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market failure
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a situation in which a market left on its own fails to allocate resources efficiently; results from certain imperfections inherent in market itself
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What is one individual motivation for regulation?
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Protection and general welfare of public
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What is a second individual motivation for regulation?
answer
developed at request of industry and operated primarily for their benefit
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What is the last individual motivation for regulation?
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maintained and expanded by bureaucrats performing government regulation
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Article 1, Section 8(3)
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Congress shall have power to regulate commerce with foreign nations, among states, and with indian tribes
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where does state authority to regulate commerce lie?
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police power
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police power
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right of state governments to promote public health, safety, morals and general welfare by regulating persons and property in their jurisdiction
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Foreign commerce
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exclusive jurisdiction to Congress; state efforts unconstitutional
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intrastate commerce
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commerce occurring within one state which cannot be regulated by the federal government; can be regulated by fed if there is substantial effect on interstate commerce
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Wickard v. Filburn
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Farmer growing too much wheat is taxed because it affects interstate commerce by reducing demand
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Raich v. Gonzales
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Supreme Court case ruling that supported the federal Controlled Substances Act as a reasonable use of Congress' power under the commerce clause; said that Congress had that the authority to prohibit the local cultivation and use of medical marijuana under the commerce clause -- theres nothing stopping weed from leaving state borders
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Federal Controlled Substances Act
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forbids use, cultivation, or possession of marijuana for any reason
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Interstate commerce
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federal authority is very broad, state regulation is not expressly forbidden
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What was the Commerce clause designed for?
answer
create an open, effectively borderless market throughout nation wherein goods move freely among states, unimpeded by state tariffs/duties
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United States v. Lopez (1995)
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Commerce clause of Constitution does not give Congress the power to regulate guns near state-operated schools; criminal law
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Brzonkala vs Morrison
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Congress exceeded Commerce Clause authority with regard to some provisions in federal Violence against Women Act; civil law; Congress didn't have power to regulate noneconomic violent crime bc it doesn't have substantial effect on interstate commerce
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Obamacare
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court upheld constitutionality of individual mandate on grounds that it constituted a tax on those without health insurance until 2017 where 5th circuit said it can no longer be read as a tax
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National Federation of Independent Business v. Sebelius
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upheld Congress' power to enact most provisions of the Patient Protection and Affordable Care Act (ACA), commonly called Obamacare,[5][6] and the Health Care and Education Reconciliation Act (HCERA)
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Heart of Atlanta Motel v. US (1964)
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Congress used its economic authority under the Commerce Clause to open public accommodations to all persons, thus reshaping American social and racial processes; Supreme Court held that the government could enjoin private businesses from discriminating on the basis of race under the Commerce Clause
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Supremacy Clause
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in event of conflict, federal law will preempt state or local law, rendering it unconstitutional
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What is one reason for why state/local regulation is unconstitutional?
answer
discriminates against interstate commerce
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What is another reason for why state/local regulation is unconstitutional?
answer
unduly burdens interstate commerce
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Granholm v. Heald
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The Court ruled that laws in New York and Michigan that permitted in-state wineries to ship wine directly to consumers, but prohibited out-of-state wineries from doing the same are unconstitutional.
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Southern Pacific Railroad v Arizona
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Arizona Train Limit Law of 1912, which prohibited passenger trains with more than fourteen cars and prohibited freight trains with more than seventy cars, placed an unconstitutional burden on interstate commerce
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Tennessee Wine & Spirits Retailers Association v. Tennessee Alcoholic Beverage Commission
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Tennessee's 2-year durational-residency requirement applicable to retail liquor store license applicants violated the Commerce Clause and was not saved by the Twenty-first Amendment
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What are example areas that states are primarily responsible for regulating?
answer
insurance industry, forms of business, property use, liquor sales, sale/leasing of goods
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licensure
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designed to protect public from unsafe, unhealthful, substandard services
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zoning
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way for communities to preserve desired characteristics of neighborhoods and commercial districts
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agency
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any government unit other than the legislature and the courts
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fourth branch of government
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administrative agencies
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administrative law
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addresses entire executive branch
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Executive Agencies
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Federal agencies that are part of the executive branch but outside the structure of cabinet departments. Their heads typically serve at the pleasure of the president and can be removed at the president's discretion.
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independent agencies
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additional agencies created by Congress located outside the Cabinet departments
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What are examples of independent agencies?
answer
SEC, FTC, FCC, EPA
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How are independent agencies created?
answer
enacting a statute called enabling legislation
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Enabling Legislation
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grants agency substantial authority to regulate specified segments of American life
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What does Congress do in creating an agency?
answer
delegates a portion of its constitutionally granted legislative authority to that body
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What are the three categories of authority of federal regulatory agencies?
answer
Control of Supply, control of rates, and control of conduct
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Control of Supply
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Government control over the supply of goods and resources a business has access to
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Control of rates
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Agencies charged with regulating utilities and carriers set the prices to be charged for the services offered within their jurisdictions. (Has been deregulated lately)
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control of conduct
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-Information (Compel companies to disclose consumer information)
-Standards (Government establishes minimum standards for private sector)
-Product banishments (Ban certain products from the market if they are harmful)
-Standards (Government establishes minimum standards for private sector)
-Product banishments (Ban certain products from the market if they are harmful)
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Administrative Procedure Act
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provides framework for agency rule-making and details broad standards for judicial review of agency decisions
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executive functions of agencies
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protection of public by ensuring compliance with laws and regulations; inspections/investigations/collecting info; enter contracts, lease fed land, register security offerings, etc
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legislative functions of agency
answer
rule-making
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what are the three types of rules?
answer
procedural, interpretive, legislative
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procedural rules
answer
delineate agency's internal operating structure and methods; no force of law status
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interpretive rules
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offer agency's view of law for which the agency has administrative responsibility
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legislative rules
answer
policy expressions that have force of law status; court is required to enforce these rules
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what are the types of rule-making processes?
answer
informal, formal, and hybrid
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how does the rule-making process start?
answer
publication of a Notice of Proposed Rule Making in the Federal Register
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What happens in informal rule making?
answer
agency must permit written comments on proposal and hold open hearings, then either discontinue process or prepare final rule
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What happens in formal rule making?
answer
agency must hold public hearing conducted with most of procedural safeguards of trial
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What can happen in either rule making process?
answer
each new rule must be subject to public comment; agencies required to respond to all "material" comments
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what is the standard for materiality?
answer
unique and fact based and of nature that it could "require a change" to proposed rule
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hybrid rule-making
answer
Combines best features of formal and informal rule-making; proposed rule published in Federal Register, with opportunity for public submission of written comments, then informal public hearing
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rule-making
answer
standards to be applied to the future conduct of a class of unspecified parties
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adjunction
answer
characteristically addresses specific parties involved in a specific present or past dispute
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rule-making/adjunction decision
answer
discretionary with agency and is based on nature of issue and fairness to parties
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what happens if a violation of statute/regulation is alleged?
answer
administrative hearing is held; congress requires agency to respect procedural due process rights of person charged
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What is the first step of admin hearing as per APA?
answer
formal notice to affected party; effort made to reach settlement - memorialized with consent order
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consent order
answer
affected party agrees to actions suitable to agency, but makes no admission of guilt
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What is the second step of admin hearing as per APA?
answer
failing settlement, hearing is held; quasi-judicial proceeding, heard by administrative law judge
question
quasi-judicial
answer
having to do with powers that are to some extent judicial
question
executive constraints of agencies
answer
appointing top administrators; budget influence; strengthening executive oversight
question
congressional constraints of agencies
answer
creating/dissolving; controlling budget; oversight; amending legislation
question
Whitman v. American Trucking Association
answer
Allows Congress to delegate broad authority to regulatory agencies.
question
Judicial Review of Agencies
answer
narrow view; judicial deference to agency regulations
question
soft intervention
answer
preserve freedom while nudging us in desirable directions
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