Admin Outline 2008

Admin Law, 2008

PART I: ADMIN AGENCIES AND THE CONSTITUTION The Nondelegation Doctrine Analysis: 1. Three formulations of the nondelegation doctrine: A. Congress can’t delegate period—minority view. B. Nondelegation doctrine imposes limits—Congress can’t give away unfettered power; must give guidelines but how much guidance is debatable—widely-held view. C. Posner-Vermuele: once Congress has passed a law and given it away, it’s no longer w/in their purview and the exec/judiciary now has the power. (But there are powers that Congress cannot give away, like powers vested in sub-committees, constitutional powers like Senate’s power to confirm, can’t give away power to vote etc.) 2. Goals promoted by the nondelegation doctrine: A. Political accountability (since Prez is democratically elected) B. Democratic values of representative govt and accountability— decisions made by the collective Congress better protects freedom and reflects will of the people. C. Social K theory: representative decision-making allows people to maintain certain private rights unless there is explicit authorization to turn them into c/l wrongs. D. Promotes rule of law values: i. Promotes planning ii. Transparency: tells you what is forbidden and what is permissible iii. Cabins discretionary authority of enforcement officials iv. Constitution’s dual branch law-making v. Promotes factions 3. Congress can’t grant unfettered discretion/ authority over very broad subject matter. ~Schechter 4. Congress must provide intelligible principles to cabin discretion and subject matter. It must provide meaningful guidance to the agency and a court must be able to measure agency action against that limitation to determine if there was compliance w/ Congress’ will. ~Amalgamated 5. Reverse engineering/constitutional avoidance: as administrative agencies become more necessary for the bureaucracy to function, cts might be persuaded by the end goal to infer “intelligible principles” or point to terms in the statute and call them limiting terms in order to save a statute and avoid answering the constitutional q. ~Amalgamated/Benzene 6. Limiting discretion: Benzene-look to the purpose of the statute in order to infer limiting principles that Congress must’ve reasonably meant 7. Limiting subject matter: American Trucking-the broader the subject area, the more the need for limiting principles; but cts will not secondguess Congress when it delegates policy-making authority to those who execute or apply the laws Cases

1. CASE: ALA Schechter Poultry v US 1

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A. Facts: NIRA granted power to Prez to enact codes of “fair competition” by soliciting proposal codes from industry trade groups that the Prez could then accept, reject or modify at will. D’s were convicted of violating the Live Poultry Code of NIRA. B. Held: SC strikes down the codes of “fair competiton” of NIRA finding them to be an unconstitutional delegation of power to the prez. C. Reasoning: i. Lack of stds to guide the Prez gives him unfettered discretion: a. Subject matter: very broad—national economy b. Discretion: “fair competition” is not defined by act or jurisprudence unlike the terms “unfair;” has the power to accept, reject or modify at will; only has to make sure that the proposals come from “truly” representative trade groups ii. Prob is compounded by the fact that industry trade groups get to propose the codes—conflict of interest D. SC doesn’t offer stds to determine whether the subject matter is too broad though. E. HYPO: if NIRA were passed today, and Congress included language like “unfair competition” or a reasonableness std, then probably pass constitutional muster. 2. CASE: Amalgamated Meat Cutters v Connally A. Facts: Meat Cutters Union challenged the Economic Stabilization Act, which froze prices and wages and granted authority to prez to enact further price/wage controls for a limited duration. This is the third in a series of price stability acts. Occurs after APA is passed. B. Held: The ESA is not a forbidden delegation of power since it provides “intelligible principles” to guide the prez’ actions in the form of inherent stds of “fairness and equity.” C. Reasoning: i. Intelligible Principle Rule: there has to be meaningful guidance given by Congress to the Prez AND a court must be able to review it later on to measure compliance w/ Congress’ will ii. Unlike Schechter, there are intelligible principles here: a. Discretion: The intelligible principles of stds of “gross inequity” and “fairness” are inherent in the statute and more comfortable since more experience w/ agencies by this time. b. Subject matter: limited to price/wage freezes in a limited window of time iii. Additional important hook: once the prez has developed stds at the outset, he is locked in and must follow them. iv. Political climate changed: APA has passed by this point and this is the third in a series of similar acts. v. Reverse engineering: SC is persuaded that the ESA is a valuable and reasonable endeavor to address cost-push inflation, so while they could strike it down for lack of explicit intelligible principles, they are willing to read in guidelines to avoid having to do so. D. Schechter, distinguished:

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i. ii.

Subject matter: ESA’s subject matter is more narrow than NIRA/national economy Discretion: “fair and equitable” seems as vague as “unfair competition” but probably has more meaning by this point in history No delegation to private groups here. APA has passed so less unsure about agencies by now. Industrial Union v American Petroleum Institute (The Benzene

iii. iv. 3. CASE: Case) A. Occupational and Safety Hazard Act: i. 3.8: the std requires conditions or practices, reasonably necessary or appropriate to provide safe or healthful employment and places of employment ii. 6(b)(5): for toxic materials, the std is set at that which most adequately assures, to the extent feasible, on the basis of the best available evidence, that no employee will suffer material impairment. B. Facts: i. OSHA has defined benzene to be a carcinogen. OSHA has defined carcinogens to be a type of toxic material. Thus benzene = toxic material. OSHA’s policy is that carcinogens have no safe levels thus lowest feasible level is best. ii. In 1971, per the Occupational Safety and Hazard Act, SoL set the permissible exposure level to benzene at 10 ppm. OSHA’s research said that 10 ppm would require millions in compliance costs but did not quantify the amount of the benefits to each category of workers (but according to their studies, the benefits are probably small). iii. OSHA recommends further limiting exposure level to 1ppm. (Ct reasonably assumes that further limitations drive up compliance costs.) OSHA did not have scientific evidence on the effects but rather, assumed a direct correlation b/t exposure and harm: the less exposure, the less harm, thus OSHA wanted to lower as much as they could. They solicited comments as to whether 1 ppm was feasible; did not solicit on whether exposure to less than 10 ppm would produce health benefits or not. C. Held: SC says that as a threshold matter, SoL must find that benzene poses a significant health risk and that a new, lower std is reasonably necessary to combat that health risk. D. Reasoning: i. If the Ct agrees w/ the govt’s interpretation that the Act does not require the risk from a carcinogen to be sufficiently quantifiable and understandable, then that would amount to a sweeping delegation of power and it “might be unconstitutional” under Schechter, thus Ct implies an intelligible principle into the statute in order to avoid the constitutional question. (It’s not clear though that the SC’s interpretation is unreasonable so plurality probably didn’t abuse its authority.) ii. The purpose of the Act was to eliminate significant risksof harm, not to create a risk-free workplace. Congress could not have meant to OSHA the power to regulate merely b/c the

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E.

F.

G.

H.

substance posed some harm. Under such an interpretation, OSHA would have the power to impose enormous costs that might produce little to no benefits. iii. 3.8 says SoL has to promulgate stds that provide safe or healthful employment. “Safe or healthful” means the absence of significant health risks, which is a limiting principle that allows OSHA to reach certain kinds of conduct only. iv. Thus as a threshold matter, the SoL must first find that it is more likely than not that benzene exposure is a significant health riskthat can be eliminated through changes in practice. “Significant risk” is not a mathematical straitjacket. SC leaves it up to OSHA to define that and prove that it was met. It does not require scientific certainty. v. This is like Amalgamated—SC infers an intelligible principle to cabin discretion and save the statute—SC probably considers the purpose of the statute to be valuable. On the other hand, a literal reading of 6(b)(5) seems to require that SoL issue regulations even if one person is at risk of suffering material impairment. Powell concurrence: Even if OSHA had met its threshold burden of proving that benzene is a significant health risk, the statute further requires a cost/benefits analysis. Congress would not have intended a policy that would significantly impair the US’ economic competitiveness if OSHA could ignore economic considerations and focus solely on health considerations. Renquist, concurring in the judgment that the regulation is not legal: i. This is a flat out unconstitutional delegation of power w/ no limiting principles. ii. Is unwilling to infer a limiting term b/c doesn’t want cts to be in charge of cleaning up Congress’ mess afterwards if Congress always declines to put in limitations. iii. Renquist is ok w/ the c/l std of reasonability b/c he has faith in the cts and cts have plenty of experience with that. He’s probably could not justify using reasonableness as a std for agency regulations since agencies are perhaps more political bodies and are likely to run amuck as opposed to cts. Dissent i. The plurality improperly requires the SoL to show that a carcinogen is “more likely than not” a “significant health risk” when all that the statute requires is the std be “reasonably necessary or appropriate.” Nothing in the statute or the legislative history supports the plurality opinion. ii. It’s not proper for the cts to infer terms and “save” the statute. Cts should stay out of this, a la Lochner. iii. Ct should defer to the agency’s determination that exposure more than 1 ppm posed a definite, albeit unquantifiable, risk which further amounts to a significant risk. Probs w/ ignoring the constitutional question and inferring in terms: i. Reduces Congress’ incentives to legislate w/ particularity ii. Maybe reflects a misunderstanding of the science, or of carcinogens

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iii. Increases costs and uncertainties associated w/ interpreting the rules iv. Might lead to other cases where cts reject actual legislative judgments 4. CASE: Whitman v American Trucking A. Facts: Sec 109(b)(1) of the CAA instructs the EPA to promulgate rules establishing “ambient air quality stds, the attainment and maintenance of which, in the judgment of the Administrator, based on the criteria of Sec 108, and allowing an adequate margin of safety, are requisiteto protect the public health.” App Ct had found that the EPA’s interpretation (but not the statute itself) of “requisite” violated the nondelegation doctrine. B. Held: A constitutional delegation of power need not require the EPA to prove a “determinate criterion” for saying how much of the regulated harm is too much. App ct reversed. C. Reasoning: i. When Congress confers decision-making authority to an agency, Congress must lay down by legislative act an intelligible principle to which the acting body must conform to. ii. An agency cannot cure an unlawful delegation by adopting in its discretion a limiting construction of the statute. The very choice of opting in and opting out is an exercise of the forbidden legislative authority. iii. “Requisite” is an intelligible principle. SC agrees w/ the govt’s definition of “requisite” to mean “sufficient but not more than is necessary.” iv. This provision is well w/in the outer bounds of Ct’s nondelegation precedents. The degree of agency discretion that is acceptable will vary according to the scope of the power congressionally conferred. More agency discretion requires tighter intelligible principles. v. Where the agency power is extremely limited, the Act need not provide intelligible principles. But when the EPA’s regs may affect the entire national economy, substantive legislative guidance may be necessary. Words like “imminent, necessary” and “hazardous” (taken from Touby) are sufficient intelligible principles. There is no requirement that agencies specify how necessary or how hazardous something must be. Agency gets to decide what “requisite” means. vi. Cts will not second-guess Congress regarding the permissible degree of policy judgments that can be left to those executing or applying the laws. vii. After this approval of a broad delegation of power, it’ll be harder to get a majority on the Court to find an unconstitutional delegation. The nondelegation doctrine has been weakened. D. Thomas, concurring: i. There must be some limit as to what authority Congress can delegate, even if they tried to delegate w/ intelligible principles. The existence of intelligible principles doesn’t automatically justify a delegation. ii. Can’t give big decisions to agencies, even if accompanied by intelligible principles. Thomas is concerned w/ broad subject

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matter delegation and not totally persuaded by the efficacy of intelligible principles to cabin authority. iii. Prob is that Art I vests “all legislative powers” in Congress; “intelligible principles” aren’t mentioned in the Constitution. The Executive, Congress and Administration Analysis 1. Congress can delegate quasi-judicial and quasi-legislative powers to agencies that sit in the executive branch. Once Congress makes the delegation, it cannot reserve power to one of its own houses in order to exercise continuous authority over that agency. It must go through dual-branch lawmaking to pass stds in order to ensure that the agency has complied w/ its will. ~Myers/Humphrey’s 2. Reserving power to one house undermines the value of dual-branch lawmaking, representative democracy and has the potential for a hold-up game over the executive; might also result from undue political influence over one house of Congress or more likely, a subcommittee of that house. ~Myers/Chadha/Bowsher 3. Aggrandizement/Encroachment: thought to be a greater threat to lawmaking b/c it erodes SoP, benefits of political accountability: A. Myers/Chadha: one-house veto that results in greater power to a unit than the whole entity is unconstitutional; we trust both houses acting together B. Bowsher: even reservations that seem to be functionally the same thing as normal lawmaking may not pass constitutional muster 4. Independence: b/c the prez can continue to exercise his constitutional functions despite the limits A. Humphrey’s Executor: When the agent exercises quasi-judicial or quasi-legislative power, Prez need not solely exercise removal power if Congress has said so B. Mistretta: look at the purpose and function of the delegation and ask whether it goes to the core function of the branch w/ also impeding it to determine constitutionality C. Morrison: if the existence of the delegation won’t impede the function of the executive, and there are good cause limitations, then it probably means that the agency is not entirely “independent,” and can be limited by Congress; although Congress did not specify what “not entirely independent” means. 5. Truly independent agencies’ officers serve at the pleasure of the president and can be removed at will. 6. Practically speaking, even if a president can’t find a rule-based reason to remove an officer, he can exert other political pressure and other tactics to make the job unattractive and effectively compel a resignation. Agency heads often voluntarily leave on their own w/ regime changes. Cases

1. Myers and Humphrey’s Executor A. CASE: Myers v US-aggrandizement

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i.

Myers is appointed as postmaster general; statute provides that PG’s shall be appointed and may be removed by the President and w/ the advice and consent of Congress. ii. Held: The postmaster was a “purely executive officer” and thus the prez should be able to control him. SC strikes down the portion of the statute requiring the advice and consent of Senate. iii. Truthfully, the PG exercises quasi-legislative and quasi-judicial duties including setting stamp prices, prosecuting postalrelated crimes, allocating the post office budget etc. B. CASE: Humphrey’s Executor v US-independence i. Prez wants to unilaterally remove FTC commissioner whose views differ from Prez’. Law says Prez can only remove for enumerated good cause reasons, ie malfeasance etc. ii. Held: Myersdoes not control. Prez can only remove for reasons given in the statute. The statutory restrictions are not an unconstitutional encroachment into exec power. iii. FTC commissioners exercise quasi-legislative and quasi-judicial roles like making regs on antitrust issues and prosecuting antitrust violations, consumer frauds etc. C. The diff b/t Myers and Humphrey’s Executor: i. In Myers, Congress had passed a law that reserved or aggrandized power to the Senate to remove a PG in conjunction w/ the Prez. When half of Congress is acting, it’s more problematic—we’re worried about one house exercising power to hold up the president, or making unconsidered decisions since the other house isn’t participating; it tends to erode the value of dual-branch lawmaking. ii. In Humphrey’s Executor, Congress passed a law limiting the ability of the Prez to remove commissioners but did not reserve any power to any one house of Congress. Unless that law encroaches on executive power or is unconstitutional in some other way, the Prez must abide by the rule. The law was not unconstitutional b/c the position was created by Congress to carry into effect an independent regulatory agency that had quasi-legislative and quasi-judicial powers as well as enforcement powers. The law did not threaten SoP by encroaching on the executive’s power or aggrandizing Congress’ power—they weren’t giving themselves any extra power. iii. Hypo: If both houses of Congress pass a law to fire the PG, is that constitutional? Yes considering the Prez has veto power— the process would remain democratic and in accordance w/ dual-branch lawmaking. 2. CASE: INS v Chadha-aggrandizement A. Facts: Under immigration law, the AG can choose to stay a deportation if the deportation would result in ‘extreme hardship’ to the alien. He must report this stay to Congress. If the House or Senate then passes a resolution (legislative veto) denying the stay, then AG must continue w/ the deportation. Here, AG stayed Chadha’s deportation and the House passed a rez overturning that decision w/o any public hearing, statement of reasons or recorded vote.

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B. Held: The one-house veto is unconstitutional. One house of Congress cannot veto a decision made by an agency that it has delegated power to. C. Reasoning: i. By retaining power in the form of a one-house veto, that increases the power of one house beyond their constitutionally given maximum, thus it’s a new power. Alternatively, it’s lawmaking by one house only. We’re less worried when Congress gives power away. Congress cannot subdivide itself and give power to individual units in a way that the entire Congress doesn’t have. The Constitution lays out the only permissible ways in which one house can act on its own. ii. Majority’s arguments on presentment/bicameralism not that persuasive b/c in each, at the time of the bill’s passing, the prez and both houses approve of it. Might argue that this isn’t a “law” thus no need to present to the prez but that creates a slippery slope and raises q’s about what else Congress can do if it can do more than pass laws. iii. Majority will persuade by showing that there’s something diff about entrusting one house versus an agency. We don’t trust one house acting alone but rather, we trust both houses acting together. iv. There are no intelligible principles to guide the reservation or delegation of power to itself. v. We don’t want Congress to indicate its approval of legislative change by inaction or the refusal to pass a one-house veto, which could imply endorsement, acquiescence, passivity, indecision or indifference. We want them to make affirmative decisions. 3. CASE: Bowsher v Synar-encroachment A. Facts: Under the Gramm-Rudman Act, the Prez can appoint a Comptroller General (who seems to exercise both quasi-legislative budgetary duties and quasi-executive budgetary duties) from a list of candidates supplied by the Speaker of the House and the Senate President. Senate must then confirm the appointee. The CG can be removed from office at any time by a Joint Resolution of Congress for one of the enumerated “for cause” reasons— disability, inefficiency, breach of duty, malfeasance or moral turpitude. B. Held: Congress cannot retain removal power (beyond that in the Constitution) over an executive agent exercising executive powers. C. Reasoning: i. The real issue is whether Congress gave any more power over the CG than it had previously. It’s not clear that they did. The joint resolution process is similar to the normal lawmaking process. Congress seems to be giving itself authority very similar to what it already possessed. ii. Methods of Removal: a. Joint resolution requires a presidential signature or a 2/3 override if prez vetoes—same form as a Bill. (Alternatively, the Constitution calls for impeachment of the Prez, V-P, and all civil officers of the United States, who may only be impeached and removed for "treason, bribery, or other high

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crimes and misdemeanors.” Impeachment requires a simple majority in the House followed by a 2/3 majority in the Senate to convict.) b. If the Joint Resolution provision didn’t exist and Congress wanted to get rid of the CG, they could impeach him, have the prez fire him or pass a new statute, eliminate the position and create a new one. c. If the prez agrees w/ the position, then impeaching is easier than joint resolution. iii. Majority holds that the Constitution does not contemplate an active role for Congress in the supervision of executive officers. If Congress could remove exec agents, then they’d interfere w/ SoP. iv. But the Constitution only provides one way for Congress to remove officers of the US: by impeachment, which is a long and cumbersome process and also limited to cases of treason, bribery or other high crimes and misdemeanors. If this is the only way to remove, then Congress was trying to find an easier way to the removal of exec agents. v. Although Congress cannot reserve to itself the power to remove executive officials, it can limit the prez’ ability to remove certain officers, who exercise quasi-legislative or quasi-judicial duties by definition, b/c the restrictions don’t really interfere w/ the Prez’ ability to carry out his constitutional duties. So restrictions are not encroachments. 4. CASE: Mistretta v US-independence A. Facts: Congress delegated power to the US Sentencing Commission, a 7-member board, residing in the judicial branch. The Commission has the legal power to write sentencing guidelines that are binding on fed judges so as to reduce sentencing disparity. Act empowered prez to appoint all members w/ advice/consent of Senate, chosen from a list of candidates compiled by the Judicial Conference of the US. Act also allows prez to remove members for good cause, ie neglect of duty or other good cause shown. B. Held: The Sentencing Commission is not an unconstitutional delegation of power and does not encroach upon the judicial function or violate SoP. C. Reasoning: i. Congress’ decision to create an independent body to promulgate sentencing rules is not unconstitutional unless Congress has vested in the Commission powers that are more appropriately performed by another branch or that undermines the integrity of the judiciary. ii. Congress may delegate to the judicial branch nonadjudicatory functions that do not invade the prerogatives of another branch and that are central to the mission of the judiciary. iii. Hypo: what if there’s a benzene commission, like the sentencing commission, that only regulates benzene? That’s probably an unconstitutional delegation; benzene isn’t part of the typical judicial authority as the judiciary can only decide cases and controversies but can’t make laws about benzene. Sentencing on the other hand, is very closely related to what judges already do.

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iv. How can the executive allow the NLRB to adjudicate labor cases but the judiciary can’t enact a benzene commission? The core functions are diff. Judges aren’t elected whereas the exec is, thus we want judges to be insulated from political influence. We don’t trust judges w/ issues that might be susceptible to outside influence. We’re less concerned when the exec does some adjudicating b/c at least he’s held politically accountable. 5. CASE: Morrison v Olson: independent A. Congress passed statute that gave a court the power to appoint an “independent counsel” to prosecute high level political officials; prez could remove only for “good cause” per the statute. B. SC ruled that such a delegation is constitutional b/c the existence of the independent counsel did not prevent the prez from exercising his constitutionally specified functions. The “good cause” limitations did not impede the functionality of the executive. C. The independent counsel was not entirely independent b/c she could be suspended for “good cause” by the prez, though the ct did not specify what that is. Article II Courts Analysis 1. Jurisdictional facts are reviewed by an Art III ct de novo. ~Crowell A. Brandeis Crowell dissent + response as to why de novo might be better. 2. State law claims cannot be final and binding and only subject to ordinary review by a non-Art III ct. ~Northern Pipeline/Union Carbide 3. Public rights can be adjudicated in legislative courts. ~Crowell/Northern Pipeline 4. Does the delegation impair either of Schor’s interests? A. Personal: right to be heard in front of a judge free from the political influence of other branches? Can be waived B. Structural: Art III’s independence and role in the govt is nonetheless protected i. Extent to which the essential attributes of judicial power are reserved to Art III cts and whether the extent to which the legislative ct exercises the range of power and jurisdiction normally reserved to Art III cts ii. Origins and importance of the right at issue iii. Concerns that drove Congress to depart from Art III Cases

1. CASE: Crowell v Benson A. Facts: Crowell, a deputy commissioner of the US Employees’ Compensation Commission makes a factual finding that Knudsen was injured while employed by Benson on US waters. Thus Knudsen is owed workman’s compensation. Benson sues to enjoin enforcement arguing that Crowell’s factual determination to trigger jurisdiction was unconstitutional. B. Held: In private rights cases, agencies are allowed to make ordinary factual findings but cts have to decide jurisdictional facts

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for themselves. But the decision must be reviewable by a court. Remanded for dist ct to find the jurisdictional facts for itself. C. Reasoning: i. Private vs public rights: a. Private: liability of one individual to another; has to be decided by Art III cts even though an agency may make some factual findings b. Public: cases arising b/t individual and govt; can be decided by legislative cts b/c the rights are issue are congressionally-created thus govt can decide how to try them; legislative cts ok as long could survive due process challenges ii. The “essential attributes” of decision must remain in an Article III court, but so long as it does, Congress may utilize administrative decisionmakers in those private rights caes that arise in the context of a comprehensive federal regulatory scheme. iii. AT: jurisdictional facts: trigger application of the statute; although an agency could make a jurisdictional fact determination, it must be reviewed de novo by cts. But it’s hard to determine what a “jurisdictional” fact and what an “ordinary” fact is. (Cts are really using the jurisdictional/ordinary fact distinction to categorize facts that shouldn’t be determined by an agency.) iv. AT: ordinary facts: can be determined by an agency; there’s a history of using nonjudicial factfinding and there’s efficiency gains due to agency expertise D. Dissent, Brandeis: i. There’s no doubt that the final arbiters of any fact or law q are the fed cts. The only real question is whether these facts are reviewed de novo or whether the ct reviews a record compiled by the agency and then gives it deference. ii. Brandeis says that the majority wants jurisdictional facts to be found de novo by why not just let the administrative body collect the record and then let the dist ct judge decide the jurisdictional facts. iii. Probs w/ Brandeis’ reasoning that it’s ok to let a judge look at an admin record instead of de novo: admin agency has incentives to skew the record in their favor so judge won’t be looking at an impartial record. 2. CASE: Northern Pipeline v Marathon Pipeline A. Facts: NP is reorganizing in bankruptcy ct, an Article I court which had most traditional Article III powers. The relevant statute gives bankruptcy cts jurisdiction over all “civil proceedings arising under” the federal bankruptcy law or “arising or related to” bankruptcy proceedings so MP filed a state law K claim against NP in bankruptcy ct. B. Held: Plurality struck down the part of the statute that allowed bankruptcy cts to decide ordinary state law claims as being an excessive delegation of adjudicatory powers. C. Reasoning: i. Plurality said that Art I cts could be military courts, territorial courts or cts that adjudicated “public rights.”

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ii. The statute had impermissibly removed most, if not all, of the essential attributes of judicial power from Art III cts and vested them in non-Art III cts. iii. Admin agencies can’t handle private rights cases b/c that would create “substantial inroads into functions that have traditionally been performed by the judiciary.” W/ public rights cases, Congress created the right so can create presumptions, assign burdens of proof or create special tribunals. iv. Today: a. If there’s a q of whether a claim even belongs in bankruptcy ct, the issue goes to the dist ct. That decision can then go to the appellate ct who looks at it de novo. b. Bankruptcy cts settle assets and all related tort/K claims so that payments/judgments and assets can be properly divided. Then appellate court would review the bankruptcy ct’s judgment under a “clearly erroneous” std which is more deferential than de novo. c. Practically speaking, the bankruptcy cts are doing most of the work; de facto, there’s quite a bit of deference being given to the bankruptcy ct’s findings. d. Moving from Art I cts to Art III cts requires a de novo std of review. 3. CASE: Commodity Futures Trading Commission v Schor A. Facts: Schor the investor sues Conti the broker for reparations under the Commodities Exchange Act in front of the Commission (although he also had the option of sueing in fed ct for a violation of the Act). Conti brings ordinary compulsory counterclaim for debt in a fed court diversity action but at Schor’s request, dismisses it and re-files before the agency. Schor loses, Conti wins. Schor argues that the agency could not have constitutionally adjudicated the state law counterclaim per Marathon. B. Held: The Commission could adjudicate the compulsory state law counterclaim w/o violating Art III. (There was no dispute about Congress’ authority to allow the Commission to adjudicate the reparations claims.) Under the Art III functional approach, Schor waived any personal right to have his claim adjudicated in an Art III ct and looking at the structural factors, the court found that allowing the Commission to adjudicate the counterclaim would not intrude on the judiciary. C. Reasoning: i. Art III serves two functions: a. Structural: protects the role of the independent judiciary 1) Extent to which the essential attributes of judicial power are reserved to Art III cts and whether the extent to which the legislative ct exercises the range of power and jurisdiction normally reserved to Art III cts 2) Origins and importance of the right at issue 3) Concerns that drove Congress to depart from Art II b. Personal: safeguards litigants’ right to have claims decided before judges who are free from potential domination by other branches can be waived ii. Ct was persuaded by:

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a. Class of counterclaims that Commission could here was limited b. Decisions on those claims was subject to judicial review c. Efficiency to hear the counterclaim 4. CASE: Thomas v Union Carbide: Northern Pipeline establishes only that Congress may not vest in a legislative court or non-Article III ct the power to adjudicate, render final judgment and issue binding orders in a traditional K action arising under state law, w/o the consent of the litigants and subject only to ordinary appellate review.

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PART II: SCOPE OF REVIEW Questions of Fact and Substantial Evidence for Formal Rulemaking/Adjudicating 1. Application: A. Applies to: questions of fact in on the record formal rulemaking or formal adjudication (excludes notice-andcomment rulemaking) B. APA 706(2)(E): “The reviewing court shall hold unlawful and set aside agency action, findings, and conclusions found to be unsupported by substantial evidence in a case subject to sections 556 and 557 or otherwise reviewed on the record of an agency hearing provided by statute… C. Requires a record to be produced that is the basis of agency action and can be reviewed 2. Meaning of “Substantial evidence:” A. CASE: Universal Camera: “substantial evidence” is enough to overcome a DV or to get past SJ—could a reasonable fact-finder find for the nonmoving party? Ct says that they have to overturn the agency’s decision if, by looking at the fair worth and testimony of the evidence, a reasonable jury could find otherwise B. Clearly erroneous (appellate std for reviewing trial ct) > substantial evidence  SE more deferential C. CASE: Allentown Mack Sales v NLRB i. NLRB makes factual determination that Allentown had not “demonstrated that it harbored a reasonable doubt, based on objective considerations as to the incumbent union’s continued majority status after the transition.” NLRB ordered Allentown to bargain w/ the local union after deciding that 17/23 were arguably in favor of no union was not enough to constitute “reasonable doubt.” SC reviews the NLRB’s decision using the SE test. ii. “Substantial evidence” = employer had to show “reasonable doubt” based on commonly understood legal principles. iii. But really, SE = could a reasonable jury make the same finding as the agency iv. Ct grants deference to the NLRB perhaps b/c they have experience and expertise as well as perhaps inchoate institutional expertise that gives more meaning to the “17” than the simple majority that the court thinks. D. ALJ—Agency—Judicial Review i. If an ALJ makes a decision, the agency can still go back and review the ALJ’s decision de novo, but it is limited to considering the record compiled in the proceeding by the ALJ. ii. Unlike an appellate ct reviewing a trial judge’s findings of fact, the agency can substitute its judgment for the ALJ’s. But when the company wants judicial review of the Commission’s decision, the ALJ’s finding is itself part of the record considered by the ct, and if it is inconsistent w/ the agency’s position, it undercuts the agency and could therefore affect a court’s

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determination of whether the agency’s finding is supported by substantial evidence iii. When an agency makes a finding inconsistent w/ the ALJ’s finding that was based on demeanor evidence heard before the ALJ, the agency’s determination is the weakest b/c the agency cannot itself assess the demeanor evidence. Mixed Q’s of Fact and Law and the SE Test (Pre-Chevron) 1. How to determine whether a q is a mixed q of fact and law: A. Is the statute ambiguous b/c some terms are not clearly defined? B. What is the purpose of the statute? C. What kinds of acts would fall under the disputed term?  if no clear answer here, then this q is a mixed question of fact and law. i. Best way to answer this might not be a pure look at legal materials, but rather, at factual situations. ii. If this becomes a case by case basis, then might be better to defer to the agency. D. Apply the law to the facts. 2. Why might a court want to defer to the agency on a mixed q of fact and law when there’s substantial evidence? A. Comparative expertise: if you want the agency to consult matters in the world, then we want the agency to make the determination B. Comparative procedural advantage or capacity: reviewing cts are appellate cts and don’t take testimony or witnesses so if the answer can be found just by reference to legal materials, then it’s ok for the ct to answer but if the answer requires facts, then ct is not in the best position C. Jurisdiction/authority: to whom has Congress given the power? D. Judicial role or comparative legitimacy: cts are responsible for demonstrating or explaining the law but when it comes to issues of fact or policy, maybe we’d prefer the agency to do it b/c they have a democratic pedigree, value judgments and we’d rather let the democratic actor make the call E. Narrowness/broadness: there are some q’s that a ct will have to decide once for an entire statute but on the other hand, we might want case by case analysis on q’s where an agency will have to decide multiple times for the statute so give the agency slightly more deference for their efficiency gains 3. CASE: NLRB v Hearst A. Facts: Publisher of four LA papers refused to bargain collectively w/ a union representing newsboys. Publisher argued that they were not required to bargain since the newsboys were not their “employees” w/in the meaning of the National Labor Relations Act terms. NLRB, after hearing, concluded that the regular full-time employees were employees w/in the meaning of the Act. On appeal, the App Ct independently examined the q of whether the newsboys were employees and decided that they were not, based on common law stds. B. Held: The Board gets to decide—they are not employees. C. Reasoning: i. These are mixed q’s of law and fact and ct needs to address:

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a. Does the statute implicitly import the c/l def or some other def?  Q of Law 1) Trying to determine the def of words. 2) Will consult: precedent, congressional records, context of other statutes etc. 3) Ct will decide on its own—NLRA does not on its own, import the c/l into the statute b. What is the purpose of the Act?  Q of Law 1) Mostly legal considerations 2) Ct decides for itself—purpose is to end industrial strife and equalize bargaining power c. What type of workers are covered under the act?  Q of Law 1) Look at statute itself, congressional records, dictionary meaning 2) Compare policy outcomes of using diff definitions 3) Look at agency interpretation perhaps as a last resort 4) Ct ultimately defers on this q—NLRB can decide this on a case by case basis or industry by industry basis 5) But the best way to answer this might not be to look at legal materials but to look at the factual situation d. Are these newsboys = “employees?”  Q of Fact 1) Apply the facts to the def of employee 2) If the agency gets to decide ultimately, then this q gets folded into their earlier inquiry of what is an employee ii. SC is additionally persuaded by: a. The task of defining “employee” was given to the NLRB since they were chosen to administer the act. b. Everyday experience in the administration of the act gives the NLRB unique familiarity and experience of employment relationships, abilities and need for self-organization etc. c. Generally q’s of statutory interpretation, esp when arising in the first instance, are for cts to resolve but when the q is one of specific application, the agency administering it usually makes the call and the reviewing ct’s function is limited. iii. The Board’s determination should be accepted if it has “warrant in the record” and a “reasonable basis in the law.” iv. As the q moves from law to fact-based, the deference to the agency increases. Interpretive/Legislative Rules & Q’s of Law in the Pre-Chevron Era 1. Interpretive rules: publications by agencies that do not carry the force of law; have the power to persuade 2. Legislative rules: carry the force of law and is the product of an exercise of delegated legis power to make law through rules 3. How to distinguish b/t interpretive and legislative rules: A. Look at the Act to see if Congress has delegated the regulationmaking authority to know that they can, not necessarily did, promulgate a rule that has the force of law B. Look at other regs to see if the agency has used its authority before

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C. See if the agency meant for it to carry the force of law: i. if it can be enforced w/o relying on another law or reg-interpretive ii. if it actually changes a prior legislative rule iii. if it creates new duties (ie look at the procedure used) 4. CASE: Skidmore v Swift A. Employees who alleged that they had worked overtime for being “on call firemen” sued for overtime back pay. FLSA administrator issued had issued an “interpretive bulletin” calling for overtime pay. Trial ct and app ct said that as a conclusion of law, the time spent working as on call firemen did not constitute overtime for which the FLSA gave overtime compensation for. As a matter of law, pursuing pleasure or performing personal chores while on call did not constitute work. B. Held: Trial Court is reversed. The court should defer to the administrator. C. Reasoning: i. The rule here is an interpretive rule not a legislative rule or a rule having the force of law. ii. Skidmore deference rule: interpretive rules, while not controlling on the cts, can effectively become binding on the court, or be given deference to, if they have the “power to persuade” iii. The “power to persuade” will depend on: a. Thoroughness evident in the considerations b. Validity of its reasoning c. Consistency w/ earlier and later pronouncements d. All those factors which give it the power to persuade, if lacking the power to control iv. Distinguishing b/t a legislative rule and an interpretive rule: a. Did Congress delegate regulation-making authority so the agency knows that they can, but didn’t necessarily, promulgate a rule w/ the force of law? Then expresses will of Congress and more deserving of deference b/c is closer to being a legislative rule b. Look at other regs to see if agency has used its authority before? c. Did the agency intend for it to have the force of law? Look at procedures used to make the rule. Look at what obligations were created etc. Chevron Deference and Policy Judgment Calls 1. The real Chevron test: A. Preconditions to even getting to the Chevron analysis: Clear Statement Principle (Kent v Dulles) B. Step 0: As a threshold matter, did Congress give authority to the agency to interpret the laws? i. Mead Option 1-Explicit : Congress explicitly grants the power to make rules with the force of law  implied congressional intent to interpret as well Chevron deference ii. Mead Option 2-Implicit: Congress grants the power to make rules using NC rulemaking such rules imply force of law 

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2.

3.

4.

5.

implicitly includes congressional intent to interpret Chevron deference a. Why can the force of law derive from NC rulemaking? b. B/c that entails deliberation, expertise, democratic decisionmaking, thus justifying deference iii. Christensen/Skidmore no go: If Congress neither 1) granted the authority to interpret via explicitly granting the power to make rules w/ the force of law, OR 2) granted the power to pass laws via NC rulemaking/formal rulemaking, then no Chevron deference, but perhaps Skidmore deference. C. Chevron Step 1: Did Congress already resolve the issue w/ clarity and precision or did they leave an ambiguity? D. Chevron Step 2: If not, is the agency’s interpretation reasonable? If an agency passes a rule w/ the force of law, using formal process and that rule fixes an ambiguity in a statute committed to agency implementation, then cts should grant Chevron deference to the agency’s interpretation as long as it’s reasonable: A. Did Congress clearly answer the question at issue or is there ambiguity? B. If there’s ambiguity and the agency offers a reasonable interpretation, then cts should defer to the agency even if there are other reasonable alternatives. Chevrondeference is warranted when the agency is effectively deciding questions of policy which are akin to mixed questions of law and fact. The Chevron ct was inclined to grant deference b/c it believed that the issue was better left to the political branches of govt to resolve. Why are these kinds of policy questions unique? A. When judges make policy judgments, they are usually trying to determine congressional intent and purpose using the canons of interpretation, ie Step 1. When they cannot ascertain intent, then they go to Step 2 which grants deference to an agency’s reasonable policy judgment call. B. Agency policy judgments are more tailored as the agency will pick one reasonable interpretation from presumably competing reasonable alternatives. Moving away from the backwards-looking inquiry into Congressional intent and into a forward-looking dialogue about the effects of particular policy proposals refocuses the dialogue inside the agencies to the consequences of adopting particular policies in light of their expertise and political accountability. Scalia’s defense of Chevron deference: A. Rejects: i. Agency expertise does not justify deference as a matter of law. ii. SoP concerns and the need to have the political branches ensure good policy (and avoid bad policy) outcomes, does not justify deference as a matter of law. B. Accepts: i. In Step 1, a court will try to determine congressional intent using the tools of statutory interpretation including dictionary defs, statutory text, legislative history, and canons of construction including policy judgments.

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ii. If the tools fail and can’t figure out purpose, a Step 1 ambiguity arises: a. If Congress intended a particular result but was not clear about itgenuine q of law; cts should resolve. b. If no single or particular intent is ascertainablego to Step 2. c. But the quest for ascertaining legislative intent is generally difficult b/c in most cases, Congress didn’t think about the issue at all. 6. Ultimately, there isn’t a really great way to defend Chevron other than to say that there are q’s the cts would rather not answer so let agencies do it. 7. Is Chevron consistent w/ nondelegation principles or is this nondelegation gone amuck? A. It’s consistent w/ the limited use of nondelegation. B. Since Congress intends to grant power to agencies, cts will defer to the agency’s interpretive calls as well. C. Response: This might be piling error on top of error. If the mistake is substantial delegation in the first place, then allowing interpretive powers just exacerbates the problem. D. Response to that: If agencies are better adept at making policy judgment calls, then let them do it, especially since their actions are still subject to political accountability. 8. CASE: Chevron Inc v NRDC A. Facts: Under the Clean Air Act, the EPA promulgated the “bubble rule” which defined a “single stationary source” that emits pollutants to be an entire entity like a plant or factory, instead of individual units like buildings or smokestacks. NRDC sued to change rule back to including individual units. The “rule” was promulgated as a regulation and carried the force of law. B. Held: Since Congress was unclear on the definition of “single stationary source” but the agency’s interpretation is reasonable, grant deference to agency’s interpretation. C. Reasoning: i. Defining “statutory source” seems to be a q of law and ordinarily would be a q for the cts, but ct grants deference anyway. The SC thinks that this is more of a question of policy or a mixed q of law and fact and thus better left to the political branches. ii. Explicit/Implicit delegations: a. This seems like an issue of statutory interpretation but SC says that where there’s an explicit gap left for the agency to fill, then there is an express delegation of authority to make legislative rules that have the force of law as long as they are not arbitrary, capricious or manifestly against the purpose of the statute. b. Sometimes the legislative delegation is implicit and in such cases the court is not free to substitute its own judgment for that of the reasonable judgment made by the agency. c. What’s the diff b/t an implicit and explicit delegation? Not clear but court doesn’t think it should matter anyway.

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iii. Chevron 2-step: 1) Did Congress address the issue directly or is there ambiguity? 2) If ambiguous, defer to the agency as long as it’s reasonable. Step 0: As a threshold matter, did Congress give authority to the agency to act w/ the force of law? 1. Step 0: Even if a ct wants to defer, as a threshold matter, did Congress intend for the agency to make interpretive rules w/ the force of law? A. Option 1-Explicit : i. Congress explicitly grants the power to make rules with the force of law ii. Implied congressional intent to interpret as well iii. Chevron deference B. Option 2-Implicit: i. Congress grants the power to make rules using NC rulemaking/formal adj ii. Such rules imply force of law iii. Implicitly includes congressional intent to interpret iv. Chevron deference C. Option 3-no go if informal i. Christensen-opinion letter from agency not entitled to Chevron deference b/c no indication that Congress intended for the opinion letters to have the force of law ii. Christensen-type “rules” get Skidmore deference possibly if it has “power to persuade.” 2. No Chevron deference for when agencies are interpreting the APA b/c it’s not a grant of authority to the agency—can’t give authority to agency to interpret that which cabins their authority. 3. CASE: Christensen v Harris County A. Facts: FLSA calls for overtime compensation to be paid in certain cases. Harris County, looking to save money, asked the DoL what to do. DoL replied in an opinion letter recommending a course of action. County followed advice. P’s sued claiming that the policy violated the FLSA. P and Govt argued that cts should give Chevron deference to the opinion letters. B. Held: Opinion letters are entitled to “respect” under Skidmorebut only to the extent that those interpretations have the “power to persuade.” Ct finds the agency interpretation unpersuasive. Opinion letters not followed. C. Reasoning: i. SoL is interpreting the FLSA. Opinion letter was probably written by a low-middle level employee but lacks the force of law. At best, it might get Skidmore deference if it has the “power to persuade,” though ct finds here that it’s not persuasive. ii. A lack of the force of law matters b/c that implies you don’t get the procedural benefits of rulemaking, ie debate, deliberation etc. D. Scalia’s concurrence:

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i. Chevron deference is warranted if the rule is an authoritative view of the DoL.

ii. Here, the letter + Solicitor General’s brief (cosigned by the Solicitor of Labor) = DoL’s view on the matter. Having them both on board indicates that this is an authoritative view of the DoL. iii. But no deference ultimately b/c agency interpretation is unreasonable. 4. CASE: US v Mead Corp. A. Facts: Mead challenges tariff classification for importing day planners. Customs informs Mead by customs letter that they are re-categorizing the day planners as “diaries” which now subjects them to an increased tariff. Customs argues that their letters are entitled to Chevron deference. B. Held: Because SC concludes that as a threshold matter, Congress did not intend for customs to have interpretive authority to reinterpret the category of the day planners. Thus, don’t get to Chevronanalysis at all. No deference. C. Reasoning: i. Threshold inquiry: did Congress intend for the agency to have the authority to interpret in the first place? ii. Ascertaining this is admittedly difficult but we can look to proxies that will imply a congressional intent to delegate the authority to interpret: a. Option 1: Explicit – Explicit delegation of power to make rules w/ the force of law  includes congressional intent to interpret  Chevron deference b. Option 2: Implicit – Process (delegation to make rules using formal process, ie NC rulemaking)  Implies force of law  congressional intent to interpret  Chevron deference iii. Why is process a good proxy to ascertain congressional intent? Formal processes (NC rulemaking, formal adjudication) involve deliberation, consideration, expertise and democratic-decision making, thereby justifying Chevron deference. D. Stevens/Breyer concurrence: i. Greater expertise and democratic legitimacy justify deference. ii. Might say that if agency had the authority to use formal process but didn’t, then they haven’t been awarded the authority to interpret E. Dissent, Scalia: i. The authoritative position of an agency, as enunciated by the agency head, should be enough for Chevron deference. ii. There is no need to link the formality of the proceedings to get to congressional intent. iii. Practical FX of this decision are problematic: a. Lead to lots of uncertainty b/c actors won’t know when there is Chevron deference since there’s an open-ended exception to what falls under “formal adj” b. This might compel agencies to over-employ formal rulemaking in order to get Chevron deference c. That in turn could lead to ossification of the laws—Chevron allowed agencies to be flexible but once the law solidifies,

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might become harder for agencies to adapt to new situations. d. Resurrecting Skidmore compounds the confusion. F. Hypo: What if agency is explicitly given the authority to make rules w/ NC rulemaking but instead makes policy using some other method? Scalia would say that is good enough. Meadmajority would probably say that it’s less clear but there might be deference. Formal rulemaking in some other form might be good enough to get the force of law if it entails similar characteristics that make Chevron deference warranted for considerate rulemaking. 5. CASE: Long Island Care Chevron Step 1: What to look for to determine ambiguity or clarity: 1. Preconditions to get to Step 1: Clear Statement Principle A. Even if statute clearly delegates absolute discretion to promulgate regs, when constitutional rights are implicated, don’t get to Chevron analysis. Ct decides b/c its unlikely that Congress even thought about the issue w/ particularity. ~Kent v Dulles i. CASE: Kent v Dulles: (pre-Chevron) a. Congress explicitly gave authority to exec to promulgate passport rules. Dir of Passport Office denied passport to Kent on the basis that he was a communist. b. There’s a clear delegation here but to uphold it would be to deny Kent’s 5th Amendment right to liberty. c. Clear Statement Principle: A more modest and targeted version of the nondelegation doctrine; Congress, not agencies, must make decisions when sensitive constitutional issues are at stake; cts will not allow agencies to make decisions when Congress has not thought about the issue w/ particularity. d. SC didn’t decide this on nondelegation grounds b/c there’s no limiting principle, thus it might be forced to strike down whole statute; instead Ct does something just shy of that. B. Scalia’s Babbitt Dissent-finds the statute to be unambiguous b/c is concerned with unconstitutional takings. 2. Step 1 Analysis: did Congress speak precisely or is there ambiguity with regards to the question at issue? A. Unambiguous: if ct can determine what Congress meant ideally by a prima facie reading of the text or using few to no canons of construction, then ct should follow the text w/o regard to what the agency thinks b/c Congress has spoken clearly. i. “On its face, the definition embraces all airborne compounds of whatever stripe.” ~MA v EPA ii. If text is unambiguous and calls for regulation, agency cannot exercise discretion to opt out citing policy decisions. Can’t argue Brown and Williamsonin reverse. ~MA v EPA B. Even if the canons lean toward ambiguity, is there a policy trump card that says Congress could not have possibly meant what the agency wants to do? (Mead hasn’t happened yet but these are pre-Chevron or Chevron Step 0 type considerations)

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i. MCI-as a matter of pure statutory construction, whether modify means small or large change or whether the FCC reg is a large or small change doesn’t matter for the bigger concern is that the FCC is changing policy in a such a huge way and w/o an explicit signal from Congress, we don’t want agencies to use delegations of power to make implicit but huge changes—it’s a kind of nondelegation argument but w/ no limiting principle, SC just interprets “modify” to reach solution they want. ii. Brown and Williamson-SC finds a way to prevent FDA from gaining jurisdiction even though textually, tobacco seems to fit the def of drug and combination product. Allowing the FDA to regulate tobacco would allow them to regulate a huge industry w/o an express grant from Congress, which is odd especially in light of the whole host of other regs that control the tobacco industry. This change in FDA policy occurs at the end of the Clinton era and may be a last-minute grab at authority that Congress would probably not have allowed. C. Ambiguous: look at the text, dictionary definitions, congressional purpose, legislative history and other canons to determine ambiguity. ~Sweet Home i. “Whether Congress spoke as to the precise q at issue” might be an issue of framing. ii. In Sweet Home-majority asks q of whether agency interpretation is excluded. 3. CASE Babbitt v Sweet Home for Oregon A. Facts: Endangered Species Act made it unlawful to “take” any endangered species. Act further defined “take” to include: harass, harm, pursue et al. SoI (who probably used formal process) promulgated a rule further defining “harm” to mean kill/inure viasignificant habitat degradation. Respondent landowners and logging companies challenged the regulation defining “harm” and argued that the SoI’s only means of preventing foreseeable habit degradation is to buy the lands. SoI argued that the prohibition on taking, which Congress defined to include “harm,” places a duty on respondents to avoid harm that habitat alternation will occur unless they first obtain a permit. B. Held: Ct goes through two-step Chevron analysis and finds that there is ambiguity and thus grants Chevron deference to the agency’s interpretation of “harm.” C. Reasoning: i. The Step 1 question according to the majority is whether Congress intended for “harm” to exclude kill/injure via habitat modification. Majority says no and looks at: ii. Dictionary: “harm” means to cause hurt or damage or to injure; Majority says that if we limit the meaning to direct injury only, then it would have no meaning diff from other words used to define “take.” iii. Purpose: Per Sec 2 of the Act: to provide a means whereby the ecosystems upon which endangered species depend may be conserved; supports EPA’s def of “harm.”

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iv. Legislative History: legislative reports indicate that Congress intended for “take” to apply broadly to cover indirect and purposeful actions. D. Scalia’s dissent: i. Offers an alternate dictionary that more narrowly defines “harm” to mean direct harms. ii. Says that “harm” refers to all the ingenious ways that people can directly cause harm to wildlife, like draining a pond to hurt a turtle. iii. As a matter of statutory construction, “harm” should not take on a meaning that is very diff from the other words used to define “take.” iv. The purpose is not as broad as the majority construes it to be; Congress could not have meant to circumscribe seemingly innocent actions or omissions that could cause large economic disruption. v. Under the SoI/majority’s acceptance of “harm,” lots of foreseeable and unforeseeable conduct could be swept into the statute. Scalia seems to be concerned w/ the possibility of unconstitutional takings as all kinds of actions could become part of a chain of causation that lead to the impermissible wildlife degradation. E. Takeaways: i. The more uncertainty, the easier it is to show ambiguity. ii. It’s not clear that this case holds true to prove lack of ambiguity. A showing of clarity should rest on fewer canons. 4. CASE: MCI v AT&T A. Facts: Communications Act authorizes the FCC to “modify” services and rates required of telephone carriers. FCC promulgated rule that forced AT&T, the historic long-distance carrier to pay tariffs while lifting the tariff requirements on new entrants such as MCI. MCI now wants Chevron deference for the agency’s “modifications.” B. Held: There is no ambiguity as to what modify means, so we don’t get to ChevronStep 2. But there’s an independent reason not to uphold the agency interpretation—Congress would not have called for such a fundamental revision of the statute in the form of agency interpretation. C. Reasoning: i. “Modify” is unambiguous; by most dictionaries means to make incremental or limited changes. The FCC’s detariffing policy is a major change and could only have been justified if made a less than fundamental change to the Act’s tariff requirements. ii. More importantly: a. Rate filings are an essential characteristic of a rateregulated industry. It’s highly unlikely that Congress would leave the determination of whether an industry will be entirely or even substantially regulated to agency discretion. b. It’s even more unlikely that permission to “modify” would be granted so subtly. Congress would not have intended such a result by implicit delegation.

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c. The FCC is fundamentally revising the statute from rateregulation to protectionist scheme. That might be a good idea but that was not the purpose when the law was enacted. D. Key takeaway: as a matter of pure statutory construction, whether modify means small or large change or whether the FCC reg is a large or small change doesn’t matter for the bigger concern is that the FCC is changing policy in a such a huge way and w/o an explicit signal from Congress, we don’t want agencies to use delegations of power to make implicit but huge changes—it’s a kind of nondelegation argument but w/ no limiting principle, SC just interprets “modify” to reach solution they want. 5. CASE: FDA v Brown and Williamson Tobacco A. Facts: After FDA had for many years disavowed any authority to regulate tobacco products, FDA claimed that nicotine is a “drug” w/in the meaning of the Food and Drug Act. Pursuant to the Food and Drug Act, FDA promulgated regs intended to reduce tobacco consumption. B. Held: FDA doesn’t get jurisdiction to regulate tobacco products. Such authority is inconsistent w/ the intent that Congress has expressed in the Food and Drug Act’s overall regulatory scheme and in the tobacco-specific legislation that was enacted subsequent to the Food and Drug Act. C. Reasoning: i. While the definition of tobacco fits the definition of “drugs” and “combination products” that would otherwise make the product fall under FDA’s jurisdiction, SC says that if the FDA could regulate tobacco, then under its own definition, it would have to ban it altogether. Thus since Congress has already foreclosed against that possibility and regulated tobacco in other ways, Congress could not possibly have meant for the FDA to have jurisdiction over tobacco. ii. What’s really going on: SC finds a way to prevent FDA from gaining jurisdiction even though textually, tobacco seems to fit the def of drug and combination product. Allowing the FDA to regulate tobacco would allow them to regulate a huge industry w/o an express grant from Congress, which is odd especially in light of the whole host of other regs that control the tobacco industry. This change in FDA policy occurs at the end of the Clinton era and may be a last-minute grab at authority that Congress would probably not have allowed. 6. CASE: MA v EPA A. Facts: CAA calls for EPA to regulate all “air pollutants.” Private orgs petitioned to regulate the emission of CO2, claiming that it’s an air pollutant. EPA takes public comments then denies the petition by making Brown and Williamson Tobacco arguments to say that Congress has not given authority to EPA to regulate CO2. B. Held: SC says EPA can’t opt out of regulating CO2 when the Act unambiguously calls for EPA to regulate all “air pollutants.” C. Reasoning: i. Unambiguous: “on its face…”

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ii. This is about agency refusal to regulate per an unambiguous statute. Ct grants limited deference and almost heightened judicial review. iii. SC says that CO2 is an air pollutant and that statute sweepingly authorizes the EPA to regulate air pollutants which include “any air pollution agent.” iv. EPA cannot opt out of regulating unless 1) CO2 is not an “air pollutant” that “endangers health and welfare” or 2) some other reason. v. Unlike in Brown and Williamson, there is no evidence that Congress meant to curtail the EPA’s power to regulate CO2. Chevron Step 2 1. If court says statute is unambiguous in Step 1, then end of story. 2. If court is silent or says that statute is ambiguous in Step 1, then to go Step 2. 3. At Step 2, agencies can get a second bite at the apply by changing policies as long as reasonable. 4. Rule: a court’s prior judicial construction of a statute trumps an agency construction otherwise entitled to Chevrondeference only if the prior court decision holds that its construction follows from the unambiguous terms of the statute and leaves no room for agency discretion. This is permissible b/c these are policy inquiries~National Cable v Brand X Internet Services 5. Agencies can change and even overrule courts at Step 2. To hold the Step 2 interpretatin will lead to anomalous results depend on who gets to it first. ~Brand X 6. What’s going on at Step 2? A. Only get to Step 2 if there’s multiple reasonable alternatives that give rise to “ambiguity” in Step 1. B. So by the time to get to Step 2, the relevant q has virtually been answered and nothing ever really get decided at Step 2. C. If there are no good alternatives, then you never get past Step 1 b/c then the meaning of the statute must be unambiguous. Hard Look Review 1. Hard look/arbitrary and capricious applies to q’s of fact arising in informal adj and NC rulemaking. A. APA 706(1)(A): ct shall hold unlawful and set aside agency action, findings and conclusions if action is arbitrary and capricious or is an abuse of discretion. i. Looking for lack of reasonable consideration of relevant factors and a clear error of judgment. B. Requires reviewing court to engage in substantial inquiry: i. Did agency act w/in scope of its authority? ii. Was the actual choice arbitrary, capricious, an abuse of discretion or otherwise not in accordance w/ the law? iii. Did the agency follow the necessary procedural requirements? C. Judicial review has to be a review of a record. Unlike formal proceedings that produce a formal evidentiary record, for informal proceedings, the ct will look at the body of information that the agency was supposed to look at, at the time of decision-making

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2.

3.

4.

5.

6.

(and give less weight to “evidence” concocted by lawyers for litigation). D. Presumption in favor of agency - as long as the agency’s determination is reasonable, ct will not substitute its own judgment for the agency’s. Overton Park Hard Look Review: cts will review agency decision for reasonableness based on the record before the agency at the time it made its decision; ct will not substitute its own judgment for that of the agency’s State Farm Hard Look Review Plus: Cts will provide a harder, more in-depth review if they are convinced that there is cause to question the reasonableness of the decision. A. Such a cause might be a suggestion that that the decision was politically motivated and without regard to the facts. B. Such a cause might be a rule rescission, major change, or inconsistency absent a reasoned explanation Purpose of hard look review: A. Forces agencies to write down and create evidentiary trail for judicial review B. Ct can look at the evidence to make sure agency is acting w/in statutory mandate by showing compliance C. Want to see that statute isn’t being applied in disparate ways but rather, being applied more generally and hasn’t been captured by special interests D. Might reach better policy outcomes if cts can impose their own expertise on top of agency expertise CASE: Overton Park v Volpe-informal adj A. Facts: Statute prohibits the Secretary of Transportation from approving fed funds to finance a highway that would run through public parks if a “feasible and prudent” alternative exists. If no such route is available, Secretary can authorize funds. In this case, DoT approved funds for a highway through Overton Park but did not release a statement of factual findings or indicate why they believed that no prudent and feasible alternatives existed. The decision was not made using formal process. B. Held: SC reverses and remands. While formal findings are not required, meaningful judicial review has to occur and cannot be based solely on affidavits prepared for litigation. C. Reasoning: i. Judicial review is to be made on the basis of the “administrative record” even though the agency decision was the product of informal adjudication. ii. The “administrative record” consists of the facts and circumstances before the agency at the time that they made the decision and it’s against this “record” that the decision’s reasonableness is weighed. CASE Motor Vehicle Mfrs’ Association v State Farm-NC rulemaking A. Facts: pursuant to N/C rulemaking, NHTSA rescindsrequirement that cars be equipped with passive restraints. NHTSA argues that automatic restraints, a type of passive restraint, don’t confer safety benefits and that airbags, another type of passive restraint, are not installed frequently enough by auto mfrs to justify the

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passive restraint requirement. Auto insurers challenged the rule change. B. Held: Using hard look review, SC finds the agency’s rescission to be arbitrary and capricious. C. Reasoning: i. Agency must examine relevant data and offer a satisfactory explanation for its action including a rational connection b/t the facts found and the choice made. ii. An agency rule would be arbitrary and capricious if agency: a. relied on factors which Congress did not intend for it to factor in b. failed consider an important part of the prob c. offered an explanation that isn’t justified by the info before the agency d. offered an implausible explanation iii. SC found that agency’s failure to consider alternate forms of passive restraints before getting rid of the rule rendered the decision as arbitrary and capricious. SC also questioned the evidence and conclusions that agency relied on. iv. SC stopped just short of saying that its own explanation (virtually a substitute for the agency’s) was the right one despite the agency’s. v. NHTSA policy change coincided w/ regime change so SC more suspicious.

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PART III: PROCEDURAL REQUIREMENTS Due Process Considerations 1. A tax levied on a property owner for the purposes of improving a public street that ran by his storefront requires due process in the form of an opportunity for oral hearing. Ct persuaded by low numerosity and lack of political power to use political process. ~Londoner v Denver A. Benefits to an oral hearing: i. Too easy to ignore paper submissions in protest ii. Can easily clear up misunderstandings iii. People’s rights are vindicated b/c they have their “day in court” iv. Oral hearing will produce a transcript which might be useful to give to media and make a political statement out of it B. This is an adjudicative action. Form follows function. 2. When a rule of conduct applies generally to a large enough group of individuals such that they have collective bargaining or political power, then change should be done through general lawmaking; the individuals affected do not have the right to a hearing b/c their due process rights would be vindicated through the political process. ~Bimetallic Investment 3. Key differences to get to hearing: A. Political power is a substitute for judicial process B. Low numerosity C. Individualized vs generalized determinations 4. Legislation delegating authority to highway commissioner to compel railroads to build overhead passages in the name of public safety without any provisions for judicial review or hearing is a violation of the 14thamendment’s due process guarantee. Agency used the process of sending letter to RR informing them to construct passage; such action is an unconstitutional taking. Whole statute struck down. ~Southern Railway 5. Timing matters: due process and hearings requirements are predepravation issues. Hearings take place early whereas judicial review takes place later thus judicial review may heighten costs b/c of timing. Adjudication vs Rulemaking 1. Adjudication-per the APA, it’s the agency process for issuing an “order” or a final disposition of an agency matter other than rulemaking; includes: A. May or may not require a hearing or due process entitlement to procedural requirements B. Resolution of specific litigation controversies b/t adversary parties C. Licensing D. Agency decisions not to spend money on a project (informal adjOverton Park) E. Authorizations like granting leases or rescinding K’s F. Other non-rulemaking management and administrative functions 2. Rulemaking-equivalent of agency legislation; is a statement of general or particular applicability and future effect designed to implement,

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3.

4.

5.

6.

interpret or prescribe law or policy or describing the organization, procedure or practice requirements of an agency A. Includes the approval or prescription for the future of rates, wages, corporate or financial structures, prices, facilities, appliances, services or allowances therefore or of valuation, costs, or accounting or practices bearing on the foregoing Formal, On-the-Record Adjudication A. APA 554, which then triggers 556 and 557 B. Is required when: i. Explicit: organic statute calls for the decision to be made “on the record after opportunity for agency hearing.” ii. Judicially imposed: when agency is imposing a sanction or liability on a party; need for Londoner due process concerns to be satisfied C. Judicial review: “substantial evidence” std (which effectively amounts to the “arbitrary and capricious” std b/c no one really knows what it means) D. Requires trial-type hearings, oaths, subpoenas, an ALJ judge hearing evidence and witnesses Informal Adjudication A. APA rules don’t seem to govern informal adj procedures explicitly, but prof thinks that Sec 555 on Ancillary Matters applies: i. If nothing else applies, 555 is the procedural backstop ii. Persons compelled to appear must be afforded the right to counsel iii. “Interested parties” can appear and be heard iv. Agency must promptly explain reasons for denial unless it’s obvious (e) v. Requirement that agency takes action expeditiously vi. You can always get a transcript of the agencies B. Refers to agency decisions that don’t fit other categories. C. Includes permitting procedures, grant procedures etc. D. Overton Park-can be done w/o procedural due process b/c it doesn’t impact anyone specifically as it’s public park E. Judicial review: per Overton Park, “arbitrary and capricious” F. For q’s of law where process is very informal, Mead says no deference Formal On-the-Record Rulemaking A. APA 553(c), which then triggers 556 and 557 B. Is required when: organic statute provides that “rules . . . be made on the record after opportunity for an agency hearing.” C. Is a cumbersome and intense process D. Florida East Coast: SC, concerned about the delays and other dysfunctions caused by the formal rulemaking requirements, severely restricted the coverage of the APA’s formal rulemaking procedures by insisting that the relevant statute explicitly provide for a “hearing on the record.” E. Formal Rulemaking hearing: all parties apprised of the evidence, CX witnesses, inspect docs, offer evidence in explanation or rebuttal F. Judicial review: substantial evidence test Informal Rulemaking: Notice and Comment Rulemaking

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A. Triggered when the statute does not provide for a “hearing on the record.” B. APA 553 procedures: i. Post notice in the Federal Register specifying time and place of rulemaking proceedings, legal authority for issuance and content of proposed changes ii. Opportunity for interested persons to comment on the proposal w/ written submissions, and at the option of the agency, opportunity for oral argument iii. After final rule promulgated, agency must issue a “concise general statement” of the basis and purpose of the decision a. “Concise statement” has, in reality, become relatively long and extensive b/c agency write w/ anticipation of litigation or to preempt lit C. Over the past few decades, agencies have moved from adjudication to NC Rulemaking to decide regulatory policy. Since no formal record was necessary under NC rulemaking (unlike formal rulemaking), cts needed to mandate some kind of record so that it could later be reviewed by cts. D. Judicial review: Hard Look/arbitrary and capricious 7. Organic statute can prescribe greater procedural formalities than APA calls for. ~Florida East Coast Railway 8. Agency choice b/t rulemaking and adjudication: organic statute typically won’t give a choice but there are other situations where agency gets to choose. 9. Judicial control of agency choice of procedures: cts generally ok w/ letting agency pick and choose b/t rulemaking and adjudication as long as they follow the procedural safeguards A. A normal “rulemaking rule” must be promulgated via APA procedures. Can’t evade process requirements by trying to create a “rule” that applies prospectively (but not retrospectively) from an adjudicative proceeding. If you want the precedent to apply prospectively, use rulemaking. ~Wyman Gordon B. Can’t enforce a “rule” if that rule is an unpublished policy written only in an internal agency manual. Rule lacks legitimacy and safeguards of rulemaking process. ~Morton v Ruiz C. Hercules v EPA-DC Circuit upheld the EPA’s authority to adopt pollution control requirements by rulemaking even though the resulting rules only applied to a single plant. Since that was formal rulemaking, the due process rights and procedures of the affected party were upheld just as they would’ve been under adjudication. D. CASE: NLRB v Wyman-Gordon i. In an adjudicative proceeding, NLRB orders W-G to produce employee roster to union, and relies in part on previous NLRB adjudication of Excelsior. W-G challenges and argues that Excelsior is procedurally invalid and cannot apply to it. ii. Held: Yes, Excelsiorwas procedurally invalid b/c the “rule” announced there was done through adjudication instead of rulemaking. But since this is a separate adjudication, NLRB has independent reason to validly order W-G to give up roster list. iii. Reasoning:

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a. Excelsior“rule” was made in an adjudication and only applied prospectively, not to the parties in that case. Can’t skirt the protections of proper rulemaking by trying to make a rule from an adj. b. NLRB has historically not used the Act’s rulemaking procedures but relies on adjudications. c. Ct doesn’t seem to want to impose a brightline rule that NLRB has to use rulemaking but in this case, probably thinks that right result was reached despite some of the impropriety of process. iv. Benefit of rulemaking would be that all interested parties could be heard as NLRB didn’t announce issue prior to ruling in Excelsior. NLRB’s response is that if they were forced to engage in rulemaking, then adjudications would be less tailored and more equivocating. E. CASE: Morton v Ruiz i. Facts: BIA limits benefits given to Native Americans based on an unpublished “policy” written only in an internal BIA manual. Info is not public. Ruiz was denied benefits, determination done by informal adjudication, probably by a letter to him. ii. Held: BIA can’t escape formal rulemaking requirements by relying on unpublished internal manual. The procedural safeguards ensured by that process also put Native Americans on notice so that they can then structure their conduct accordingly. iii. Can’t uphold this informal adjudication under Wyman-Gordon b/c there, WG was put on notice of the roster requirement after formal adjudication of Excelsior. Here, Ruiz never had notice. Formal On-The-Record Rulemaking 1. Statute authorizing agency to act “after hearing” ≠ APA’s requirement that formal rulemaking is made “on the record after opportunity for agency hearing.” APA formal rulemaking is not triggered unless APA language is expressly used orother language having the same meaning could trigger 556 and 557 rulemaking process. ~AlleghenyLudlum Steel 2. “After a hearing” was satisfied by NC Rulemaking; doesn’t trigger formal rulemaking. ~Florida East Coast 3. CASE: US v Florida East Coast Railway A. Facts: ICC’s organic statute states that it “may, after hearing…” change freight rates. ICC wants to set rates for RR’s who borrow other RR’s freights. So this will affect some RR’s more than others. Per NC Rulemaking, ICC solicits written submissions, including challenges by Florida East RR (and others) petitioning for an oral hearing, changes rates and rejects requests for oral hearings. B. Held: SC rejects RR’s argument since the organic statute didn’t explicitly use APA language or express clear intent for formal requirements, no oral hearing. C. Reasoning: i. Only clear language indicating an intent or trigger words requiring both a decision on the record and an opportunity for an agency hearing will suffice. Cts are less strict about the

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ii.

iii. iv.

v.

magic language requirements when it comes to adjudications b/c of greater need to protect due process rights there. If there was an individualized determination here, then probably will require a hearing on the record. For the purposes of the Londoner/Bi-metallic inquiry, should Florida East Coast RR get a hearing? a. Numerosity: affects all RR companies b. AT: numerosity: this affects some RR more than others c. No depravation of property. (Right to charge whatever you want probably won’t count as a depravation of property; no right to conduct business exactly how you wish) d. So this situation is closer to Be-metallic and no need for individualized determinations according to the SC. If this was closer to Londonerand Florida RR required individualized determination, then due process concerns would be met by moving to formal rulemaking or formal adjudication. Statute calls for hearing, so what would satisfy that? SC says oral hearing not necessary to satisfy. The “paper hearing” generated by NC Rulemaking was good enough to satisfy. Now agencies typically get Chevron deference to define “hearing” when they are interpreting their own organic statutes.

Notice and Comment Rulemaking Impx of Rulemaking 1. Florida East Coast encouraged agency to shift from adjudication to rulemaking to develop law and policy, especially since rulemaking need not be carried out using sticky trial-type procedures. 2. NC Rulemaking is subject to hard look review which requires an evidentiary record. Agencies’ increasing use of NC Rulemaking threatened to create a less rich record since interested parties couldn’t engage in CX and thoroughly examine the reasons for NC rulemaking. 3. Even when an agency’s enabling statute expressly requires it to hold a hearing, the agency may rely on its rulemaking authority to determine issues that do not require a case by case consideration. ~FPC v Texaco 4. In an adjudicatory hearing, a litigant can’t challenge the validity of a rule promulgated in NC Rulemaking. The procedural safeguards of NC rulemaking itself provides sufficient procedural safeguards to the eventual litigant. Use of the matrix rule affects a class of people so should not and cannot be challenged in adjudicatory hearing. ~Heckler v Campbell 5. CASE: Heckler v Campbell A. Using NC Rulemaking, HHS promulgates rule using matrix to classify disability claimants into those who do and do not get benefits. B. In formal adjudication, ALJ, relying on the matrix, affirms claimant’s denial of benefits. C. App Ct, reviewing ALJ’s decision under SE Test, says ALJ should have relied on specific evidence beyond that of the matrix.

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D. SC says rule using the matrix is allowable b/c matrix affects a class of people rather than individuals. Judicial Transformation of Sec 553 NC Procedure 1. How do you create a record for pre-enforcement review when the validity of regs are challenged in court immediately after they have been adopted and before they’ve been enforced against anyone? 2. Cts require agencies to develop an evidentiary base for their regs through “paper hearing or “hybrid rulemaking” procedures that are less formal than a full-fledged trial-type hearing but more substantial than traditional notice and comment requirements. 3. Nova Scotia Food Products requirements for meaningful evidentiary base? A. Full disclosure: Sec 553(c) says that agency has to give interested persons an “opportunity to participate...” For that to be meaningful, the agency must disclose all its data. i. W/o such a high std, can’t engage in meaningful hard look review ii. If you want to fight this in a political forum, then more agency disclosure results in a better political fight. iii. Drawback: reviewing cts often cherry-pick whatever info they want to focus on to render their decision. (like State Farm) B. Per Sec 539(c), agency shall publish a concise general statement of their basis and purpose for the new rule. i. Ct doesn’t require that agency must answer every single concern possible. ii. But practical effect is that the “concise statement” is anything but. Agencies now write statement w/ threat of litigation in mind. iii. Here ct is emphasizing how info is conveyed to the public. C. After Nova Scotia, NC Rulemaking has turned into an elaborate “paper hearing” procedure often resulting in a record of millions of pages. It allows for meaningful hard look review but raises costs to agencies. 4. Vermont Yankee Nuclear Power clarifications to Nova Scotia A. Generally speaking, Sec 553 establishes the max procedural requirements which Congress was willing to have the cts impose on agencies in conducting rulemaking. B. Agencies are free to grant additional procedural rights in the exercise of their discretion but reviewing cts are not free to impose them if the agencies have not chosen to grant them. 5. Agency can’t rely on a new reason to justify its actions when it gets to court—it must depend on the rationale it took at the time it made its decision. ~Chenery I A. W/ new rationale, it’s the lawyers tailoring to the litigation B. Better notice function when responses are tailored to exactly what the agency was considering at the time C. Encourages more reasoned decision-making D. Record produced will inform us as to what the agency was thinking at the time 6. CASE: Vermont Yankee v NRDC

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A. Facts: On the issue of whether nuclear waste disposal should affect the granting of licenses, NRC instituted a generic NC rulemaking on wastes generated by a hypothetical “typical” plant in lieu of case-by-case basis of adjudicating for new plant licensing. As part of the NC rulemaking comments, Dr Pittman offered testimony arguing that plan would produce little environmental threat. On the basis of these conclusions, Vermont Yankee was granted an operating license w/o affording any hearing rights on the waste disposal issue in the Vermont Yankee licensing adjudication. B. Environmental groups challenged the license by arguing that the rulemaking was defective. DC Cir agreed and reversed license and rulemaking since the commission had failed to expose and permit adequate adversary probing of waste disposal issues. C. SC reversed DC Circuit. i. Even if there was a hearing for Vermont Yankee, there’s no material q’s of fact left. No one disagrees on what kind of plant VY is constructing so adjudication is cursory. ii. Environmental groups want more process. SC says cts can’t add more process above and beyond APA including trying to import more procedure from the c/l. iii. Organic statute can’t be read to impose process beyond APA absent a very clear statement from Congress that statute demands even more process. 7. CASE: Chenery I A. Statute calls for SEC to certify public utility reorganization plans. SEC denies certification for one reorganization citing violations of equitable principles. On appeal, SEC justifies its decision on a new reason—its policy expertise. B. SC rejects new reason and remands. SEC can’t offer a new reason on appeal. It’s actions will be judged by what it did at the time of decision-making. Exceptions to Sec 553 1. 553(a) says that the rulemaking provisions do not apply to: A. Rules involving the military or foreign affairs function of the US B. Rules involving matters relating to agency management or personnel or public property, loans, grants, benefits and contracts

2. 553(b) says the following are exempt from NC Rulemaking procedures and at the same time, don’t get Mead/Step 0 or Chevron deference b/c of no force of law or procedure: A. interpretive rules B. general statements of policy C. rules of agency organization, procedure and practice and

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D. agency findings for good cause that notice and public procedure are impracticable, unnecessary or contrary to the public interest 3. If agency doesn’t use NC rulemaking, then they’ve either made an interpretive rule or a kind of legislative rule and we have to strike it down if it doesn’t comport w/ 553; it’s hard to tell the diff 4. “General statements of policy” A. Don’t have the force of law thus they are meant to guide the regulated entities but since they are not binding, they might not offer as much guidance as a regulated entity might want.

B. Agencies might wish to shield their regs from the scrutiny of NC rulemaking by casting would-be regs as “statements of policy” but they would still be subject to scrutiny. ~Young Dissent

C. CASE: Community Nutrition v Young i.

Facts: FDA issued what it called a “general statement of policy” indicating that it would not take enforcement measures for food containing a certain level of contamination unless the contamination reached a certain actionable threshold level.

ii. Held: DC Circuit held that this effectively made amounts lower than the threshold level illegal. There was no evidence that this was a tentative decision or that the agency would not always follow its own policy, thus this is meant to have the force of law and should have been promulgated through NC Rulemaking. 5. Rules that are “interpretive”

A. Distinguishing legislative from interpretive rules: ~American Mining i.

In the absence of the purported interpretive rule, would there be an adequate legislative basis for enforcement or other agency action to ensure compliance or enforcement?

ii. Is the ruled published in the Code of Federal Regs? iii. Has the agency explicitly invoked its general legislative authority? iv. Is the rule effectively amending a prior legislative rule?

v. If “yes” to any  then yes legislative rule B. At the ChevronStep 2 inquiry of reasonableness, agency disregard of significant policy arguments will clearly count against it. ~American Mining

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C. CASE: American Mining Congress v DoL i.

Facts: DoL promulgates rules through NC rulemaking on illness reporting requirements. DoL issues “Program Policy Letters” to determine who has been “diagnosed” with an illness according to the opacity of x-rays. PPL’s were not adopted through NC rulemaking.

ii. Held: The PPL’s are interpretive and not subject to NC rulemaking. 6. Agency’s “interpretation” of its prior regulations

A. CASE: Hoctor v USDA (lions and tigers case) i.

Facts: USDA uses NC rulemaking to issue reg that housing for big cats must be “structurally sound.” At the suggestion of the USDA, Hoctor built a 6-foot fence around his big cats. Then dept issued internal memo saying that the fence must be at least 8 feet high and cites Hoctor for violation. USDA claimed that the 8-feet requirement was an “interpretive rule.”

ii. Held: 8-foot rule can’t be adopted w/o NC rulemaking. iii. Reasoning: The 8-foot requirement, as opposed to 7.5 feet or 9 feet would be ok if made through NC rulemaking but the “interpretation” here was not an interpretation of any specific statutory provision and it was arbitrary in terms of being “structurally sound.” 7. Rules of “procedure”

A. Rule: if agency’s alleged “procedural rule” encodes substantive value judgments that encroach on a D’s due process or APA rights to notice and hearing, then the rule must be passed through NC rulemaking. ~Air Transport B. Exempted rules of “procedure”-refer to rules that don’t govern the primary conduct of persons but rather are more internal; ie if agency passes procedural rule saying a permit must be filed in duplicative, that is not subject to NC rulemaking.

C. Rules that prescribe a timetable for asserting substantive rights are procedural and ned not use NC rulemaking. ~National Whistleblower

D. CASE: Air Transport Association of America v DoT-vacated by SC i.

Facts: Congress authorized the FAA to establish a program of admin penalties for violations of its act. FAA issued its “Penalty Rules” implementing the program w/o NC Rulemaking. Penalty

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Rules include a schedule of fines as well as a comprehensive adjudicatory scheme providing for formal notice, settlement procedures, discovery, an adversary hearing before an ALJ and an admin appeal. FAA argued that the Penalty Rules are of “procedure” and are thus exempt from NC rulemaking. ii. Held: DC Cir says a rule does not fall w/in the scope of the exception merely b/c it has some “procedure.” iii. Reasoning: a. Test: a so-called procedural rule is not exempt from NC rulemaking if it substantially affects a D’s right to an administrative adjudication. Under the due process clause and the APA, the D has a right to notice and a hearing before being forced to pay a fine. b. If agency’s choices “encode a substantive value judgment” on the appropriate balance b/t a D’s right to adjudicatory procedures and the agency’s interest in efficient prosecution, then should be done through NC rulemaking

E. CASE: National Whistleblower Center v NRC i. Facts: NRC changed its std for granting filing extensions from a showing of “good cause” to a showing of “unavoidable and extreme circumstances” as part of a goal to streamline the schedule for license renewals. Std was not passed pursuant to NC rulemaking. ii. Held: DC Cir held that NRC was free to adopt this new std w/o using NC rulemaking b/c rules that assert a timetable for asserting substantive rights are procedural. And the new std gave plenty of time to intervene.

The Availability and Timing of Judicial Review 1. APA 701 provides that APA’s judicial provisions don’t apply “to the extent that:” A. (1)-statute precludes judicial review or B. (2)-agency action is committed to agency discretion by law

2. Abbott Labs-start w/ presumption of reviewability; only upon a showing of “clear and convincing evidence” of a contrary legislative intent can the cts restrict judicial review

APA 701(a)(1): No judicial review if statute precludes judicial review

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1. Preclusion can be explicit or implicit due to policy reasons.

2. Block/Bowen policy reasons to allow/deny judicial review to a potential P: A. Is there complete silence on potential P? B. Is the potential P’s interests represented by another interested party? C. Will allowing potential P to sue disrupt agency’s relationship w/ other parties? D. Congressional intent and purpose behind statute? E. Inappropriate special interest influence that could be changed by allowing P to sue? F. Other policy concerns?

3. Bowen and Block make the Abbott Labs presumption weak; now it seems like cts will made decisions on a case by case basis.

4. CASE: Block v Community Nutrition Institute A. Facts: Under Act, Secretary of Agriculture sets the min price that milk handlers must pay to milk producers for their milk. Milk processed for drinking is highest priced. CNI challenged the decision arguing that b/c the higher price also applied to reconstituted milk, this made reconstituted milk less economical for milk handlers to process, thus depriving consumers of a source of cheaper milk. Statute says that milk handlers can challenge Secretary’s orders in court after exhausting admin remedies. B. Held: Ct holds that the consumers cannot challenge the agency’s decision. C. Reasoning: i.

Statute doesn’t address suits by consumers either way but b/c of complete silence on the matter, ct is hesitant to allow consumers to sue.

ii. Policy reasons to disallow CNI: a. Worried about dragging Secretary straight into court b. Issues involve technical and complex regs; parties are repeat players c. Don’t want consumers to ruin the bargains struck by Secretary and milk handlers since Secretary is brokering deals to keep milk prices stable

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d. CNI’s interest in keeping pricing down is identical to milk handler’s desire to keep prices down to them iii. Responses: a. Consumers not part of original txns, didn’t have a voice so let them in b. If purpose of legislation was to protect consumers, then more of a reason to let them in. c. If the entire deal was a product of special interest influence, then maybe want to let outsiders like consumers sue

3. CASE: Bowen v MI Academy of Fam Physicans A. Facts: HHS passed a reg setting higher Medicare reimbursement rates for “board-certified” fam physicians than for identical services performed by non-board certified. An association of nonboard certified physicians sued claiming that the distinction violated the Medicare Act and the 5th. B. Held: Yes, the physicians can sue. C. Reasoning: i.

Act doesn’t say anything about challenging the regs as a whole. We can draw an inference from the silence that doctors can sue. We know that patients can sue.

ii. This is unlike Community Nutrition: a. Neither case says anything about the parties that want to sue. b. But here P’s interests are not really represented by any other party c. Major policy distinction: milk consumers will probably buy milk even if the price goes up but it’s worse if docs stop providing medical services b/c they aren’t being reimbursed competitively. But it’s not clear that this is the right reason since P has the simple solution of getting board certified.

APA 701(a)(2): committed to agency discretion b/c there’s no law to apply 1. Is a very narrow exception; only works when there’s no legal std or judicially cognizable std by which to weigh the lawfulness/unlawfulness of agency action.

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2. Overton Park-ct said the yardstick was the “reasonable or prudent alternative” language; it’s a very open-ended std but SC says good enough to be “law to apply”

3. Heckler Rule; absent a specific statutory limitation on an agency’s prosecutorial discretion, the decision to enforce or not is committed to agency discretion by law and cannot be reviewed by cts.

4. Norton Rule: discretionary agency action taken to comply or not comply w/ a general statutory std cannot be reviewed if such review would force a court to be a super-monitor. A. Final dispositions can be reviewed by a court. B. If cts force agencies to promulgate rule, then cts have to measure compliance and ct will be turned into a continuous monitor. (Counterargument is that this happens in many situations, so judges do become overseers.) 5. If statute specifically requires an agency to undertake rulemaking, then it does not have the authority to refuse to make the rule or enforce it.

6. CASE: Heckler v Chaney A. Facts: Prisons used drugs for lethal injection that hadn’t been approved for that use. Death row inmates challenge the FDA’s inaction or failure to take enforcement action against these prisons. B. Held: Food, Drug and Cosmetic Act did not prescribe any rules to weigh the use of FDA’s prosecutorial discretion—the decision of whether or not to take enforcement action was committed to FDA discretion by law.

7. CASE: Norton v Southern Utah Wilderness Alliance A. Facts: BLM, per Act, must “continue to manage [fed land] in a manner so as not to impair the suitability of such areas for preservation of wilderness.” People were driving ORV’s through the park. Environmental group sued SoI under the APA for the “failure to act” b/c org believed that BLM was not taking sufficient action pursuant to the nonimpairment obligation. B. Held: A failure to comply w/ general statutory stds is not subject to judicial review but rather is committed to agency discretion. C. Reasoning:

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i.

SUWA sued under APA 706(1) which gives cts the authority to “compel agency action unlawfully withheld or unreasonably delayed.”

ii. SUWA acknowledges that it cannot compel the BLM to act in a specific way but that it can compel some agency action of compliance. iii. SC says that SUWA is attempting to challenge a day-to-day operation whereas Sec 706(1) applies to final agency actions which are limited to discrete actions: whole/part of a final agency order, rule, license, sanction etc. iv. To allow this suit would inevitably require the cts to judge the sufficiency of discretionary agency action and compliance w/ general statutory stds.

8. CASE: MA v EPA Redux A. Facts: CAA says EPA “shall by regulation prescribe…stds” for certain kinds of air pollution. B. Held: EPA is statutorily required to act; key phrase is “shall regulate,” thus EPA can’t duck the issue. They have to make a judgment on whether CO2 is an air pollutant and then regulate it based on that decision.

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PART IV: STANDING

1. Standing is a way for cts to control their dockets. 2. The ideal plaintiff is well-financed, a good representative of the interests at stake, will litigate vigorously and is an experienced or repeat player

3. P must have suffered an “injury in fact,” which comes from the “cases and controversies” requirement of the Constitution. ~Sierra Club v Morton

A. Injury in fact can be economic, noneconomic or even aesthetic ~Sierra Club

B. SC rejects the “special interest” theory; standing does not expand to groups that have a “special interest” in the subject matter of the litigation, that is not enough to show that the party was “adversely affected” or “aggrieved” w/in the meaning of the APA. ~Sierra Club

4. Lujan v Defenders of Wildlife Standing: A. Injury in fact: i.

Concrete

ii. Particularized to P iii. Not the result of some independent action of a third party not before the court iv. Aesthetic injury can be “injury in fact” C. Causation by D D. Redressability: P has to get something meaningful beyond the ‘warm and fuzziness’ of knowing that you’ve won

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