I.
Introduction
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Types of
agency action
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||
|
|
Informal
|
Formal
|
|
Adjudication
|
? (but most common)
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APA 554, 556, 557
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Rulemaking
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APA 553
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APA 556 (pre-filed testimony OK if no interests thereby
prejudiced)
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Overton Park
·
The
city planned to build a road through a park with federal funds.
·
If
there is a reasonably feasible and prudent alternative to running the
road elsewhere that does NOT have a harmful environmental impact, then that
alternative must be taken in order to get federal funds.
o
If
there is no such alternative, then federal funds can be given if there is a
plan to minimize harm.
·
Plaintiffs
sued the DoT for releasing federal funds to the city to build the road through
the park.
·
3
subsections:
o
Judicial
reviewability of agency action
§ There is a strong presumption in favor of reviewability of agency
action
§ But Congress can make exceptions by stating clearly that certain
actions shall not be subject to judicial review
o
Judicial tests
/ standards applied to agency in/action
§ Agency action:
·
May not be arbitrary
and capricious; abuse of discretion; or otherwise not in accordance with law;
·
May not violate
the Constitution;
·
May not violate
statutes adopted by Congress;
·
May not violate
the agency’s own rules (AZ Grocery);
·
Must be
supported by substantial evidence in the record as a whole;
·
?
o
Contents of arbitrary
and capricious review
§ There must be a reasonable policy rationale for the agency’s
decision
§ The Court will not make policy for agencies
·
Held:
Remanded. The agency head does not have to come into court to testify to
whether or not he considered alternatives, but the agency must supply a policy
rationale for the decision.
II.
Congressional Powers /
Non-Delegation Doctrine
A.
Early Cases
State ex. rel. R.R.
§ Organic statute gave the commission the authority to set “fair and
reasonable” freight rates.
§ Held: Agencies cannot make law, but they can only carry out the law.
Since the legislature meets infrequently, deference must be given the agency’s
decision to set the rate.
Schechter Poultry v. U.S.
§ Congress enacted a statute empowering the President to create a
commission to regulate hours, wages, and minimum ages of employees. Businesses
challenged the law.
§ Held: Congress cannot delegate its legislative authority to the
Executive branch. The statute created a “roving commission” to create rules
without any democratic oversight.
§ Today, the case would be different since there was an Intelligible
Guiding Principle.
B.
Modern Cases and the Death
of the NDD
Industrial Union Dept. v. Amer. Petroleum Inst. (Benzene
case)
§ The OSH Act empowers the Dept. of Labor to adopt rules necessary to
“provide safe and healthful employment.
§ The Secretary of Labor adopted a rule pursuant to the Act reducing
the amount of benzene that workers could be exposed to in the workplace from 10
ppm to one ppm, claiming that exposure to 10 ppm caused leukemia.
§ Companies challenged the rule, that it was outside the Secretary’s
authority.
§ Held: The SCT struck down the rule because nothing in the agency’s
record showed that exposure to 10 ppm of benzene caused leukemia but exposure
to one ppm did not.
Amalg. Meat Cutters v. Connally
·
Congress passed
a law giving the President authority to set price, wage, and rent controls.
·
The President
issued an executive order pursuant to the law establishing a temporary freeze
on price and wage increases for the meat packing industry.
·
The industry
challenged the order, that it was an unconstitutional delegation of legislative
authority.
·
Held:
Congress may not grant permanent legislative authority to the President. But it
can grant temporary authority and, in doing so, must provide an Intelligible Guiding
Principle for the agency to be bound by, which can found in the statute, in
legislative history, or in the context of the situation or problem.
III.
Ability of President to
Control Administrative Actors, Limits on Presidential Power to Remove Officials,
and Proper Role of Congress
Myers v. U.S.
·
A statute
provided that postmasters can only be removed by the President with the advice
and consent of the Senate.
·
The President
removed a postmaster without going through the Senate, his action was
challenged.
·
Held:
the statute unconstitutionally restricts the President’s ability to control the
Executive officers of the U.S. Since it is an Executive branch position, the President
must have sole and absolute authority to remove people from the position.
Humphrey's Executor v. U.S.
·
Congress
enacted the FTC Act and created the FTC, a quasi-legislative quasi-judicial
agency.
·
The Act said
the President could only remove the head of the agency with just cause.
·
President
Roosevelt fired the FTC head because he was a conservative.
·
Humphrey died
and his executor challenged the President’s removal.
·
Roosevelt
responded by citing Myers and saying that the FTC Act unconstitutionally
restricted his ability to execute the laws by having absolute control over
Executive officers.
·
Held:
The Act is constitutional. The President’s removal power can be limited to
for-cause grounds for quasi-adjudicative, quasi-legislative agencies; these agency
heads need to be able to be neutral and make independent decisions without fear
of getting fired.
INS v. Chadha
·
The Immigration
and Nationality Act authorized either house of Congress to vote to invalidate
INS deportation rulings.
·
Chadha was
deportable, but he convinced the ALJ to suspend his deportation.
·
The House voted
to overrule the ALJ’s ruling and deport Chadha.
·
Chadha
challenged the Act, that it violated the Separation of Powers Doctrine since it
gave one house the ability to veto an act of the Executive.
·
Held:
The Act is unconstitutional to the extent that it gives the Legislative branch
a unicameral veto of agency action. Except in rare circumstances specifically
laid out in the Constitution, the Legislature’s actions require bicameralism and
presentment to the President.
·
Powell’s
concurrence: Only judicial bodies can determine the rights of a named
individual, not a legislative body.
Executive Order 12,291
·
Requires
agencies to engage in a cost-benefit analysis before taking an action.
·
Exceptions:
o
Independent
agencies
§ President cannot order an independent agency to do anything
o
Action brought
about by formal rulemaking
§ A cost-benefit analysis would be superfluous
·
If the action
would cause a $100 million or more economic impact, the agency must prepare a
Regulatory Impact Analysis.
IV.
Power of Agencies to
Adjudicate
Crowell v. Benson
·
Congress
enacted a statute that ordered worker’s compensation for injured people as long
as two jurisdictional facts are satisfied: 1) They were injured while on U.S.
waters; and 2) while employed by an employer.
·
The statute set
up a judicial agency to determine the two facts when someone made a claim.
·
The agency
awarded Benson’s employee compensation, Benson sought judicial review de novo.
·
Held:
o
There is an
absolute right for de novo review of an agency determination of a question of
law
o
There is no
right for de novo of an agency determination of a question of fact that speaks
to a public right and, thus, affords no individual standing;
o
There is
usually not a right for de novo review of an agency determination of a question
of fact that speaks to a private right; it is generally effective and
efficient, but there are two exceptions where de novo judicial review must
occur when a judicial agency determines:
§ Facts pertaining to Constitutional rights; and
·
SCT doesn’t
want agencies messing with fundamental rights.
§ Facts pertaining to jurisdictional rights.
·
SCT doesn’t
want agencies aggrandizing themselves.
o
Here, the facts
are jurisdictional; as long as they are met, the board will hear the claim; so
de novo judicial review and a new factfinding must take place.
Universal Camera v. NLRB
·
In the
employment law context, the Dept. of Labor ALJ makes a preliminary decision, which
can be appealed to the NLRB, then the NLRB’s decision can be appealed to the
District Court.
·
The SCT is
resolving a Circuit Split on the standard of review when the District Courts
review employment law cases:
o
The 2nd
Cir. says deference should be given to the Dept. of Labor ALJ;
o
The 6th
Cir. says deference should be given to the NLRB.
·
In the past,
courts would wholly defer to the agency if there was just one scintilla of
evidence in the record to support its finding and would ignore any other
evidence that may negate it.
·
Held:
o
Reviewing
courts must look at the whole record and base their opinion on a finding of substantial
evidence on the record as a whole.
o
Substantial
evidence means whatever would persuade a reasonable jury.
o
For questions
of fact, we defer to the ALJ since he was there.
o
For questions
of agency policy, we defer to the agency
V.
Rigor or Deference of
Judicial Review of Agency Determinations of Fact, Law, or Policy in Agency
Adjudication, Rulemaking, or Adoption of Non-Binding Interpretive Rules
A.
Rise and Fall of
Constitutional Fact Review in the Context of Utility Rate Cases
Smyth v. Ames
·
Here, the SCT
supported the RR companies and said the agency’s implementation of uniform
maximum rates to be charged for freight was an unconstitutional taking of the
companies’ potential profits.
FPC v. Hope Natural Gas
·
Here, the SCT
overrules Smyth and defers to the agency’s determination that uniform
maximum rates are good policy and finds that the companies received sufficient
due process before the max rates were implemented.
·
Really, the SCT
doesn’t want to review the agency’s record full of incomprehensible economic
models.
B.
Deference to Agencies on Questions
of Law
53 Eclectus Parrots
·
The statute
says “no wild Eclectus parrots from Indonesia are allowed in the U.S. since
Indonesia doesn’t want people exporting their wild Eclectus parrots.”
·
Before
importing, a customs official mistakenly told the importer that his parrots
would be allowed in.
·
There is no
factual dispute; both parties agree that the parrots are wild.
·
The dispute is
a question of law: what does “wild” mean in the statute?
o
Importer: If
they can be bred in captivity (even with limited success), then they are not
wild under the statute. Since there has been limited success in captive
breeding, they are not wild.
o
Customs: “Wild”
means anything that is normally found in the wild.
·
Held:
SCT deferred to the agency
·
Reasoning:
o
The statute
says that the reasonable interpretations of the agency should be deferred to;
o
The agency has
expertise;
o
Nobody really
cares about this, so we might as well get some brownie points with Indonesia;
o
Customs’s
interpretation is more flexible and less costly to apply, the importer’s
interpretation is fact-intensive and could lead to a battle-of-the-experts
problem.
NLRB v. Hearst Publications
·
Hearst’s
newsboys wanted to start a union, but Hearst refused to collectively bargain
with them, that they were not employees but independent contractors.
·
Under common
law, the newsboys were independent contractors; they were paid commissions, not
a fixed wage or salary.
·
The NLRB found
that the newsboys were not independent contractors under the NLRA but were
employees under the NLRA and ordered the employer to collectively bargain with
them; the employer appealed.
·
Held: The
SCT agrees with the NLRB, but is not necessarily deferring to its specific
findings. The SCT looks at the history, terms, and purpose of the statute to
find that Congress intended to expand the definition of “employee” under the
NLRA.
|
Broad
questions of law
|
Specific
questions of law
|
|
No deference to agency
|
Defer to agency
|
C. Skidmore and Chevron Judicial Deference to Agency
Interpretation of Statutory Terms
Skidmore v. Swift
·
Firemen were
paid per alarm they responded to; they were required to stay on-site, but they
could do whatever they wanted while waiting for alarms.
·
They sued their
employer under the FLSA for overtime pay for the time spent waiting for alarms.
·
Without any
precedent or statutory support, the trial court concluded as a matter of law
that the time spent waiting for alarms was not working time under the FLSA and
thus they were not entitled to overtime pay; the appeals court affirmed.
·
The Dept. of
Labor filed an amicus brief stating that its interpretive bulletins would
consider this issue on a case-by-case basis as a question of fact, not a
question of law.
·
Held:
The court should have at least considered the interpretive bulletins, even
though they aren’t controlling. There are four factors to consider when
determining how much judicial deference to give to an agency determination:
o
The evidence of
thoroughness in the agency’s determination;
o
The validity of
the agency’s logic and reasoning;
o
The consistency
of the agency’s prior determinations related to the issue;
o
Any other
relevant considerations.
·
Skidmore
deference is low-level deference to the agency. We are probing the substance of
the agency’s determination, the methods used to reach it, and whether or not
the agency is subject to political whims.
Chevron v. Natural Resources Defense Council
·
The Clean Air
Act required firms to get a permit in order to construct or modify a “source”
of pollution.
·
The EPA promulgated
a rule that allowed firms to treat an entire plant as a “source” within the
meaning of the Act, so they did not have to get a permit to construct new
pollution-emitting units so long as the amount of pollution coming from the
plant as a whole did not increase.
·
The NRDC
challenged the EPA’s authority to promulgate the rule.
·
Held:
The EPA has authority
·
Stage 1:
o
If Congress
expressed a clear intent on the question at stake, then that intent controls
over any agency opinion or determination.
o
Congress’s
intent can be determined by the face of the statute, or through any traditional
tool of statutory interpretation (legislative history, dictionaries, etc.).
·
Stage 2:
o
If Congress’s
intent on the question at stake is unclear, then Congress has impliedly
delegated interpretive authority to the agency, so we defer to the reasonable
opinion of the agency.
o
But, Congress
may have explicitly delegated this authority to the agency, in which case the
agency’s opinion must be followed unless it is arbitrary.
D.
Changing Scope of Chevron
1.
Deference to Agency
Materials
Christensen v. Harris County
·
The FLSA allows
governmental entities to substitute leave time for cash when employees work
overtime. If the employee refuses to take leave time, the entity must compensate
him in cash.
·
Harris County
deputies had accumulated a lot of compensatory time (probably waiting to get a
cash payment instead), so the county wrote a letter to the Dept. of Labor and
asked if the county could force the deputies to take leave so the county
wouldn’t have to pay them cash. The Dept. replied that it was OK in an opinion
letter
·
The deputies
sued, that the FLSA did not allow this forced leave.
·
Harris County
countered, that the opinion letter was entitled to Chevron 2 deference.
·
Held: Whether
we apply high or low deference to an agency opinion depends on how the agency
reached the opinion.
o
For
“battle-tested” sources subject to adversarial fire, we can give high level Chevron
2 deference.
§ E.g., formal adjudications, formal rulemaking and formal rules, 553
notice and comment rules, and even some informal adjudications.
o
For untested,
unilateral, internal agency sources, we give low level Skidmore
deference.
§ E.g., interpretive rules, statements of agency policy, internal
rules, interpretive bulletins, letters, manuals, briefs.
o
Here, the
agency just gave an opinion letter to the county. The content was not
adversarially tested, so it gets low, Skidmore deference.
o
The SCT does
not believe that Chevron overruled Skidmore.
·
Dissent
(Scalia): Chevron overruled Skidmore. Some battle-tested
sources should still get high level deference. An opinion letter from the head
of the agency is authoritative and should get high level deference.
U.S. v. Mead Corp.
·
There were two
categories for notebooks and related products: one was duty free, the other 4%
tariff.
·
Customs had
treated Mead’s day planners as duty-free, then in a ruling letter, changed it
to the 4% category.
·
Mead challenged
the ruling letter and argued that, since it was not open to notice and comment
and not battle-tested, it should get low level Skidmore deference.
·
DC Circuit:
Customs’ rulings are not subject to notice and comment, do not carry the force
of law, and are not entitled to Chevron deference.
·
Held:
o
The Customs
official’s classification here gets low level Skidmore deference.
§ In Chevron, the SCT said that Congress can implicitly or
explicitly grant interpretive authority to an agency.
§ In Christensen, the SCT said that “battle-tested” agency
materials get high-level Chevron 2 deference, while unilateral untested
materials get low level Skidmore deference.
§ Thus, when Congress implicitly or explicitly grants lawmaking
authority to an agency and the agency makes a rule pursuant to that authority,
the ruling must receive high level Chevron 2 deference, even if it was not
battle-tested.
o
Here, however,
there is no such lawmaking authority delegated from Congress to Customs, so the
ruling letter gets Skidmore deference.
2.
Modern Test
Barnhart v. Walton
·
Walton had to
quit his teaching job due to a mental illness and, 11 months later, he got a
job as a cashier.
·
Then, he applied
for disability.
·
The statute
says “disability will be given to people who have an inability to engage in
gainful employment by reason of any medical impairment which has lasted for a
period of not less than 12 months.”
·
There is a
basic disagreement on the interpretation of the statute:
o
The SSA says
you have to have the inability to work for 12 months in order to
get disability and, since Walton got a job 11 months after the illness, he does
not qualify for disability.
o
Walton says you
have to have the medical impairment for at least 12 months in
order to get disability and, since he still suffers from it, he does qualify
for disability.
·
The Appeals
Court agreed with Walton and the SSA appealed.
·
Held:
o
In dicta,
Justice Breyer’s 5 factor balancing test for whether an informal interpretive
rule should get high level Chevron 2 or low level Skidmore
deference. Circumstances to consider:
§ The interstitial nature of the legal question;
·
How broad is
the question? If it is a narrow question, we can defer to the agency. If it is
a broad question, the courts may need to decide.
§ The related expertise of the agency;
·
If the issue is
novel to the agency, then the courts may need to decide the issue. But if it’s
an issue the agency deals with regularly, then defer to the agency.
§ The importance of the question to the administration of the
statute;
·
If one
interpretation would make things harder for the agency and require it to do
considerably more work and the other interpretation would make things easier
for the agency, then we defer to the agency’s choice.
§ The complexity of that administration; and
·
The greater the
complexity of the issue, the more deference to the agency.
§ The careful consideration the agency has given the question over a
long period of time.
3.
Clear Statement Principle
Kent v. Dulles
·
Congress
enacted a statute vaguely giving the Secretary of State authority to issue
passports according to whatever rules he cares to promulgate.
·
Kent never
committed any crimes, but his application for a passport was denied because he
was a known communist. He challenges the agency’s authority to deny a passport
on these grounds.
·
Held:
International travel is not a constitutional right, but it is a practical
liberty interest. Normally, this agency action would get high level Chevron
2 deference; however, for an agency to be able to restrict a liberty
interest, there must be a Clear Statement from (Congress via the statute / or
the Secretary via the rules he promulgates according to the statute??? Check)
specifically stating as such (i.e., “communists cannot get a passport”).
E.
Judicial “Hard Look” of
Agency Determinations of Fact or Policy
Judicial Hard Look
·
Can occur
under:
o
A rigorous Section 706 “arbitrary
and capricious” review of the substance; or
o
A rigorous Section 553 review of the
procedure, e.g.:
§ Inadequate notice;
·
The proposed
rule must be laid out and worded sufficiently.
§ Inadequate opportunity to meaningfully comment on the proposed
rule; or
§ An inadequate concise general statement of the basis and purpose of
the rule.
Scenic Hudson Preservation Conference v. FPC I
·
The company
applied for a license with the FPC.
·
Under the
statute, the FPC had to consider all relevant factors when deciding on whether
or not to issue a permit, including potential damage to scenery and recreation.
·
The FPC granted
the license and the Scenic Hudson Preservation Conference appealed.
·
Held: The
2d Circuit gave a “hard look” to the FPC’s decision and held that the FPC
failed to take into consideration a few of the relevant statutory factors. The
statute required the FPC to consider Scenic Hudson’s expert’s opinion of a less
costly, less harmful alternative; but the FPC only gave it a paltry ten pages
of consideration before disregarding it.
·
[The 2d Circuit
remands and after five years, hundreds of new exhibits, and hundreds more
protracted hearings, the license is granted again and the 2d Circuit affirms in
Scenic Hudson Preservation Conf. v. FPC II; but at this point, the
project was abandoned. The environmentalists lost de jure, but won de
facto.]
Citizens to Preserve Overton Park v. Volpe
Part III
·
The
city planned to build a road through a park with federal funds.
·
If
there is a reasonably feasible and prudent alternative to running the
road elsewhere that does NOT have a harmful environmental impact, then that
alternative must be taken in order to get federal funds.
o
If
there is no such alternative, then federal funds can be given if there is a
plan to minimize harm.
·
In an
informal adjudication, the DoT released federal funds to the city to build the
road through the park; Plaintiffs sued.
·
Issue
for Part III: What does
“arbitrary and capricious” review mean?
o
Under Section
706, a thorough and critical, searching and careful, non-deferential review.
o
There must be a
reasonable policy rationale for the agency’s decision
o
The Court will
not make policy for agencies
·
Held:
Remanded. The agency head does not have to come into court to testify to
whether or not he considered alternatives, but the agency must supply a policy
rationale for the decision.
F.
Limiting and Expanding Agency
Discretion
Holmes v. NYC Housing Authority
·
90,000 families
apply for 10,000 vacant public housing slots.
·
The Housing
Authority does not give any information on its decision process, standards, the
in/eligibility of any specific applicants, or the status of an application,
except that the Authority admits that certain persons in emergency situations,
split families, and the like are given preference.
·
The applicants
sue, that the lack of transparency is a violation of the 14th Amd.
·
Held:
The system is inappropriate. First, Due Process requires the Authority to
create some ascertainable standards and that selections be made according
thereto. Second, where several applicants are equally qualified, there must be
a method for choosing them which is not subject to abuse, like a coin flip or
lottery.
Fook Hong Mak v. INS
·
FHM was
admitted to the U.S. on an 8 day transit authorization; he was traveling to South
America from Hong Kong.
·
The statute
allows the Attorney General to exercise his discretion to give an alien
“lawfully admitted” alien status.
·
He overstayed
his visa and was deported.
·
He sued, saying
that the Attorney General was required to give him an individual hearing to
determine whether or not he wanted to exercise his discretion and convert FHM
to “lawfully admitted” status.
·
Held: We
can’t just require agencies to give an individual hearing every time Congress
grants it discretion to do something
G.
Requiring Satisfactory
Agency Explanations
SEC v. Chenery Corp. I
·
The SEC denies
a reorganization plan by Chenery Corp. and says that the Chenerys are violating
basic standards of fair dealing and cites case law supporting the SEC’s
position.
·
Held:
The case law the SEC cites is totally irrelevant and the SEC has a basic
misunderstanding of the law. The SCT will not weigh policy and make a policy
decision for an agency; Congress intended the agency to do this, not the SCT. Remanded.
SEC v. Chenery Corp. II
·
The SEC comes
to the same conclusion, but substitutes the case law for “its accumulated
experience and expertise” that similarly situated shareholders like the
Chenerys would be encouraged to engage in arguably unfair trading so, in order
to avoid an appearance of impropriety, it should be prohibited.
·
Held:
Affirmed. The SEC can rely on its own expertise and experience, but does not
have authority to base its adjudicatory decisions on case law.
SEC v. Chenery Corp. III
·
The Chenerys
allege that the SEC developed a new rule as a result of the previous case and,
thus, it cannot apply the rule retroactively to them.
·
Held:
Agencies can apply rules retroactively to individuals in an adjudication.
Arizona Grocery v. Atchison, Topeka & Santa Fe Railway
·
The Interstate
Commerce Commission is tasked with setting a “reasonable rate” for freight.
·
The ICC says
that there is no way to determine what a reasonable rate is until after it is
charged, so they make a guess and demand that the railways pay reparations to
their clients if it turns out the rate was set too high.
·
But if it turns
out the rate was set too low, the railways have to eat the cost.
·
Held:
Once an agency makes a decision, that decision stands and the agency can’t
retroactively recant it. An agency must follow its own rules until it
articulately explains that it is changing course and why.
VI.
Estoppel
Schweiker v. Hansen
·
Hansen went
into the social security office and asked the representative if she was
entitled to Mothers’ Benefits under the Social Security Act.
·
The
representative erroneously told Hansen that she was not entitled to Mothers’
Benefits and failed to inform her that benefits can only be applied for via a
written application.
·
When Hansen
later discovered that she had been entitled to the benefits, she sued the
agency for the misinformation, asking for equitable estoppel and damages in the
amount of what she would have received had she been correctly informed.
·
Held:
Claimants cannot get equitable estoppel against an agency in this situation.
First, the Act and all the agency’s documents have all the information that the
claimant needs to get benefits; the representatives are just there to make
things easier for regular folks. We don’t want to punish agencies like this
because then they will just fire all their representatives, clam up, and tell
all claimants to go away and get an attorney. We want agencies to be able to
have representatives so we can make things easier for society.
VII.
When is an Individualized
Agency Hearing Required?
Londoner v. Denver
·
The city
council implemented an ordinance assessing a tax against some property owners
for the paving of a public street on which their property fronted because it
would increase the value of their homes.
·
The owners
filed written objections and requested a hearing, which was denied; the tax was
levied.
·
The owners
appealed to the SCOTUS under the DPC 14th Amd.
·
Held:
Due Process requires an individualized hearing when the government picks an
individual or a small group of people out of the whole and deprives him of his
property. Here, the group was small, so the owners are entitled to an
individual hearing and it is cost effective to do so.
Bi-Metallic Investment Co. v. State Board of Equalization
·
The City
Council ordered a tax increase of 40 percent for ALL taxable property in
the city.
·
The company was
denied an individual hearing and appealed to the SCOTUS on DPC 14th
Amd.
·
Held: On
the other hand, if the government deprives a large group of people of their
property such that, if they were all given an individualized hearing, they
would just continuously raise the same objections, then an individualized
hearing is not required. It would be a waste of time and money.
VIII.
Rulemaking v. Adjudication
National Petroleum Refiners v. FTC
·
The FTC issued
a universal trade rule stating that it is an unfair trade practice to sell
gasoline without posting the octane rating.
·
The companies
challenge the rule, stating that the FTC’s organic statute only says that the FTC
can enforce the Act by engaging in adjudications and that it can only make
interpretive, not binding, rules.
·
Held:
The court looked at the plain language of the Act and said the FTC’s rule was
OK. But the court also looked at the policy: rulemaking has an efficiency
advantage over adjudication in that it is easier to just issue a rule and nail
the few people who break the rule. The companies here want the FTC to go to
every single gas station and file a complaint against them, then persuade the
ALJ that not posting the octane rating is an unfair trade practice. This would
not only inefficient, but unfair since the gas stations who get nailed last
will have several years to operate without the restriction, while its
competitors are disadvantaged.
U.S. v. Florida East Coast Ry.
·
The Interstate
Commerce Commission’s organic statute said that it could make rules “after a
hearing.”
·
The ICC made an
informal rule that there would be a tax for borrowing another freight company’s
train cars.
·
The companies challenged
the rule and demanded a formal rulemaking hearing according to the statute.
·
Held:
the SCT doesn’t like formal rulemaking, which is essentially a trial. They
recall the formal rulemaking case where the peanut butter companies fought the
FDA for 10 years on whether peanut butter should comprise 87% or 90% peanuts in
order to be labeled as such. The SCT says that it will not infer that Congress
intended formal rulemaking unless it is unambiguous. Since the organic statute
just said “a hearing is required,” then informal rulemaking is fine. There are
no magic words for when a formal rulemaking is required, but something like
“after a hearing on the record” would do.
U.S. v. Nova Scotia Foods
·
The FDA issued
a 553 rule saying that commercial hot smoked whitefish had to be heated to a
certain degree in order to ensure that botulism is killed; the FDA did not
include any scientific data supporting this reasoning.
·
Nova Scotia
Foods commented on the rule, said that it would make the product inedible, would
kill the industry, and offered an alternative using nitrites and salt to kill
the botulism.
·
The FDA did not
respond and implemented the rule and Nova Scotia sued.
·
Held:
For proposed rules of a scientific nature, the agency must make available its
scientific data supporting the rule. This rule was arbitrary and capricious;
the FDA didn’t even consider the effect it would have on the industry or
respond to Nova Scotia’s proposed alternative plan.
·
FPC
v. Texaco: The oil industry said that the FPC’s rule forbidding automatic
price escalator clauses in their contracts with airlines would be harmful to
the oil industry. Texaco wants an individual hearing on the rule and purposely
files its tariff with an automatic price escalator clause. The agency denies the
tariff and denies Texaco’s request for a hearing. Held: You can’t
challenge a rule by waiting for the enforcement by the agency. If the FPC
granted a hearing, there would be nothing to discuss since the tariff was
invalid on its face.
·
In Texaco,
the industry took the initiative to challenge the rule by affirmatively filing
a non-compliant tariff without a waiver request. Here, the industry just
refused to comply with the rule and waited until the FDA sued them over it.
Vermont Yankee v. NRDC
·
Vermont Yankee
applied for a permit to build a power plant, the NRC heard the request in an
adjudication and came to the conclusion that it would need to adopt some new
rules, so it entered the informal rulemaking process and even had a hearing,
where the NRDC voiced its oral comments.
·
The NRC adopted
the rule anyway and the NRDC sued, saying that it should have had the
opportunity to cross-examine witnesses and do discovery.
·
The DC Circuit
agrees and orders the agency to engage in the hybrid informal / formal rulemaking
procedure proposed by the NRDC. Vermont Yankee appeals.
·
Held:
The SCT says the DC Circuit is being political. Generally, how much procedure
the agency must require and when is a question for Congress to control. The
only restraints that the courts can place on procedural requirements for agency
action is Constitutional principles (procedural due process), the text of the
APA, the agency’s organic statute, and the agency’s own rules. Otherwise,
courts cannot arbitrarily fashion its own procedural requirements that they
think should be followed.
Hoctor v. USDA
·
The organic statute
says that the USDA can issue any rules to carry out the Act’s purpose.
·
The USDA issued
a binding rule saying that wild animals must be housed in a “structurally
sound” pen.
·
Hoctor asked
what “structurally sound” meant and the USDA told him informally a 6 foot high
fence was sufficient.
·
The USDA
circulated a memorandum saying that the pen’s fence must be at least 8 feet
high.
·
Hoctor got
nailed for having too short a fence, he challenged the rule.
·
The USDA said
that the 8 foot rule was an interpretive rule interpreting the statute and the
binding rule.
·
Held:
The rule is arbitrary and capricious. The statute does not have any connection
to the “structurally sound” rule. Further, the 8 foot rule does not have any
connection to the “structurally sound” rule, since structurally sound could
refer to anything besides height, like materials used.
IX.
Procedural Due Process and
Agency Practice
North American Cold Storage v. Chicago
·
Chicago ordered
NACS to turn over its chicken alleging that it was spoiled and unsafe for
consumption, that there would be a hearing afterward to determine if it really
was spoiled and, if not, then Chicago would compensate NACS.
·
NACS demanded a
pre-deprivation hearing and appealed to the SCT under the 14th Amd.
·
Held: A
pre-deprivation hearing is not required here. The burden of proof is on Chicago
to show at the post-deprivation hearing that the chicken was spoiled and, if
not, then NACS has a sufficient remedy to recover its damage.
Goldberg v. Kelly
·
Welfare
recipients were cut off from welfare without a pre-deprivation hearing; they
sued under the 14th Amd.
·
Held:
Welfare is a property right and post-deprivation remedies for an incorrect
decision to cut someone off from welfare are not sufficient. A person in need
of welfare who is cut off will not have the resources to raise his claims at a
later post-deprivation hearing. Thus, they are entitled to a pre-deprivation hearing
with a relatively high degree of procedure: they must be allowed to present
evidence, bring an attorney, call and cross-examine witnesses.
Board of Regents v. Roth
·
Roth was on a
one-year teaching contract with the possibility of renewal after each year with
a state university.
·
Without a
hearing, the contract was not renewed.
·
Roth sued,
saying that he had a property interest in the contract renewal and it was
denied without a required hearing.
·
Held:
the alleged property interest is a one-year contract renewal. There is no
continuing, ongoing interest here. The contract has expired, so there is no
deprivation of property, no need for a hearing.
Perry v. Sindermann
·
Sindermann
taught at a state university under one-year contracts as well. But the school’s
handbook says that, while there is no tenure system, professors should feel as
though they have tenure as long as they do a good job.
·
After 4 years,
Sindermann’s contract was not renewed and no hearing was given.
·
Held:
The language of the handbook is ambiguous so, at the very least, Sindermann is
entitled to a hearing before the Board of Regents to determine if his contract
should be renewed or not.
Mathews v. Eldridge
·
Eldridge’s
disability benefits were cut off and he was informed there would be an informal
post-deprivation hearing.
·
Eldridge wants
an elaborate pre-deprivation hearing.
·
Held:
o
There are 3
factors to balance for determining what kind of hearing is required and when:
§ The weight of the claimant’s interest;
·
Life or death
vs. fishing license?
§ The weight of the government’s interest;
·
The government
wants to get entitlements into the hands of the right people, but it doesn’t
want to waste money on elaborate hearings if they are unnecessary.
·
Will the same
result be reached with an informal hearing?
§ Compare the error rates of the claimant’s desired elaborate,
pre-deprivation hearing and the government’s desired informal post-deprivation
hearing.
·
If the issue is
not very important and the same result will be reached whether or not its elaborate
or informal, then save money by going informal.
·
If the issue is
extremely important then, no matter what, we want an elaborate hearing.
o
Here,
disability is not as important as welfare was in Goldberg v. Kelly.
Anyone can get disability, whereas only needy people can get welfare.
X.
FOIA and 1983
Freedom of Information Act (FOIA)
·
Requirements:
o
Physical and
electronic documents in possession of a government body (both state and
federal);
o
No standing
required to get access;
o
Can be used as
a discovery tool;
o
There are fees,
especially if the request is broad or poorly articulated.
·
Exceptions,
documents that do not have to be disclosed:
o
National
security;
o
Internal
personnel rules and practices;
§ E.g., how many sick days are allowed
o
Statutory
mandate of non-disclosure;
§ E.g., HIPPAA laws
o
Confidential
business information / trade secrets;
o
Materials
protected by an attorney-client privilege;
o
Materials
protected by the deliberative process privilege;
§ E.g., how the agency came to a decision (we want agencies to have
the freedom to express candor in internal decision-making processes).
o
Clearly
unwarranted invasions of personnel privacy;
o
Investigatory
matters;
§ E.g., can’t ask for identities of informants, double agents,
location of planted bugs.
o
Requests
related to oil wells.
§ For competition purposes, drillers can’t ask the USGS for locations
where their competitors have tried to drill for oil.
42 U.S. Code Section 1983
·
Allows for
damages and attorney’s fees when a state (not federal) actor (i.e., anyone
acting under color of state – not federal – law) violates the plaintiff’s
federal rights.
·
Defenses:
o
No recovery
when the alleged actor had qualified immunity;
§ A reasonable person in the defendant’s position would not have
known he was violating the plaintiff’s federal rights.
o
No recovery for
violations of hortatory rights.
§ Rights that were enacted as political grandstanding and have no
teeth.
XI.
Judicial Review of Agency
Inaction
Heckler v. Chaney
·
Death row
inmates petitioned the FDA to commence enforcement proceedings alleging that
the lethal cocktails to be used in their executions were not approved by the
FDA.
·
The FDA denied
the petition and the inmates sued the FDA, seeking a judicial order compelling
the FDA to commence enforcement proceedings.
·
Held:
o
An agency’s
discretion not to take action is presumptively not subject to judicial review.
o
Exceptions:
§ When a statute expressly says the agency must take action (i.e., no
discretion);
§ If an agency erroneously believes that it has no jurisdiction to
take action, the court can review the situation and correct the erroneous
belief;
§ If the action is a major responsibility of the agency and it
unilaterally, without any Congressional or Executive support, decides to
abdicate its responsibilities;
§ If the agency’s failure to take action would result in the
violation of one’s constitutional rights; and
§ If the agency’s failure to take action was the result of
corruption.
o
Here, none of
the exceptions apply and the FDA has a limited budget, staff, and resources, so
it has discretion to take action against the use of unapproved lethal
cocktails.
XII.
Standing to Challenge
Agency Action
Sierra Club v. Morton
·
Disney wanted
to build a theme park, which would require cutting a road and power line
through a national forest.
·
The Sierra Club
sued to enjoin the construction, alleging a general interest in the enjoyment
of nature as a whole for its members.
·
Held:
The Sierra Club does not have universal jurisdiction to sue anywhere in the
U.S. where nature is threatened, even though the Club is probably the most
knowledgeable and qualified body to litigate the issue. Standing to challenge
agency action requires injury in fact, not just a mere interest in the issues,
however longstanding it may be and however qualified the plaintiff may be to
litigate the issue. Sierra Club must show that its members actually used the
Sequoia National Park and that their enjoyment thereof would be specifically
harmed by the purported construction.
XIII. Ripeness
Abbott Labs. v. Gardner
·
Congress
enacted a statute that required drug companies to print the generic name of the
drug under the drug companies’ trade names in order to increase competitive
pricing and empowered the FDA to promulgate rules enforce the statute.
·
The FDA
promulgated a rule saying that every time the trade name is printed anywhere,
the generic name must be included.
·
The drug
companies sued, that the FDA’s “every time” rule was outside the scope of its
authority under the statute.
·
The Appeals
Court found that the issue was not ripe.
·
Held:
o
Two issues to
determine ripeness of the issues:
§ Fitness of the issues for judicial resolution;
§ The possibility of hardship to the parties.
o
Here, the
issues are fit for judicial resolution because both parties have filed motions
for SJ and there would be hardship to the companies if the case is not heard
because they would have to destroy all their packaging and make new packaging
or just use up the old packaging and get hit with fines.
XIV. Exhaustion
Exhaustion Doctrine
·
Before going to
court to challenge an agency action, you must exhaust your administrative
remedies. Why?
o
So the agency
can cost-effectively develop a full record, which the court can review later
on;
o
So the agency
can develop expertise and experience;
o
It’s cheaper
than court.
·
Exceptions:
o
Futility;
§ E.g., the agency head says your claim is futile and will be denied.
o
Where the issue
is one of facial constitutionality;
§ Here, the courts are the experts, not agencies.
o
Civil rights
oriented Section 1983 lawsuits;
§ You inherently don’t trust the agency, so why go through the
system?
o
The agency
statutorily cannot grant the remedy you seek;
o
The McKart
exception.
McKart v. U.S.
·
McKart had a
lower draft status since he was the sole surviving son of a veteran who was
killed in action.
·
Then, his
mother died, so the agency raised his draft status on the erroneous argument
that his status was now not applicable since the family unit is nonexistent.
·
McKart is given
notice of the status change and informed of his opportunity to be heard, but he
never appears at the hearing and later, when his number is drawn, he does not
appear for service and is charged with AWOL.
·
At trial,
McKart raises the defense that his draft status has not changed, but the agency
objects, saying that McKart cannot raise that defense since he did not appear
before at the hearing before the agency to contest it, that he did not exhaust
his administrative remedies.
·
Held:
First, the SCT says that McKart wins on the merits of his case because his
status has not changed and the agency was wrong. Then, the SCT uses a balance
of interests test to decide that McKart should not be prohibited from raising
the status defense at trial. The government has an interest in not having its
draft laws and procedures flouted. McKart has an interest in being able to
raise his defense at trial, and this interest is increased by the fact that
McKart is facing a criminal penalty of five years in jail. Because the penalty
at stake for McKart is so severe, it outweighs the government’s interest and he
must be allowed to raise the defense.
XV.
Agency Primary Jurisdiction
Nader v. Allegheny Airlines
·
Nader brought a
common law fraud claim against the airline.
·
The court
granted the airline’s motion to stay the proceedings and ordered Nader to take
his claim to the FAA’s Deceptive Trade Practices Board. Nader appealed.
·
Held:
The elements of common law fraud are different than the statutory elements
included in the FAA’s deceptive trade practices scheme. The former requires
proof of intent while the latter does not. The remedy for the common law fraud
claim is money damages, while the remedy for the statutory claim is an
injunction. The courts, not agencies, are equipped to hear common law claims,
so Nader must be allowed to bring his claim in court.
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