ADMINISTRATIVE LAW—COGLIANESE 2007

ADMINISTRATIVE LAW: guiding principles and theoretical bases

I.Deficiencies of the Common law

a.Tort law (liability regime) v. regulations

b.Example: Relaxation of trucking rules.

II.Regulation—purpose and scope

a.Market Failures

b.Other (questionable) Economic Purposes

c.Redistribution

d.Collective Values

e.Solve systematic disadvantages and informal castes

f.Planning

g.Paternalism

III.Administrative Law—purpose and scope

a.Purpose

b.Scope

IV.Influences on Administrative Agencies

a.Structural influences

b.Political influences

c.Corporate influences

d.Legal influences (Administrative law)

e.Social influences

f.Historical influences

V.The Traditional Model of Administrative law

a.Purpose

b.Characteristics

c.The “transmission belt”

VI.Models of Political Science/Political Economy

a.James Q. Wilson and the Collective Action Model

b.Public Interest Model

c.Public Choice Model

d.Principal/Agent Theory

ADMINISTRATIVE LAW: the FDA as case study

I.The FDA—Purpose and Power

a.Purpose

b.Power

II.Political influences on the FDA

a.Public Interest Model

b.Public Choice Model

c.Principal/Agent Theory

III.Rule-Making Process

IV.Legal Constraints

STATUTORY INTERPRETATION: FDA v. Brown & Williamson

I.Theories of statutory interpretation

a.Textualism

b.Intentionalism

c.Purposivism

II.Canons of interpretation

a.The “Whole Act” rule

b.The “cannon of avoidance”

III.Hierarchy of sources in statutory interpretation

IV.Statutory Interpretation: FDA v. Brown & Williamson

a.General

b.Justice O’Connor’s Majority Opinion:

c.Justice Breyer’s Dissent

ADMINISTRATIVE AGENCIES AND THE BALANCE OF POWERS

I.The Principle of Separation of Powers and/or “Checks and Balances”

a.Framer’s intent

b.Benefits of Separation of powers

c.Costs of Separation of powers

d.General Principles: Mistretta v. United States

II.The non-delegation (non) doctrine

a.Analytic and Textual foundations

b.Reasons for delegation

c.Function/purpose of the non-delegation doctrine

d.Early History (Pre-1935 decisions)

e.Flowering of the Doctrine: Panama Refining and Schecter

f.The “Intelligible Principle” rule

g.The Modern non-delegation doctrine

h.Delegations to non-executive agencies/entities

i.Non-Delegation as a canon of construction

j.Theoretical Critiques and Policy Concerns

III.Legislative controls over executive agencies

a.The Legislative Veto

b.Legislative removal power

c.Direct Congressional Representation

d.Summary of solutions to principal/agent problem

IV.The Executive Branch and the Agencies

a.The Appointment/Removal power

b.Presidential Review—Executive Order 12,866, OMB and OIRA

c.Criticism of Executive Review Process

d.Theoretical Critiques and Policy Concerns

V.“Independent” Agencies

a.Characteristics

b.Constitutionality

c.Presidential Control over Independent Agencies

d.Legal and political critiques

Rulemaking and Adjudication

I.Administrative procedure, generally

a.Value of procedure

b.Legal sources of administrative procedure

II.Rulemaking v. Adjudication: Constitutional Distinction

a.Historical development

b.Legal Rules/Principles

III.The Administrative Procedure Act (APA)—General framework for adjudications and rulemaking

a.General

b.Definitions

c.Formal Adjudication (APA §§554, 556, 557)

d.Informal Adjudication

e.Formal Rulemaking (§§553, 556, 557)

f.Informal (notice and comment) rulemaking (APA §553)

IV.Rulemaking v. Adjudication: Policy Concerns

a.Factors to consider

V.Constitutional Due Process in the context of agency adjudications

a.Framework for analysis

b.What rights/interests are protected?

c.What process is due?

d.Impact of Due Process requirements

e.Goals of Due Process

f.Alternatives to Due Process hearings

VI.Informal (Notice and Comment) Rulemaking

a.Rulemaking, generally

b.Policy concerns and considerations of increased rulemaking

c.Rulemaking and Adjudication: clash and impact

d.Requirements for Informal Rulemaking (APA §553)

e.“Hybrid Rulemaking”: additions to §553

VII.Exceptions to APA §553

a.APA §553(a) exceptions

b.APA §553(b) exceptions, generally

c.Non-exceptions/cautions

d.Interpretative Rules

e.Statements of Policy

f.Rules of Agency organization, procedure and practice

g.The Good Cause exception

h.APA §552(a)(1)—publication of agency documents

VIII.Additional Rulemaking Procedures

a.Executive Orders

b.The Unfunded Mandate Reform Act

c.The Paperwork Reduction Act

d.National Environmental Protection Act

e.The Regulatory Flexibility Act

JUDICIAL REVIEW

I.Access to Judicial Review I—Statutory preclusion

a.General

b.Doctrinal development

II.Access to Judicial Review II—Agency Discretion

a.General

b.Doctrinal Development

c.Synthesis/Rule

III.Access to Judicial Review III—Final agency action

IV.Access to Judicial Review IIV—Standing

a.General

b.Purpose/Function of Standing Doctrine

c.Injury in Fact

d.Causation and Redressability

e.Standing—Summary and Synthesis

V.APA Chapter 7

a.§701—Definitions

b.§702—Right of Review

c.§704—Actions Reviewable

d.§705—Relief Pending Review

e.§706—Scope of Review

VI.Review of questions of law—The complexities of Chevron deference

a.Policy concerns and Legal framework

b.Pre-Chevron problems of statutory interpretation

c.Chevron, Inc. v. National Resources Defense Council

d.Step Zero: When does Chevron apply?

e.Step One: statutory interpretation

f.Step Two: Reasonableness (Chevron deference)

g.Chevron and consistency

h.The Chevron continuum: how much to defer?

VII.Arbitrary and Capricious or “Hard Look” review

a.General issues

b.Policy/Theoretical concerns

c.Overton Park

d.“Relevant Factors”

e.“Clear Error of Judgment”

f.the Modern Hard Look Doctrine

g.Ex-Parte Communications and hard look review

VIII.Impact of Judicial Review on Agency Decisions

a.“Ossification” of the rulemaking process

b.The relationship between politics, expertise and law

c.Behavioral impact of administrative law

d.Alternatives to APA rulemaking

e.The Negotiated Rulemaking Act

ADMINISTRATIVE LAW: guiding principles and theoretical bases

I.Deficiencies of the Common law

a.Tort law (liability regime) v. regulations

  1. Functions of Tort Law
  2. Redistributes the cost of accidents
  3. Deters negligent behavior
  4. Punishes wrongdoers and compensates victims for their suffering
  5. Internalizes externalities
  6. Deficiencies of a liability regime
  7. Uncertainty (high information costs)
  8. a corporation will be uncertain as to the stability of a judge made rule.
  9. Crude utilitarian calculations
  10. A corporation may simply decide that the costs of lawsuits is less then the cost of ignoring negligence (B<PL).
  11. Compounding the problem is the fact that many injured plaintiffs don’t bring suits because of the cost and because plaintiffs have the burden of proof.
  12. High administrative costs
  13. Trials are costly, slow and inefficient
  14. Insurance creates a moral hazard that might increase the amount of negligence.
  15. Narrow scope
  16. Courts adjudicate individual cases and are thus not equipped to make broad policy decisions that might eliminate the problem—courts are remedial in function.
  17. Tort law serves as a background regulatory system to the one created by administrative agencies

b.Example: Relaxation of trucking rules.[1]

  1. After intensive lobbying by the trucking industry, the Federal Motor Carrier Safety Administration has moved to de-regulate many aspects of the trucking industry.
  2. Benefits
  3. Proponents point to increased speed and lower costs in transportation
  4. Costs
  5. Opponents say that de-regulation will result in more accidents.
  6. As in many other cases, de-regulation may result in more accidents to be handled by the tort system, but the default liability regime set up by the Common Law may deter accidents by internalizing costs (which are redistributed to victims). This is an ongoing debate that will depend on intangible political views and normative judgments.

II.Regulation—purpose and scope

a.Market Failures

  1. Control of monopolies
  2. traditional rationale for price and profit regulation is the need to control “natural” monopolies.
  3. if one believes that natural monopolies will raise prices substantially, then one can argue that regulating prices results in allocative efficiency.
  4. Information asymmetries
  5. For markets to work well, consumers must have information about competing products.
  6. People also have problems processing information
  7. Cognitive biases
  8. Motivational biases (i.e., too much optimism)
  9. Collective action problems
  10. individually rational behavior may case public harm
  11. example: public goods like national defense
  12. Externalities/ lowering transaction costs
  13. often, a market price does not reflect a product’s true cost to society (i.e., doesn’t take into account pollution costs, etc.)
  14. Coase Theorem
  15. If there are no transaction costs, individuals will bargain to an optimal outcome.
  16. So, regulation may help to correct bargaining that doesn’t take place because of high transaction costs (i.e., between steel producers and pollution sufferers)

b.Other (questionable) Economic Purposes

  1. Control of windfalls
  2. Some have argued that regulation should transfer allegedly undeserved profits from producers of natural resources who may obtain “windfall” profits in the case of shortages.
  3. This is not an inefficiency or market failure purpose
  4. Elimination of “excessive” competition
  5. The argument here is that too much competition may make prices so low that competing firms will go out of business, leaving only one or two firms that will then be able to set high prices.
  6. Another argument concerns industries with large fixed costs and cyclical demand
  7. Some firms may have insufficient revenue to continue production during a recession, but it would be inefficient to close down since it is more expensive to re-open the plants when the recession is over.
  8. A third reason is the possibility of “predatory” pricing
  9. The concern here is that a dominant firm may set prices below costs to drive competitors out of business and then increase costs once it has a monopoly.
  10. Need to alleviate scarcity
  11. Proponents sometimes argue that regulation is needed to allocate an item in short supply
  12. Agency problems
  13. If a person other than the buyer makes purchasing decisions, or pays for the purchases, market forces may be distorted and a consumer may over-consume. (i.e., medical care)

c.Redistribution

  1. Regulation is sometimes justified as a way to redistribute resources from one group to another (i.e., social security)
  2. Rationales for redistribution
  3. unequal bargaining power
  4. information asymmetries
  5. Criticism
  6. it is unclear that efforts to redistribute resources work well. That is, it is often the case that redistributive regulations seeking to make a group better off may actually make them worse off (i.e., rent controls and minimum wage laws)

d.Collective Values

  1. Regulations are sometimes supported on the grounds that they are necessary to promote public decency, democracy or good decision making (i.e., FCC)

e.Solve systematic disadvantages and informal castes

  1. Some support regulations to change social norms and preferences that disadvantage groups and create a caste system (i.e., many civil rights laws and regulations, like EEOC).

f.Planning

  1. Some support regulation to “plan” an industry in order to make sure that it operates in an economically efficient manner.

g.Paternalism

  1. Some argue that regulations are necessary to protect individuals from their own confusions or irresponsibility.
  2. Some of this is justified by information costs—people sometimes do not process information efficiently or rationally.

III.Administrative Law—purpose and scope

a.Purpose

  1. Administrative law exists to govern the behavior of regulators
  2. Administrative lawregulatorstargets
  3. Administrative law
  4. Defines the authority and structure of administrative agencies
  5. Specifies the procedural formalities used by the agencies
  6. Determines the validity of agency decisions
  7. Outlines the role of reviewing courts and other organs of government in their relation to the agencies.
  8. Behavioral values
  9. transparency
  10. democratic behavior/accountability
  11. efficiency
  12. Administrative law provides a set of procedures dictating how actions will be conducted and oversight over those actions. The actions are outcome-directed. The actions themselves come from a decision maker

b.Scope

  1. regulatory tools
  2. Cost-of-service ratemaking
  3. Allocation in accordance with public interest standard
  4. Standard setting
  5. Historically based price-setting or allocation
  6. Screening or licensing
  7. Fees or taxes
  8. Provision of information
  9. Subsidies
  10. Influences through political incentives or moral persuasion.
  11. Universal constraints on administrative agencies
  12. the adversarial relationship between the agency and its target industries
  13. the desire on the part of administrators to craft and implement rules that can be administered with relative ease
  14. regulatory stagnation—many new regulatory programs just copy old ones.
  15. Administrative law (i.e., the APA)

IV.Influences on Administrative Agencies

a.Structural influences

  1. Often, agencies are part of much larger departments with broad, overlapping and sometimes conflicting agendas.
  2. this means that agency heads must incorporate the opinions and views of the Cabinet Secretaries and the President as well as those within the agency.
  3. Bridges between the branches
  4. agencies occupy a unique position in our separation of powers, bridging between the executive, legislative and judicial branches. This means that agencies will often be subject to the institutional politics and processes from extremely varied governmental sources.
  5. Congressional influence
  6. Oversight committees
  7. The budget process
  8. Legislative action
  9. Executive influence
  10. Appointment decisions
  11. The budget process (OMB)
  12. Executive orders
  13. judicial influence
  14. Judicial review

b.Political influences

  1. Often operate through congressional prerogatives
  2. President can also influence with appointment power.

c.Corporate influences

  1. Regulatory Capture
  2. an agency is sometimes “captured” by its targets and, as a result, may issue regulations that benefit the targeted industry at the expense of the general public.
  3. This occurs because, often, the best administrators are those who have previously served in the industry. Conversely, government regulators may hope for employment in the target industry when they retire or quit.
  4. Also, the targeted industry may “activate” the other actors—congress, the President, the media and the public—against the agency.
  5. Regulatory Welfare
  6. Sometimes an industry doesn’t want to actively oppose regulation or “capture” an agency—it wants to be regulate to limit competition

d.Legal influences (Administrative law)

  1. Constitutional constraints
  2. Due Process
  3. Balance of Powers
  4. Statutory constraints
  5. The APA
  6. Organic Acts
  7. Federal “common law” interpreting the statutes
  8. Agency judgments and decisions

e.Social influences

  1. The media
  2. Well organized public interest groups

f.Historical influences

  1. English Common Law
  2. At common law, Officers of the Crown were subject to damage liability if the officer had committed a prima facie wrong or the officer was unable to justify his action by reference to a higher authority
  3. The writ system
  4. Writ of Mandamus—required officials to restore citizen entitlements
  5. Writ of prohibition—used to preclude an authority from using powers no in its jurisdiction
  6. Courts of Equity
  7. Injunctive remedies provided by chancellor to control unlawful action.
  8. Revolution to 1875
  9. The role of the federal government in economic and social life was extremely circumscribed relative to today. The dominant ideology was laissez faire economics.
  10. “Administrative” law generally consisted of the common law writ system, with some adaptations by creative courts to deal with surprise situations
  11. The Progressive Era (1875-1930)
  12. The Interstate Commerce Commission was created in 1887[2]
  13. Federal and state courts, using common law ideas to stop regulation, laid the foundations of modern administrative law—the “traditional” model of administrative law owes its genesis to this period.
  14. The New Deal (1932-1945)
  15. much of the authority traditionally enjoyed by states was transferred to the federal government
  16. the government believed that capitalism needed to be saved from itself and advocated unprecedented levels of intervention in the economy.
  17. The APA and the Maturation of Administrative law (1945-1962)
  18. The New Deal created bitter struggles between supporters and those critical of regulatory institutions. This struggle resulted in a compromise—the APA, which sough to limit agency discretion.
  19. The “rights revolution” (1962-1980)
  20. In this period the court greatly expanded the category of legally protected rights
  21. See Goldberg v. Kelly, Board of Regents of State College v. Roth and Perry v. Sinderman
  22. Many also proposed solutions to the problem of “regulatory capture”
  23. Greater openness
  24. Statutory deadlines
  25. Increased participation by the public
  26. More formal procedures
  27. Stricter judicial scrutiny
  28. Closer congressional scrutiny
  29. Other worked to reduce the size and power of administrative agencies
  30. Proponents of this view argued for
  31. Deregulation
  32. Greater attention to cost of regulation
  33. Consolidation of administrative programs
  34. Criticisms of administrative state
  35. Regulatory agencies are created and administered by special interest groups at the expense of the general public
  36. Certain kinds of administrative intervention are justified to correct serious market failures, but the tools usually used by agencies are clumsy and costly
  37. Courts responded by asserting more judicial control over agency decisionmaking
  38. Courts extended the right to participate in agency decisions
  39. Court extended the coverage and content of procedural formalities, with an eye towards creating a factual record for use in judicial review.
  40. Court’s expanded the availability of judicial review and broadened its scope by requiring more documentation from agencies and scrutinizing the record’s factual and analytic bases.
  41. Presidential Administration and the Cost/Benefit State (1980 to Present)
  42. Executive Order 12,291 (Reagan)
  43. Called for OMB control of regulations in cost/benefit terms
  44. Reaffirmed by Clinton (XO 12, 866)
  45. Increased use of quantitative analysis.
  46. Changes in court precedent
  47. Agencies have been given more freedom from judicial review when they decide not to take certain actions
  48. Other cases have limited the extent to which the court can impose new procedural requirements on agencies (Vermont Yankee)
  49. Courts have given more deference to agency interpretations of statutes.
  50. Standing doctrine has become somewhat more restrictive

V.The Traditional Model of Administrative law[3]

a.Purpose

  1. The purpose of the traditional model was to control government intrusions into private liberty and property interests.

b.Characteristics

  1. The legislature must authorize administrative sanctions on private person through rules that limit agency discretion.
  2. reflects the view that administrative officials possess no inherent power over private liberty or property. (illustrated in Southern Railway v. Virginia)
  3. this has the purpose of promoting the rule of law—limited arbitrary decisions and unequal treatment
  4. The procedures used by the agency must tend to ensure agency compliance with legislative directives
  5. in cases involving enforcement, this often translates into a trial-type hearing
  6. Judicial review must be available to ensure that agencies use accurate and impartial decision making procedures and comply with legislative directives.
  7. Agency processes must facilitate the exercise of judicial review.

c.The “transmission belt”