reason”

Area where most likely to see preclusion of judicial review: allocation of individual financial benefits in federally
funded programs – if individual believes they are not being paid enough this is just a factual review of agency
determination [preclusion of judicial review]

Preclusion is the exception, not the norm: applicable only when there is no law to apply, no measure to determine
efficacy of action of the agency

Bowen v. Michigan Academy of Family Physicians

Rule: The strong presumption in favor of judicial review of administrative action may be overcome if a
congressional intent to preclude review is: (1) explicitly shown by statutory language or (2) implied by the overall
statutory scheme or legislative history.
Facts/PH: MI Academy challenged validity of Title 42 of USC authorizing payment of benefits in different amounts
for similar physician services. HHS Sec. argued that Congress prohibited jud. review of all questions affecting
amount of benefits payable under Medicare Part B. Under Part B: afforded an opportunity for a fair hearing by the
insurance carrier. Under Part A: entitled to a hearing by the secretary and judicial review.
Holding: Congress did not bar judicial review of regulations promulgated under Part B.
 Implicit preclusion expressly allows judicial review under Part A, no mention under Part B; but implicit
preclusion doesn’t automatically mean lack of judicial review
 Legislative history showing that Congress didn’t intend to preclude judicial review of the method used to
determine benefit amounts under Part B, just the amounts themselves

V. Review of Agency Inaction

Fact of an apparent violation of regulatory standards or norms doesn’t create an absolute obligation to go forward
that’s enforceable in court.

Agency inaction is generally vested in agency’s discretion; courts are usually hesitant to interfere

Presumption that non-enforcement action (refusal to act/inaction) is not reviewable

Deference: courts typically give deference to agency inaction
Tension: between APA § 701(a)(1) and (a)(2): no judicial review for agency discretion and review for abuse of
discretion
31
 Rationales for presumption
Action requires expertise; general deference to interpretations of statutes and procedures; inaction is not
coercive and does not interfere with property or liberty; prosecutorial discretion

Challenging agency inaction: P must show that agency failed to take a discrete action that the agency is required to
take. Achieved through..
 553(e) petition demanding response; agency has to respond
 Writ of mandamus: order from a court compelling a government official to properly fulfill their official
duties or to correct an abuse of discretion. It’s an extraordinary remedy reserved only for transparent
violations of a clear duty to act. Writ must establish that (1) there was a duty and (2) the agency has
“unreasonably delayed” the contemplated action.
 Political alternatives

Heckler v. Chaney
Rule: An agency’s decision not to take enforcement action is presumed immune from judicial review under § 701(a)
(2), but presumption can be rebutted if substantive statute has provided guidelines for agency to follow in
exercising enforcement powers
Facts/PH: Ps were prisoners sentenced to death who filed petition FDA argued that drugs that were going be used
to kill them violated FDCA because had not been approved for use of lethal injection. FDA refused to take action.
Holding: FDCA provides no substantive standards under which court can base review, only says agency can choose
whether to regulate as it sees fit. Under APA § 706, anyone aggrieved by agency action or inaction is entitled to
judicial review as long as the action is a final agency action for which there is no other adequate remedy in a court.
 First have get over hurdle of 701(a)(2) under which agency decision to not take enforcement action is
presumptively unreviewable
 An agency’s decision not to prosecute or enforce (civilly or criminally) is a decision generally committed to
the agency’s absolute discretion

VI. Extraordinary Remedies for Inaction

MA v. EPA
Rule: Agency refusal to promulgate rules is subject to extremely limited and highly deferential judicial review
Facts/PH: Congress enacted Global Climate Protection Act: directed EPA to propose policy on climate change after
well-documented rise in global temps. EPA declined several private petitions to issue regulations governing
greenhouse gas emissions. Group of states (Ps) sued seeking declaratory relief on issue of whether EPA had
statutory authority to regulate greenhouse gas emissions under Clean Air Act (CAA); and if so, whether EPA’s stated
reasons for refusing to regulate were consistent with CAA
Holding: Actions were arbitrary and capricious and not in accordance with the law. In responding to a rulemaking
petition, the EPA must have included reasons for action or inaction. Reasons EPA gave for inaction were NOT
justifiable: (1) Might impair President’s ability to negotiate w/foreign entities, (2) DOT’s responsibility to deal w/ car
pollution, (3) regs. would be ineffective approach to dealing w/climate change, (4) other agency programs are
already effectively responding to climate change.

Responses to Agency inaction or unreasonable delay

Inaction – writ of mandamus to compel agency action
Unreasonable delay – bypass exhaustion requirement; writ of mandamus to compel agency action

32
 Analyze unreasonable delay under the TRAC factors
 Time agencies take to make decisions must be governed by a “rule of reason”
 Where Congress has provided a timetable or other indication of the speed with which it expects agency to
proceed in enabling statute, that statutory scheme may supply content for this rule of reason
 Delays that might be reasonable in sphere of economic regulation are less tolerable when human health and
welfare are at stake
 Court should consider effect of expediting delayed action on agency activities of a higher or competing
priority
 Court should also take into account the nature and extent of interests prejudiced by delay
 Court need not find any impropriety lurking behind agency lassitude in order to hold that agency action is
unreasonably delayed

In Re Bluewater Network & Ocean Advocates

Rule: Where agency’s decision is governed by statute and agency has unreasonably delayed in action, there is
public hazard or risk
Facts/PH: Exxon Valdez supertanker spilled 11 mil. gallons of oil into Alaska’s coastal ecosystem, Congress enacted
Oil Pollution Act of 1990 (OPA) establishing tanker reqs. to prevent spills and broadening federal liability. Coast
Guard was supposed to issue regulations within 1 year of OPA passage, but did nothing for 9. So, P environmental
group filed writ of mandamus to compel agency action.
Holding: Coast Guard unreasonably delayed, regulations have important environmental impacts. Court grants
mandamus and orders Coast Guard to undertake prompt rulemaking. Consider a writ of mandamus when:
(1) there is a legitimate timetable,
(2) the delay is egregious,
(3) action sought is arguably nondiscretionary,
(4) an important interest (such as public health) is at stake,
(5) the delay is unreasonably and has a prejudicial effect, and
(6) dissuance of writ would sere not only an individual client interest but also the public interest

VII. Judicial Review of Retroactive Agency Action

Retroactivity – premise that one should not be sanctioned for behavior that, when it occurred, was not unlawful
Primary & secondary retroactivity
 Primary retroactivity: a rule that would alter past consequences of past action
 Secondary retroactivity: a rule that affects future consequences of past action
Analyzing retroactivity:
 Did Congress intend agency to issue retroactive rules or adjudicatory orders?
 Did Congress prohibit agency from issuing retroactive rules or adjudicatory orders?
 Is application of new rule (to past facts) going to create a manifest injustice?
 Was agency action unexpected – did the parties have de facto or de jure notice?
 Was there justifiable reliance (a settled expectation) on existing rules or standards prior to issuance of the
retroactive rule or order?
 Is there new liability, sanction, legal consequence/obligation, or fine that did not exist before?
 Were there easy/available other means to change govt policy/program w/o harsh effect of a retroactive
rule or order?
 Would statutory goals be frustrated if agency is prohibited from issuing retroactive rule or order?
 Will “law breakers” go unpunished (thus compromising deterrence and the statutory purpose) if agency is
prohibited from issuing the retroactive rule or order?
 When you evaluate retroactive rule or order, consider level of misconduct or harm agency is trying to
address – which is worse – the fact of a retroactive action or behavior seeking to be prevented?

33
  Is this primary retroactivity (alters past consequences of past action) or secondary (affects future
consequences of past action)
 Is challenged retroactivity central to rights, interests or entitlements of parties or is it collateral, e.g.,
procedural?
 Does retroactivity respond to an emergency or correct a critical error?

Mischief rule [SEC v. Chenery Corp.] Balance the retroactivity against the mischief of producing a result that is
contrary to statutory design or to legal and equitable principles: if the mischief is greater than the ill-effect of the
retroactive application of a new standard= acceptable retroactivity. Agency gets to choose process, in adjudication
agency must follow established standards.

SEC v. Chenery Corp

Rule: Agencies can adopt new standards through individual orders based on adjudication of a particular situation
and can also issue prospective rules.
Facts/PH: Federal Water Service Corp. (FWSC) sought SEC approval during a reorganization. Majority of
shareholders owned preferred stock (w/o voting rights). Chenery owned a block of common stock (w/ voting rights)
had control over selecting corp. management
Holding: SEC had sufficient justification to believe that trading of company’s stock by company’s management
during a reorganization could be dangerous. SEC’s conclusion rested squarely in area where ALJs are entitled to the
greatest amount of weight by appellate courts: was an allowable judgment, Court declined to disturb. Product of
administrative experience; based on substantial evidence and consistent w/ statutory authority.

Bowen v. Georgetown University Hospital

Rule: No primary retroactive rulemaking unless expressly authorized by Congress: retroactivity is not favored in the
law—congressional enactments and administrative procedures will not be construed to have retroactive effect
unless their language requires this result
Facts/PH: Government reimbursed healthcare providers for expenses they incur while providing medical services to
Medicare beneficiaries. Sec. of HHS issued a 1981 regulation that set limits on the levels of costs to be reimbursed.
Changed the method of calculating wage index new rule excluded federal government hospitals. Hospitals in DC
wanted to invalidate the schedule, lower court held this violated APA because no N&C. HHS then published notice
seeking public comment, reissued the 1981 wage index rule retroactively requiring the P hospitals to return over $2
mil in reimbursement payments.
Holding: Rule invalid under APA and Medicare Act—no congressional intent in statutory scheme to grant agency
authority to make rules retroactively. Congress must state in express terms that a statutory grant of legislative
rulemaking authority includes the power to promulgate retroactive rules.

Chapter 5: Rulemaking – Delegation, Limitations, and Alternatives

VIII. Expansion/Limitation of Agency Control and Power
An agency may not expand its power by virtue of regulation beyond what was contemplated by Congress. However,
so long as the agency practice is generally consistent with congressional mandate, it may well be that some level of
expansion of power or modification of procedure is inherent in a rule the agency articulates.

Main Principles of Delegation:

1) Congress cannot delegate to an agency powers it does not have
a. Power to subpoena
b. Power to summon a jury
2) Congress must delegate with sufficient clarity

34
 a. Congress cannot delegate to an agency the power or obligation to act if the exercise of that power is
inconsistent with the Constitution
b. i.e., Congress cannot delegate responsibility such that the agency is charged with making fundamental
public policy choices
c. Agencies are not Article I legislative bodies cannot make substantive policy or expand jurisdiction
3) Congress cannot delegate unlimited power to an agency or to the President
4) Congress cannot delegate power or responsibility that it is required to perform
5) An agency cannot expand its own authority

Panama Refining Company v. Ryan

Rule: Congress must clarify statutes that delegate specific authority to a particular body; if not, it appears as
if it’s a delegation of ALL power
Facts/PH: Law allowed the President to enact a prohibitory executive order against transporting a
petroleum through interstate or foreign commerce. In the law, there were no set limits on the conditions
under which the President could act, which gave rise to an interpretation that gave the president unlimited
authority.
Holding: Statutes that give the President unlimited authority are unconstitutional.
 Congress did not clarify specific powers to be delegated
 Regardless of whether POTUS is presumed to be acting in good faith, the question is still rooted in
constitutional authority—POTUS intent is always irrelevant in these cases

ALA Schechter Poultry Corp. v. United States

Rule: Congress cannot delegate legislative power without clear indication of underlying policy (strict
standards) and specific instructions as to how power is to be enforced.
Facts/PH: Petitioners convicted of violations of Live Poultry Code, which allowed the President to implement
industrial codes regulating employment hours, wages, and ages for the purpose of fairness in competition.
Issue: whether the Live Poultry Code unconstitutionally delegated legislative power to the President?
Holding: Live Poultry Code unconstitutionally delegated legislative power to the President to make codes
and rules of law that was within the power of Congress and not the Executive
 President and trade associations can’t create laws governing
 Carter v. Coal Co. [same sentiment as Schechter Poultry]

Industrial Union Department, AFL-CIO v. American Petroleum Institute

[Benzene Case]
Rule: Congress cannot delegate authority with vague statutory language. Instead, the statute must be
clearly defined or standardized
Facts/PH: Dept. of Labor promulgated a rule regulating occupational exposure to benzene, a carcinogen.
Two Occupational Health and Safety Act standards are in play here—one that defines occupational health
and safety standards as requiring conditions “reasonably necessary or appropriate” to provide safe or
healthful employment, and another that requires all standards to assure, “to the extent feasible, on the
basis of the best evidence available,” that no employee will suffer material impairment. Congress used term
“feasibility,” but does not define if that means cost/benefit or scientific capacity. These analyses have
completely different outcomes. Rule is not upheld or given deference. The agency’s process failed; should
have conducted better rulemaking.
Holding: OSHA may not set level of benzene that is “dangerous” without first making threshold
determination that benzene poses a health risk.

35
FDA v. Brown & Williamson Tobacco Corporation
Rule: Agencies cannot expand their own power, only Congress Can.
Facts/PH: FDA issued a rule prohibiting the marketing of tobacco products to young people; it claimed
authority under the Food, Drug, and Cosmetic Act. FDA was challenged based on legislative history and
structure of FDCA in that it didn’t give FDA jurisdiction to regulate tobacco.
Holding: FDA does not have jurisdiction to regulate tobacco products because Congress expressed its clear
intent that FDA did not have jurisdiction by enacting tobacco-related legislation without FDA involvement
 Chevron analysis → issue involves an admin agency’s interpretation of a statute (the FDCA).
Congress has directly addressed issue (don’t get to step 2 of analysis), and FDA does not have
authority to regulate tobacco.

Martin v. Vermont
RULE: An agency MAY NOT expand its power beyond delegated authority.
FACTS: DMV denies P’s request for vanity plates that read IRISH or IRISH1, relying on a regulation
that prohibits references to ethnicity. DMV has power to deny requests for plates that may be
confusing/offensive to public, but DMV does not allege that ethnic references categorically do so.
HOLDING: Regulation extends beyond delegated authority and allows the DMV to reject requests
that merely have the potential to offend.
 DMV imposing its own policy RE plate requests; one that is inconsistent with and beyond
the delegated congressional authority.

American Library Association v. FCC

RULE: Agencies can’t regulate what they’re not allowed to regulate.
FACTS: FCC adopted broadcast flag regulations requiring that devices capable of receiving digital
broadcast signals include specific technology that would allow them to recognize broadcast flags.
FCC relied on Chevron because its promulgated regulations reflect a reasonable application of its
ancillary authority under the Communications Act.
HOLDING: FCC was acting outside its delegated scope of authority, and the promulgated rule is
impermissible.
 Nothing in the statute, legislative history, case law, or agency practice indicating that
Congress intended to provide this sweeping authority to the FCC.
 Agency invoked Chevron, but it left out Chevron step 0 threshold question

Wyeth v. Levine
Rule: State law is only preempted by federal agency law if it is impossible to comply with state and federal
law simultaneously, or if the state law is in some way an obstacle to achieving Congress’s intent evidence in
federal law.
Facts/PH: Wyeth produced a drug that, when injected, was incredibly harmful. A jury found for the
respondents awarding over $7 million dollars in damages. Wyeth raised a federal preemption claim whereby
they allege that Levine’s failure to warn claims was preempted by applicable federal labeling laws.
Holding: The respondents’ complaint was not preempted when considering the surrounding circumstances.
 Impossibility defense failed
 Congress has repeatedly declined to preempt state law [although it is possible for a state law to
frustrate Congressional intent]

36
IX. Presidential Power
One of the most direct forms of executive governance is the issuance of Executive Orders. Presidents can issue
executive orders and have some authority within agencies.

OIRA [Office of Information and Regulatory Affairs]

Created with the responsibility of approving or disapproving information collection requests from agencies.

Executive Order 12866 → basis for presidential review of agency action [1993]
 Empowers OIRA to review all rules an agency considers
 Assesses whether the benefits the rule provides are greater than the costs
 Expands the role of the Vice President to include regulatory review and agency oversight

Four propositions to understanding OIRA:

 OIRA helps oversee a genuinely interagency process, involving many specialists throughout the federal
government
 When a proposed or final rule is delayed, and when the OIRA review process proves time consuming, it is
usually because significant interagency concerns have yet to be addressed
 Costs and benefits are important, and OIRA does focus closely on them, but they are usually the dominant
issues in the process
 Much of the OIRA process is technical. When rules are delayed, it is often because technical specialists are
working through the technical questions. Much of the time, the problem is not that OIRA has fundamental
objection to the rule and the agency’s approach. It is that the technical questions need good answers

OIRA has significant transparency limitations:

 No public log
 No explanations
 No disclosure

Line-Item Veto Power

A line-item veto, or a partial veto, is a special form of veto that authorizes a chief executive to reject particular
provisions of a bill enacted by a legislature without vetoing the entire bill.

Clinton v. City of New York

Rule: There is no provision in the Constitution that authorizes the President to enact, amend, or repeal statutes.
Facts/PH: Line Item Veto Act gave President power to cancel three types of legislative provisions: (1) any dollar
amount of discretionary budget authority, (2) any item of new direct spending, (3) any limited tax benefit.
Cancelling an item strips it of legal force and effect. Clinton invoked Act to cancel provision of Balanced Budget Act
that would have allowed NY to avoid repaying funds under Title XIX of Social Security Act. Ps are individuals who
would have benefited from cancelled items.
Holding: Line Item Veto is unconstitutional; it’s equivalent to the President rejecting Congress’s policy judgment
and relying on his or her own. President has power to ratify or veto a bill in its entirety. Cancelling certain items is
equivalent of amending legislation, and is unconstitutional. Congress can override veto with 2/3 in both houses
 This limitation on presidential authority is domestic. If this was international or treaty, it would be treated
differently under Curtiss-Wright.

Appointment Power
NLRB v. Noel Canning
Rule: The President may invoke the Recess Clause to fill any vacancy that exists during any sufficiently long Senate
recess. Any vacancy may be filled whether it arose within the recess or while Congress was in session.

37
 Facts/PH: POTUS used Recess and Appointment Clause to appoint people to NLRB during three-day senate break
between pro-forma sessions.
Holding: 3 days or less, not a recess; 3-10 days rebuttable presumption that it’s not a recess; over 10 days then it is
a recess but that a rebuttable presumption as a probable recess

X. Rulemaking by Adjudication – When Is It An Option?

APA appears to create dual regimes, one for adjudication and one for rulemaking. Agencies have discretion to
decide whether to proceed with a rulemaking or an adjudication.

Appropriate Conditions to Apply New Standards through Adjudication

 Diversity and complexity of the regulatory problem make it well-suited for a case-by-case evolution of the
standards [right parties are before the agency];
 Agency has the information it needs to decide this case;
 Lack of detrimental reliance; and,
 Does not impose new liabilities or sanctions

National Labor Relations Board v. Bell Aerospace Company

Rule: an agency may announce new policies and standards in an adjudicative hearing rather than with rulemaking
Facts/PH: A union tried to unionize buyers in Bell Aerospace. Bell argued that buyers were not subject to the
National Labor Relations Act because they were “managerial employees.” When this issue was subsequently
litigated before the NLRB, it reversed its earlier policy that all managerial employees were exempt from Act. It
found that only managerial employees with labor-management responsibilities were exempt. After concluding that
buyers at Bell’s plant had no such responsibilities, NLRB found that they were subject to the Act. Federal appellate
court held that NLRB could only make this determination through rulemaking.
Holding: NLRB can announce new policies and standards in adjudicative hearing.
SEC v. Chenery Corp.
To insist upon general rules over individual orders is to promote form over necessity. Therefore, agencies may
act either by general rule or by individual order—discretion.

Agencies have the power to resolve disputes in adjudication. If agencies must create a new standard to resolve a
case, they may issue a rule that applies to the parties in that case. The rule from an adjudication applies only to the
parties in the case, but it also provides notice to non-parties. Order is binding on the parties, but probably not
binding on non-parties.

Clark-Cowlitz Joint Operating Agency v. FERC

Announcing a standard in adjudication—balancing of interests. [CC Factors—add to retroactivity]. Factors for
when a rule can be applied in the adjudication it was announced in include:
 Whether the case is one of first impression
 Whether the new rule represents an abrupt departure from well-established practice or merely
attempts to fill a void in an unsettled area of law
 The extent to which the party against whol the new rule is applied relied on the former rule
 The degree of the burden which a retroactive order imposes on a party
 The statute interest in applying a new rule despite the reliance on a party on the old standard

NLRB v. Wyman-Gordon Co.

Rule: Federal agency must comply with rulemaking procedures in APA and may not promulgate a rule through
adjudication.

38
 Facts/PH: NLRB ordered company to produce a list of names, addresses of its voting eligible employees so that
unions could use for elections. Company refused to comply and election was held without list. Unions were
defeated. Board ordered a new election and company refused
Holding: NLRB’s procedure of rulemaking during an adjudication is improper. Agencies can resolve disputes
between parties in adjudication, and the rule from that adjudication only applies to the parties in that case.

XI. Negotiated Rulemaking

Negotiated Rulemaking: process by which an agency and parties affected by a proposed rule negotiate terms of a
proposed rule. Because N&C rulemaking is prohibitively time consuming and expensive, sometimes agencies will
attempt to negotiate, in advance of N&C rulemaking, a proposed rule that has a greater chance of success and a
lower probability of attack in the N&C process.

Agencies are required to consider negotiation before rulemaking. Agency has discretion to decide whether to
conduct negotiated rulemaking and can choose who to include in negotiation.

When an agency contemplates the need for a rule where there is some possibility of negotiation, it must comply
with the Negotiated Rulemaking Act. Assuming the basic requirements of the Act are met, the agency will then
designate a “convener” who will facilitate the negotiation. The convener’s responsibility includes selecting
representatives for the different interests that will be affected by the rule to participate in a negotiation in which a
rule can be written in collaborative way. In this negotiation, the government and each of the interested parties
have one vote. If the representatives reach a consensus, a proposed rule emerges that has support of those who
participated in the negotiation.

Risks and Benefits of Negotiated Rulemaking

 High compliance levels
 Low enforcement costs
 Not subject to judicial review
 Actions of parties are not discoverable
 Results aren’t binding

USA Group Loan Services v. Riley

Rule: Agency promises made during negotiated rulemaking are not enforceable.
Facts/PH: Federal government program of subsidizing student loans. Negotiation in bad faith for dropping cap
liability after negotiated rulemaking, but before N&C rulemaking.
Holding: It was not bad faith for Sec. to withdraw the proposal regarding the cap on liability. Negotiated
Rulemaking Act does not envision negotiated rulemaking ending in a binding contract. [can’t have a negotiation
with more than 10-12 people].
Negotiating Regulations: A Cure for Malaise
Participants can make substantive decisions rather than acting like experts in decisionmaking processes; they
work closely with government interests during the process.

Bargaining Toward the New Millennium: Regulatory Negotiation and the Subversion of the
Public Interest
Arguing that negotiations actually limit and, in some instances, silence the public because the number of
participants is limited.

In Search of Goldilocks: Democracy, Participation, and Government

Negotiated rulemaking = deliberative democracy. The agency plays the central role of assembling the
representatives together to solve a difficult problem and ensures that the decision is faithful to the criteria that
are to enter into the resolution.
39
Chapter 6: Adjudication – Basic Principles and Entitlements
I. Overview of Adjudicatory Process
Agencies use the adjudicatory process to resolve disputes, enforce statutes and regulations, and grant or deny
licenses or benefits.

The rules for formal adjudication are found in the APA §§ 554, 556-57
APA § 554(a) requires formal adjudication when the statute being implemented requires agency
determination to be made on the record after opportunity for an agency hearing. Legislation that uses
phrases such as "hearing" or "public hearing" does not, without more, mandate formality.

The APA also created exceptions for circumstances where formal hearings might otherwise seem the
appropriate process. Those exceptions include: (1) Matter subject to a subsequent trial of the law and facts
de novo in a court; (2) Selection or tenure of an employee, except an ALJ; (3) Proceedings in which decisions
rest solely on inspections, tests, or elections; (4) Conduct of military or foreign affairs functions; (5) Cases in
which an agency is acting as an agent for a court; (6) Certification of worker representatives

In many instances, an agency will have an option to proceed with formal adjudication, using an enforcement
action to apply and interpret its own rules as well as statutes, or to proceed with a rulemaking. Unless
mandate by statute, the choice between rulemaking and adjudication "lies primarily in the informed
discretion of the administrative agency.”

The rule and procedures for informal adjudication are not found in any one place in the APA; it is too difficult to
create a one size fits all approach to cover informal adjudicatory process. Informal adjudication is the most
common process of all agency processes.

Similar to Auer v. Robbins deference, in adjudications, an agency's interpretation of its own regulations must be
given controlling weight unless it is plainly erroneous or inconsistent with the regulation. Deference to
interpretations in adjudications extends to certain positions taken for the first time in the adjudication itself.

Rulemaking and adjudications have different decision-makers

 In rulemaking cases, the commissioner or administrator heading the agency bear primary responsibility
 In an adjudication, there are a range of decision-makers involved at every range, with different titles, and
different powers

APA § 555(b) creates a right to counsel in some adjudicatory proceedings: "A person compelled to appear in person
before an agency or representative thereof is entitled to be accompanied, represented, and advised by counsel or,
if permitted by the agency, by other qualified representatives.”

There is no across the board right to counsel in all adjudicatory proceedings, and the right can be waived.
Sometimes a statute clarifies that a party compelled to appear before an agency is entitled to representation,
and there is a right to have counsel present in many adjudicatory hearings, particularly where a statute clarifies
the entitlement. However, there are kinds of hearings (e.g., social security disability cases) where a party is not
entitled to counsel. Other kinds of hearings (e.g., asylum hearings) are so important that denial of counsel is
grounds for remand.

II. Due Process: Individual Interests and Procedural Entitlements

Due process claims require a traditionally cognizable interest, entitlement, or right. If someone raises a 5th or 14th
amendment violation at the hands of the government, the claimant must demonstrate an interest, right, or
entitlement the Constitution actually protects and is neither automatic nor facile. See Mathews v. Eldridge.

40
 Mathews Balancing Test:
Step 1: does a constitutionally protected interest exist?
Liberty Interest: broader than the items enumerated in the Constitution [e.g., marriage, procreation,
speech, religion, press, travel]

Property Interest: legitimate entitlement to real and personal property and some expectation of a
continuing benefit

→ if no, might deserve a hearing [but maybe not depending on what the Constitution says]
→ if yes, the right cannot be taken away without adequate process

Step 2: what process is due? Weigh interests

→ §§ 554, 556, 557
→ Interests
Individual’s interest
Liberty Interest: hearing must be before the agency action
 You need notice when a liberty interest is affected
 Liberty interest gets adjudicatory before remedy is given because you can’t replace
a liberty interest like you can (theoretically) for property interests
Property Interest: hearing can be after agency action because the interest can be returned

Government’s interest
Process-based interests: speed and efficiency of a decision-making system or the necessity
to proceed to process a large number of claims
Substantive Interests: importance of regulatory goals like national security, environmental
quality, or education

Risk of error: is the reversal rate low? Would the risk of error change if hearing provided
beforehand?

Step 3: Types of processes [notice and opportunity OR full pre or post hearing]

It is not a foregone conclusion that the 5th and 14th amendment Due Process protections will apply to
adjudication.

However, some kinds of denial are required. There is no general right to discovery in agency practice. The fact-
finder (ALJ) is also the decision-maker, unlike how Article III courts do under the separation of functions doctrine
[no jury of your peers].

Cafeteria & Restaurant Workers Union v. McElroy

Rule: Determining what procedures due process requires under the given circumstances requires that you first
determine the precise nature of government function involved, as well as the private interest that has been
affected.
Facts/PH: Lady worked in a cafeteria on a military base and was fired because commanding officer determined she
could not pass security requirements; was given no pre-termination hearing or told what specifically grounds for
her firing.
Holding: DP did not require that a civilian be advised of specific grounds for her firing and be accorded a hearing
because government employment, in absence of legislation, could be summarily denied

41
  Did not deprive life, liberty, or property interests – denying her access to gun factory did not impair her
other employment opportunities
 Where private interest is characterized as mere privilege subject to executive power, usually held notice &
hearing not required – privilege is not a right

Goldberg v. Kelly
Rule: Procedural due process requires the state to provide the welfare recipients with a pre-termination
evidentiary hearing to determine the validity of discontinuing an individual’s public assistance benefits.
Facts/PH: NYS and NYC terminated Π’s public assistance [means of living (property and liberty interest)] before an
evidentiary hearing at which the person is present, can present oral evidence, and confront witnesses violated
procedural due process.
Holding: Π has a property and life interest in continued receipt of payments; and, absence of in-person hearing to
challenge termination of benefits (pre-termination hearing) violated DP

Goldberg hearings – the maximum procedural entitlements you get:

 Notice of proposed action and grounds asserted for the action in advance of a hearing
 Full opportunity to present the reasons why the proposed action should not be undertaken
 Right to: unbiased tribunal; call witnesses; know in advance the evidence that will be used against an
individual’s interest; have a decision based only on the evidence presented during the hearing
(correlation); have counsel present (but no right to counsel); have a full record maintained; statement of
reasons for the decision; public attendance at the hearing; and, judicial review of the hearing

Marchwinski v. Howard
The act that gave benefits in Goldberg was later replaced and it made it more difficult for people to get pre-trial
hearings before benefits are terminated

Obergefell v. Hodges
Same-sex couples have a liberty interest in eligibility for the same civil benefits of marriage.
Rule: The right to marry is a fundamental right inherent in the liberty of the person and under the Due Process and
Equal Protection Clauses of the 14th Amendment, coupes of the same-sex may not be deprived of that right and
that liberty.

Board of Regents of State Colleges v. Roth

Rule: Procedural due process protections apply when a person has legitimate claim of entitle to the property
interest in a benefit; it must be more than an abstract need or unilateral expectation.
Facts/PH: Professor hired for one year, given contract for one year, had no tenure, property interest is limited to
what his contract created and for only one year, he was not re-hired, did not get pre-termination hearing, a
statement of reason as to why he was not re-hired, or a chance to appeal decision. Roth brought an action claiming
that he had a 14th Amend property interest in his job and was entitled to a statement of reasons and a hearing on
decision not to rehire him for another year.
Holding: No constitutional right to a job; Roth’s contract didn’t entitle him to a property or liberty interest under
14th amendment in a new contract. Court balance nature vs. weight of the interest at stake.
Perry v. Sindermann
Rule: Interest in a benefit is a DP property interest if there are rules or mutually explicit understandings that
support claim of entitlement to the benefit that may be invoked at a hearing
 If what is lost is irrecoverable = hearing before action
 If what is lost is it is recoverable = hearing after action

42
 Facts/PH: Junior college professor hired onto one-year contract, no tenure, but had worked enough years to have
informal tenure, critical of administration, not rehired, administration provided no explanation. Professor brought
action alleging that failure to afford him a hearing violated his 14th Amend procedural DP. He claimed legitimate
reliance that employment for 7 years or more at his particular college created some form of tenure that was no less
a property interest than a formal tenure system at another university
Holding: a state college teacher is entitled to a procedural due process prior to termination if the teacher has a
property interest in continued employment.
 Meets Mathews step 1 – might be able to show a legitimate claim to entitlement to job in light of objective
factors in school policies
 Although TX college system had no formal tenure program, its guidelines and standard practices, coupled
with length of professor’s employment, were sufficient that an “entitlement” could be found to procedural
due process

Mathews v. Eldridge
Rule: Whether an administrative procedure meets the constitutional guarantees of the Due Process Clause requires
a consideration of three factors:
1. Importance of private interest subject to deprivation
 What is the importance of the private interest at stake?
2. Risk of erroneous deprivation and probable value of additional or substantive procedural safeguards
 Party is asking for specific procedure – ask: is the procedure going to greatly increase the chances
of getting to a fair answer?
3. Burden on government to employ proposed procedure(s)
 How much time/money/resources will this additional DP procedure cost the government?
Facts/PH: defendant had disability benefits taken away without pre-termination hearing
Holding: absence of in-person hearing to challenge termination of SS disability benefits did not violate P’s DP rights
 Distinguished from Goldberg – welfare recipient benefits are only income source; here, SS disability may
not be only income source
 No need for step 1 analysis – this is a statutory entitlement, not aspirational benefit/interest [like the right
to continue working for a specific employer]

Cleveland Board of Education v. Loudermill

Rule: The Due Process Clause of the Fourteenth Amendment requires a limited pre-termination hearing before the
discharge of an employee who has a constitutionally protected property interest in his employment, followed by a
more elaborate post-termination hearing to challenge the discharge.
Facts/PH: Π was hired as civil servant (security guard), who could only be fired for cause. Π lied on application, was
terminated via letter, never received an opportunity to contest the decision or respond to charge and a couple
months later, the board approved a resolution to fire him. Π brought suit alleging Board deprived him of property
without due process.
Holding: P is entitled to notice and opportunity to be heard before
 14th Amendment DP clause prohibits states from depriving individuals of property without DP.
 A state statute that creates a constitutionally protected property interest may not also limit the
procedures for enforcing that right.
III.Basic Agency Obligations in the Adjudicatory Process
When an agency exercises adjudicatory power, it must produce a record demonstrating that: (1) the agency has
evaluated the evidence the parties submitted and (2) made its decision based on some meaningful standards.
A. Appeals of adjudicatory decisions within agencies also require a written decision for the most part
B. Agencies do not have to consider every alternative as part of adjudicatory procedure

43
Citizens to Preserve Overton Park v. Volpe
Rule: When reviewing an agency decision, the Administrative Procedure Act (APA) requires courts to consider: (1)
whether the agency acted within the scope of its authority; (2) whether the agency’s actions were arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with the law; and (3) whether the agency’s action
met the necessary procedural requirements
Facts/PH: Secretary of Transportation can withhold funds for building roads if they go onto park lands if a feasible
and prudent alternative route exists. Here, Secretary made no formal findings, was sued, prepared affidavits for
litigation, and this was not enough to determine whether Secretary’s actions were prudent within meaning of
statute.
Holding: Record was insufficient to support running road through the park. Agency action must be set aside if it: (1)
was not within the scope of its authority, (2) was arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law, or (3) failed to meet statutory, procedural, or constitutional requirements.
 Step 1: Court looked to whether Sec. reasonably believed there were no feasible alternatives or that
alternatives involve unique problems
 Step 2: Court looked to whether decision was based on consideration of relevant factors & whether there
has been a clear error of judgment
 Step 3: Formal findings not required to satisfy the “public hearing” requirement, but court found that
judicial review based solely on affidavits was not adequate
Intent of Congress was clear: protection of parkland was to be given paramount importance- Sec can’t approve the
destruction of parkland unless he finds that alternate routes present unique problems

Horsby v. Allen
Rule: All licensing cases are adjudicative and judicial in nature as it requires some sort of record containing
eligibility criteria. Therefore, all licensing matters are entitled to due process
Facts/PH: Liquor license in Atlanta case where resident met standards but was still denied license.

There are some exceptions to this

C. Public health & safety: when the issue involves public safety, no hearing before the fact is required; the
remedy is in tort
North American Cold Storage Co v. Chicago
Rule: Matters of public health are so important that they supersede the need for strictly adhering to
the requirements of the DPC; in cases of seizure of products that pose a danger to public health, a
person is afforded no notice or hearing before seizure. Police power allows states to protect public
health and safety; a preliminary hearing is not required where there are adequate remedies after fact.
Facts/PH: Spoiled chicken case. Owners of cold storage houses that were statutorily required to
preserve food in a clean and wholesome condition. Chicago had an ordinance where health inspectors
could seize rotten meat and destroy it, where they did not require a hearing before seizure,
condemnation, and destruction of food when the food was unwholesome and unfit for use.
Holding: In an emergency, a post-seizure hearing about the legality of the government’s seizure of a
person’s property may be sufficient to provide due process to the property owner; remedy in tort also
an option—ability to compensate after the fact.

D. National security exception: in time of a war or national security emergency, DP doesn’t require
opportunity for judicial review before a regulation or order is made effective

44
 Bowles v. Willingham
Rule: National security is an exemption from having to provide someone with due process before
state or agency action if the statute allows for judicial review
Facts/PH: Allegation against property owner that she has been overcharging rent during wartime;
Emergency Price Control Act allows federal rent control administrator to reduce rents during wartime.
Holding: Congress provided sufficient procedural DP by allowing for judicial review of the rent control
statute. Prior hearings for many similarly situated landlords impracticable for natl. security reasons

E. Reliance on rulemaking exception: agencies may rely on their rulemaking authority to determine issues that
do not require case-by-case consideration, even if an agency’s enabling statute expressly requires it to hold
a hearing (Heckler v. Campbell)
Heckler v. Campbell
Rule: Adjudication may be based on prior rulemaking guidelines which establish classes of decision-
making and outcomes
Facts/PH: P’s application for disability benefits was denied, and she requested a hearing (permitted by
regulations). Secretary created medical vocational guidelines to help make determinations as to
whether people could collect disabilities benefits. Using prior employment opportunity guidelines, ALJ
determined that her back injury was not severe enough to make her disabled, and determined she
could perform less strenuous jobs.
Issue:
Holding: agencies can pre-determine what kind of compensation a party can get, so long the pre-
determination does not interfere with fact-specific functions
 Here, HHS may rely on published medical-vocational guidelines to determine a claimant’s
right to SSD benefits
 Becomes a found fact

F. Streamlining [making an adjudicatory decision without creating a written record] is a common practice in
administrative decisions. It is very common in immigration cases.

Present Entitlement
Present entitlement is when a claimant is denied a right by virtue of which he was presently entitled either to
exercise ownership dominion over real or personal property or to pursue a gainful occupation. The post-deprivation
remedies appropriate to the deprivation of an interest to which there is a present entitlement are characterized by
promptness and by the ability to restore the claimant to possession.

When a terminated employee possesses a present entitlement and has only been afforded a limited pre-
termination hearing, a state law breach of contract claim is not an adequate post-termination remedy.
In Baird v. Board of Education, a super intendent was fired in his first year of a three-year contract and claimed
a breach of contract. The District collected negative comments about him and at his post-termination hearing,
he was asked for information that was denied to him.
ISSUE: Whether post-termination lawsuits of breach of contract can remedy the full due process deficiency from
the lack of a pre-termination hearing?
HOLDING: Baird was entitled to a pre-termination hearing because he held a present interest

Office of Communication of the United Christ of Church v. FCC

Rule: Intervening in agency adjudication has less stringent nexus for standing requirements as compared to Article
III courts. A party has standing in a license renewal hearing (agency adjudicatory hearing) if (1) they have an

45
 articulable injury/they are affected by the grant of the license, and (2) renewing the license would be inconsistent
with public interest
Facts/PH: Plaintiff sued, trying to intervene to prevent WLBT from getting a license to air their racist TV show. The
plaintiffs were residents of the area that would see that broadcasting.
Holding: Church has standing to intervene because there is no standing requirement of economic injury in agency
adjudication agency. Agency may not use ad hoc criteria to block intervention and should develop criteria to detail
standards. Some audience participation must be allowed in license renewal proceedings – all about the expectation
of the gov.

Rainbow/PUSH Coalition v. FCC

Facts/PH: plaintiff moved to deny applications to transfer broadcasting licenses claiming that allowing the asking
party to get the license would prevent them from seeking employment in broadcasting. Plaintiff was an interest
group that wanted to have more minorities work in broadcast.
Rule: To have standing in a licensing case, you need to show that you suffered a real harm and would suffer a real
harm if the license was granted.

Chapter 7: Judicial Review of the Facts, Law, and Agency Policy in Adjudication
I. The Exhaustion Requirement
Exhaustion: requires individuals to take advantage of administrative remedies before going to court. Exhaustion is
advisable when:
 Agency expertise makes agency consideration necessary to generate a proper record and reach a proper
decision
 Relaxing requirement would encourage deliberate bypass of administrative scheme and
 Administrative review is likely to allow agency to correct its own mistakes and to preclude need for judicial
review

II. Judicial Review Standards

Substantial Evidence Test: basic standard of review for adjudicatory decisions
 Such relevant evidence as a reasonable mind might accept as adequate to support a conclusion (Universal
Camera)
o Must look at what supports the decision as a whole and look at whether [1] what the agency has
done is outside the agency’s authority or [2] the agency’s decision is impermissible
Universal Camera v. NLRB [created substantial evidence test]
Rule: a court should defer to an agency’s findings of fact if they are supported by “substantial evidence on
the record as a whole”
Facts/PH: NLRB ordered that P reinstate an employee who was fired and also ordered that P stop
discriminating against employees that filed charges under the Wagner Act
Holding: Courts should not view evidence in isolation; instead, court must review record as a whole, also
looking at what evidence the agency relied on in rendering its decision, to determine whether there is
substantial evidence.
 Court of appeals did consider record as whole: but did not properly take into account examiner’s
findings, the examiner’s report is part of the record.
Have to set aside the NLRB’s findings when the record clearly precludes its decision from being
justified
o More than a mere scintilla of evidence, less than a preponderance of evidence, the kind of
info on which a jury might rely, similar to the clearly erroneous standard for appellate
judicial review
Substantial: must be based on the record taken as a whole
46
 NLRB v. Hearst Publications [forward thinking opinion—applied SET before Universal Camera
established it]
Rule: When reviewing agency decision involving mixed q of law and fact, courts review [1] facts found
by agency to determine whether agency’s conclusion has “warrant in the record” & [2] agency’s
explanation of decision to determine whether decision has reasonable basis in law
Facts/PH: News boys complained about their compensation and wanted to unionize, dispute about
the meaning of the word employee under NLRA and whether newsboys fit into definition or if they
were independent contractors.
Holding: Reviewing court must accept agency determination if it has “warrant in the record” and
“reasonable basis in law.” NLRB found that they were employees within definition—language of the
Act is meant to be interpreted broadly; Congress did not specifically define “employee” w/i meaning
of the act.

 Credibility determination: defer to the ALJ because he is the one who initially hears the evidence
Pensaquitos Village Inc v. NLRB
Rule: (1) Decision by top of the agency cannot be based in evidence thoroughly discredited by an Admin
Law Judge. (2) if decision from top of an agency conflicts with decision by ALJ, and if that’s going be set
aside, there must be some credible evidence, something supporting the decision of the board, other
than they don’t like the ALJ. And that if the top of a board sets aside an ALJ decision, there is going to be
a more substantive critique.
Facts/PH: P fired two employees because they were watching people sunbathe. Employees argue that
this was retaliatory discharge because of their participation in union activities. ALJ finds in P’s favor, goes
up to NLRB and they disagree, set aside ALJ decision. (disagreement between NLRB and ALJ on facts)
Holding: Find it was not based on substantial evidence: based on discredited evidence. When the record
has independent, credited evidence more supportive of NLRB’s decision, reviewing court will review
them more critically if they are contrary to ALJ’s factual conclusions.
 ALJ’s credibility determination is a factual finding
 Court is to give special deference to ALJ’s factual determinations based on testimonial
inferences
o ALJ gets to see the testimony, reviewing court looks only at records
o Distinguishing between credibility determinations based on demeanor and inferences drawn
from evidence itself (testimonial inferences vs. derivative inferences)

 Adjudicatory hearings should be on the record unless statute specifies otherwise

Seacoast Anti-Pollution League v. Costle
Rule: Public hearings that an agency holds to decide whether to issue permits or grant exemptions from
statutory standards are subject to APA requirements for formal adjudicative hearings.
Facts/PH: Public service commission applied for discharge permit of heated water and exemption from
EPA standards. Text of statute required “public hearing” for exemption. Hearings were held before ALJ,
EPA employee who denied application got a copy of these proceedings.
Issue: did this mean that a “hearing on the record” is required?
Holding: An adjudicatory hearing subject to judicial review must be on the record (unless modified by
statute)
 Statute here did not say hearing must be on the record, but agency procedure was inadequate
because it only allowed written submissions.
 Consider the nature of the hearing that Congress intended to provide instead of whether the
specific words “hearing on the record” were in statute

47
 Dominion Energy Brayton Point, LLC v. Johnson
Rule: A public hearing requires the opportunity to be heard but does not require a full evidentiary
hearing on the record: courts must defer to agency’s reasonable interpretation of statutory public-
hearing requirement absent clear expression of congressional intent
Facts/PH: Similar set of facts to Seacoast, just decided post-Chevron: P requests full evidentiary hearing
based on CAA permit, dispute about the term “public hearing” in CAA.
Holding: Dominion is not entitled to a full hearing: EPA’s reasonable construction of the public hearing
requirement gets Chevron deference not Seacoast
 Under Chevron, EPA amendments to its regulations requiring a “public hearing” in its
adjudicatory proceedings are entitled deference. A public hearing is not a full evidentiary
hearing, but the opportunity to be heard.
 Note that Brand X would apply if there were binding precedent regarding statutory
interpretation of an unambiguous statute, but there was not here.

Chapter 8: Administrative Judging

At the basic level, those who serve as decision-makers in administrative adjudications are administrative law judges;
they are expected to be informed, impartial, and fair.

Analyzing decision-maker objectivity:

Substantial prejudice: bias influences outcome
Unalterably closed mind: judge decided case in advance of hearing
Irrevocable taint: misconduct/impermissible ex parte communication makes decision lack credibility. (See Ex Parte
Communication in Rulemaking).

I. ALJ Decisionmaking
Morgan v. United States
Rule: The one who decides must hear. Admin law judge must review the record to hold on an adjudication. Unless
congress says different, you need to read the evidence and see the facts and hear the case before you decide the
case
Facts/PH: Secretary of Agriculture was fixing maximum rates for buying and selling livestock. Plaintiffs sued in a class
action.
Holding: Agency should have had the same official view evidence and make the decision.
Bates v. Sponberg
Facts: Π was a professor and director of the center of aquatics and had to submit certain reports, he refused to
in an effort to protest the university's accounting policies. He was given a meeting with the grievance committee
and the file was sent up to the president for final decision. The president recommended termination to the
board of regents.
Issue: Whether the circumstances violated the Π's right to due process under the 14th amendment?
Holding: the proceeding did not violate the 14th Amendment
o Normally, failure to adhere to an established process would result in revocation of agency action, but
the school is not an agency governed by the APA, it is a school controlled by State agency law.
Nash v. Bowen
Rule: Under administrative law, a federal agency may impose reform measures to improve the adjudicatory process
and ALJ decision-making and increase the efficiency of its ALJs.
Facts/PH: Secretary of HHS passed three policies that an ALJ (Π) argued interfered with his decisional independence.
The first was with regard to the peer review program. The second was in regard to the production quotas. The third
was in regard to the quality assurance program.

48
 Holding: ALJ’s can have restrictive oversight placed on them, and the HHS’s practices didn’t infringe on the ALJ’s
decisional independence.

Withrow v. Larkin
Rule: Due Process requires a neutral decision-maker. Vesting an agency with both investigatory and adjudicatory
functions does not necessarily violate Due Process (there’s a risk of agency bias, but there is a strong presumption of
honesty and integrity).
Facts/PH: A doctor in Minneapolis was sent a letter by the reviewing medical board as to his actions that could
potential constitute a violation of the state laws. He was told that he was going to be placed under investigation and
would be subject to a hearing, so the doctor got a restraining order. The board respected it, but they conducted
their own investigative hearing and came to the conclusions that there was PC that he was practicing medicine
without a license. It was sent to the DA to allow them to come to a conclusion.
Holding: Allowing the board to investigate the case and then decide it does not violate the doctor's due process
rights. Test to determine whether allowing one person to investigate and decide case is violation of DP:
 Convince that under a realistic appraisal of psychological tendencies and human weakness, conferring
investigative and adjudicative powers on the same individuals poses such a risk of actual bias or
prejudgment that the practice must be forbidden if the guarantee of due process is to be adequately
implemented
 Here, the test was not met

Cheney v. US District Court for DC

Rule: A judge must recuse himself only if reasonable basis to believe he will not be objective.
Facts/PH: Scalia is friends with Cheney and went a hunting trip with him when Cheney shot that guy in the face
during his camping trip
Holding: Justice Scalia does not believe that he has to recuse himself. Recusal is required when impartiality might
reasonably be questioned. Friendship is not grounds to exclude a judge from hearing a case unless it concerns an
official action.

II. Privatized Decisionmaking

Schweiker v. McClure
Rule: An agency can appoint an agent to make statutory determinations for them; private entities may conduct
hearings on behalf of an agency consistently with due process if there are no conflicting interests.
Facts/PH: The Social Security Act has a part B that creates Medicare which is basically private medical insurance that
is mostly subsidized by the govt but also subsidized in part by the people who use it through payments of premiums.
The HHS was so backlogged in approving payments that they allowed for private insurance companies to determine
which payments qualify under Part B claims. The congressional intent of the program was to take advantage of the
experience that these people have in reimbursing physicians. After this decision is made, the parties have two
appeals that they can exercise.
Holding: Congress, consistently with due process requirements, may provide that hearings on disputed claims for
certain Medicare payments be held by private insurance carriers, without a further right of appeal.
 Start analysis that hearing officers are unbiased
o The hearing officers are quasi-judicial; Due Process requires impartiality from people n
judicial and quasi-judicial positions.
 The only offer of bias that was offered were some attenuated connections between the
hearing officers and the private insurance carriers
 Insufficient
 Court applied Mathews test and determined that providing ALJ's would not be unduly
burdensome
49
Cinderella Career and Finishing Schools v. FTC
Rule: Parties are entitled to an impartial agency adjudication. Test for disqualification:
 Whether a disinterested observer may conclude that the agency has in some measure adjudged the facts as
well as the law of a particular case in advance of hearing
 Requires a showing of complete fairness in both appearance and elementally
Facts/PH: Appeal of FTC decision to prevent π from engaging in what it determined to be unfair and deceptive
practices. Initial hearing officer dismissed the case against π and the FTC appealed the decision to the entire board
and the board found against Π on 6/13 counts
Holding: (1) the Commission cannot ignore facts and findings of the hearing examiner [If they chose to modify or set
aside the previous decision then they have to give reason]. (2) The Commissioner's statements call for his
disqualification because they make it clear that he has a very strong pre-determined opinion about this case [Even if
his vote was not necessary to pass the action, his strong opinion makes it clear that the plaintiff did not have a fair
shake in this case]

Andrews v. Agricultural Labor Relations Board

Rule: An appearance of bias only is insufficient to disqualify an ALJ from hearing a member; the moving party must
make a showing of actual bias.
Facts/PH: Action started by GC of ∆ alleging that Π (employers of workers covered by the Agricultural Labor
Relations Act) had committed various unfair labor practices in connection with a union representation election held
amount petitioner employees. The Board appointed Menocal as temporary ALO [Admin. Law Officer] to conduct the
hearing. Menocal works for a pro-employee public interest-private law firm. The π learned of this an hour before
trial and moved to disqualify the judge, the judge denied the motion and the π lost the case. This was sent to the
Board and the board adopted the ALO's decision and said that it was an independent decision.
Holding: Just because the ALO works and represents people on these kinds of issues doesn’t make him impartial.
The right to a neutral trier of facts does not mean the right to someone devoid of opinions

50