Admin Law Williams

Admin Law -- Williams

Fall 2005

Non-Delegation Doctrine—Art. 1, §1: all legislative powers shall be vested in Congress = Congress can’t delegate legislative powers.

Intelligible Principle: If Congress lays down by legislative act an intelligible principle to which the person or body authorized to exercise the delegated authority is directed to conform, such legislative action isn’t a forbidden delegation of legislative power. Misretta
Misretta: Congress creates an intelligible principle when it tells an agency to make rules following specific "goals, purposes, and factors"
e.g., Panama Refining and Schechter:
where standard for rulemaking is "vague and standardless" and there is no restriction on discretion, the delegation is unconstitutional
Whitman v. American Trucking:
dicta: the degree of agency discretion that is acceptable varies according to the scope of the power conferred by Congress

Legislative Veto—Congress can delegate authority, but reserves to itself the power to nullify an individual action taken pursuant to delegated authority.

For legislative act (incl. legislative veto) to be constitutional, it must comply with:
Bicameralism—need concurrence of a majority of members in both houses.
Presentment—present to President for approval or veto.
INS v. Chadha
the per se requirements of presentment and bicameralism emerge based on a formalist reading of the text of the Constition
the Dissent in this case would use a functionalist approach and permit single-house veto in order to speed up decision-making
Bowsher v. Synar
Congress cannot reserve for itself a legislative veto over the exercise of executive power

Relationship to President—removal questions

NW on Humphrey's: this case splits the definition of principal officer created in Myers

principal officer (at-will removal)purely executive (at-will removal)

quasi-legislative/quasi-judicial (Congress can

restrict)

NB: if official is not purely executive, then Congress must affirmatively grant President the removal power (Weiner)

inferior officer (Congress can restrict)

If person is an inferior officer or employee, Congress can insulate employees from President’s removal power b/c the President’s removal powers derive from statute or congress’ consent.
If person is a principal officer (appointed by President & approved by Senate), ask if they’re:
Purely executive officials—President can remove at will b/c power is derived from the constitution.
Quasi judicial or quasi legislative officials—Congress can insulate (limit) officials from President’s at will removal the President’s removal powers derive from statute or congress’ consent. Jobs require freedom from executive interference.
Humphrey's Executor: i.e., someone in an agency/capacity that cannot in any proper sense be characterized as an arm or an eye of the executive
…but Morrison... Core Function Test. Case controls to the extent there is any inconsistency between it and prior cases. (But is there really any inconsistency?)
The determination of whether President’s power to remove an official does NOT turn on whether the official is purely executive (no rigid categories) but whether Congress’ removal restrictions interfere with the President’s ability to perform his core functions to exercise the “executive powers” and his constitutionally appointed duty to “take care that the laws by faithfully executed” under Art.II.
i.e., where a removal restriction impedes the Art II duties of the President, Congress can never insert itself into the removal process
For quasi-judicial or legislative officials, all cases point to the same outcome. Only for purely executive officials is there a conflict between Morrisonand Myers, w/ Morrison providing greater flexibility for Congress to insulate those officials from Presidential removal.

Relationship to Judiciary—When does Art. III require an Art. III court to decide a matter and when does it forbid Congress to give the adjudicatory power to another official person or body for decision? Supreme Court hasn’t established a definitive test, so analyze using Schorand Crowell.

Art. III, § 1: judicial power of the U.S. shall be vested in one superior court and in such inferior courts as Congress shall from time to time ordain and establish.
Crowell—“Public/private right” distinction determines whether Congress can grant adjudicatory power to a non-judicial body:
Public Rights cases—Art. I courts can always adjudicate (i.e., per se rule)
def: claim between private individual and the government
Marathon puts cases between individuals based on right created by statute into this category.
Statutory right closely intertwined w/ a federal regulatory program.
Suits by/against federal gov’t, but gov’t doesn’t have to be a party.
Private Rights cases—Art. I courts can adjudicate if there’s judicial review and the Art. I court has expertise and therefore an "integral part" of the administrative scheme.
def: claim of liability between two private individuals
Any state law claim
Claim with a legal effect on an individual
NB: Article I courts are:
tax court, courts martial, b/k court, and territorial courts
Schor—rejects the public/private rights distinction as an absolute basis and holds that an agency can adjudicate a case as long as
the adjudication does not invade a core function[1] of Art. III adjudication [goes back to Marbury's desire to keep power of each branch within prescribed limits]; AND
protects litigant's rights to have claims decided by judges who are not dominated by other branches of government. [cf. Congress's attempt to separate functions in the APA]
NB: O'Conner's discussion of personal/structural concerns (p. 10 notes)
Four factor functional balancing test:
Extent of delegation
if limited, then weighs against violation of Art III
Reservation of authority w/ in an Art. III court—judicial review?
if review of law and facts permitted, then weighs against violation of Art III
Origins and importance of right to be adjudicated.
public/private right
Concerns that drove Congress to depart from the requirements of Art. III.—is there a legitimate need?
i.e., the reasonableness test

HEARINGS

Organic Statute Requirement of Decision on “Record” After Opportunity for “Hearing”
Yes / No
Rulemaking / Formal Rulemaking
§§ 553(c), 556-57 / Notice-and-comment rulemaking § 553
Adjudication / Formal Adjudication
§§554, 556-57 / Informal Adjudication
(no APA procedures)

What the Constitution requires

Bi-Mettalic: individuals are not entitled to a hearing when the legislature makes a policy decision that affects everyone equally because it would be impracticable to hold more than a general hearing
However, the APA often imposes additional procedural requirements
Southern Railway: while a legislature could impose a burden on RR without a hearing, an agency cannot without violating DP because it must gather facts before making a decision
e.g. of legislative vs. adjudicative facts

Formal Rulemaking (small area after FL East Coast)

Promulgation of rules through a formal public and deliberative process.
§ 553(c)—when rules are required by statute to be made on the record after opportunity for an agency hearing, §§ 556 & 557 apply (formal rulemaking).
To trigger formal rulemaking, congress must use words “hearing on the record” in the organic statute. FL East Coast
Hybrid Procedures: In informal rulemaking, if there’s a provision in the organic statute for judicial review, the agency should provide an adversarial, adjudicative type procedure even when the organic statute doesn’t say “hearing on the record.” See §556(d) (Overruled? By Vermont yankee)
These procedures developed by courts to ensure the ability to give proper judicial review because FL East Coast basically killed formal rulemaking
[see also "separation of functions" section below]

Informal Notice and Comment Rulemaking

the judicially-created "paper hearing"
agency must disclose information on which it will rely to make its rule so that parties may address this information in their written comments. Nova Scotia Food
failure to disclose vitiates the element of fairness essential to any kind of administrative action
final conclusions of an agency must be a logical outgrowth of the n&c proceeding (i.e., can't ambush a party with a rule based on all new conclusions). Weyerhauser.
agencies must explain the basis of their decision and respond to all comments of "cogent materiality"
in practice, agency responds to ALL comments so as not to have rule invalidated
Vermont Yankee:
APA precludes judicial requirements that agencies use additional procedures beyond those specified in the APA and other relevant statutes absent extremely compelling circumstances.
adequacy of record turns only on whether the agency has followed the statutory mandates of the APA and its organic statute

Challenging Agency Rules
FPC v. Texaco says that no agency rule may be challenged on its face during an adjudicatory proceeding
The only thing that cannot be established by rule are facts needed for each case-by-case adjudication (Heckler) – adjudicative facts
How to challenge the rule (see NW's comments at p. 18 of notes):
argue that procedure in creating the rule was defective under DP or APA.
argue that rule is "arbitrary and capricious" based on the facts in the record

Informal Rulemaking: Exceptions

Used in rulemaking when the applicable statute doesn’t provide for a “hearing on the record” under § 553.
Agency doesn’t have to comply w/ notice-and-comment rulemaking under § 553 b/c public participation isn’t useful or necessary when:
Good Cause that a hearing would be:
impracticable
unnecessary; or
not in the public interest (e.g., it would give heads up to violators)
Interpretative rules[2]—allows agency to explain ambiguous terms in legislative enactments w/out having to undertake cumbersome proceedings. Test to determine if rule is interpretative:
Does reg have present & binding effect? If not, reg is interpretative. 4 part test under American Mining to see if interpretive rule has “legal effect” [if you answer yes to any of these factors, then you have a legislative rule; no to all is an interpretive rule][3]:
Whether in the absence of the rule there would not be an adequate legislative basis for enforcement action or other agency action to confer benefits or ensure the performance of duties (most weight put on this first factor)
Whether the agency has published the rule in the CFRs
Whether the agency has explicitly invoked its general legislative authority
Whether the rule effectively amends a prior legislative rule
Does the agency have discretion on whether to enforce the rule? If yes, reg is interpretative. See Shalala
General policy statements—allows agency to announce its tentative intentions for the future w/out binding itself.
Rules of agency organizations, procedure, or practice—agency retains latitude in organizing its internal operations.

Common Law Requirements for Agency Action

Explanation(Chenery)
Whatever explanation of its conclusion given by the agency will govern judicial review, lawyers can't add better explanations in their briefs
Reasoning should be expressed with clarity and thoroughness
reliance on informed discretion (i.e., expertise) is permissible reason for a decision
Consistency(Arizona Grocery)
an agency cannot use adjudication to amend a rule; it must abide by the rule or change it in the proper rulemaking process
NB: adjudication by itself can have retroactive effect
Caceres limited the Arizona principle to agency actions by permitting wiretap obtained in violation of agency rules to be used in a criminal action, but could not be used in an agency-only adjudication of the same person
Estoppel & Res Judicata (for comparison of the two, see fn 16, p 25 of notes)
Estoppel cannot be applied against the gov’t when the remedy is money from the US treasury, but can apply estoppel when remedy is something else (land, license to operate business). Schweiker and Richmond.
unless we have affirmative misconduct
possible remedy: seek private bill in Congress!!
Non-Mutual Collateral estoppel will NEVER run against gov’t—Once a court has decided an issue of fact or law necessary to its judgment, that decision is NOT conclusive in a subsequent suit based on a different cause of action involving different parties.

Retroactivity—when is adjudication & rulemaking permissible when retroactive?
Adjudication:
Agencies can apply retroactive policy changes, but cannot condemn a party’s action that was lawful at the time the party engaged in the conduct.
An agency’s retroactive policy change will be upheld if the prior conduct by parties was lawful. Change doesn’t effect party’s legal status.
An agency’s retroactive policy change will NOT be upheld if the prior conduct of parties was unlawful.
the test is ad hoc and balancing: what matters in not the change in the policy, but how the change impacts the regulated entities.
"hardship altogether out of proportion to the public ends to be accomplished"
Rulemaking
A court will not construe congressional enactments and administrative rules to have retroactive effect unless the organic statute states so. Congress must expressly delegate retroactive rulemaking.
this is a per se rule
NB: secondary vs. primary effects under Bowen.

Due Process

Has there been a deprivation of life, liberty, or property? If not, stop inquiry. Bailey.
If individual can be made whole by post-judicial remedy, they’ve received all the due process that’s necessary (can individual be compensated fully in monetary terms for destruction of property?). NA Cold Storage[4]
Cold Storage can be compensated for destruction of chickens. NA Cold Storage
Subcontractor can be made whole through an ordinary breach of contract suit.
i.e., where private interest has been historically protected by a CL cause of action, no need for pre-deprivation hearing because CL action protects person against erroneous deprivation. Lujan v. G&G Sprinkler
If yes, look to what process is due. Cafeteria Worker.
NB: Cafeteria also rejected the privilege/right binary of Bailey

Interests entitled to procedural protection: Due process protections are only triggered when there’s a deprivation of life, liberty, or property.
Property right can be an affirmative grant or statutory entitlement.
Welfare entitlement. Goldberg.
NB: can't be made whole be post-deprivation process because of danger of immediate destitution.
However, NA Cold Storage is still good law, but limited to situation where there is a threat to public health or safety
Old property—money, possessions, state common law, real property
New property—statutory entitlements (jobs, welfare), state and federal regulations, contractual
govt benefit is only a property interest where the litigant has a legitimate claim of entitlement to it. Roth and Perry
Liberty Interest – state employment (in some situations); freedom from stigma
“Significant & Atypical” test—a prisoner does NOT have a liberty interest if he is free from atypical and significant hardships imposed upon them by prison officials. If state does something to prisoner that’s atypical and significant, it must provide prisoner w/ due process. Sandin and Wilkinson
What Process is due?
NB: Court always reviews process required based on DP clause of the Constitution, not the type of substantive right created by a legislature. See Arnett.

-Use Mathews’ Balancing Test (an elaboration on Cafeteria Worker):

Private interests (of the entire class[5] of claimants) that will be affected by the official action.
The risk of an erroneous deprivation (to whole class) of such interest through the procedures used and the probable value (to whole class), if any, of additional or substitute procedural safeguards.
Look to risk of error in process offered v. the probable value of added process.
The government’s interest (vis-à-vis the whole class), including the function involved and the fiscal administrative burdens that the additional or substitute procedural requirement would entail.
Look to the govt's interest in avoid the added process.

Separation of Functions in Rulemaking—only applies in formal rulemaking & not adjudication or informal rulemaking.

Agency head, but not mere agency employee, can sit as both investigator & ultimate adjudicator. The combination of investigative and adjudicative functions does NOT, w/out more, violate due process. See 554(d). Courts can look to specific facts and circumstances of case to see if the risk of unfairness is intolerably high.
Unalterably Closed Mind Test—adjudicator should be disqualified only when there has been a clear and convincing showing that the agency member has an unalterably closed mind on matters critical to disposition of proceeding.
aka, prejudgment test applied where agency is making policy through adjudication
An adjudicator with a substantial pecuniary interest in the case should not adjudicate the dispute.

Who Decides? “He who decides must hear.” Morgan

The reviewing court will not probe into the adjudicator’s thought process to determine how they came to their decision—just need to show some material involvement.
Absent a showing of bad faith, a reviewing court will not allow discovery into the adjudicator’s process in reaching his decision. The P must make an evidentiary showing that the adjudicator has not complied w/ Morgan…but this will rarely happen b/c it’s almost impossible for outside parties to know if the adjudicator has failed to comply w/ Morgan. Nation Nutritional Foods Assoc.

Agency Decision-Making Structure

Separation of Functions in Adjudication (3 major prohibitions under §554(d) that apply to formal adjudication under statute or Constitution when performed by ALJs)

NB: unlike FL East Coast which requires magic words (or their functional equivalent) for formal rulemaking, formal adjudication may be required simply because the Constitution requires it (see DP).
APA separates adjudicatory and prosecutorial functions under § 554(d)—“an employee or agent engaged in investigation or prosecuting function can’t participate or advise in the decision, recommend decision, or agency review.”
ALJ can't engage in ex parte communications[6] §554(d)(1)
ALJ is not subject to supervision or direction of an employee engaged in investigation or prosecutorial functions §554(d)(2)

Congress must expressly state in the organic statute that the same person ("specially designated") can prosecute and decide a case if it wants to exempt the agency from §554(d).

Judicial Review of Agency Actions

§ 706—court shall review the whole record or those parts of it cited by a party (incl. evidence that would contradict the jury verdict).

Review of Factual Determinations—Standard of Review

Substantial Evidence Test—requires that the evidence be substantial after the reviewing court takes into account whatever in the record detracts from its weight. Evidence must be sufficient to support the conclusion of a reasonable person after considering the evidentiary record as a whole, not just the evidence that is consistent w/ the agency’s finding. Universal Camera (SC)
Gives considerable deference to agency findings of fact—if evidentiary record would permit a reasonable person to reach more than one conclusion, the agency’s finding will be affirmed as long as it reaches any of those conclusions.
In conducting review of discrepancy between ALJ & agency, court attaches great deference to agency findings of primary (credibility) inferences, but not to derivative (non-credibility) inferences. Universal Camera (2d Cir, concur)
Test is dominant standard for judicial review of factual determinations by agencies in “on the record” proceedings, which includes formal adjudication and formal rulemaking.
POLICY
we have judicial review to prevent agency from making biased findings in favor of particular classes of people (e.g., unions); NW: agency could use fact finding to evade legal limits on its authority
however, we don't have de novo review because: it would be too expensive, and it would make agency factfinding superfluous
Why have whole record review?
evidence matters because it may outweigh the inferences that the agency used to make its determination (e.g., Universal Camera and believing the ALJ's finding)
When must an agency defer to an ALJ's findings? (Universal Camera III)
must defer to primary inferences (i.e., credibility-based findings), except when there is a "very substantial preponderance" of evidence to the contrary
need not defer to derivative inferences
How much weight should a court give to a factual dispute between an agency and its ALJ?[7]
depends largely on the importance of credibility in the particular case
i.e., some undefined weight (Hand collapses this standard into the primary/derivative findings test)
Substantial evidence exists where the record does not preclude the finding based on a fair estimate of its worth or an agency's expertise
NW: this is more deferential than clear error standard because of the deference to "agency expertise"

Review of Legal Determinations