Administrative Law Wypadki 2009

From AdministrativeLawWypadki

Introduction

Administrative agencies often have all three enumerated powers (legislate, execute, adjudicate). APA procedures advantages: • Better decision-making • Constrain administrative power • Give the agencies political legitimacy

Rice (85 f3d 535) Sarasota County wanted to build a landfill in some wetlands, but needed Army Corps approval with additional regulations by the FWS and EPA. Plaintiff challenged the procedures used to get the approval. Ultimately, the county won but had many stipulations added along the way.

APA definitions: Rules – future effect Order – adjudicating past events

553 Rule-making NoticeCommentRule Formal rule-making includes hearings (556 and 557) Informal rule-making does not require a hearing

554 Adjudications Formal agency hearing when required by statute.

Problem 1-5: Should gvt lawyer have appeal dismissed because he can, or should he let the issue go to court for a final judicial decision? Letter believes “justice” is his client, so he’s going ot give his opposition a pass on their procedural mistake. The DC bar would say the DOJ is his client. In private practice, lawyer would face malpractice charges for allowing an opponent’s procedural mistake to pass.

Problem 1-6: Fein would suggest that Jay follow the president’s order. The ABA rules would suggest that Jay ask his superiors which eventually goes up to the president anyway. If asked to approve the permit because landowner is a good donor, under the ABA Rule 1.13 (c), Jay may be able to raise concerns to another gvt agency like the DOJ for further investigation.

Rulemaking Problem 2-1 (pg 51): The lawyer for the biotech firm should first talk to the staff at the EPA—probably in the Pesticides & Toxic Substances. He should stress that the new proposal will work within the current departmental objectives and mission. If doing a top-down approach, you risk alienating the agency.

Problem 2-2 (pg 64): The EPA has responded that there are other issues that they are working on before they can consider this issue and the 2-year delay is probably not unreasonable. Applying the 6 considerations of the TRAC decision to this problem, it seems unwise to bring a lawsuit yet. Courts are reluctant to impose deadlines, especially when there is no definitive time table of what is reasonable. The lawyer can show that the EPA’s backlog can be partially eliminated by allowing the biotech pesticides to be tested.

Problem 2-3 (pg 69): Now EPA has made a decision. Now you can utilize APA rule 706. See Arkansas Power and Light and Northern Spotted Owl. The Arkansas test only requires “some basis” so may be a weaker test. An agency lawyer would probably advise for a smaller fact record, so the agency has the flexibility that the courts cannot dispute as they did in Northern Spotted Owl. There may be ethical issues in prescribing a thin record. It is unlikely a court will overturn the EPA’s decision here.

APA §553 (a) – categorical exceptions – certain subjects are exempt from the notice and comment requirements (military or foreign affairs, agency management, public property, loans, grants, etc.). At the time the APA was enacted, there was concern that the APA would affect individual liberties. If a certain action affects individuals personally, then more procedures are required by the APA, but if an action affects an amorphous group of individuals, then we don’t need much if any procedure (for example, public property does not affect individuals specifically, so it is an exception to the APA notice and comment requirements).

American Hospital Assn. (Medicare Act) • Required them to review more admissions than they had planned. • Peer Review Organization (PRO) reviews 5% randomly and if it sees a problem it will review 100% of the files. • Agency claims that it can be exempt from notice/comment since the rule keeps the burden on the agency not the individual. • Ct says that if the rule is procedural, then it’s not required to go through notice/comment. • However, the PRO is making value judgments when assessing whether admissions were necessary.

Air Transport Association of America (FAA) • FAA rules adopted that issue penalties, but did not go through notice/comment. • New procedures change how much due process the Defendant is going to get. • Ct finds that that the new rules severely impacted the defendant’s right to defend themselves and should have gone through notice/comment. • Ct says the exception in §553 (A) is not about whether a rule is substantive or procedural, but does it affect the regulated parties? If so, then notice/comment is required. • Dissent says that even internal departmental decisions affect regulated parties, so everything would require notice/comment. We must look at them on the Procedural/Substantive continuum.

JEM Broadcasting (FCC) • Same judge from Air Transport dumps his prior ruling and adopts the dissents argument. • Ct recognizes that the rules be looked at on the Procedural/Substantive spectrum, even if it is hard to do. Two-part test: o Are the rights of the parties altered o Are the effects sufficiently grave that the APA would favor or disfavor notice/comment. • Without notice and comment, how is the public interest taken into consideration?

Problem 2-4: Is this sufficient to trigger a notice requirement? Are the rights of the parties altered? The chemical companies must go through a 4-month approval cycle, but the biotech companies must only wait 7 days for approval, which is granted unless otherwise notified within that time. The agency believes this difference to be acceptable enough since they had data showing that biotech products were relatively harmless.

When is a hearing required for rulemaking? The default is no hearing, but what does a statute have to say to trigger the formal rulemaking requirements?

US v. Allegheny-Ludlum Steel Corp. (ICC) • “after hearing” is not sufficient—it must say something like “hearing on the record”

US v. Florida East Coast Railway Co. (ICC) • When agency is making law, ordinarily notice and comment is sufficient. When adjudicating, a hearing is more likely.

Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc. (NRDC) • Agencies should be free to fashion their own rules of procedure and pursue methods of inquiry tailored to their tasks. List of considerations given to support the court’s holding: o importance of predictability of JR o too much second-guessing o misapplication of the standard of review • Conducting hearings is inefficient. Agencies may become inefficient if forced to conduct hearings more often than not. • Congress wanted an efficient informal process. Formal hearings should be an exception, not the norm.

Problem 2-5: USDA wants to alter school lunch guidelines based on new nutritional findings. VEGI group believes that new guidelines should go beyond the 1990 standards because students probably do not get a balanced diet at home, so school lunch program should go beyond the 1990 standards. The beef industry was on notice that the USDA would follow the 1990 guidelines, but the final rule was even more protective. The beef producers submitted comments on the 1990 guidelines, and so did the VEGI group. The USDA chose to adopt the VEGI group comments, not the beef producers’ comments. The agency will argue that all comments were considered and based on these comments, the agency made a well-reasoned decision. Logical outgrowth—the final decision must be logically derived from the notice and comments.

Ex-parte contacts: How do agencies handle comments that are not part of the commenting and hearing procedures? Sources of law behind ex-parte contacts: • Due process clause • APA (silent about informal rulemaking, but limits ex-parte communication in formal rulemaking procedures) • Statutes that define ex-parte communication • Agency rules (each agency has internal rules)

Problem 2-6: Secretary of Agriculture is being pressured by beef producers, VEGI, and members of congress on the proposed school lunch rule. Beef producers want to meet with secretary: • Due process issue? Probably not • APA? This is informal so APA is silent about ex-parte communication • Statutes? Don’t know of any • Agency rules? Don’t know of any Secretary can probably talk with the beef producers ex-parte. Does this give powerful organizations more clout with the agencies? Courts will also stay out of the way when the President talks with the secretary or the beef groups since that the judiciary cannot dictate how the executive talks with the executive branches.

Hybrid rulemaking Even informal rulemaking can be a complex process. Executive orders and treaties affect the complexity of many administrative rules. Regulatory Flexibility Act – protects small business • Trigger – significant economic impact on a substantial # of small businesses, organizations, and governments • Analysis – If triggered, agency must create a Regulatory Flexibility Analysis that includes analysis and alternatives and their affect on small entities. For final rules they must summarize any comments received and how they were resolved. • Judicial review – Yes, but cannot directly review substance of RFA; can consider if rule is arbitrary and capricious

E.O. 12866 – concerned with significant impacts on economy • Trigger – When an action with an affect of $100 million or more • Analysis – If triggered, the OIRA (part of the OMB) can comment on the agency’s proposed rule. Agencies cannot enact rules whose cost is greater than its benefit. • Judicial review – None, but the executive has review through the OMB

Information Quality Act – Protects non-scientists from misinformation • Trigger – When agency regulations are determined with scientific information compiled by the government • Analysis – Peer review by independent scientists • Judicial review – Congress did not indicate if there is JR. Currently being litigated.

Problem 2-7: RFA will be triggered because there are many small governments (school districts) and organizations (small farmers) that are affected. If USDA relies on VEGI’s data, the Information Quality Act will be triggered.

Negotiated rulemaking: rules developed with the stakeholders at the table up front. That way the comments and issues are resolved right away before the proposed rule is posted. • Boosts legitimacy of process and rule

Judicial review When will the courts set aside their Marbury v. Madison power to determine what the law is and allow agencies to define the law? Three questions to ask regarding judicial review: 1. What is the scope of review? a. In a formal hearing, substantial evidence is required (706-2-E). b. In informal rulemaking, only a determination of arbitrariness and capriciousness (706-2-A). c. In hybrid rulemaking, Congress may increase the scope of review above the arbitrary and capricious standard but only up to the substantial evidence standard 2. What is the record? a. In formal rulemaking, the record is whatever is included in the formal record (testimony, documents, etc) b. In informal rulemaking, the record is information that was considered by the agency. 3. How much explaining does an agency have to do to justify its rule? a. In informal rulemaking, written findings are not required, but some explanation is required. An agency head may be required to testify in court if they did not explain their decision in written findings—a little judicial coercion. Therefore, written findings are almost always given.

Chevron v. NRDC (1984) Parties disagree about what is meant by the word “source”—is it the individual stacks (NRDC), or the whole of the refinery (Chevron) Courts will defer to any reasonably permissible agency construction of a statute. Chevron 2-step: 1. Is the statute ambiguous? (little deference here) • Plain meaning approach – looks to the text of the statute. Scalia sees this approach as possibly given judges too much power to determine what language is “clear” even though he embodies this approach. • Statutory construction – determining congressional intent. 2. If the statute is ambiguous, then the court will determine whether the agency’s interpretation is reasonable or permissible. (lots of deference here) • If the interpretation is not reasonable, it will remand it to the agency Notes: • Chevron lowers the intensity of judicial review, court may not substitute its own judgment for that of the agency – must be deferential. • Note the relationship here…as intensity of JR goes up, the freedom of the agency goes down. • Why in step two should a court defer to an agency’s legal interpretation that they think is incorrect? § 706 says that courts shall decide all questions of relevant law. How do you justify that inconsistency? Courts ought to respect the delegation of legislative authority. • But how clear does that conferring of power have to be? (Delegation can be implicit or explicit). Implicit delegation might take the form of an ambiguity. • Chevron applies to an agency’s interpretation of their own rules.

Problem 2-9: Is the statute ambiguous? “Same” vs. “equivalent to” is distinguished by Congress. ATA will argue that the Black’s Dictionary definition makes the terms interchangeable, but the Random House dictionary treats them differently. The amendment that changed “at least equal to” to “the same as” proposed by Helms represents some legislative history that leads us to believe it’s ambiguous, however, the poultry industry is big business in N.C. and this “technical amendment” is really politically charged. This is why Scalia says we shouldn’t look to legislative history because it can be very misleading. Analyze using the Chevron 2-step.

State Farm (1983): definition of A&C: • Rational connection between the facts found and the decision made? • Based on relevant factors? • Clear error of judgment? • Agency relied on factors Congress didn’t want considered? • Agency failed to consider something Congress thought was important? • Failed to provide an explanation? o Does the explanation require us to yield to the agency’s expertise? Held: if the agency fails to take something very important into account, it won’t suffice if the agency doesn’t provide a good explanation.

Problem 2-10: The scope of review is substantial evidence imposed by Congress in the statute. FTC makes findings of facts (how dealers behave and how buyers behave) and conclusions of law. The 1st FTC finding was that dealers routinely inspect cars before purchasing and know of a car’s major defects. In the FTC’s 2nd finding, they argue that dealers are unaware of the car’s defects. The consumers group will argue that this drastic rule change requires more data justifying the change. The dealers will argue that the studies in WI and MN show that this change is warranted—MN buyers without this disclosure law were more aware of defects than WI residents with the disclosure requirement. Is the change between the Carter administration and the Reagan Administration at issue here?

Problem 2-11: Cost/benefit determinations are not solely about money. Relationships are vitally important costs or benefits as well. Van Cleve suggests exploring some alternatives such as getting an exception or raising the issue with Congress. The latter may hurt your relationship with the agency. The cost of challenging a rule may be significant, but sometimes the cost is less than the cost of imposing the rule on your client anyway. Some challenges are done only to delay the rule.

Problem 2-12: Are there ethical issues to challenge a rule when the only reason is to delay the rule? What if delay was the major reason, but not the only reason?

Challenging agency rules

Adjudication The application of law to specific facts—not to be confused with rulemaking, which is always looking forward, adjudication looks backward. The outcome of adjudication is an order.

Formal adjudication under § 554: 1. Lists areas where adjudication doesn’t apply 2. Notice required – how much and what 3. General procedure. If you can’t settle it, you have a formal hearing under §§556 and 557 4. Ex parte communications 5. Declaratory orders

§§ 556 and 557 cover formal adjudications

Problem 3-1: Is a trial-like hearing required here? In rulemaking, the presumption is that an informal hearing is appropriate unless the statute says otherwise. Seacoast (1st circuit), says that adjudication is very different than rulemaking so a formal hearing is presumed for adjudication. City of W. Chicago (7th circuit) follows the rulemaking decisions and states that a formal hearing is not required. Chemical Waste Management (D.C. circuit) applies the Chevron 2-step and defers to the agency to resolve ambiguous language. Dominion (1st circuit) overrules Seacoast, and applies the Chevron 2-step as well (Chevron was decided after Seacoast). The 9th circuit applies Marathon Oil which upholds Seacoast. Assume that your firm represents a San Francisco museum that is in the 9th circuit. • Following Marathon and Seacoast, a formal hearing is presumed, so this regulation is most likely unlawful. Chevron may replace this approach in the 9th circuit someday. • Following City of W. Chicago, an informal hearing is presumed, so this regulation is lawful. • Following Chemical Waste Management, the language is ambiguous, and the agency’s interpretation is reasonable, so the regulation is lawful.

Should Chevron apply to this question? Chevron regarded rulemaking, but is being applied to adjudication. It’s thought to apply in these cases because it creates expediency in decision-making. It also keeps the separation of powers intact—the judiciary defers to the agency because Congress said so.

ALJs are employees of the agency, but are evaluated and promoted by a separate agency. § 554 (d) states that an agency employee cannot influence/advise an ALJ’s decision. ALJs cannot invalidate an agency rule—a court or the agency itself can.

Split-enforcement – one agency inspects and cites, another adjudicates those citations (OSHA/OSHRC). Which agency decides what the regulations mean? If there’s an ambiguity in the regulations, the agency that promulgated the rule can interpret it, not the adjudicating agency.

Hearsay is acceptable if there was an opportunity to cross-examine. If you choose not to subpoena the witness and chose not to, you cannot complain about H/S issues.

Problem 3-2: OSHA issued citation for workers not wearing their respirators, but they cited the wrong regulation. Company claims that there was no painting going on at the time, so why would they be wearing respirators. Also, they argue that the affidavit of the inspector is H/S. Union 25 – no notice was given at all. Southwest Sunsites – the agency reversed the ALJ and changes the standard, but court says that the standard is harder on the agency, not those regulated by the agency.

Did Lane’s have sufficient notice since the wrong regulation was cited? The agency probably prevails because the exact findings were specific even though the wrong regulation was cited. Even if Lane’s wins this now, the agency will recite to the correct regulation and Lane’s will lose later.

Why should Lane’s be cited when no painting was going on? Agency says that the fumes are still present, so they believe that its regulation applies even if no painting was going on.

Was OSHA’s reliance on the affidavit to prove its case acceptable hearsay? Could Lane’s subpoena the inspector? If you had the opportunity to cross-examine the inspector but chose not to, then you made a mistake—not the agency.

Ex-parte communications – Adjudication

Generally, § 557 (d) covers ex-parte contacts outside the agency. Generally, § 554 (d) covers ex-parte contacts inside the agency.

554 (d) 557 (d) Facts Can’t talk to anyone within the agency Can’t talk to any outside interested persons Anything at all Can’t talk to prosecutors or investigators within the agency Can’t talk to any outside interested persons

PATCO v. FLRA (1982) Secretary Lewis, although in the executive branch, was “outside the agency.” 3 features of the prohibition on ex-parte communications: 1. must be Interested persons – must be more interested than the general public 2. must be oral or written communications except for status reports – unless status reports are coercive 3. must be relevant to the merits of the proceeding

Judge discusses legitimacy and the need for informed decision-making, but does not mention efficiency.

Decision is not void because of ex-parte contacts, but it is voidable based on the following factors: • gravity of the offense, • who benefited, • how much it influenced the decision, • did opposing parties know about the contacts and get to respond, and • would it serve a useful purpose to remand the agency’s decision. (Is this where efficiency comes in?)

Problem 3-3: Administration pressures opening up of logging land. Spotted Owl is affected by this decision. § 557 (d) is applicable because the administration is considered outside the agency. 1. Is the White House policy person (Clayton Yeutter) an interested person? Most likely, yes. 2. Was Yeutter’s status request coercive? Probably, since we’re to assume that allegations are true. 3. Since this is voidable, does it satisfy the factors for voidability? Most likely. 4. Were the White House meetings relevant to the merits of the proceeding? Absolutely. The court is likely to remand this decision. Although there may be no changes in the final decision, it may give that decision more legitimacy. If the vote had been 6-1, the decision may not have been voidable—remanding would not have made much of a difference.

Stone v. FDIC (1999)

Due Process Hearings

To trigger due process, a case must look more like an adjudication (affecting targeted people as in Londoner) rather than a rulemaking (affecting a broad group as in Bi-metallic) The next hurdle for due process claims is that they affect life, liberty or property. Admin law cases rarely affect life.

2 questions to ask of all due process issues: 1. Is there a deprivation of life liberty, and property? 2. If yes, what kind of process is due?

Londoner v. Denver (1908) A small number of people were exceptionally affected.

Bi-metallic v. SBE (1915) Broad tax applied to many people. No small group was exceptionally affected.

Goldberg v. Kelly (1970) Welfare entitlements are protectable rights as in property. The Ct saw a class issue in only protecting property in the strictest sense because only the wealthy own property.

Board of Regents v. Roth (1972) !4th amendment employment issue. Professor hired for one year and not rehired. Professor argued that he was deprived of his entitlement without a hearing. Ct. says no. The university did not promise or even allude to secured employment beyond that 1 year, so this is not like the welfare case.

Wisconsin v. Constantineau (1971) The stigma of being on a public drunkard list curtails his liberty. How is the FBI’s most wanted list different? How about St. Paul police department list of prostitution arrests—even though they have not gone to trial yet?

Paul v. Davis (1976) Stigma-plus: not only must there be a stigma, but it must be affecting your liberty in some way as well (unable to get a job or to purchase alcohol).

Codd v. Velger (1977) Police officer threatened suicide with service revolver and can no longer get employment because it appears on his record. Ct. says that he doesn’t get hearing because he did not deny the fact—so there is nothing to dispute. A factual dispute must exist before forcing an administrative agency to have a hearing.

Shands v. City of Kennett (1993) The stigma must be significant.

Problem 3-5: Has DP been activated—is this individualized decisionmaking? Yes, it is particularized to Jeremy Is Jeremy being deprived of liberty? He’s being stigmatized in his school record. Even if it is a stigma case, he determines who reads his transcript. What choice does he have about releasing his transcript? Even if he has stigma plus, there is no factual dispute—he admits it. He admitted to plagiarizing, but he’s unclear on the definition of plagiarism—so there may still be a factual dispute. Is Jeremy being deprived of property—is there an entitlement? Possibly. Once he was accepted and enrolled he has an entitlement to the property as long as he follows certain standards.

If the due process clause has been activated, certain procedural safeguards are required.

Mathews v. Eldridge (1976) 3 factors in determining how much process is due: 1. Private interest 2. Risk of erroneous deprivation if more process were added 3. The government’s interest Comparing Mathews with Goldberg: 1. SS income is not as depended upon as welfare income is. 2. The doctor’s analysis is not going to change with more process. 3. The government does not want more process that affects efficiency.

Osteen v. Henley (1993) Osteen was dismissed for “stomping” other students in an argument. Applying Mathews factors: 1. Osteen may lose scholarship, but this is not very compelling. 2. The risk of erroneous outcomes is low—schools do not kick out students often, especially athletes that bring revenue into the school. 3. The government has no interest in making this an issue for lawyers—it’s too expensive.

Problem 3-6: Jeremy wants a lawyer and the right to call witnesses. Are there legal arguments? Quite possibly, since the term “plagiarism” is not clearly defined. 1. His private interest is to stay in school 2. 3. The government’s interest is to not judicialize the process—but it’s a law school and the faculty members are already lawyers.

Withrow v. Larkin (1975) APA §554 (d)(2)(C) applies. Agency heads can be investigators and adjudicators. There’s a presumption that they will be fair.

Problem 3-7: In order for Jeremy to show that the Dean is not a neutral decisionmaker, he needs to show that the Dean is biased. He can argue that the Dean had already made up his mind that Jeremy plagiarized when he initially found out. The Dean will counter that it is his job to opine about the law when determining if a student plagiarized.

Due Process and ex-parte communications: Some ex-parte contacts may be a due process violation

Stone v. FDIC (1999) A hearing to determine whether to take away someone’s job (property), so due process is triggered. The ALJ received ex-parte memorandum from officials recommending Stone’s dismissal. Ct create 3-part test: 1. That new allegations were introduced which Stone was not given notice of; 2. That the deciding official was influenced by these new allegations; and 3. That the procedural error created by considering these new allegations likely had a harmful affect on the outcome of the agency’s decision.

Judicial Review Substantial evidence – deferential standard where courts will uphold agency determinations if they are found to be reasonable, even if the opposite agency determination would also be reasonable.

Fact questions – in COA appeals of DC decisions, the COA will use a “clearly erroneous” review standard; however in court appeals of an agency decision, the court will use a substantial evidence review standard. A problem arises when the ALJ decision is not the same as the ultimate agency decision. The court will be very deferential to the ALJ because the ALJ determines the credibility of the witnesses that were present—the agency only reviews the paper record of the hearing and hears no testimony.

Pensquitos v. NLRB (1977) Testimonial inference – for example, the testimony was not believable because of blushing, squirming, etc. Derivative inference – for example, the content of what the person said was not believable The court will be very deferential toward testimonial inferences made by the ALJ. Any claims that rested on testimony that the ALJ doesn’t believe was credible will fall away. When an ALJ couches their determination in testimonial terms, the agency will have difficulty overcoming that.

Problem 3-8: When the ALJ’s decision is based on the transcript, the agency has a lot of leverage to come to their own conclusion, but if the ALJ’s decision is based on witness’ demeanor, then the agency cannot easily come to a different conclusion.

ALJ Board Derivative inference • Jones is unclear on times and places • Darby is believable because he admits cheating on his wife • Darby did not use the language he is accused of using in court • Times/places are not a big credibility factor (Jackson) • Darby is unbelievable because he cheats • How Darby behaves in a hearing is irrelevant to how he behaved towards Jones. Testimonial inference • Jones was brusque and opinionated • Darby is forthright • There’s no connection between being brusque and opinionated and credibility. • Because of all of the reasons listed above, we do not think that the ALJ can accurately assess Darby’s forthrightness.

Jackson v. Veterans Administration (1985) This is a sexual harassment case where the agency came to a different conclusion than the ALJ. Because the ALJ based his assessment on Jackson’s credibility and believed that the employee’s demeanor was not as credible. In one instance, there was another corroborating witness. In this instance, the agency was able to overcome the ALJ’s finding.

Mixed Questions of Law and Fact

Fact – red or green Law – what does the word “source” mean (Chevron) Mixed questions – we can’t determine what the word “source” means unless we look at the facts

NLRB v. Hearst (1944) Are newsboys “employees”? The Board’s determination that specific persons are “employees” is to be accepted if it has “warrant in the record” and a reasonable basis in the law. Congress entrusted the agency to make this decision, not the courts (this was 40 years before Chevron reiterated that concept.)

Problem 3-9: TVA employee found dead in vehicle with another woman. Did his death arise out of his employment? Fact question – Was he actually engaged in his job or taking a break, or was he just out having a good time? If he was taking a break, was he still within the course of his employment. Courts are reluctant to deny benefits to a widow.

Judicial review of informal proceedings

Overton Park v. Volpe (1971) This case states that informal rulemaking and adjudication will be reviewed with the “arbitrary and capricious” standard. The court will believe contemporaneous findings more so than post-hoc reasoning made afterward to justify the agency’s decision.

Allentown Mack v. NLRB (1998) “reasoned decisionmaking” as in State Farm.

Yepes-Prado v. INS (1993) YP has lived in the US a long time with no negative instances, but was convicted of heroin possession. The INS wants to deport him. YP wanted a waiver, but the agency declined. The court wants to know why the agency denied his waiver. “Agencies abuse their discretion no less by arriving at plausible decisions in an arbitrary fashion than by reaching unreasonable results.” There must be predictability in agency decisionmaking as there is in the court system (stare decisis).

Davila-Bardales v. INS (1994) INS regulations prohibit admissions by those under 16 unless accompanied by a parent or guardian. DB is 15 and is picked up at the border where he admits he arrived in the US illegally. DB also states that his admission was coerced—border agent hit him. INS had made statements in another case, that same day that these types of admissions are not allowable. The court states that this looks arbitrary and capricious.

Problem 3-10: Air Force serviceman comes out and is found to be unfit to serve. He appeals for a waiver but is denied. In the absence of §556/557 formal proceeding, we cannot use the Substantial Evidence standard. We must use the arbitrary and capricious standard. The agency doesn’t explain what “unusual circumstances” are. How can a court determine if this was reasoned decisionmaking? How can we have predictability without knowing what this standard is? The agency has granted this waiver before but has not distinguished this case as being different from the other cases. This inconsistency looks arbitrary.

Choices of Procedures and Nonlegislative Rules

Choice of Procedure 1. Adjudication 2. Rulemaking 3. Nonlegislative rules

Adjudication Advantages – gives agency flexibility in a variety of situations – good thing for agencies like the NLRB Disadvantages – doesn’t provide the open forum of rulemaking, doesn’t give a bright-line rule requiring a certain reimbursement system for everybody like rulemaking does, plus you’re only hearing from the particular parties to the adjudication.

Problem 4-1: Adjudicating this issue allows the agency to resolve the problem without involving large lobbying groups or their lawyers. However, if adjudicating, the outcome of that may not create compliance across the entire industry. Rulemaking opens the door for the lobbying groups but offers a clearer rule that must be followed throughout the industry. The negotiation involved during that rulemaking will probably dilute the overall outcome.

Retail, Wholesale and Dept Store Union v. NLRB (1972) 5 factors on retroactivity: 1. Whether this case is one of first impression 2. Whether the new rule represents an abrupt departure from well established practice or merely attempts to fill a void in an unsettled area of law 3. The extent to which the party against whom the new rule is applied relied on the former rule 4. The degree of the burden which a retroactive order imposes on a party 5. The statutory interest in applying a new rule despite the reliance of a party on the old standard.

Problem 4-2: Factor 1 – this is a case of 1st impression (score 1 for the agency) Factor 2 – there was no prior standard, so there was no abrupt departure—debatable though (score 0 points) Factor 3 – there was no former rule, so there was no reliance; however, see above (score 0 points) Factor 4 – sounds a lot like factor 3 (very significant burden to Country Bob) Factor 5 – the agency may want to make an example of Country Bob, but it must be weighed against factor 4. How much is the adjudication going to hurt Country Bob and is it worth it to create an example of Country Bob?

A cease and desist order tips the balance significantly toward the agency since it virtually eliminates factor 4 (however, a C/D order is not retroactive anyway).

If the agency is in the middle of a rulemaking, the agency should not be adjudicating the issue.

Rulemaking The APA does not grant rulemaking power; that power must be provided for in each agency’s legislative charter. Legal issues that arise when an agency chooses to do rulemaking: 1. Does the agency have the authority to promulgate substantive rules? 2. Can the agency restrict the scope of adjudicatory hearing rights by promulgating a rule that eliminates the materiality of facts that otherwise would be subject to resolution in a hearing? 3. Can the agency give retroactive effect to a rule? 4. To what extent does DP limit an agency’s authority to use adjudication to clarify an ambiguity in a rule?

Impact on adjudication rights: By adopting a legislative rule, the agency might be able to limit the scope of rights to formal adjudication. Storer Broadcasting Co. (p. 335) held that it was okay even if RM did have this impact.

Retroactive rules Bowen v. Georgetown Univ. Hosp. (p. 336) Agencies do not have the power to give rules retroactive effect without an express grant of such authority by Congress. Ambiguous rules: GE v. EPA (p. 339) Violates DP when EPA enforced a reasonable interpretation of its own regulations because it did not give GE fair warning of what was substantively required by the regulation. 1. Interpretation of agency’s own rule—court will defer to agency unless agency is clearly wrong 2. Enforcement of agency’s rule—raises DP concerns, so court will not allow agency to take property without showing that GE was notified through some reasonable manner.

Problem 4-4: OSHA interpreted regulation to require the self-rescue equipment near the advancing face area regardless of whether the employees were working in that area or not. A court would uphold OSHA’s interpretation since it is not plainly wrong. Company will argue that a cease/desist order is most applicable enforcement, but OSHA will argue that company was given fair notice about regulation.

Nonlegislative rules § 553 recognizes 2 types: 1. Interpretive rules 2. Statements of policy

Advantages: • Efficient o Not subject to APA o Exempt from other statutory and administrative procedures for rulemaking • Beneficial o Informs public of agency’s views and intentions o Guides agency employees controlling administrative policy

Disadvantages: • Rules may get adopted without public input • Agency may treat rule as binding on members of the public • Members of the public may rely on these rules, and later be adversely affected by that reliance

Problem 4-5: Adjudication – Under Chenery, this appears like a broad issue that affects many businesses, so rulemaking may be more appropriate. Nonlegislative rulemaking – OSHA might get voluntary compliance, and will be giving fair notice to businesses. This does not allow businesses to voice their concerns and may further harm the OSHA-business relationship.

American Hospital Association v. Bowen (1987) In addition to rulemaking activity, agency puts out RFP to enter into contract with PRO’s. The RFP included many items to be addressed. AHA argued that this was a form of rulemaking. The court disagreed. They found the RFP to be a nonbinding “general statement of policy.” These items were nonlegislative policy concerns and none of them were binding.

CNI v. Young (1987) FDA sets an “action level” for contaminants that put people on notice that if they exceed that level, the FDA will start enforcement proceedings. This puts people on notice, but is still an enforceable rule that had no public input. FDA cannot enforce this rule, but can reword their statement to make it a voluntary level. To enforce this “action level” the agency will need to go through formal rulemaking procedures.

Problem 4-6: Assistant Secretary’s statement seems binding (“will be charged…”). NAB will attack this for lacking notice and comment before implementing rule. A court would probably strike this rule down.

Formal Rulemaking  § 553 - § 556/557 (formal rulemaking/adjudication)

Informal Rulemaking  § 553 – notice and opportunity to comment

Hybrid Rulemaking  Notice/Comment + additional procedures prescribed by statute

Non-Legislative Rulemaking  No real procedural requirements like notice/comment (553(A/B)) – They only have to be published

Problem 4-7: USDA Interpretive Rule (page 358) • Pro USDA o Statute calls for “minimum requirements” for “housing” and so agency is just interpreting that requirement to mean at least 8 ft. high  Simply clarifying the underlying regulation – Davila o Purpose of statute is to protect animals and surrounding populace, so agency is just applying the regulation and getting everyone on the same page • Pro Ms. Jones o The internal memo creates a new “binding” rule so they should go through the notice/comment procedures  Not interpreting the previous rule but adding another element to it  Rule talks about structural strength and material; it doesn’t talk about fence height  How did the agency arrive at 8 feet? • Like AMC defining the diagnosis, USDA is defining the 8 ft fence requirement

Rules by process • Formal rules • Notice and comment • Publication rules o Interpretive rules o Policy statements o Procedural rules o Good cause rules – often emergency rules

Rules by power: • Legislative – binds courts, agencies, and regulated parties • Nonlegislative – interpretation and policy statements o Allows more room for argument

AMC v. Mine Safety and Health Administration 1. Did congress delegate such power to the administration? 2. Did the agency invoke: a. Legislative authority in absence of a rule? b. Explicit invocation? c. Amended legislative rule?

Metropolitan School District v. Davila (1992) Determining if rule is interpretive or legislative: 1. Characterizes (legislative history and language used) a. Agency used statutory language implying that they were interpreting the statute 2. Creates new duties a. Agency claims to be clarifying what the old duties mean and are not imposing new duties

Alaska Professional Hunters Association v. FAA (1999) Bush pilots are told by the local office that they are not subject to regulations of commercial pilots. 35 years later, FAA began studying the bush pilots and the pilots petitioned for a rulemaking. The FAA interpreted the role of bush pilots as being commercial pilots; however, an entire industry had already developed depending on the local office’s original interpretation. Agency says that the APA appears to permit an agency to make an immediate change to a nonlegislative rule. Court says that more process is necessary than the APA requires. Vermont Yankee does not allow courts to impose more process though. Court reasons that since the pilots were not part of the original rulemaking and have later been relying on the local office’s opinion, they have effectually not been allowed to comment on the regulations that are imposed on them.

Problem 4-8: For Agency: • New interpretation is not significantly different than prior interpretation • The local agency’s vet does not represent the definitive opinion of the agency

For Ms. Jones: • The local agency’s opinion was relied on (not likely a winning argument)

Hard to estop the government: • Laws are supposed to reflect the public interest. • Constitutionally, the public funds are spent by the legislative branch, not the executive branch (OPM v. Richmond) – sovereign immunity and separation of powers • Those that deal with the government are expected to know the law and not rely on the conduct of government agents (Heckler v. Community Health Services) • Affirmative conduct by the government may be cause for government estoppel

Problem 4-9: For HPF: • Relied on inspector’s opinion • HPF requested an immediate interpretation but was told that the 8-10 week process for interpreting the rule must be followed—good faith effort. • As in ENO, HPF was led to believe that their efforts were sufficient and are now being penalized for their efforts—due process problem. Government cannot fine HPF without DP. For USDA:

Judicial Deference

We know that Chevron is the proper level of deference to give to regular agency rules. But what deference is due to interpretive rules?

Skidmore v. Swift & Co Interpretive rules are due less deference. Court isn’t bound by agency’s statements: See top of p. 389 – court looks at agencies experience, logical consistency, validity of reasoning, etc.

Gonzalez v. Reno Agencies doing formal adjudications get Chevron deference, but less formal stuff gets Skidmore deference. What about this kind of informal adjudication? Sounds like it gets Chevron deference. But it’s a little unclear, and nobody really knows.

See note: Agencies get Chevron plus when they’re interpreting one of their own rules – does that give them way too much power?

Mead Mess: Mead muddies the water compared to Christensen. Barnhart muddies it further by stating that some interpretive rules “might” get Chevron deference. Barnhart basically says that the courts will decide this on a case-by-case nature going forward. This allows the courts to determine if they like the agency’s decision and if they do, they can apply the factors to get that result. If they don’t like the agency’s decision, they can apply the factors to get a different outcome—Scalia saw that this would happen.

Mead is still applicable; Christensen is probably dead; but Barnhart is still around.

What is being interpreted? Rule Statute: strong, weak or no deference? Seminole Rock Mead Barnhart Notice/Comment or formal adjudication? The factors listed on pg 396 Other factors? Skidmore deference (weak deference with power to persuade) will be applied

Problem 4-10: HUD policy says that YSP’s are determined on a case-by-case basis. If the YSP is payment for “services actually performed” then they are not referral fees, but if these services have already been paid, then the YSP clearly acts as a referral which is illegal. HUD’s policy is stated in a guidance document, not a “force of law” (Christensen). Unlike Mead, there’s only one letter and it was meant to be applied broadly and the letter was published in the Federal Register. It may, or may not get deference under Mead. Under Barnhart (interstitial nature, agency expertise, importance to statute, complexity, and carefulness of agency’s consideration), it becomes no clearer. Chevron may or may not apply.

Agency interpretation of its OWN regulations (not interpretations of a statute) Does the agency or a court determine what an agency regulation means? Unless the agency’s interpretation is clearly erroneous, a court will not get involved. Courts may get involved if the interpretation is invalid (unconstitutional, counter to statutory language, etc.)

Judicial Review – Reviewability

Standing – Am I the right person to make this challenge? 1. Injury 2. causation 3. redressability Ripeness – Is it the right time to make this challenge? Is there more procedure that should be followed before challenging the agency decision?

Lujan v. Defenders of Wildlife (1992) Scalia states that the injury suffered by the plaintiff must be “fairly traceable” to the government’s action and that it must be “likely, as opposed to merely speculative” that the injury will be redressed by a favorable interest. The dams are being funded by private interests as well as the government, so there’s no guarantee that a favorable result here would stop the dam building since the private interests were not party to this litigation.

Not following procedure is an actionable injury—a more concrete injury is not required.

FEC v. Akin (1998) Standing – voters were deprived information about campaign financing Injury – taxpayers are injured when their tax dollars, but injury is generalized

Generalized grievances do not meet prudential standing requirements. Congress has provided a cause of action for taxpayers to bring suit, so Congress has circumvented the prudential standing requirement.

Reviewability – Exclusions to judicial reviewability §701 (a)

Abbott Labs v. Gardner (1967) There’s a presumption of reviewability unless clear and convincing evidence of a contrary legislative intent restricts access to judicial review.

Block v. Community Nutrition Institute (1984) A system of price supports for milk is challenged. Court says that Congress did not want a presumption of reviewability. The “clear and convincing” standard is changed to a “fairly discernible” standard.

Heckler v. Chaney (1985) Death row inmates argue that the drugs used to execute inmates are an “unapproved use of an approved drug.” The court, citing Overton Park says that where there is no law to apply, the court will leave it to the agency’s discretion. The court presumes that the agency’s discretion is not reviewable by a court.

Webster v. Doe (1988) CIA agent is fired when he announces that he is gay. He alleges violation of statutory rights and that he was discriminated against (5th amendment rights). The statutory claims fail because Congress meant the individual employee discharges to be the Director’s determination. There are no standards here for the court to apply anyway. The constitutional claim is still valid—Congress cannot specify when a constitutional claim is valid because the S. Ct has the power to interpret the Constitution (Marbury v. Madison). There’s a large body of constitutional law to utilize in determining an appropriate standard to apply.

Zone of interest / Cause of action

§ 702 Right of review – A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof.

Air Courier Conference of America v. American Postal Workers Union (1991) Court says that Court of Appeals conflates the zone of interest with the injury in fact. Congress meant to protect the parties, not those that benefit from the process (court stenographers are employed to create transcripts, but the transcript requirement in any given case is not to create work for stenographers). Which is the relevant statute?

National Credit Union Administration v. 1st National Bank & Trust Co. (1998) Credit unions used to have limited scope of customers (employees of that entity, i.e., county employees), but the statute was interpreted to include anybody that wanted to bank there, thereby creating competition for banks. Did Congress meant to limit market share for credit unions? So do banks, so banks are within the zone of interest. O’Connor dissents stating that the purpose of the statute was to make strong credit unions, which the banks do not want. Both interpretations of the statute are viable, but the Thomas majority interpretation wins this time.

Problem 5-6 (pg 477): To establish that the ranchers are within the zone of interest, they must show that their interests are arguably within the zone of interest. The Forest Service will argue that § 1604 is the relevant statute and that the ranchers’ interest are not environmental interests, but are economic interests. The ranchers will argue that § 4331 is the relevant statute, and it states that economic interests are within the zone of interest.

Agency Action Three things impact timing of judicial review: 1. Final agency action 2. Exhaustion of remedies 3. Ripe for review

Norton v. Southern Utah Wilderness Alliance (2004) Is the BLM’s failure to take action to protect lands considered for Wilderness Area status from off-road vehicles an agency action? Court says that a failure to act is properly understood to be limited to a discrete action. If the action is not lawfully required, it cannot be unlawfully withheld or unreasonably delayed. The BLM has discretion to determine what they should be doing, or even if they should be doing anything. The court doesn’t want to be in charge of policing.

Problem 5-3: Policy letter says that it is ok to do recalls on a regional basis, but statute says that recalls must be done on a national level. § 702 rules. Consumer advocate will argue that this is agency action and falls under the definition of “rule;” However, a court will likely remand this back to the agency for clarification. The consumer advocate may be able to petition for formal rulemaking on this issue.

Right plaintiff? 1. Standing 2. Zone of interest Right Time? 1. Finality – agency done? a. Action? b. Final? 2. Exhaustion – plaintiff done? 3. Ripeness – court ready to hear this?

Finality 2 tests derived from Abbot Labs: 1. sufficiently direct and immediate and has a direct effect on….day to day business (Franklin v. Mass) 2. by which rights or obligations have been determined or from which legal consequences will flow (Bennett v. Spear) These tests have a lot of overlap

Taylor v. Dole (1991)---------------------------------------------------------------------------Appalachian Power v. EPA

Taylor Letters do not constitute final agency action. The letters stated they were not final agency decisions and were sent to other counties, not just to these particular counties. The impact is not direct and obvious enough. These counties had no option but to comply or to willfully violate. The court does state that if the counties decide not to comply, they cannot be held to be willfully violating.

Appalachian Power Although the guidance is not technically binding, it does have a binding effect. The EPA acts like it’s controlling by imposing legal consequences, so it is treating the guidance as final agency action.

Problem 5-7: The letter is targeted toward your client only, not a broad policy statement, and there are specific legal consequences involved. Therefore, this letter probably is final agency action. Is it action? • It might be a rule by definition, but is closer to an order—it’s specific to this client (more like an adjudication). Is it final? • It is a definitive statement of the agency’s opinion—directed to this particular party • It has the status of law—No, but it carries the threat of penalties • It has direct and immediate impacts—it’s directed toward this party • Immediate compliance is expected—it says so in the letter It is clearly more final than Taylor, but it may not be more final than Appalachian. A court may find that the threats in the letter are not necessarily legally binding: It fosters administrative efficiency.