Chapter 15, Test 3

• Involves agencies at all levels of government: federal, state, local
• Boards, bureaus, commissions, and organizations that make up the governmental bureaucracy
• Create and enforce laws constituting the legal environment of business

Quais legislative
Quasi judicial

• Agencies can issue rules and regulations that have the same impact as law

• Agencies can make decisions like a court

Provide Specificity
Provide Expertise
Provide Protection
Provide Regulation
Provide Services

○ It's impossible for congress to make a law to cover every possible issue that might arise.
○ Congress cannot possibly legislate in minute detail, and as a consequence, it uses more and more general language in stating its regulatory aims and purposes.
○ Also, courts cannot handle all disputes and controversies that may arise.

○ A reason many agencies are created is to refer a problem or area to experts for solution and management.
○ Not everybody can be a pyrotechnic expert
○ Provide continuity and consistency in the formulation, application, and enforcement of rules and regulations governing business.

○ Many governmental agencies exist to protect the public from bad businesses that injure the public.
○ Business often fails to regulate itself, and the lack of self-regulation is contrary to the public interest.

○ Replace competition with regulation
○ Administrative Agency regulates monopolies
• When a firm is given monopoly power, it loses its freedom of contract, and a governmental body is given the power to determine the provisions of its contracts.
• An Administrative Agency has the power to set the rate structure for the utility
○ Regulation is often a substitute for competition

○ These spring to life out of necessity
○ The mere existence of most government programs automatically creates a new agency or expands the functions of an existing one.
○ The Affordable Care Act required many Administrative Agencies to be created.

Rule-making
Adjudicating
Advising
Investigating

○ An agency's quasi-legislative power to make rules that are law
• Rules may apply generally to all business or specifically to certain businesses
• Number of rules grow exponentially everyday
○ Guidelines are also issued by agencies to supplement rules.

Guidelines are administrative interpretations of the statutes that an agency is responsible for enforcing.

○ Quasi-judicial function
○ Fact finding and apply law (rules) to the facts
○ Cease & desist order: an order that a violator must stop the objectionable activity (cease) and refrain from continuing to do the activity (desist)
>>Settled by the issuance of consent orders

• A consent order requires that the organization or individual accused admit to the jurisdiction of the agency and waive all rights to seek a judicial review.
• There is no admission that the business has been guilty of a violation of the law, but there is an agreement not to engage in the business activities that were the subject of the complaint.
• A consent order saves considerable expense and has the same legal force and effect as a final cease and desist order issued after a full hearing.

○ Provide reports to the president or congress
○ Can propose new legislation to congress
○ May inform the attorney general of the need for judicial action due to violations of the law
○ Report information to the general public
>>Publish Advisory Opinions

• Not binding. Don't carry the same weight as actual rules. Just gives the business an indication of the view an agency would take if the practice in question were challenged formally.
• Advisory Opinions are unique to Administrative Agencies because courts only deal with actual cases and controversies.
• "If we did this, then how would you Administrative Agencies handle it."
• Courts don't do this.
• You can submit a request for an Advisory Opinion.

○ One of the major functions of each agency is to investigate activities and practices that may be illegal.
○ In exercising their investigative functions, agencies may gather information concerning a corporation's business practices by using subpoena power and
requiring reports, examining witnesses under oath, and examining and copying documents, or they may obtain information from other governmental
offices.
○ Goes hand-in-hand with the power to adjudicate
○ Don't forget that if you make a false and fraudulent statement to an Administrative Agency, you can go to jail (white collar crime)

• Administrative Agencies
○ Legislative
• Power to create rules & regulations
○ Executive
• Power to investigate, prosecute, advise, and supervise
○ Judicial
• Power to decide controversies

• Consist of five to seven members
○ One member is appointed as chairperson
• Appointments require Senate confirmation
• Appointees are not permitted to engage in other employment during the terms
○ Can be removed from office by the president for inefficiency, neglect of duty, or malfeasance in office.
• Agencies have distinctive organizational structure to meet its responsibilities

>Appointed by the president
>Belong to same political party as president almost always
>Presiding officer at agency meetings
>While an equal in voting, is somewhat more important than the other agency members because of visibility and the power to appoint staff.

>Responsible for the minutes of agency meetings and is legal custodian of its records
>Usually signs orders and official correspondence and is responsible for publication of all actions in the Federal Register.

the official journal of the federal government that contains government agency rules, proposed rules, and public notices.

>Persons not employed by the agency but interested in its mission.
>Usually selected because of their expertise.

>Has a big influence on policy.
>So important that appointment usually requires Senate approval
>Chief law officer and legal advisor
>Represents the agency in court and often makes the decision to file suit or pursue other remedies
>Often as powerful as a commissioner or board member

>Duties and sub-organization varies greatly from agency to agency. >These operating bureaus are assigned specific areas of activity.

Bureaus
Investigations
Advisory
Opinions Litigation

Chief operating official of an agency and supervises usual administrative functions such as accounting, budgeting, and personnel.

Agencies spend a great deal of time lobbying with Congress.

>Often employed by the agency that brings the complaint
>Quasi-judicial staff
>Perform the adjudicative fact-finding functions
>Like other types of judges, ALJs are protected from liability for damages based on their decisions; they have immunity.
>Despite their best efforts to serve as neutral adjudicators, administrative law judges have been accused of being biased in favor of their employer (the agency). To reduce the likelihood of this accusation, several states have created an Office of Administrative Hearings. Such an office provides impartial administrative law judges for hearings involving all agencies in the state government.

• Due process rights require that before a rule or regulation can be passed by an agency, interested parties have to be given notice and be able to support or
oppose the rule or regulation.
• The best way to influence Administrative Agencies is to participate in the adoption process.
• Agencies are not elected by the people, but the react to public opinion.
• Telling on them at the Congressional level can lead to inquiries, investigations, funding cutbacks.
• Agencies give public notice of proposed rules and hold public hearings
• Interested parties present evidence in support or opposition to the regulation
• Agencies react to the force of public opinion
• Each branch of government has control over the administrative process

Standing to Sue
Review of Rule Making
Procedural Aspects
Review of Factual Determinations

Any party seeking the judicial review of any administrative agency's decision must be able to prove standing to sue.

Must show:
Review-ability
Aggrieved Party

• Is the action or decision of the agency subject to judicial review?
• Judicial review is provided except where
1. Statutes prevent judicial review
2. Agency action is committed to agency discretion by law.

the plaintiff is aggrieved

• Generally the plaintiff must have been harmed by an administrative action or decision to have standing.
• One has standing to sue if they can show:
• Economic injury
• Non-economic injury (ex: First Amendment Rights have been jeopardized)

○ An administrative agency must propose rules and regulations within the confines of its grant of power from the legislature, or a court will find the proposal
void.

• Constitution -> Agency -> Rules and Regulation

• Once courts decide that an act of the legislature is constitutional or a rule of an agency is authorized, the courts will not inquire into its wisdom or
effectiveness.

• An unwise or ineffectual rule adopted by an Administrative Agency can be corrected by the legislature that gave the agency power to make the rule in the first place.

○ There are 2 basic issues in litigation challenging the validity of a rule made by an administrative agency.
First, is the delegation valid?
Second, has the
agency exceeded its authority?

1. It must be definite.
i. Definiteness means that the delegation must be set forth with sufficient clarity so that all concerned, and especially reviewing courts, will be able to determine the extent of the agency's authority.
ii. Broad language has been held sufficiently definite to meet this test.
Example: "unfair methods of competition"

2. It must be limited.
i. Must provide that the agency's power to act is limited to areas that are certain even if these areas are not specifically defined.
ii. Procedural safeguards must exist to control arbitrary administrative action and any administrative abuse of discretionary power. iii. Broad standards meet the limited-power test.
iv. May involve very broad language
Example: "public interest, convenience, and necessity may require"

• Courts will on occasion find that agencies have worked outside of the limitations given by Congress.
• Courts will hold that an agency exceeds its authority if an analysis of legislative intent confirms the view that the agency has gone beyond that intent, however noble its purpose may be.

>By its very nature is very limited. Usually the courts are forced to issue great restraint and resolve doubtful issues in the agency's favor.
Agencies can't ignore all "court-type rules"
Because an agency "is frequently the accuser, the prosecutor, the judge, and the jury" in their little fiefdom, it must remain alert to observe accepted standards of fairness

○ 2 doctrines that guide the courts:
Exhaustion of Remedies
Primary Jurisdiction

• A court-created rule that limits when courts can review administrative decisions.
• Avoids the premature interruption of the administrative process.
• Courts refuse to review administrative actions until complaining party has exhausted all of the administrative remedies and procedures
available to him or her for redress.
>>> Reason: The court hopes that the agencies will get it right.

• Exceptions
• When very fundamental constitutional guarantees such as freedom of speech or press are involved
• When the administrative remedy is likely to be inadequate
• When the agency is clearly acting beyond its jurisdiction or where it would result in irreparable injury to the petitioner
• When an agency acts fraudulently

• Applies when a claim is originally filed in the courts
• As opposed to exhaustion of remedies, which applies when a claim must go in the first instance to an administrative agency alone.
• Comes into play whenever enforcement of the claim requires the resolution of issues that, under a regulatory scheme, have been placed within
the special competence of an administrative body.
• Ensures uniformity and consistency in dealing with matters entrusted to an administrative body.
• Invoked when referral to the agency is preferable because of its specialized knowledge or expertise in dealing with the matter in controversy.

○ When it reviews the findings of fact made by an administrative body, a court presumes them to be correct.

• Courts do not:
• Reweigh the evidence
• Make independent determinations of fact
• Substitute their view of the evidence for that of the agency

Courts only:
• Determine if there is substantial evidence to support the action taken.
• In their examination of the evidence, all that is required is evidence sufficient to convince a reasonable mind to a fair degree of certainty

○ Will only overturn if record was devoid of relevant data, or if the agency was so meager as to ignore issues before it or if it was influenced by improper
considerations. In this case, a court may set aside the agency's decision because it is arbitrary and capricious.

that which a reasonable mind might accept as adequate to support the conclusion

Relating to Personnel
Relating to procedures
Relating to substance

○ Difficulty in hiring and retaining the best-qualified people
○ Difficult to discharge unsatisfactory employees
○ Personnel in top positions are selected for political reasons

○ Delay in the decision-making process
○ Administrative process is overwhelmed with paperwork and meetings
○ Rules and regulations are written in complex legal language
○ Dictatorial in nature

○ Rules and regulations overlap and conflict
○ Actions for illegal conduct end only with consent orders
○ Enforcement of laws varies over time