PART I: CONSTITUTIONAL AND POLITICAL CHECKS ON
Araiza, William - Brooklyn Law School
CONSTITUTIONAL LIMITS ON AGENCY ACTION
Limits on delegating authority to agencies:
· (1) Limits on Congress’ ability to give power to agency as adjudicator: taking power away from Art. III courts.
o Detracts from system of checks and balances. Art. III: “The Judicial Power…”
o ALJ’s don’t have life tenure: beholden to the agency or to the executive.
o Debate of formalism v. functionalism.
· (2) Congress’ ability to give away its own power: non-delegation doctrine.
What makes an agency legitimate?
· (1) Expertise, (2) Political Accountability, (3) Procedural Fairness
· Justifications are somewhat inconsistent: more reliance on expertise, less political accountability. More political accountability, less use of expertise.
· Problems with agencies: agency discretion, combination of functions
o Procedural due process: adjudicator is also the prosecutor.
· POLICY: can split agency into divisions – enforcement, adjudication, rulemaking.
· POLICY: can create Art. III courts that just deal with appeals from agency decisions. (Kind of what the DC Circuit does).
Commodity Futures Trading Commission v. Schor:
· Court uses three part balancing Schor test:
· (1) Extent to which the “essential attributes of judicial power” are reserved to Art. III courts. Extent to which the non-Art. III forum exercises the range of jurisdiction and powers normally vested only in Art. III courts.
o Does the agency have the trappings of an Art. III court?
o Essential attributes:
§ Extent to which the ALJ can enforce his own orders.
· Calling marshals, garnishing assets.
· If he can’t enforce his orders, winning doesn’t really matter.
§ Scope of jurisdiction: is it broad or narrow.
· Supplemental jurisdiction: issues that may relate to what the agency is adjudicating.
· Permissive v. mandatory: is counterclaim permissive or mandatory.
§ Standard of review: to what degree does the agency have the final say and to what degree can the Art. III court review the agency’s decision.
· How carefully can the Art. III court review the agency decision?
· Standard of review of what?
o Fact finding: ?
o Interpreting law (legal conclusions): de novo review
§ What does federal law mean?
o Orders: “weight of the evidence” standard.
o Review of facts may not be important: the whole point is to have ALJ’s who understand commodities transactions. (Expertise reason).
§ Ordinary powers of an Art. III court: can’t preside over jury trials or issue writs of habeas corpus.
· (2) Nature of the right: public or private.
o Common law right v. statutory right
§ Classic public right: right between private party and government based on statute.
· Easier for agency court to adjudicate.
§ Classic private right: common law based between two parties.
· More of a problem: court is more concerned.
o Why the distinction: artifact of two-three centuries ago.
§ Common law rights were thought to be pre-governmental.
§ Gov’t has no legitimate interest interfering with these rights.
§ Gov’t can’t place right in the hands of administrative tribunal that is not independent.
o CAVEAT: not always a functional analysis. Public right could be a seemingly private right the adjudication of which is important to a government scheme.
· (3) Did Congress have good reasons for doing what it wanted to do?
o Congress had good reasons for putting adjudication in agency courts.
o Congress didn’t have bad reasons (such as not liking results in Art. III courts).
· Outcome of Schor: with regards to judicial branch, Congress enjoys broad discretion.
o No intrusion on powers of the judiciary.
Stern v. Marshall: Anna Nicole case
· What’s said in Stern might not apply to Schor.
· Involves a private right that we don’t want bankruptcy courts adjudicating.
· Agencies have broad discretion/power.
· Which bankruptcy courts don’t have.
· Is there an “intelligible principle” in the statute?
o Comprehendible principle to which the agency is directed to conform; provides guidance.
· If both the goals of the statute and the tools provided to the agency are broad, SCOTUS may invalidate it.
· Why is delegation allowed?
o Congress can’t answer every question; will delegate some decisions to administrative agencies.
o There has to be some delegation allowed.
· Policy: (1) The nondelegation doctrine ensures to the extent consistent with orderly governmental administration that important choices of social policy are made by Congress, the branch of government most responsive to the popular will. (2) The doctrine guarantees that to the extent Congress finds it necessary to delegate authority, it provides the recipient of that authority with an “intelligible principle” to guide the exercise of the delegated discretion. (3) The doctrine ensures that courts charged with reviewing the exercise of delegated legislative discretion will be able to test that exercise against ascertainable standards.
Whitman v. American Trucking Assoc., Inc.:
· The statute giving the EPA control over air quality standards was too broad; almost anything in the air can harm public health.
· Agency cannot cure a non-delegation violation caused by Congress by drafting regulations.
· Court adopts narrow reading of intelligible principle standard to avoid facing a constitutional issue.
· Result: as long as either the tools or goals can be seen as limited, the intelligible principle standard will most likely be met.
CONGRESSIONAL AND PRESIDENTIAL CHECKS ON AGENCY ACTION: THE LEGISLATIVE VETO AND EXECUTIVE CONTROL OF THE AGENCIES
Morrison v. Olson:
· Real question of the case: can Congress put law enforcement within an agency and immunize the agency from executive control?
· Schor (taking Art. III powers and giving them to agency) factors are very analogous to Morrison (taking Art. II powers and giving them to agency) factors.
· First issue: appointments clause issue
o Is the special prosecutor officer or inferior officer?
o Inferior officer: limited tenure, limited jurisdiction, removable/controlled by higher authority (to some degree), limited powers.
· Second issue: removal power
o What kind of reasons does Congress have?
o Does it aggrandize its own power? Is there an attempt by Congress to gain a role?
o What is the nature of the power the special prosecutor is wielding?
§ If the powers were quasi-legislative or quasi-judicial, immunizing him would not be a bad idea. à Not inherently an executive power to begin with.
§ Special prosecutorial power is a pure executive power.
· Court says it’s not a decisive factor.
§ Do the powers given impede on the President’s power too much?
· Has Art. II power been infringed on too much: balancing approach like Schor.
· How much power has been taken away?
· Has it been done for a good or bad reason?
· Is the agency being created independent of political branches? What is its authority? Legislative/judicial?
· Holding: Independent Counsel provision of the Ethics in Government Act does not violate separation of powers. Even though the President could not directly fire the IC, he was still an executive officer.
· Single level of insulation btw President and officer. AG has ways to fire the IC; IC is an inferior officer.
· Constitutional limits on Congress’ ability to create the administrative state.
· Morrison is important b/c Congress is creating an admin officer not directly under Presidential authority.
Free Ent. Fund v. PCAOB (2010 or 2011):
· SCOTUS strikes down removal provision regarding members of the PCAOB.
· Double insulation from Presidential removal at will.
o Second level of insulation makes a difference for SCOTUS.
· Single level of insulation in Morrison: AG is removable at will by the President. When the AG has the power, the President has the power.
· From Morrison to Free Ent. Fund: from a fluid, non-bright line to a much more bright line analysis.
· Schor to Stern: relatively more bright line approach.
o Involves a private right: don’t want bankruptcy courts adjudicating it.
o What’s said in Stern might not apply to cases like Schor.
§ Agencies have broad discretion/power.
§ Which bankruptcy courts don’t have.
· Chadha: legislative veto is the equivalent of making law without bicameralism and presentment.
o Legislative veto tries to circumvent the process.
o Court doesn’t give a good answer as to why agency gets to legislate without bicameralism and presentment but Congress does not.
· After Chadha, Congress has to work more closely with the President.
· Chadha and Chevron: political accountability is coming to the fore.
· SCOTUS starts thinking about political accountability as the more appropriate reason for agency action.
· In practice, Congress has authority over agencies.
· Authority not to fund an agency or a program.
· There are limits: not funding an agency that Congress thinks isn’t doing enough à counterintuitive.
· Block nominees to the agency. Call agency head to testify: bother them.
PART II: RULEMAKING PROCEDURES
THE RULEMAKING-ADJUDICATION DISTINCTION: CHOOSING BETWEEN RULEMAKING AND ADJUDICATION
· Adjudication: the process of acting like a court. A determination of individual rights or duties.
· Rulemaking: drafting a regulation
o The factual inquiry focuses on the development of general or “legislative” facts rather than focusing on individual facts.
· Rule: an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy.
· Order: a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than rulemaking.
· Rulemaking advantages:
o (1) Effectiveness: permit flexibility in the choice of procedures used in reaching a decision.
o Affords the agency an opportunity for advanced planning and better utilization of limited resources.
o Making policy in adjudication distorts the adjudication, leading to inefficient policymaking and interference with individual rights. General rules evolved through adjudication tend to be obscure.
o Rulemaking that specifically focuses on issues of general applicability results in clearer and more accessible codification of the agency’s interpretation of the law.
o (2) Fairness: enables an agency to have a better understanding of the law.
o Participation is offered to all those affected by a rulemaking.
o Rules are primarily aimed at future conduct and hence a person has a clearer understanding of the law before it is applied.
o Efforts to undertake general policymaking in adjudication confuses the priorities and interferes with the adjudicative rights of the party on trial.
o The standards articulated in a rule apply with equal force to the entire group of those similarly situated, such as competitors.
o Rules enhance the rights of judicial review by clearly stating the agency’s position for the reviewing court and by permitting review before application of the standard adversely affects any individual.
o (3) Advanced notice: everyone is able to adjust their behavior.
§ Adjudication is kind of a surprise.
o (4) Economic efficiency: know what the rule will be
§ In adjudication, it’s unpredictable whether precedent will apply to you.
o (5) Stability: less common for an agency to change a regulation
§ Easier for an agency to justify its decision in an adjudication; can change its mind.
Who is doing the acting?
No DPC (bill of attainder/epc protection)
Londoner: Due Process à hearing
Bi-Metallic: no DP right to a hearing. Rely heavily on the APA and its rulemaking procedures.
· Why have a hearing:
o Accuracy: if an issue impacts a few people, they may have good information.
§ If a rule affects everybody, no reason to think people have good information about something that affects everyone generally.
o Politics/Fairness: political process is the process you get when gov’t affects many.
§ But, agency is not a political entity.
o Dignity: gov’t hits you over the head by singling you out à hurts your dignity.
§ Less so if the gov’t hits a group over the head.
o When the agency acts with regards to many, there’s no political recourse.
§ Solution: APA (S) 553: agency has to go through a process.
· When the legislature is acting, the political process is enough.
o Speaking, lobbying, voting: these satisfy fairness.
o The hearing is during election day.
o If the political process isn’t enough, the courts come to the rescue à EP: discrete and insular minority.
o Few individuals: individual may have EP claim if legislature singles him out. Also, no bill of attainder.
· If an agency starts with rulemaking, it has to continue with rulemaking.
· If it starts with adjudication, it may be able to turn to rulemaking.
· Retroactivity: gov’t can act retroactively
o Regulatory benefit from adjudication is low compared to retroactivity hit.
Formal v. informal rulemaking/adjudication:
· Basic rule: courts are pretty liberal to read in rulemaking authority from a statute.
o Courts like it when agencies do rulemaking.
· Retroactivity: APA defines a rule as having a prospective affect.
o But, authorizing statute always trumps the APA.
· Generally don’t like it when agencies draft retroactive rules.
o Read authorization for retroactive rule narrowly.
o Less legitimate when a non-elected entity enacts a retroactive rule.
· APA (S) 553: informal rulemaking (“Notice and comment rulemaking”)
o Agency has to give notice, allow for written comments to be submitted, consider comments, and explain how agency got to its final result.
o After considering comments, agency has to briefly explain why it’s doing what it’s doing: regulation’s basis and purpose.
· APA (S) 556 and parts of 557: formal rulemaking
o Procedures they set forth sounds like a trial.
Londoner v. City & County of Denver
· City council enacted an ordinance to pave streets. Landowners who benefited would pay.
· Issue was whether the inability of the landowners to charge the assessment against them at a hearing violated their DP rights.
· Court held that the taxpayers had to be heard. Few people, individualized grounds.
Bi-Metallic Investment Co. v. State Board of Equalization
· The Board ordered an increase in the valuation of all taxable property in Denver.
· Issue was again whether the taxpayers had a right to be heard.
· Court held that there was no hearing right. Taxpayers had a power because they have the power to choose the legislature, who controls the Board.
· Too many people were affected.
· Board decision affects many people on general grounds. No hearing.
NLRB v. Wyman-Gordon Co.
· The NLRB made the employer provide the unions with a list of employees, saying that this was a rule established in a previous adjudication.
· The employer argued that this was a rule of general applicability, and had to be done through notice and comment rulemaking.
· The court agreed, finding that an agency cannot use an adjudication to set rules of general applicability.
· However, this case arose as part of an adjudication, in which the agency made specific findings to support the order.
· Thus the court said that it was a valid order on its own, and that the citation to the previous adjudication had no legal significance because it was not necessary to justify the ruling.
· The end result is that you can use adjudications to show what you are going to do in future adjudications, but the record of the adjudication must support the ruling.· Contrast this with using a rulemaking to limit the issues in future adjudications, where the rule substitutes for the record in the specific adjudications.