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THE REGULATORY PROCESS

Chapter 15

The rise of the administration bodies

probably has been the most significantlegal trend of the last century and

perhaps more values today are affected

by their decisions than by those of all

the courts . . . .They have become a

veritable fourth branch of the

government. . . . Supreme Court in F.T.C.

v. Ruberoid Company(1952)

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The Rise of

Administrative Agencies

The first federal agency: The Interstate Commerce

Commission (ICC,1887)

Early 1900s: The Federal Trade Commission (FTC) and the

Food and Drug Administration (FDA)

1930s: Securities & Exchange Commission (SEC) and Federal

Communications Commission (FCC)

1960s & 1970s: Environmental Protection Agency (EPA), Equal

Employment Opportunity Commission (EEOC), and

Occupational Safety & Health Administration (OSHA)

Agencies: Tools for local, state & federal regulatory functions

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Creating An Administrative Agency

Congress gives an agency power &

authority through legislative

delegation

Congress delegates powerto the

agency to perform the regulatory

purpose

Congressional statute delegates

powers anenabling statute

Agencies are created to have

expertise and supervision over

special problems about which

Congress is concerned

If voters unhappy with regulations,

the can pressure representatives in

Congress to make changes

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Administrative Law

Administrative law consists of legal rules that define

authority & structure of an agency

Sources include

Enabling statutes of administrative agencies

Administrative Procedures Act (APA, 1946)

Rules issued by administrative agencies

Court decisions Review validity of agency actions The structure of administrative law created by the APA

An agency must abide by APA requirements

Congress may impose different requirements than APA

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ADMINISTRATIVE REGULATORY

POWERS

Legislative (or Rulemaking)

Investigative

Adjudicatory

Enforcement Part of the powers of all

three branches of

government are

incorporated into anagency

See Exhibit 15.2

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Rule Making Formal rulesand regulat ions

Informal pol icy guidance documents

Substantive or Legislative

Same force as statutes of Congress

Agency usually must give public notice of these rules so parties

have opportunity for written comment

Interpretative

Issued by an agency to give guidance regarding interpretation of

a substantive rule or statute

May be created without public notice

Procedural

Rules outline the method of agency operation

Procedures for enforcement, investigation & adjudicatory review

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Rulemaking Procedure

Proposed rule drafted by the agency staff

Internal review of proposed rule

Rules approved by the head of the agency for public consideration

Publishing of the proposed rules in the Federal Register

Interested parties may submit written comments to agency After public comment period (60-90 days), agency reviews comments

and finalizes the rule

Some statutes require rulemaking must be on the record. Agency

must hold hearings for witnesses to testify about proposed rule.

Once agency issues final rule, it may be appealed through agency, thento the U.S. Court of Appeals

Courts uphold rules if reasonable given language of authorizing statute

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Chevron , USA v. Natu ral

Resources Defense Counc i l

The Clean Air Act requires states with nonattainment (dirty air)

areas to create permit program

Program regulates new or modified major stationary sources of

air pollution

EPA regs. state a plant with multiple sources of pollution aretreated as one source of pollution

The Bubble Concept as if multiple sources are under bubble

The whole bubble is measured (rather than each source)

National Resources Defense Council (NRDC) challenged EPAs

Bubble Rule

Said rule was inconsistent with Clean Air Act

Court of Appeals overturned the EPA regulation

Decision was appealed

Continued

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Chevron , USA v. Natural Resources

Defense Counci l , cont.

HELD: Reversed. Regulation is appropriate. Two questions asked:

1. Has Congress directly spoken to the precise question at issue?

2. If statute is silent or ambiguous re: an issue, was the agencys

answer based on permissible construction of the statute?

Agencies allowed to fill gaps left by Congress Unless agency decisions are arbitrary, capricious or manifestly

contrary to statute, regulations given controlling weight

Legislative delegation may be implicit or explicit often implicit

Court usually defers to administrative interpretations

Question is not whether the bubble concept is inappropriate

Question is if Administrators view is appropriate and reasonable

regarding the Bubble Program

EPAs use of the concept is reasonable policy for it to make.

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Enforcing Rules

Gathering information and investigating violations

Broad investigative powers of agencies by:

Monitoring and self reporting by business

Business is concerned with 5th Amendmentviolations re: self incrimination

Direct observation by agency

See Dow Chem ical v. U.S. (within text)

Agency obtains information through subpoena power Directs person receiving subpoena to appear and

testify or to produce documents

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General Principles of 4th Amendment Search &

Seizure Guidelines of Administrative Agencies

Need WarrantRoutineinspections

No WarrantOpen fieldobservation

No Warrant Consent bymanagement for agency tolook over or search thepremises

No Warrant Closelyregulated industries, i.e.

Pharmaceuticals industry

Nuclear facility

Even junk yards (ifprotection of evidence

needed)

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Enforcement Power

Agencies have array of enforcement tools in civil and criminalpenalties, plus the use of injunctions

Possible sanctions:

Prohibitions, requirements, limitations

Withholding of relief; penalties & fines

Destruction, taking, seizing, withholding of property

Assessment of damages, reimbursements, restitution,

compensation, costs, charges or fees

Requirement, revocation, suspension of license

Informal procedures (i.e. tests, inspections, permits,negotiations, advice, settlements)

Formal procedures (i.e. adjudicatory hearings that may lead

to litigation)

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Adjudicatory Hearing

Formal agency process under APA rules Similar to those followed in a trial

Business must respond to complaint that alleges

violation of agency regulation

Adm inistrat ive Law Judge (ALJ)presides ALJ is a civil service employee who is usually an

attorney

Witnesses may be cross examined

Less formal than a court trial

Hearing must meet due process guarantees of the

Constitution

There is no right to trial by jury

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Judicial Review

APA sets out procedural requirements for court review Jurisdiction is needed by the court to hear the case

Action must be reviewable by the courts (review may be

prohibited by statute, i.e. VA actions regarding benefits for

veterans, dependents or survivors) Party must have standing to seek court review of an

agency action

See Lu jan v. Defenders o f Wildl i fe(within text)

The agency action must be final to warrant judicial reviewunder the ripeness doctrine

Parties must complete all agency appeals before turning

to the courts under the exhaustion doctrine

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Reviewability

Review of substantive determination

Courts usually yield to agencys

judgment unless decisions are

arbitrary, capricious, or an abuse

of discretion or rulemaking is

vague or unduly burdensome on

business

Review prohibited by Statute

Congress may specify in the

statute which court has

jurisdiction for review

Can prohibit certain judicial

review

Review of statutory

interpretation

Courts determine if the

agency has gone beyond

Congressional authority

Review of procedural

requirements

Courts ensure an agency

has not acted unfairly or

disregarded procedures(has not violated

procedural fair play)

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CONTROLS ON AGENCY POWERS

Direct Controls

Congressional budget process

Agency Appropriations & Reporting Requirements

Cost-Benefit and Risk Analysis

Example: Office of Management and Budget may sendproposed regulation back to agency if scientific, technicaland economic information standards are not met

Presidential Executive Orders instructing tasks tobe undertaken by agencies

Example: Pres. Johnsons order to agencies re: affirmativeaction programs

Indirect Controls

Freedom of Information Act

Privacy Act

Government in the Sunshine Act