I.

Introduction a. Definition i. Agency is each authority of the Government whether or not is within or subject to review by another agency, but does not include: a. Congress b. Courts of the United States c. Governments or territories or possessions of the United States d. Government of D.C. e. President could be an agency, but the court has declined to interpret the APA that way b. Role i. Agencies take Formal actions that have legal repercussions and informal actions that make a difference. c. Timeline of Regulatory Development i. 1787: James Madison had a deep suspicion of human nature and unchecked government power. Wanted an elaborate system of formal legal controls and checks. ii. 1875-1887: Interstate Commerce Commission created. Outgrowth of a Progressive vision that administration could be a technocratic enterprise. Necessary because society was becoming more complex. Lawyers and judges meant to monitor agency compliance with congressionally mandated boundaries. iii. 1932-New Deal: Public interest theory of regulation. Governments must step in to address market failure. Give law-making role to administrators so that regulators can act as quickly as businesses. Role of Congress, courts, and President diminished during this era. iv. 1941-1946: Push back against the broad deference accorded agencies during the New Deal. APA was a fierce compromise between New Deal opponents who wanted to impose procedural requirements to circumscribe agency power and New Dealers who opposed such formality. v. 1960s and 1970s Capture: Rising backlash against the failures of administrative agencies. Theories: 1. Regulatory lifecycle necessarily moves from fervor for public interest to entrenched interests. 2. Industry capture: Agencies served regulated interests from the outset. vi. 1980s Responses to Capture: 1. Chicago school fight capture by deregulating. 2. Empower courts to review agency determinations. d. Democratic failings i. Collective Action: concentrated interests have a systematic advantage over diffuse interests. Small groups that have a lot to lose will organize, whereas large diffuse groups will not. ii. Public choice theory: Everyone, including agency heads, acts to maximize individual private interest. Sometimes private and public interests align. Sometimes relevant players do not have the power to battle other entrenched interests. Under this theory, ideology plays no role. iii. Cost-benefit analysis: We should be able to calculate the value of any item, and that should be an explicit consideration in fashioning any piece of regulation. iv. Expertise: Include regulated industry actors in the regulatory process because they best understand the issues. v. Madison and Landis 1. Madison Formalist. Separate power amongst different branches of government so that no one branch may dominate another. Counter-majoritarian checks are 1

necessary because men are not angels. Every branch must be involved before the government imposes any liability upon an individual. 2. Landis Functionalist. A tripartite government of Madisonian design is inadequate to deal with the challenges posed by the modern world. Governmental exigencies lead to the creation of agencies better able to address contemporary problems.

II.

The Constitutional Position of the Administrative Agency a. Nondelegation i. Theoretically, three approaches: 1. All discretion is unlawful. 2. Granted authority is acceptable within limits. 3. When Congress delegates, it exercises its legislative power. Therefore, no discretion is too much. ii. Nondelegation had one good year 1935. 1. ALA Schecter Poultry Corporation v. US (1935) Sick Chicken Case a. Court struck down a provision of the National Industrial Recovery Act that authorized the President to approve codes of fair competition for the poultry industry. b. Grant was too broad and was therefore a violation of nondelegation. 2. Amalgamated Meat Cutters v. Connally (1971) a. Decided by a 3-judge panel, not reviewed by the Supreme Court b. For a delegation to be valid, Congress must articulate an intelligible principle to allow courts to evaluate Executive actions. c. Because this statute places a limit upon the duration of the Presidents authority and because it provides that the exercise of such authority is limited by subsequent standards developed by the President, there is an intelligible principle. 3. Industrial Union Dept., AFL-CIO v. American Petroleum Institute (1980) Benzene Case a. OSHA instructed the AFL-CIO to set benzene exposure at the lowest feasible limit. Alternate interpretations of feasible: i. Stevens (Majority): Statutory language and legislative history express legislative intent to require the elimination of significant risks of harm. Agency has a burden to use substantial evidence to demonstrate a significant risk. Here, the agencys standard was not supported by substantial findings. The delegation of power, however, is permissible. ii. Powell: to the extent feasible means cost-benefit analysis. iii. Marshall: to the extent feasible means regulate as far as you can without forcing the industry to collapse. iv. Rehnquist: This is an unconstitutional delegation of power. There are no criteria to cabin agency discretion. iii. Congressional means of limiting agency power: 1. Funding: a. Cut-off funding b. Limit funding and force the agency to come back to ask for money. c. Advantages: i. Like a scalpel force the agency to do precisely what you want it to do. d. Disadvantages: i. May make the agency less effective; ii. Taking away money is politically charged; iii. This can be time consuming and may only block one agency action. 2. Bring secretary in front of Congress. Yell at secretary. a. Advantages: may make the agency fear Congress will cut its budget. 3

b. Disadvantages: Will not necessarily produce results, particularly if the secretary has job security. 3. Sunset agencies. a. Disadvantages: once something has been created, it has a constituency. 4. Amend the agencys statutory mandate: a. Disadvantages: i. Impossible to cover every issue; ii. Specific statutes are difficult to pass. 5. Limit the process of agency decisions 6. Insert legislative history 7. Legislative Veto a. Unconstitutional under Chadha. When Congress exercises its legislative power, bicameralism and presentment are required. b. White: Legislative veto is merely a check on Congressional power. Seems contradictory to authorize the delegation but not the check. b. The Executive and the Agencies i. American Trucking Associations, Inc. v. EPA (1999); Whitman v. American Trucking Associations, Inc. (2001) 1. Neither EPA nor Congress articulated an intelligible principle. 2. District Court wants to give the EPA the opportunity to articulate an intelligible principle on its own. 3. Supreme Court rejects this approach: a. Internally contradictory to give the agency the authority to determine the intelligible principle on its own. b. Statute survives because Congress has delegated an appropriate amount of authority in line with previous cases. c. Court is reluctant to draw the lines of how much authority is too much. d. Thomas: Willing to reconsider the cases as a matter of first principle. e. Stevens: Legislative delegation is constitutional. ii. Myers v. United States (1926) 1. Federal statute provided that postmasters be appointed by the President with the advice and consent of the Senate. 2. Myers was appointed Postmaster and removed by President Wilson before the end of the term. 3. Taft, former president, says this is okay. To adequately enforce the law, he must be able to remove subordinates who do note serve his purpose. This is essential to allow the President to promulgate uniform policies. 4. Congress may limit the Presidents removal power, but here it did not do so. iii. Humphreys Executor v. United States (1935) 1. Roosevelt wanted to remove Humphrey, who had been appointed by his predecessor, because Humphreys philosophy was at odds with Roosevelts. 2. Court drew a distinction between administrators whose functions are merely executive, and those who act in a legislative or judicial mode. The foRmer, such as Myers, can be removed at will. The latter, such as Humphrey, must be removed for cause. iv. Weiner v. United States (1958) 1. Congress established the War Claims Commission, which had jurisdiction to adjudicate claims for compensating people damaged by World War II. 2. Members were appointed by the President with the advice and consent of the Senate. There was no provision for removal. 3. Eisenhower removed Weiner, and Weiner challenged his removal power. 4

v.

vi.

vii.

viii.

ix.

4. Court held that the War Claims Commission was an adjudicatory body. Because it was clearly not part of the executive, its members could not be removed at the Presidents will. Immigration & Naturalization Service v. Chadha (1983) 1. Chadha overstayed his visa. Attorney General suspended his deportation. House overturned the suspension without a public hearing, report, or meaningful statement of reasons for the committees recommendation. Chadha challenged the action. 2. Where action of either House is legislative, presentment and bicameralism are required. Bowsher v. Synar (1986) 1. Balanced Budget Act gave the Comptroller General power to make broad budgetary decisions as a member of the executive branch. 2. President appointed the Comptroller from a list Congress provided; removal obtained by joint resolution of Congress. 3. Statute invalid because Congress cannot retain control over removal of executive branch officers. 4. Congressional removal through impeachment only. Otherwise, Congress has too much power over another branch of government. 5. White, dissenting: Interferes with the mutual workings of the legislative and executive branches. 6. Blackmun, dissenting: Removal authority is unconstitutional and should be severed from the rest of the statute. Mistretta v. United States (1989) 1. Congress established the Sentence Commission to promulgate binding sentencing guidelines in criminal cases. Commission was to be comprised of seven members, three of whom were supposed to be federal judges. 2. Mistretta argued that mixing judges and non-judges on the panel undermined the judiciary. 3. Separation of powers concern is that one branch not aggrandize itself at the expense of another. Merely placing the judges alongside non-judges neither empowers nor undermines the judiciary. 4. Does not empower judiciary, because sentencing is judges province. Does not undermine judiciary because judges still appointed for life. Can be removed from the commission for good cause, but not from their judgeships. Withrow v. Larkin (1975) 1. Wisconsin Medical Examining Board investigated Larkin to determine whether his medical license should be suspended. Same people who investigated were prepared to adjudicate a hearing. Larkin brought suit on the theory it was improper for the agency to adjudicate the case it investigated. 2. It is not a per se denial of due process to have the same agency officials investigate and adjudicate. 3. Adjudicators have a presumption of honesty and integrity that can only be overcome if the people executing the functions are shown to have bias. Gibson v. Berryhill (1973) 1. Alabama Board of Optometry was composed of independent optometrists. Board brought charges against Optometrists of Lee Optical for engaging in the unlawful practice of optometry. Lee Optometrists alleged that the board was biased, as it stood to gain customers from disqualifying the Lee Optometrists. 2. Court held that the Alabama Board could not adjudicate the case because they have significant pecuniary interests in the legal proceedings. 5

x. Appointment of Agency Heads 1. Article 2, 2, Clause 2 Appointments Clause: a. Principal officers must be appointed by the President and confirmed by the Senate. b. Congress may provide that inferior officers are appointed by the heads of departments or courts of law. 2. Buckley v. Valejo a. Statute gave the House the power to appoint an officer. Nothing in the appointments clause gives the House the power to appoint. b. The Necessary & Proper clause cannot be used to provide an N-run around the appointments clause. c. An officer can only be appointed by the President, the head of a department, or a court of law. 3. Line between inferior and principle officers a. Morrison v. Olson i. Scalia: Independent counsel has no superior officer. Cannot be inferior without a superior. b. Edmund v. US i. Inferior officers are those supervised by someone who has been appointed by the President with the advice and consent of the Senate. xi. Removal Power 1. Options: a. There is no removal power. Removal must be achieved through impeachment. b. Removal follows the method of appointment. c. President can remove, but Congress sets the terms. d. Removal is part of the executive power and should be left to the President. i. This is the option Congress pursued under the Decision of 1789. 2. Tenure in Office Act a. Congress was opposed to President Johnson and tried to keep officials c. Presidential Control i. Executive Order 12, 291Regulatory Analysis ii. Executive Order 12, 498Regulatory Planning iii. Executive Order 12, 866: Regulatory Planning and Review iv. Paperwork Reduction Act

III.

Administrative Discretion, Administrative Substance, and Regulatory Performance

IV.

Procedural Requirements: Rulemaking and Adjudication a. APA Requirements and the Interplay Between Rulemaking and Adjudication i. APA is a default/gap-filler. Organic Acts can, and often do, override provisions of the APA. ii. Legislatures do not always operate through open hearings. They can alter your life, liberty, and property without procedural safeguards. iii. Rulemaking v. adjudication: 1. Generality and prospectivity are the relevant criteria: a. If general, it is a rule. If specific, it is an adjudication. b. If forward looking, it is a rule. If backwards looking, it is an adjudication. 2. Where more people are affected by agency action, it is more legislative than adjudicative. Yet, regardless of whether its legislative or adjudicative, your property is being diminished. 3. A decision on a license is adjudication, the more protected category. iv. Formal v. informal adjudication: 1. When the organic act says after hearing on the record, formal adjudication is required; 2. When the organic act says nothing, not subject to formal adjudication; 3. Many organic acts say hearing, but do not add on the record. Courts are split: a. Seacoast (2d Circuit): The word hearing without more creates a presumption that it will be on the record. b. Chemical Waste (DC Circuit): i. Presumption in Seacoast abrogated to the Court what should have been the province of the agency. ii. When the state is ambiguous, the agency can interpret it. 4. Agencies always prefer informal adjudication. v. Two relevant portions of the APA: 1. Chapter 5, Subchapter II: Administrative Procedure 2. Chapter 7: Judicial Review vi. Definitions, under the APA: 1. In both formal Rulemaking and formal Adjudication, there is a requirement of decision on the record after opportunity for hearing. In informal rulemaking (notice-and-comment) and informal adjudication, there is no such requirement. 2. RULE, 551 (4): a. General and particular applicability. Act says general AND particular, but this would obscure the distinction between adjudication and rulemaking, so everyone ignores the word particular. b. Future effect. 3. FORMAL RULEMAKING: a. 553, (a) (b) (d) (e): i. a) Exceptions to 553: 1. 1) military or foreign affairs 2. 2) agency management or personnel, public property, loans, grants, benefits, or contracts. ii. b) 3 exceptions: affected individuals have actual notice, interpretive rules/statements of policy and procedure, contrary to the public interest to publish. iii. b) ctd. 1: Notice of proposed rulemaking SHALL be published unless people effected are NAMED and SERVED/HAVE ACTUAL NOTICE. 8

iv. b) ctd. 2: NOTICE/HEARING required by the statute, publication not required: 1. to INTERPRETIVE RULES, GENERAL STATEMENTS OF POLICY, RULES OF AGENCY ORGANIZATION/PROCEDURE 2. GOOD CAUSE finding that notice and public procedure IMPRACTICABLE, UNNECESSARY, CONTRARY TO THE PUBLIC INTEREST v. d) 30 days to publish substantive rule, unless a. 1) substantive rule grants exception; b. 2) interpretative rule/statement of policy; c. 3) good cause. vi. e) interested person must have right to petition for issuance/amendment/repeal. vii. 556) Hearings; Presiding Employees; Powers and Duties; Burden of Proof; Evidence; Record as Basis of Decision viii. 557) Initial Decisions; Conclusiveness; Review by Agency; Submissions by Parties; Contents of Decisions; Record 4. INFORMAL RULEMAKING (NOTICE-AND-COMMENT) a. 553 (c) outlines procedures for notice-and-comment rulemaking b. EXCEPTION: statute requires rules to be made on the record after opportunity for agency hearing, 556 and 557 apply (becomes a formal rulemaking). 5. FORMAL ADJUDICATION a. 554, 556-557 b. 554) Adjudications (formal adjudications) c. 556) Hearings; Presiding Employees; Powers and Duties; Burden of Proof; Evidence; Record as Basis of Decision d. 557) Initial Decisions; Conclusiveness; Review by Agency; Submissions by Parties; Contents of Decisions; Record 6. INFORMAL ADJUDICATION a. No formal procedures. The null set. vii. Londoner v. Denver (1908) - ADJUDICATION 1. Denver city council approved assessment of Londoners property for the costs of paving a public street. Londoner was given notice and opportunity to file written objection. 2. Court held that due process requires that before an agency sets a tax, taxpayers have notice and opportunity to participate in an evidentiary hearing. 3. There are few limitations on a state legislatures power to tax, but when an agency exercises this power, the taxpayer must be allowed to present evidence and have opportunity to participate in oral argument. viii. Bi-Metallic Investment Co. v. State Board of Equalization (1915) - RULEMAKING 1. Colorado tax commission ordered 41% increase in the valuation of taxable property in the City of Denver. Bi-Metallic Investment Company sought to enjoin enforcement of the order because it had not had opportunity to be heard. 2. Court held that Agency orders and rules which will affect vast numbers of people may be adopted without affording every interested party direct opportunity to be heard.

V.

Scope of Judicial Review a. Review of Factual Determinations i. 706: Scope of Review 1. (2) directs reviewing court to SET ASIDE action, findings, and conclusions, found to be: a. a) ARBITRARY and CAPCRICIOUS (for informal proceedings) this is the catch-all provision b. e) UNSUPPORTED by SUBSTANTIAL EVIDENCE (for formal proceedings) 2. 706 (2) (a) and 706 (2) (e) are not the same. 706 (2)(a) is a gap-filler for judicial review; 706 (2) (e) is only for factual findings. 3. Agencies are better off under Arbitrary and Capricious review. Should put whatever they want in the record. 4. Some statutes have their own formulation. In such a case, this formulation controls. 5. The APA standard applies in most contexts. ii. Evidentiary standards, under the APA: 1. Formal Rulemaking: Substantial Evidence 2. Informal Rulemaking: Arbitrary and Capricious 3. Formal Adjudication: Substantial Evidence 4. Informal Adjudication: Arbitrary and Capricious 5. Note that the APA is a gap-filler, look FIRST to the Organic Act iii. Substantial Evidence v. Arbitrary and Capricious review: 1. By definition, these standards are the same. Arbitrary and Capricious sometimes regarded as a bit easier. 2. According to Scalia, both Substantial Evidence and Arbitrary and Capricious are the same as the jury standard (no reasonable person. iv. Arguments for upholding an agencys decision: 1. Efficiency: we want to allow agencies to make determinations. 2. Agencies have specialized knowledge and expertise. v. Arguments for overruling an agency: 1. Agency composition and decision-making patterns (particularly highly political agency like the NLRB) swing wildly with the political affiliations of the President; 2. Its possible to be too efficient; 3. Expertise only gets you so far. vi. NLRB v. Universal Camera Corp. (I) (1950 4 years after the APA) (2d Circ.) 1. NLRB reversed findings of fact its examiner made as to Universals firing of an employee. NLRB tried to enforce order to reinstate employee; Universal petitioned to have NLRBs findings reviewed in conjunction with the board examiners findings. 2. Because a majority of the NLRB rejected the examiners report, a Court of Appeal cannot review it. 3. The boards findings were supported by substantial evidence when viewed on the record as a whole, and the order of reinstatement should therefore be enforced. vii. Universal Camera Corp. v. NLRB (1951) (SCOTUS) 1. 2d Circuits finding that the order of reinstatement should be enforced because it was supported by substantial evidence when viewed on the record as a whole appealed to SCOTUS.

10

2. Court of Appeals erred in holding it was bound by the NLRB findings. Court has a duty to weigh both the supportive and contradictory evidence to evaluate whether NLRB findings are based on substantial evidence. viii. NLRB v. Universal Camera Corp. (II) (1951) (2d Circ., on remand) 1. On remand from SCOTUS. Question is how to treat the NLRBs rejection of its examiners report given SCOTUS imperative to look at the record as a whole. 2. Under Taft-Hartley, examiners findings should not be disregarded unless the substituted findings are supported by a preponderance of the evidence. 3. There is no preponderance of the evidence, so the examiners findings should be reinstated. ix. Allentown Mack Sales and Service v. National Labor Relations Board (1998) 1. Mack employees represented by Local 724. Mack sold its business to Allentown, Allentown hired majority of Mack employees. Many of the employees made statements that they did not support the union, so Allentown conducted a secret poll to see if the employees wanted to continue to be represented by the union. Allentown found the employees did not support the union. 2. NLRB held that the secret poll was an unfair labor practice because Allentown had not demonstrated that it held a reasonable doubt, based on objective characteristics, that the employees did not want to be represented by the union. Allentown appealed, and the DC Circuit court found in favor of the NLRB. 3. Court held that the reasonable doubt test is consistent with the Act, but the finding that Allentown lacked a reasonable doubt is not supported by substantial evidence on the record as a whole. 4. Here, the agency was overruled because it employed a set of rules of construction that were not part of official board policy. Surprising result. x. Zhen Li Iao v. Gonzales (2005) (7th Circ) 1. Li left China because government was persecuting her for practicing Falun Gong. Immigration judge ordered her deported because he did not believe she faced a reasonable fear of being persecuted in China. 2. Administrative judge made many errors: a. She did not claim to have been persecuted; b. Brothers failure to testify about Falun Gong deserves no weight; c. Inconsistencies in her testimony may reflect difficulty in Chinese/English translation process. d. Order is not well reasoned, and therefore does not deserve deference. 3. Posners weighing of the facts sends a message that administrative agencies should make careful decisions. This would slow the administrative process. b. Review of Legal Determinations i. NLRB v. Hearst Publications (1944) 1. Newsboys distributed Los Angeles newspapers. Hearst controlled the prices at which the newsboys purchased the papers and sold them to the public. Newsboys wanted to bargain collectively under the NLRA. Hearst claimed newsboys were independent contractors, and therefore not protected by the NLRA. 2. NLRB said that newsboys were employees and were protected by the NLRA. Court of Appeals overturned the NLRB. 3. Court held that the Court of Appeals should not have overturned the NLRB: If an application of a broad statutory term is supported by the record and has a reasonable basis in law, a reviewing court must accept an agencys interpretation. ii. Skidmore v. Swift & Co. (1944) 1. Group of employees sued to recover overtime for time spent waiting on company premises to respond to fire alarms. During this time they had to stay within 11

hearing distance of the alarms. They were allowed to utilize recreational facilities and were allowed to eat and sleep. They were not compensated for waiting time, but were compensated for each of their responses. 2. Lower court denied the claim, relying on an administrative bulletin that time spent waiting was not time worked. 3. Court held that it was appropriate to give weight to the administrators opinion. 4. Evaluation of interpretive rules: a. Thoroughness evident in the judgments consideration; b. Validity of the judgments reasoning; c. Judgments consistency with earlier and later pronouncements; d. Other factors that give the judgment power to persuade. 5. Factors articulated here create a sliding scale of deference. Because one of the important factors is consistency, this decision provides a disincentive for the agency to change course. iii. Chevron USA Inc. v. Natural Resources Defense Council (1984) 1. Clean Air Act required states to develop air pollution plans requiring permits for construction and operation of stationary sources of pollution. EPA interpreted stationary sources to allow states to consider an entire plant a stationary source, even if it contained different kinds of pollution emitting sources. This interpretation allowed states to avoid the act. 2. Natural Resources Defense Council sued Chevron for violating the act. EPA rejected the complaint. District Court affirmed the rejection, Court of Appeals held that the EPA could not use this interpretation of stationary source. 3. SCOTUS says EPAs interpretation must be upheld. 4. Where Congress has not spoken on an issue, courts must accept the reasonable interpretation of administrative statutes given by the agency. 5. Unless regulations are arbitrary, capricious, or manifestly contrary to the statute, they must be upheld. iv. Chevron defined 1. Chevron two-step: a. Has Congress directly spoken on the issue? (Range of meanings available to the agency) b. If no, was the agencys position a reasonable interpretation of the statute? (Given range articulated in 1, is what the agency did within the range?) 2. Under Skidmore, agency would have to justify inconsistent interpretations; under Chevron, this is not necessary. 3. Agencies tend to lose at Step 1. Brings us closer to all-or-nothing deference. 4. Chevron applies to legal determinations. Universal Camera is the law for judicial review of factual determinations. 5. Chevron applies to both Independent and Executive Agencies. 6. Unless Congress speaks clearly on the issue, defer to the agency. The assumption is that Congress wanted this deference. Best fictional presumed intent. 7. Chevron v. Skidmore: a. If you want to change the law, you want Chevron, not Skidmore. b. If you are an administration that promulgated lots of legislation, you want Skidmore. 8. Chevron is feast or famine. Agencies are accountable in ways that courts are not. 9. Even though Chevron focuses on democratic accountability, it applies the same way to all agencies, regardless of executive control. 10. As a court uses more rules of statutory construction, it becomes more likely to stop at Chevron Step 1. 12

v. Chevron and its Scope 1. Immigration & Naturalization Service v. Cardoza Fonseca (1987) a. INS denied asylum because Fonseca had not established more likely than not that persecution would result from deportation. b. Fonseca argued that the more likely than not standard only attached out of 243 (h) of the Immigration Act; her right not to be deported came from 208 (a) of Refugee Act. INS said the same standard should apply to both provisions. Court of Appeals found this interpretation inconsistent with Congressional intent. c. INS reading of the statute is wrong; the judiciary is the final authority on issues of statutory construction. d. Scalia, concurring: This is a misapplication of Chevron. Suggests first that courts should not defer when they can resolve the question using traditional tools of statutory construction and second that courts may substitute their judgment whenever they face issues of pure statutory construction. e. Case distinguishes between pure questions of law and application of legal questions to fact. Approach dropped of the radar. 2. Young v. Community Nutrition Institute (1986) a. Statute instructed the Secretary of Health and Human Services to promulgate regulations whenever a poisonous substance required in the production of food cannot be avoided by good manufacturing procedure. Secretary did not promulgate a regulation for aflotoxin, one such substance. Secretary claimed he relied on a longstanding agency interpretation that left the issuance of such rules to his discretion. b. Court accepted the agencys interpretation because the statute was ambiguous. c. Stevens dissented, claiming the statute was not ambiguous. He disparaged the majority for issuing a formulaic opinion that trivialized the art of judging. 3. Maislin Industries, US v. Primary Steel (1990) a. Statute says that a carrier may not charge or receive compensation for a service other than the rate specified in its tariff; b. ICC said that a different statutory provision that requires a carriers practices to be reasonable forbid carriers from claiming to file at one tax rate and later trying to get more money out of shippers. c. Court held that the statute prevented the ICC from outlawing this practice. d. Stevens dissented. 4. Christensen v. Harris County (2000) a. Administrator of the United States Department of Labors Wage and Hour division said, in an opinion letter, that the County could not accept compensatory time in lieu of compensation for overtime unless the County had made an agreement with the workers prior to doing so. b. County administered a policy that contradicted the opinion letter, and the employees sued. c. No deference given. An opinion letter is only entitled to respect. This letter gets no deference because it is not reasonable. d. Scalia, concurring: Opinion letter warrants Chevron deference because the Solicitor General filed an amicus brief that represents the position set forth in the letter. However, this is not a reasonable interpretation of the statute. 13

e. Breyer, dissenting: Labor Departments position is reasonable and should get deference under Chevron and Skidmore. 5. United States v. Mead Corporation (2001) a. Mead challenged a classification that subjected its day planners to a 4% tax. b. The classification was issued by Customs Headquarters in a ruling letter. Ruling letters are not subject to notice and comment, they can come from any one of 46 customs officers, are not binding, and they are only made available for public inspection. c. There is no Congressional intent to give Customs rulings the force of law. There is no indication of intent in the amendments to the statute, and the ruling letters are not subject to the procedural safeguards, such as notice and comment, that suggest the ruling letters should receive deference. d. Remanded in the event the case deserves Skidmore deference. e. Scalia, dissenting: A reasonable agency application of an ambiguous statute should be sustained because Congress gives the agency discretion as to how to resolve the ambiguity. The majority opinion will create confusion, an increase in informal rulemaking, and the exclusion of large portions of statutory law. 6. Implications of Mead: a. Chevron deference does not apply; Skidmore is the default in the sense that the extent of the influence is guided by Skidmore. b. Chevron, not Skidmore, is the special category: i. If Congress delegated, the agency is expected to speak with the force of law; ii. Inquiry asks what was Congressional intent and whether the agency acted with the force of law. iii. It is generally fair to assume that Congress contemplates giving the agency the authority to act with the force of law, but sometimes Chevron applies when there are no procedural safeguards. c. Touchstone is Congressional intent. d. Generally, rules that have been subject to notice and comment get Chevron deference. However, after Mead, there are lower court cases that have not given Chevron deference to rules promulgated through notice and comment. e. Mead flips the presumption of Chevron deference. f. Mead creates an incentive to send rules through notice and comment so that they can get Chevron deference. If you worry about litigation costs, Mead probably creates more. g. Mead is Chevron step zero: Congress gave the agency the authority to act with the force of law, and the agency acted with the force of law, grant Chevron deference. vi. Chevron and Textualism 1. Formulations of statutory clarity under Chevron Step 1: a. After using every interpretive device at your disposal, and after exhausting all your interpretive efforts, an answer emerges as correct; b. After using every interpretive device at your disposal, and after exhausting all your interpretive efforts, an answer emerges as correct with a very high level of confidence. In other words, you end up (after your exhaustive review) fairly certain that your answer is correct. Courts must have great confidence in their interpretation to find a statute clear. 14

c. After a relatively cursory review of the statute, an answer emerges as correct. The interpretation must arise from the words of the statute for a statute to be clear. d. After a relatively cursory review of the statute, an answer emerges as correct with a very high level of confidence. For a statute to be clear, there must be great confidence and the interpretation must arise from the words of the statute. e. When Chevron became popular, people assumed high level of confidence and clear from the text was the most preferable position. 2. Gonzales v. Oregon (2006) a. Oregon Death with Dignity Act insulates physicians who prescribe lethal doses of drugs for patients who request them from criminal liability. b. The lethal drugs are regulated under the Controlled Substances Act. In 2001, the Attorney General issued an interpretive rule that said prescribing for this practice was unlawful. c. Court held that the CSA gives the AG limited powers to be exercised in specific ways. The AG exercise here does not comport with that delegation. d. Because the Interpretive Rule was not promulgated pursuant to the AGs authority, it does not receive Chevron deference. It is eligible for Skidmore deference, but it is not persuasive, so it does not receive it. e. Scalia, dissenting: i. Under Auer v. Robbins, the AGs interpretation of legitimate medical purpose must be given deference; two conclusions follow naturally from this interpretation. ii. The interpretation of regulation at issue is the most natural interpretation, so it is correct under de novo review. iii. AGs interpretation of public interest and public health and safety are entitled to Chevron deference. 3. Babbit v. Sweet Home Chapter of Communities for a Great Oregon (1995) a. Secretary of the Interior promulgated a regulation that interpreted the term takings to prohibit significant habitat modification or degradation to where it actually kills or injures wildlife. b. Sweet Home Chapter of Communities for a Great Oregon brought action alleging that application of the harm regulation to the red-cockaded woodpecker injured them economically. c. The lower courts found that this reading of harm was not in line with the statute. Secretary of the Interior appealed. d. This reading of harm is sound. Congress did not unambiguously manifest intent to adopt opposing view; the interpretation is reasonable; deference is owed to this reasonable interpretation. i. Majority considers: 1. How the dictionary defines harm; 2. Broad statutory purpose; 3. Legislative history (not limited to text) e. OConnor, concurring: Regulation is appropriately limited to actual, possible foreseeable harm, rather than hypothetical harm. f. Scalia, dissenting: This interpretation makes nonsense of the word harm. It should take stronger evidence to make the court believe that Congress defined the term in this manner. i. Chevron in the dissent: 15

1. Congress spoke to the issue; 2. Agency regulation is NOT consistent with the statute using sources to discern textual meaning. 4. MCI Telecommunications Corp. v. American Telephone & Telegraph Co. (1994) a. 1934 Communications Act requires long-distance telephone carriers to file tariffs for services and rates with the FCC. b. FCC provided that only ATT, the historically dominant long distance carrier, was required to file tariffs. Other new long-distance carriers were not required to file tariffs. c. Court holds that this is a fundamental revision of the statute that cannot be classified as a modification under the act. The FCC interpretation cannot stand. d. Case turns on the definition of modification. Majority looks at dictionaries: i. Webster 2d gives a prescriptive definition of modification; ii. Webster 3d gives a descriptive definition of harm. e. Majority goes beyond the four corners of the document to determine the textual meaning. This is a step zero consideration: was it plausible Congress gave the agency interpretive authority over the word modify. f. Note that MCI introduces a new element to Chevron: the import of the decision affects the courts deference. g. Stevens, dissenting: Even if the sole definition of modify was make minor changes, further elaboration is needed to show why the detariffing policy should fail. This interpretation is supported through a series of rulings that gradually relaxed filing requirements. vii. Chevron Step 2 and More 1. Food and Drug Administration v. Brown & Williamson Tobacco Corporation (2000) a. In 1996, the FDA asserted jurisdiction to regulate tobacco products. b. The Act grants the FDA the authority to regulate drugs, devices and combination products. The FDA can restrict a device to sale, distribution, or use because of its potential for harmful effect or the collateral measures necessary for its use. c. The FDA issued regulations restricting the sale and distribution of cigarettes and smokeless tobacco to protect children and adolescents. d. The FDAs assertion of jurisdiction is impermissible because Congress precluded the FDA from asserting jurisdiction to regulate tobacco products. This is evident from the overall regulatory scheme and from tobacco-specific legislation Congress has enacted. e. Congress has foreclosed the removal of tobacco products from the market through six different pieces of legislation. f. Under the Act, the FDA would have to ban cigarettes, which clearly violates Congressional intent: Congress has enacted six separate pieces of legislation that address the problem of tobacco use and human health. Congress considered and rejected bills that would have given the FDA jurisdiction, and it preempted other regulation of cigarette labeling and advertising. g. Breyer, dissenting - Cigarettes come within the FDAs statutory authority for the following reasons: i. Tobacco products fall within the statutory definition; 16

ii. Statutes basic purpose is the protection of public health, which supports including cigarettes within its scope; iii. Congress did not bar FDA jurisdiction, and the FDA can change its policy. h. Policy points: i. Possible that the system has broken down and the agency should therefore step-in and fill the hole. The utter failure of Congress should allow the agency to act; ii. Its possible that this is how the system is supposed to look. Objection simply means you do not like the job Congress is doing. iii. Majority says that Congress directly spoke to the issue and the FDA loses. The majority does not limit itself to the four corners of the document. iv. When its a big issue, the court is more likely to say that Congress did NOT delegate to the agency. v. As more outside considerations come into the courts reasoning, Chevron becomes less predictable. 2. Massachusetts v. EPA (2007) a. In 1999, a group of private organizations petitioned the EPA to regulate the emissions of four greenhouse gases, arguing that the gases already met the EPAs statutory standard for regulation, and the EPA therefore had an obligation to regulate them. b. EPA denied the petition: i. Clean Air Act does not authorize mandatory regulations that address global climate change; ii. Fuel economy essential to regulate GHGs, but that had been delegated to the Department of Transportation; iii. Finding that GHGs threaten health/welfare does not require the administrator to issue standards; iv. Policy-based objections. c. Petitioners appealed to the DC Circuit. 2/3 judges said EPA properly exercised its discretion; 1 judge dissented: EPA relied on factors that were not relevant under the statute, but ignored the factors the statute required to inform the decision. d. Clean Air Act was enacted when the study of climate change was in its infancy. Since then, Congress has endorsed the study of climate change a number of times. e. The scope of review of the merits of statutory issues is narrow. Refusals to promulgate rules are susceptible to extremely limited and highly deferential judicial review. Clean Air Act permits reversal of any decision found to be arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law. f. Review of act: i. The Act DOES authorize EPA to regulate greenhouse gas emissions; ii. Statutory definition of air pollutant is unambiguous and forecloses EPAs reading; iii. EPA invokes post-enactment congressional actions and deliberations. They do not curtail EPAs power: collaboration and research can complement regulatory effort; iv. NOT like Brown & Williamson: 17

1. EPA jurisdiction would not lead to the extreme result present there; 2. Nothing counterintuitive in the idea that EPA can curtail emission of substances affecting the environment; 3. In Borwn, series of congressional enactments made sense against the backdrop of the FDAs statements that it lacked authority to regulate tobacco. g. Review of reasoning: i. EPA can avoid taking action only if it determines that greenhouse gases do not contribute to climate change or if it provides a reasonable explanation as to why it cannot exercise its discretion; ii. Policy judgments have nothing to do with whether greenhouse gas emissions contribute to climate change; iii. If scientific uncertainty precludes EPA from making a reasoned judgment, EPA must say so. h. Essentially, the EPA is unreasonably trying to carve things out of a broad definition: green house gases are pollutants. i. Scalia, dissenting: i. The policy rationales the Court criticizes are not divorced from the statutory text: the reasons EPA gave are reasons agencies regularly take into account, and the reading that the discretion is limited to EPAs judgment is reasonable. ii. Court errs when it concludes that the Clean Air Act authorizes EPA to regulate greenhouse gas emissions: 1. Greenhouse gases are not an air pollution agent or combination of such agents; 2. Term including is ambiguous, so the EPAs interpretation should be afforded Chevron deference. iii. Reasonable to conclude air pollutant distinct from air pollution: 1. Regulating buildup of CO2 in the upper reaches of the atmosphere is not the same as regulating a substance that is polluting the air. iv. Essentially: where a term is not defined by the statute, there is an ambiguity. Defer to EPAs interpretation. 3. Brown &Williamson and Mass v. EPA are similar in that neither of them is particularly deferential. 4. AT&T Corporation v. Iowa Utilities Board (1999) a. Before the Telecommunications Act, states gave local exchange carriers (LEC) exclusive franchises, which created local monopolies; b. Under the Act, states may no longer create such monopolies, and LECs have to facilitate market entry; c. FCC issued a report and order implementing local-competition provisions. LECs and States challenged these provisions, saying that States, not the FCC, had the authority to implement the Act; d. Court of Appeals held that the general rulemaking authority conferred on the FCC extended only to interstate matters; e. Court held: i. 201(b) grants the commission the authority to prescribe rules and regulations as may be necessary in the public interest to carry out the provisions of this act. This applies to the 1996 amendments. ii. Commissions application of network element is reasonable; 18

iii. Under 251 (d) (2), the commission, in considering what elements shall be made available for entrants, must consider whether access to network elements is necessary and whether failure to provide access would impair the entrants ability to provide services; iv. Commissions standards for necessary and impair allows entrants, not the commission, to determine whether they need access to certain elements; this is a misunderstanding of the statute. f. This is the only case to fail at Step 2. Step 2 is very, but not completely, deferential. At Step 2, the court is not construing the statute, but instead trying to figure out what falls within the range of reason. g. Souter, dissenting: i. Commissions interpretation of 251 (d) (2) is reasonable; ii. Courts reasoning rests on assessment that Congress would not have legislated if its only purpose was to adopt economic rationality. This fails to address the commissions reasoning as to why it adopted the standards it did; iii. Commission was reasonable, and therefore deserves Chevron deference 5. National Cable and Telecommunications Assn v. Brand X Internet Services (2005) a. Telecommunications Act defines two categories of regulated entities: telecommunications carriers and information-service providers. After a notice and comment rulemaking, the Telecommunications Association decided that broadband internet service is an information service; b. Relying on AT&T Corp. v. Portland, the Ninth Circuit vacated this ruling; c. Court held: i. Chevron applies; ii. Congress gave the Commission the authority to execute and enforce the Communications Act, and the Commission issued the order under review pursuant to that authority; iii. Courts prior judicial construction of a statute trumps an agency construction only if the court held that its construction follows from the unambiguous terms of the statute and therefore leave no room for agency discretion; iv. Contrary rule would preclude agencies from revising unwise judicial constructions of ambiguous statutes; v. After a court issues a construction of a statute, an agency can chose a different construction; vi. Court of Appeals erred in refusing to apply Chevron. d. Agencies like Brand X. Brand X best understood if Chevron is taken as a rule of statutory construction that best applies democratic accountability. e. Stevens, concurring: Court of Appeals decision does not foreclose a contrary reading by an agency, but a SCOTUS decision might. f. Breyer, concurring: i. Writes to refute Scalias reading of Mead; ii. Under Mead, agency action qualifies for Chevron deference when Congress has delegated to the agency the authority to fill a statutory gap; iii. Absence of notice and comment rulemaking neither necessary nor sufficient: other ways to arrive at an authoritative interpretation 19

OR Congress may not have left an issue that went through notice and comment up to an agency. g. Scalia, dissenting: i. Mead limited the categories of agency action that would qualify for Chevron deference; ii. Court invents novelty: judicial decisions subject to reversal by Executive officers. 6. Entergy Corp. v. Riverkeeper, Inc. (2009) a. Under the Clean Water Act, the EPA regulates cooling water intake structures, so long as they reflect the best technology available for minimizing adverse environmental impact. b. EPA implemented Phase II national performance standards that did not require closed cooling systems. Even though they would create more effective reductions, the EPA concluded they were not cost-benefit justified; c. Environmental groups challenged the regulations, and the Second Circuit held that the act precluded cost-benefit analysis in setting these standards; d. Court held: i. EPA relied on best technology available standard; ii. It is reasonable to conclude that best technology available is that which most efficiently produces some good; iii. Respondents contend that minimize means reduce to the smallest amount possible, but it is a term that admits of degree; iv. Best technology available does not preclude cost-benefit analysis; v. Failure to authorize cost-benefit analysis does not preclude its use: this would mean that the EPA could not consider any factors in implementing the statute; vi. It was well within the bounds of reasonable interpretation to conclude that cost-benefit analysis is not forbidden; vii. EPAs practice is a reasonable and therefore legitimate exercise of its discretion. e. Breyer, concurring in part, dissenting in part: i. The relevant language DOES authorize the EPA to compare costs and benefits; ii. However, the legislative history reveals that the bills sponsors intended the law to restrict the use of cost-benefit analysis; iii. The EPAs reading of the statute would permit it to describe environmental benefits in non-monetized terms and to evaluate costs and benefits in accord with its expert knowledge and scientific judgment. f. Stevens, dissenting: i. EPA is not authorized to use cost-benefit analysis in setting regulatory standards; ii. Congress typically decides when it is appropriate for an agency to use cost-benefit analysis in crafting results. We should not treat a provisions silence as an implicit source of cost-benefit authority; iii. Analysis of the CWAs structure and legislative history shows that Congress granted EPA authority to use cost-benefit analysis in some contexts, not others, and Congress intended to control when cost-benefit analysis should be used; 20

iv. The EPA is without authority to use cost-benefit analysis in setting BTA standards. 7. Federal Express Corp. v. Holowecki (2008) a. The Age Discrimination in Employment Act of 1967 provides that a civil action enforcing the act must be filed with the EEOC 60 days before the charge is formally filed. b. Petitioner submitted a form and attached an affidavit; the question is whether this was a charge. c. The ADEA does not exhaustively define charge; the EEOC holds that the proper test for determining whether a filing, taken as a whole, should be construed as a request by the employee for the agency to take whatever action is necessary to vindicate her rights. d. Where ambiguities in statutory analysis and application are presented, the agency may choose among reasonable alternatives. e. Having determined that the agency acted within its authority in formulating the rule that a filing is deemed a charge if the document reasonably can be construed to request agency action and appropriate relief on the employees behalf, the question is whether the filing here meets this test. The agency says it does, and we agree. The agencys determination is a reasonable exercise of its authority to apply its own regulations and procedures in the course of the routine administration of the statute it enforces. c. Arbitrary and Capricious/ Hard Look Review i. General Notes 1. Always start with the organic act, the APA is just a gap filler; 2. If there is no specific position in 706 Scope of Review, 706 (2) (a) is the default, calling for arbitrary and capricious review; 3. 706, Scope of review, (2): a. b) contrary to constitutional right, power, privilege or immunity; b. c) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; c. d) without observance of procedure required by law; d. f) unwarranted by the facts to the extent that they are subject to de novo review; e. Court shall review the whole record or those parts a party cites; the court shall take account of prejudicial error. 4. In hard look review, courts want to see that the agency thought about questions and formulated a non-arbitrary response. Courts want to know procedurally what the agency did and substantively why it decided as it did. 5. In reviewing agency action, the fear is that agencies will act at the behest of powerful public interest groups. 6. In arbitrary and capricious review, the court needs information from the agency to get traction. As a formal matter, an agency does not have to keep a record of its entire decision-making process. However, if there is no record, top-decision makers will have to testify to justify every agency action. Thus, existences of hard-look review incentivizes agencies to keep a record of their entire decisionmaking process. ii. Scenic Hudson Preservation Conference v. FPC (I) (2d Circ, 1965) 1. FPC granted Consolidated Edison a license to construct a hydroelectric plant;

21

iii.

iv.

v.

vi.

2. SHPC petitioned to have the order granting the license set aside on the grounds that FPC violated its statutory duty to evaluate and consider alternative projects that are less expensive and that have a lesser impact on the environment; 3. The FPC must consider alternative projects, even after the close of hearings and grant of the license according to their relative merits in serving consumer needs and protecting the environment. Here, the failure to review an alternative project was a breach of the FPCs statutory duty; 4. Failure to consider the alternative or to create a record sufficient for review concerning its reasons for denying the alternative project render the order and license invalid. Scenic Hudson Preservation Conference v. FPC (II) (1972, rehearing affirmed by equally divided court, cert denied) 1. After review hearings, the FPC awarded Con Ed a license to build a slightly different facility than that licensed in Scenic Hudson I. SHPC once again sued to have the license set aside; 2. Because the findings upon which the FPC based its decision to grant the license were based on substantial evidence in the record, the FPC complied with the remand instructions. License upheld. Citizens to Preserve Overton Park, Inc. v. Volpe (1971) 1. Federal Statutes prohibited the authorization of federal funds to build highways through public parks if a feasible and prudent alternative route existed. 2. Volpe approved authorization of federal funds for a highway to be built through Overton Park. 3. Citizens challenged the authorization, objecting that the Secretary was bound to make formal findings and state his reasons. On review, Citizens contended that courts must either engage in a de novo review of the facts OR review the findings for substantial evidence. 4. District court upheld the Secretarys findings. 5. The court must determine whether: a. the action was within the agencys statutory authority; b. the action was arbitrary, capricious, an abuse of discretion, or otherwise contrary to law; c. the agency followed procedural requirements. 6. De novo review is only used in review of adjudicative actions where the agencys finding procedures are inadequate. 7. Here, the hearing was quasi-legislative. Because the secretary was within his statutory authority, because his decision was based on considerations of the relevant factors, and because he followed proper procedural requirements, his determination must be upheld. Implications of Overton 1. After Overton, courts in the business of reviewing the substantive decisions agencies made; 2. Overton is a widely celebrated case; 3. Courts are more deeply in the agency process than the bare words of the APA require; 4. Process reviewed in the context of whether or not agency action was arbitrary or capricious. Can be understood as a means of working out the non-delegation doctrine. Pension Benefit Guaranty Corp. v. LTV Corp (1990)

22

vii.

viii.

ix.

x.

1. Pension Benefit Guaranty Corporation (PBGC) permitted LTV to terminate pension obligations because LTV was failing financially. When LTVs fortunes reversed, PBGC demanded LTV restore the old pension plans. 2. Second Circuit held that this was arbitrary because PBGC did not show it had considered federal pension guaranty law, bankruptcy, and labor law. 3. Supreme Court reversed: a. The statute authorized PBGC to restore a plan where consistent with its duties; b. This rule would subject many agency decisions to reversal: permit reversal every time an agency failed to explicitly consider a statutory policy; c. PBGC has no expertise in other fields of law, so it may be ill-equipped to consider them. National Coalition Against Misuse of Pesticides v. Thomas (DC Circuit, 1987) 1. EPA set a zero-tolerance for ethylene dibromide in imported mangoes. It changed the tolerance level, permitting 30 million ppb because zero tolerance would have an adverse impact on the economies of less developed nations; 2. DC Circuit invalidated: the relevant statute gave EPA the authority to regulate to the extent necessary to protect public health, but did not authorize it to take the economic welfare of foreign nations, the determinative factor, into consideration; 3. EPA kept the rule but rephrased the justification: effective enforcement of food safety laws depends on cooperation between the US and various food-importing nations that could increase the likelihood that foods treated with unsafe pesticides would be imported into the US. Community Nutrition Institute v. Vergland (DC District Court,1989) 1. Federal legislation directed the secretary of agriculture to adopt regulations identifying nutritious foods to be provided to schoolchildren under federally assisted school lunch programs; 2. Nonprofit nutrition organization challenged the secretarys adoption of regulations authorizing the sale of non-nutritious foods fortified with nutrient additives; 3. Judge found that the challenged regulations reflected thorough inquiry and analysis, but invalidated them anyway: a. Secretarys general statement concludes that fortified snack foods should not be encouraged; b. FDA has promulgated guidelines that discourage fortification of snack foods; c. Congressmen were critical of the proposition of fortified snack foods being available in schools; d. Weight of evidence and expressions of congressional concern show that regulations were irrational and arbitrary. Microcomputer Technology Institute v. Riley (5th Circuit, 1998) 1. FAA adopted a new interpretation of an old regulation, which it wanted to apply retroactively; 2. Court held that retroactive application was arbitrary and capricious: a. Agencys departure from previous interpretation and the reasonableness of the aggrieved partys reliance v. statutory or regulatory interest in retroactivity; b. Chevron inapplicable because retroactivity does not involve policy considerations, but instead involves settled principles of law. US Air Tour Assn. v. FAA (DC Circuit, 2002) 23

1. FAA issues a rule to reduce aircraft noise in the Grand Canyon. Grand Canyon challenged the rule because it only considered the noise produced by air tour operators, and did not consider noise from other aircrafts that fly over the Grand Canyon; 2. Court invalidated the rule because in failing to consider relevant criteria, the rule overstated how quiet the Grand Canyon actually is, and was therefore less stringent than it should have been. The decision to rule out the other aircraft was arbitrary and capricious. xi. Motor Vehicle Manufacturers Association v. State Farm Mutual Automobile Insurance Co. (1983) 1. NB: This is the case in which SCOTUS signs on to hard look review. 2. Standard 208 was promulgated by the Department of Transportation dealing with motor vehicle occupant safety. Between 1976 and 1980, a mandatory passive restraint requirement was issued. Two systems satisfied the standard: an air bag system and a passive seat belt system, with the choice of system left up to the manufacturer. 3. By 1981, 99% of the cars produced were being equipped with passive belts, which could be detached easily and permanently. Even though studies, surveys, and other empirical evidence indicated that the use rate associated with passive belts was more than double that associated with manual belts, the NHTSA concluded that the safety benefits associated with the standards implementation did not justify the costs of implementing the standard. NHTSA, without considering the possible use of air bags, rescinded the passive restraint requirement. 4. The Court of Appeals found the revocation of the passive restraint requirement arbitrary and capricious. The NHTSA appealed. 5. When an agency rescinds or modifies a previously promulgated rule, it must supply a satisfactory, rational analysis supporting its decision. 6. The agency must show a rational connection between the facts found and the decision rendered. 7. If an agency relies on improper factors, fails to consider important aspects of the problem, or renders a decision that runs against the evidence, its decision may be arbitrary and capricious. 8. Here, the logical response would have been to require air bags. The NHTSA did not even consider this. A rational rescission decision cannot be made without the consideration of technologically feasible alternatives of proven value. The empirical evidence runs against the agencys determination that the safety aspects associated with the use of passive belts could not be determined. 9. By failing to consider feasible, logical alternatives and dismissing the safety benefits associated with passive restraints in light of the evidence, the NHTSA failed to present an adequate basis or explanation for rescinding the mandatory passive restraint requirement. xii. Federal Communications Commission v. Fox Television Stations, Inc. (2009) 1. The Communications Act of 1934 prohibits a broadcast licensee from uttering any obscene, indecent, or profane language by means of radio communication. 2. Full context in which particular materials appear is critically important but a few principal factors guide the inquiry such as the explictness or graphic nature of the material, the extent to which the material dwells on or repeats the offensive material, and the extent to which the material was presented to pander, titillate, or to shock. 24

3. In 2004, the Commission declared that a nonliteral use of the F and S words could be actionably indecent, even where the word is used only once. 4. Here: a. Cher, 2002 Billboard Music Awards, Ive also had critics for the last 40 years saying I was on my way out every year. Right. So f*** em. b. Nicole Richie, 2003 Billboard Music Awards, Why do they even call it The Simple Life? Have you ever tried to get cow s*** out of a Prada purse? Its not so f***ing simple. 5. Both broadcasts fell within the Commissions indecency test: a. Literal description of excrement b. Invoked the F-Word c. Patently offensive under community standards for the medium. d. Golden Globes order eliminated any doubt that the fleeting expletives could be actionably indecent; disavowed contrary dicta. e. Order declined to impose any forfeiture or other sanction. 6. Court of Appeals for the Second Circuit set aside the order as Arbitrary and Capricious. 7. No basis in the APA or case law for a requirement that all agency change be subject to more searching review. 8. When an agency changes its policy it need not demonstrate to a courts satisfaction that the reasons for the new policy are better than the reasons for the old one; it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency believes it to be better. 9. Not arbitrary or capricious: a. Commission acknowledged that its recent actions broke new ground; explicitly disavowed inconsistent prior opinions as no longer good law b. Agencys reasons for expanding the scope of its enforcement activity were entirely rational c. Commission could rationally decide to step away from its old regime because it was at odds with its overall policy. d. Technological advances that make it easier to bleep out words support the enforcement policy. 10. Stevens, dissenting: a. There should be a strong presumption that the FCCs initial views reflect the views of the Congress that delegated authority to flesh out the enabling statute; b. It makes sense to require the Commission to justify why its prior policy is no longer sound before allowing it to change course. 11. Breyer, dissenting: a. Agencies must offer a rational explanation of why they changed policies; b. This is not a heightened standard of review, but instead the same standard of review applied to different circumstances; c. FCC did not address the First Amendment concerns implicit in the fleeting expletive policy; d. FCC failed to consider the impact of its policy upon local broadcasting coverage: smaller, independent broadcasters unlikely to be able to afford bleeping technology. e. Explanations the FCC offered do not address the shortcomings. d. Agency Bias in Rulemaking i. Association of National Advertisers v. FTC (1980) 25

1. In 1977, Chairman Michael Pertschuk of the FTC gave a speech in which he suggested that advertising aimed at children harms them. 2. In April 1978 the commission issued a notice of proposed rulemaking that considered banning televised advertising of sugared products on childrens programs. 3. The District Court held that Pertschuk should be disqualified under Cinderella. 4. Any suggestion that congressmen may not prejudge factual and policy issues is fanciful. 5. In determining the due process standards applicable in a section 18 proceeding, we are guided by its nature as a rulemaking. Congress is under no requirement to hold an evidentiary hearing prior to its adoption of legislation and Congress need not make that requirement when it delegates the task to an administrative agency. 6. We never intended the Cinderella rule to apply to a rulemaking procedure such as the one under review. Legislative facts adduced in rulemaking partake of agency expertise, prediction, and risk assessment. Application of Cinderellas strict lawfact dichotomy would necessarily limit the ability of administrators to discuss policy questions. 7. The Cinderella view of a neutral and detached adjudicator is simply an inapposite role model for an administrator who must translate broad statutory commands into concrete social policies. If an agency official is to be effective he must engage in debate and discussion about the policy matters before him. 8. A Commissioner should be disqualified only when there has been a clear and convincing showing that the agency member has an unalterably closed mind on matters critical to the disposition of the proceeding. The clear and convincing test is necessary to rebut the presumption of administrative regularity. The unalterably closed mind test is necessary to permit rulemakers to carry out their proper policy-based functions while disqualifying those unable to consider meaningfully a section 18 hearing. e. Consideration of Risk Regulation

26

VI.

Procedural Requirements: Rulemaking and Adjudication a. APA Requirements and the Interplay between Rulemaking and Adjudication i. Formal rulemaking is almost the null set; formal usually means adjudication; ii. Different number of parties to a rulemaking than to adjudication; iii. Relief is different. Adjudication is limited in scope, while rulemaking is expansive. iv. Rulemaking can be appealing because it allows the agency to control the agenda; adjudication involves multiple sides that cannot be controlled. v. Rulemakings are more visible; rulemaking is more likely to be covered by a newspaper. vi. In adjudication, apply rules in a flexible context, but their scope is limited. vii. 553 1. (b) general notice of proposed rulemaking. 2. (c) interested parties allowed to submit comments. viii. Courts keep agencies politically accountable because they are NOT democratically accountable. ix. The administrative state is such that there is no non-delegation doctrine, and there is no formal rulemaking. x. Effect of the case law is to change 553 from a rule-making to a rule-adopting process. 1. This can be seen negatively: the public is not commenting when the agency is formulating policy. xi. Final rule must be a logical outgrowth of the proposed rule. A citizen should not be surprised by the final rule. If a citizen is proposed, there has been a procedural error. Agencies rarely lose on logical outgrowth. xii. Under logical outgrowth, Portland Cement makes 553 more stringent than one might assume. xiii. Challenges to rulemaking are generally decided at summary judgment. xiv. Concise statement at the beginning of a rule is no longer very concise. xv. The APAs innovation is the formal comment process. xvi. For agencies, its tempting to avoid notice and comment procedures. 40% of rulemakings take place outside of notice and comment. b. Rulemaking Requirements i. National Petroleum Refiners Association v. FTC (1973) 1. FTC promulgated a regulation declaring it illegal to fail to post octane rating numbers on gas pumps. National Petroleum challenged the regulation, claiming that the FTCs rulemaking power was limited to nonadjudicatory investigative functions, and did not extend to substantive rulemaking power. 2. District court found that the FTC lacked substantive rulemaking power. The FTC appealed. 3. Court held: a. FTC is empowered to promulgate rules defining statutory standards of illegality. b. Substantive rulemaking is fairer to regulated parties than total reliance on case-by-case adjudication. ii. NLRB v. Wyman-Gordon Co. (1969) 1. NLRB ordered Wyman-Gordon to provide a list of its employees names and addresses to labor unions who wanted to organize them. This action was supported by the NLRBs decision in Excelsior. Court of Appeals vacated the order because the Excelsior order was effectively a rule, but the NLRB had not gone through the rulemaking procedure. 2. Plurality held that the rule in Excelsior was invalid, because it did not comply with rulemaking procedures in the APA, but the order was valid, and WymanGordon was required to obey it. 27

3. Black, concurring: a. Pluralitys rationale is flawed: courts should not be required to enforce orders that are based on invalidly adopted rules. b. Here, however, the requirement was not improper. It arose during an adjudication, and the NLRB followed all the procedural requirements for an adjudication. 4. Douglas, dissenting: a. Excelsior rule applied prospectively, to cases in general. It therefore should have gone through the procedural requirements of the APA. 5. Harlan, dissenting: a. Under the APA, an agency is not adjudicating when it fashions a rule but fails to apply it to the current dispute. b. The rule in Excelsior required compliance with the APA rulemaking procedures. c. Case should be remanded to the NLRB for reconsideration. iii. United States v. Florida East Coast Railway (1973) 1. ICC ordered a per diem rate charge on the rental of freight cards. Under the Interstate Commerce Act, the Commission had the authority to impose such charges after hearing. Florida East Coast Railway challenged the order, claiming that the language triggered the formal rulemaking procedures of the APA. District Court held that 556 applied, and vacated the order. 2. Supreme Court held that after hearing did not require a formal hearing on the record. The hearing requirement of ICA only requires a notice and comment rulemaking proceeding, not an adjudication of individual rights. 3. After this case, 556 and 557 are only triggered if the organic act says after hearing on the record. After hearing does not trigger the requirements. 4. In part as a result of this case, formal rulemaking has withered into nothing. This leads to a shift from adjudication to notice-and-comment rulemaking under 553. 5. Douglass, dissenting: a. Florida East Coast was prejudiced by being limited to written objections. The informal procedure violated the APA and the order is invalid. iv. FPC v. Texaco, Inc. (1964) 1. Natural Gas Act allowed the FPC to set hearings on applications for certificates of public necessity which were required before a company could sell natural gas to pipeline companies. Texacos application was dismissed without a hearing; it brought suit claiming it was denied due process. Lower court held for Texaco. 2. Supreme Court held that the FPC can validly deny a hearing and dismiss an application that does not conform to standards promulgated under the commissions rulemaking power. 3. The FPC can condition acceptance of applications on threshold requirements. Requiring a hearing in every case would lead to numerous proceedings on the same issues. v. Heckler v. Campbell (1983) 1. Department of Health and Human Services adopted regulations that factored a disability claimants age, heath, education and experience and set rules that said whether the applicant was qualified for a significant number of jobs. Before the guidelines were adopted, vocational experts made determinations on a case-bycase basis. Campbell was denied benefits after use of the guidelines. Court of Appeals held the DHHS must identify specific alternative jobs for an applicant. 2. Supreme Court held that the DHHS may rely on published medical-vocational guidelines to determine a claimants right to Social Security disability benefits. 28

The requirement of individualized treatment does not prohibit an agency from using standards not requiring case-by-case treatment. c. Exceptions to Notice-and-Comment Rulemakings i. APA 1. 553: Rulemaking a. a) General Exceptions: i. 1) military or foreign affairs of the United States; ii. 2) matter relating to agency management or personnel or to public property, loans, grants, benefits or contracts b. b) Exceptions to notice an comment procedures: i. A) interpretative rules, general statements of policy, rules of agency organization, procedure, or practice; or ii. B) when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefore in the rules issued) that notice and public procedure thereon are impracticable, unnecessary or contrary to the public interest. ii. Determining the difference between types of rules 1. If a rule creates a binding norm, it is legislative or substantive. 2. If you are required to do x, it is legislative or substantive. 3. The fear is that an agency will claim a rule is non-binding, but will always use a guidance document in a particular way. 4. An agencys statement that something is a policy statement is persuasive but is not dispositive. 5. At some point, we want the agency to put something in the form of a rule. 6. California requires almost all guidance documents to go through notice-andcomment rulemaking. 7. OMB and OIRA review guidance documents in addition to significant legislative and substantive rules. 8. Procedural rules do not but code/substantive value statements on private actors. 9. Good cause is the most commonly used exception a. Used when it is contrary to the public interest to go through notice-andcomment rulemaking; b. Courts have said agencies must show a true genuine problem 10. Agencies sometimes issue rules on an interim basis: a. Rules issued on an interim basis still impose costs; b. Fear that agencies will perpetually evade notice-and-comment. 11. Interim Final Rules a. Agency sometimes issues an interim rule at the same moment it issues a notice of proposed rulemaking i. Agency tries to invoke the emergency exception; ii. Even if agency cannot claim the emergency exception, it is implementing the notice and comment process. 12. When there is environmental damage, agencies must clarify. iii. United States v. Nova Scotia Food Products Corp. (2d Circuit, 1977) 1. FDA conducted notice and comment rulemaking proceedings to promulgate safety regulations for the fish smoking industry. The FDA sued to enjoin Nova Scotia from processing hot-smoked whitefish in violation of the regulations. 2. Became clear that the FDA did not make a record of its rulemaking proceedings. Record was reconstructed, and it became apparent that questions that addressed the need and wisdom of applying these regulations to processing whitefish were dealt with in a cursory manner. 29

iv.

v.

vi.

vii.

3. Court held that the proceedings were inadequate: the FDA did not disclose what scientific data it relied on, and the FDA dealt with the concerns of Nova Scotia in a cursory manner. Agencies are not at liberty to obscure the reasons for their decisions or to leave vital questions completely unanswered. Weyerhauser Co. v. Costle (D.C. Circuit, 1978) 1. EPA promulgated a series of effluent-limitation regulations. Weyerhuaser challenged the manner in which the EPA computed the secondary waste-load. After it computed the waste load, the EPA considered new data and recalculated the load at a lower level. EPA modified its cost calculation again on an assumption it later admitted erroneous. 2. Court held that the absence of the factual basis and legislative purpose behind the agencys actions, coupled with the denial of the opportunity to comment on these facts, undermines the assumption that notice and comment proceedings will achieve rational results. 3. EPAs decision did not grow out of the notice and comment process. It instead grew from a complex interaction of uncommented on and controversial data. The regulations cannot stand. Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council (1978) 1. Atomic Energy Commission granted Vermont Yankee a license to operate a nuclear power plant, using a licensing standard the Commission developed in a rulemaking procedure. 2. Proceedings conformed with 553 of the APA but the court of appeals invalidated the formula and the licenses holding that the AEC should have used stricter investigative standards. 3. Court held that a reviewing court cannot impose more stringent procedural requirements than those outlined in the APA. An agency may conduct more stringent requirements than those outline in the APA, but it cannot be compelled to do so by a reviewing court. 4. Case remanded to see if it was validated under 553. American Hospital Association v. Bowen (DC Circuit, 1987) 1. Department of Health and Human Services contracted with Peer Review Organizations to oversee the expenditure of Medicare dollars by doctors and hospitals. HHS promulgated regulations concerning the organization of PROs without following notice and comment procedures. 2. Court held that notice and comment provisions do not apply to interpretive rules, general statements of policy, or rules of agency organization, procedure or practice. 3. The terms of the contracts between the PROs and HHS set goals rather than imposing definite standards. They are thus statements of policy exempt from procedural requirements. 4. Exemptions for interpretive rules allow agencies to explain ambiguous terms in legislative enactments without having to undertake cumbersome proceedings. The exemption for general policy statements allows agencies to announce their tentative intentions for the future without binding themselves. Appalachian Power Co. v. EPA (2000) 1. Following notice and comment EPA issued regulations providing that where an applicable federal or state emissions standard does not require periodic testing or monitoring to demonstrate compliance with the permit, states must include monitoring requirements in its permits. 2. EPA published a periodic monitoring guidance document on its website. 30

3. Court held that the Guidance was a final binding determination that amended the 1992 regulations by requiring states to include additional monitoring requirements in permits. d. Consequences of the Transformation of Notice-and-Comment Rulemaking i. Community Nutrition Instituted v. Young (1987) 1. FDA established action levels of no more than 20 ppb of aflatoxin, which occurs naturally in corn. FDA tried to fit this rule into the 553 exception for interpretive rules and general statements of policy. 2. The language the FDA uses suggests that the action levels have a present effect and are binding. 3. Confirmed by the fact that FDA considers it necessary for food producers to secure exceptions to the action levels. 4. FDA has made statements indicating that action levels establish a binding norm. 5. This holding does not mean that any time an agency issues a written guideline the court can change it into a binding norm. 6. Because the FDA has chosen to have its actions have a binding effect, it must use notice and comment rulemaking. 7. Dissent: a. The correct measure of a pronouncements force in subsequent proceedings is practical: must the agency show that the pronouncement has been violated, or must the agency show that pronouncement is justified in light of the underlying statute and the facts. ii. Professionals & Patients for Customized Care v. Shalala (1995) 1. Nine factor test that the FDA classified as a statement of policy and advisory opinion designed to guide agency enforcement personnel but not establishing a legal standard did not establish a legislative rule because CPG did not draw a line in the sand that removes all discretion from the agency. iii. United States Telephone Association v. FCC (1994) 1. An order to adopt more specific standards for assessing penalties that specified an exhaustive framework for sanctions was not a general statement of policy exempt from notice-and-comment rulemaking. iv. American Mining Congress v. US Department of Labor (1993) 1. Program Policy Letters were interpretive and not subject to notice and comment rulemaking. 2. A rule does not become an amendment because it supplies crisper and more detailed lines than the authority being interpreted. 3. A non-legislative rules capacity to have a binding effect is limited in practice by the fact that agency personnel at every level act under the shadow of judicial review. 4. Because failure to provide notice and comment means affected parties have not had prior formal opportunity to present their contentions, judicial review for want of reasoned decision-making is likely to take place in review of agency actions implementing the rule. v. Jerris Ceramic Arts v. Consumer Product Safety Commission (1989) 1. Under the old rule, the CPSC excluded paper, fabric, yarn, fuzz, elastic and string and pieces of those materials from a regulation. In 1987, the CPSC changed the rule and decided that the excision only applied to pieces that might become detached from another object. 2. The court held that this was NOT an interpretive rule: a. Clear intent of eliminating a former exemption and providing the Commission power to enforce violations of a new rule; 31

vi.

vii.

viii.

ix.

b. Full range of civil and criminal penalties; c. Imposes new duties that have the force of law; d. Changes a previous longstanding position; e. Directly impacts an enormous range of childrens products industries. New York City Employees Retirement System v. SEC (1994) 1. SEC no action letter stating it would not bring an enforcement action if Cracker Barrel omitted management proxy materials proposed by its shareholders was not interpretive because it was not binding on the parties or the courts, and was subject to reconsideration by the SEC. Hoctor v. US Department of Agriculture (1996) 1. Rule stated that animals must be kept in a sound structure. 2. Internal memorandum stated that dangerous animals must be kept inside a fence that is at least 8 feet height. 3. 8 foot provision could not be adopted without notice and comment: a. Not an interpretation of any specific statutory provision; b. Without more explanation from the department, it could not be defended as an interpretation of the structurally sound regulation because it was essentially arbitrary. Air Transport Association of America v. Department of Transportation (1991) 1. FAA issued Penalty Rules for violating the FAA without notice and comment procedures. 2. FAA argues that the rules establish procedures for adjudicating civil penalty actions and are thus exempt from notice and comment because they are rules of agency organization, procedure, or practice. 3. Prior cases employ a functional analysis: do nominally procedural rules encode a substantive value judgment or substantially alter the rights or interests of regulated parties? If yes, notice and comment. 4. These rules substantially affect a civil penalty defendants right to an administrative adjudication. A party has a right to notice and a hearing before being forced to pay a monetary penalty. 5. Congress meant to distinguish between rules affecting different subject matters. Members of the aviation committee had a legitimate interest in participating in the rulemaking process. 6. Dissent: a. Rules that deal with enforcement or adjudication of claims of violations of the substantive norm but that do not purport to affect the substantive norm are clearly procedural. b. The majority approach assumes the conclusion by describing petitioners interest in the agencys adjudicatory procedures as if it were a substantive right. Chamber of Commerce v. Department of Labor (1999) 1. OSHA implemented the Cooperative Compliance Program that sought to induce employers with a particularly poor history of worker safety to take steps beyond those required by law. 2. Agency argued that the Directive fell into the 553 exception for rules of procedure and general statements of policy. 3. Distinguished procedural rules which do not alter the rights or interests of the parties from substantive rules that have a substantive impact on private parties and put a stamp of agency approval or disapproval on a given type of behavior. Distinction difficult to apply because even a purely procedural rule can affect the substantive outcome of an agency proceeding. 32

4. The leverage of the inspection power meant that the Directive would have the same impact on employer interests as a substantive rule directly mandating Program requirements. 5. Not a general statement of policy because the Directive mandated inspection of facilities on the list and removal from the list facilities that agreed to the program. x. USA Group Loan Services v. US Department of Education (1996) 1. DOE adopted regulations imposing unlimited liability on servicers for violations of laws that result in losses to the programs that the department is unable to recoup from the servicers clients. A 1992 amendment required the department to submit draft regulations to a process of negotiated rulemaking. 2. Servicers challenged the rule contending that the department negotiated in bad faith. 3. Comments part of comment and notice rulemaking would be irrelevant if the agency was already bound by promises it made to the industry. 4. The act simply creates a consultative process in advance of the more formal arms length procedure of notice and comment rulemaking. xi. E-Rulemaking 1. Attractive because it provides greater opportunity for we the people to comment. Might allow for real citizen participation. 2. Some studies suggest that comments made by individuals sometimes make a difference even though less so than comments made by lawyers who are regular players 3. E-Rulemaking does not give a representative sample of the populous. 4. Agencies assume comments from individuals are unlikely to add.

33

VII.

Common Law Requirements a. Consistent Explanation Chenery i. SEC v. Chenery Corp. (I) (1943) 1. Respondents, who controlled the Federal Water Service Corporation, negotiated a voluntary reorganization with the SEC. As they were negotiating, respondents purchased stock that, under one scheme, would have given them the controlling share of the company. 2. SEC did not think it fair to allow respondents to control the company while they were negotiating its reorganization. 3. Plan was amended so that the stock was not stock in the reorganized company. 4. Commission ruled that management violates its duty of fair dealing if those who control the corporation purchase its stock. 5. Commission acted as a court of equity. The grounds upon which an administrative order must be judged are those upon which the record discloses that the action was based. If an order is valid only as a determination of policy or judgment that the agency alone is allowed to make, and which it has not made, judicial judgment cannot stand in for administrative judgment. 6. In evolving standards of fairness and equity, the Commission is not bound by settled judicial precedents. Commissions actions must be judged by settled judicial precedent. 7. Effect of trading by management is measured by its relation to the timing and dynamics of the reorganization. Commission uniquely poised to articulate this standard. 8. The commission did NOT rely upon its special judicial competence. The judgment can only stand if the specific transactions showed that respondents misused their position. The Commission did not make findings or present reasoning that make its decision consistent with the act. 9. An administrative order cannot be upheld unless the grounds upon which the agency acted in exercising its powers were those upon which its action can be sustained. 10. NB: a. This case is about political accountability. Decisions MUST have a rational basis. Clever arguments will not justify agency action. The arguments must have been adopted by the agency at the time of rulemaking. b. The rule from Chenery I is bedrock administrative law. c. This case stands for the proposition that post-hoc rationalizations will not stand. 11. Black, dissenting: a. The grounds upon which the Commission made its findings are clear. b. Just because the Commission relied on common law does not mean its actions were not based upon its experience. c. Requiring detailed findings of fact can bog the administrative power in a quagmire of minutiae. ii. Federal Water Service Corp. (SEC Decision on Remand, 1945) 1. It is the responsibility of the plans proponents to show that the plan is fair and equitable under Section 11(e). 2. Because achieving personal gain through the use of fiduciary power is unfair, the incentive to misuse this power must be removed. 3. Commission does not have to adopt a rule, even though the Supreme Court recommended it. 34

iii. SEC v. Chenery Corp. (II) (1947) 1. After a thorough examination of the problem in light of the purposes and standards of the Holding Company Act, the Commission has concluded that the proposed transaction is inconsistent with the standards of 7 and 11 of the Act. 2. The view advanced by Chenery would create a regime in which the rule would have to be prospective and would have no effect on this situation. This grows out of a misapprehension of the prior decision. When the case left the court the unsettled question was what the Commission might decide if it gave the facts proper administrative and statutory considerations. 3. Just because the prior decision said that the Commission might have promulgated a general rule, we did not imply that the Commissions failure to anticipate this problem withdrew the agencys power to perform its statutory duty. 4. The Commission has the ability to make prospective laws, and has less reason to rely upon ad hoc adjudication to make such orders. An administrative agency must have the freedom to act either by general rule or individual order. 5. There is a definite place for case-by-case evolution of statutory standards. The choice between proceeding by general rule or by individual litigation should lie with the informed discretion of the administrative agency. 6. Every case of first impression has a retroactive effect, whether the new principle is announced by a court or by an administrative agency. This retroactivity must be balanced against the mischief of producing a result contrary to a statutory design or to legal or equitable principles. 7. Here, the commission has made a thorough examination of the problem. The breadth of the statutory language precludes a reversal of the Commissions judgment. 8. NB: a. This case stands for freedom of agency choice. b. Chenery II has been somewhat abrogated, but its still true that retroactivity does not always work against an agency. 9. Jackson, dissenting: a. This decision makes judicial review of administrative orders a hopeless formality for the litigant. The principals announced in this decision put administrative orders over and above the law. b. This order is a personal deprivation denying particular persons the right to continue to own their stock and to exercise its privileges. Other persons who bought at the same time and price in the open market would be allowed to keep and convert their stock. It is not an exercise of control over the terms and relations of corporate securities. c. This literally takes property away from its rightful owners for the benefit of other private parties. No such power has ever been confirmed in an administrative body. d. The courts only substantive argument is judicial deference to administrative experience. e. If the court thought that some law prohibited the purchases, it would not have had to say that the Commission was not prohibited from utilizing this proceeding to announce a new standard of conduct. This decision actually approves the Commissions power to govern the matter without law.

35

VIII.

Procedural Requirements: Rulemaking and Adjudication a. Due Process Rights i. Background 1. Londoner: no procedural due process if agency issues a rulemaking. 2. Due process: no deprivation of life, liberty, person (nothing turns on person) without due process of law. 3. State determines whether or not there is an entitlement; the court then determines what is due procedurally. To establish property interests, look to state law. Liberty is not subject to government control, but property is. 4. Entitlement means, if x, you get y. Entitlements can be described procedurally and substantively: scope of entitlement and the procedural protections the government created. 5. The question in these cases is what purpose is served by a pre-deprivation hearing. Pre-deprivation hearings slow government, but adding process requirements is almost always beneficial for claimants. Two questions: a. On whom is the burden? b. How great is it? ii. Bailey v. Richardson (DC Circuit, 1950; affd by an equally divided court, 1951) 1. Plaintiff rehired subject to removal for disqualification. Regional Loyalty Board found that she was a commie. 2. Plaintiff denied accusations. At a hearing before the Regional Board, she presented witnesses. No one else testified. Nevertheless, she was found disloyal and banned from Civil Service for six years. 3. Plaintiff appealed the decision, arguing that evidence must be presented at the hearing. Court held that evidence could be any information learned by the tribunal. 4. Court held that banning her from Civil Service was punishment, subject to criminal prosecution. Dismissal from government service, however, was not. 5. The Due Process Clause of the Fifth Amendment does not apply to government employ. 6. Never in our history has government employee been entitled to a quasi-judicial hearing before dismissal. 7. The criterion for retention/removal of subordinate employees is confidence, which is not subject to process. 8. Whereas she may have been stigmatized, efficient functioning of government prohibits court from imposing hearing. 9. NB: Stands for the proposition that you do not have a life, liberty, or property interest in a government job. iii. Joint Anti-Fascist (1950) 1. 5/3 decision decided the same day as Bailey. 2. Concurrence: look at the greivousness of the loss. iv. Greene v. McElroy (1959) 1. Defense contractor executive had his security clearance revoked for being a commie. At trial, he produced witnesses. Government produced none and relied on confidential informers to cross-examine the witnesses, but nevertheless prevailed. 2. Right of cross-examination is immutable in our jurisprudence. 3. Decisions by the President or Congress to delegate authority to administrators to use unfair procedures cannot be assumed by acquiescence or non-action.

36

4. Without explicit action by lawmakers, decisions of great constitutional import and effect would be relegated to administrators who do not have the authority to decide them. v. Cafeteria Workers v. McElroy (1961) 1. Petitioner was a short order cook in a facility on a naval base. She failed to meet security clearance, and requests for a hearing or further explanation were denied. Her permit was revoked. 2. Congress and the President sufficiently authorized the Navys action. 3. 5A does not require a trial-type hearing in every conceivable case of government impairment of private interest. 4. Where the private interest affected by government action is a privilege subject to the Executives plenary power, it has been held that notice and hearing are not constitutionally required. 5. Here, the private interest was Petitioners opportunity to work at a particular restaurant. The government function was the power to manage the internal operation of an important federal military establishment. The federal government has traditionally exercised unfettered control with respect to the proprietary military capacity. 6. Government employment can be revoked at the will of the appointing officer. Petitioner could not have been excluded if the grounds for exclusion were patently arbitrary. As the reason presented here was rational, she was not entitled to notice 7. Brennan, dissenting: a. The Court holds that mere assertion by government that exclusion is valid forecloses further inquiry. What government official would admit to a discriminatory cause? b. Petitioner may be the victim of a baseless charge. c. NB: Dissent advocates for the grievousness of the loss standard, while the majority sticks to the rights/privileges distinction. vi. North American Cold Storage Co. v. Chicago (1908) 1. Chicago health officials threatened to destroy putrid poultry housed at a warehouse in violation of a Chicago ordinance. Also threatened to stop deliveries to this warehouse. 2. Hearing is not necessary before seizure and condemnation and destruction of food which is unwholesome and unfit for use. 3. A party who cannot have a hearing before the seizure and destruction of food can have it afterward. vii. Goldberg v. Kelly (1970) 1. New York City residents receiving financial aid brought suit because aid was being terminated without due process of law. 2. Termination procedures: caseworker doubts recipients eligibility, discusses it with recipient, consults unit supervisor, sends recipient notice of termination with provision that he may request that a higher official review the record. If higher official affirms termination, aid is permanently terminated. Recipient may request a post-termination fair hearing. 3. The extent to which procedural due process must be afforded is influenced by the extent to which the recipient may be condemned to suffer grievous loss and on whether his interest in avoiding that loss outweighs the governments interest in summary adjudication. 4. In the welfare context, termination of aid pending resolution of the controversy may prevent recipient from being able to focus on the case because he will be preoccupied with obtaining means for daily subsistence. 37

5. There are government interests. Welfare helps make opportunities available to the poor so that they can participate meaningfully in society. 6. State argues that lack of hearings preserves administrative costs. True, but not overriding. Interest of the recipient in uninterrupted receipt coupled with the states interest that benefits not be terminated outweigh the states interest in preserving its fiscal and administrative resources. 7. Pre-termination hearing is to determine the validity of the grounds for termination, and need not approximate a full trial. Recipient must have timely and adequate notice and opportunity to defend by confronting adverse witnesses and presenting arguments and evidence orally. 8. Existing procedures fail because recipient not allowed to give oral testimony or cross-examine adverse witnesses. Cannot rely on written documents for welfare population. 9. NB: a. After Goldberg, the welfare approval process became slower: more objective, more form-based, less personal, less contextual. viii. Board of Regents of State College v. Roth (1972) 1. Roth hired for one-year term as assistant professor. Not rehired; university gave no reason. 2. District court balanced weights of interests; must first determine if the Fourteenth Amendment encompasses this interest. 3. Liberty interests not relevant here. State did not make any charge that might damage his standings or associations in the community. State did not stigmatize him in a manner that will prevent him from pursuing other jobs. Stretches the notion of liberty too far to suggest that a person is deprived of liberty when he is not rehired and remains free to seek other jobs. 4. To have a property interest, a person must have a legitimate claim of entitlement to it. 5. Respondents appointment stated his term was to end on June 20. Nothing in the appointment secured his interest in re-employment. 6. Marshall, dissenting: a. Every citizen who applies for a government job is entitled to it unless the government can establish a reason for denying employment. 7. Notes: a. Roth changed Goldberg; BIG opinion. b. Grievousness of the loss is relevant if due process applies in the first place. The first step is determining what life, liberty, property loss is relevant here. c. This opinion effectively rejects grievousness of the loss and Bailey. ix. Perry v. Sindermann (1972) 1. Sindermann had been teaching in the Texas state college system for ten years. System had not formal tenure system. Perry not rehired, no reason given. Perry alleged failure to rehire was for his exercise of his first amendment rights. 2. Government may not deny a benefit on a basis that infringes constitutionally protected interests. 3. Sindermann asserted a property claim that resulted from a provision of the Faculty Guide that encouraged faculty members to feel as though they had tenure. 4. Respondent alleged the existence of rules and understandings that may legitimate his property interest. Proof of property interests would not entitle him to reinstatement, but would entitle him to a hearing. x. Arnett v. Kennedy (1974) 38

xi.

xii.

xiii.

xiv.

1. Kennedy worked for Office of Economic Opportunity, was fired on charges that he falsely accused his superior of attempted bribery. 2. Under the Lloyd-Lafollette Act, an individual in competitive service may only be removed or suspended for causes that will promote the efficiency of the service. Employee is entitled to notice of the action, reasons, time to file a written answer, and a written decision at the earliest date. 3. Appellee has an expectancy that he not be removed from office (unless to promote efficiency of the service), but he asks for procedures that are not outlined in the act. 4. In federal regulation of government employees, where the government employer has virtually uncontrolled latitude in hiring decisions, a statutory enactment may not be parsed discretely. The substantive right in this instance cannot be separated from the procedural limitations placed upon it. 5. After the fact hearing provides sufficient process. 6. Powell, concurring OPINION REPRESENTS CURRENT LAW a. Under the statute, appellee is entitled to notice and a hearing. b. Plurality concludes that the statute governing federal employment determines the nature of the property interest. This is incompatible with Roth and Sindermann. This leads to the conclusion that deprivation of a property interest can be accomplished without notice and a hearing. c. Procedural due process does not come from the legislature, but from the Constitution. d. On balance, a prior evidentiary hearing is not required and the afforded process comports with due process. 7. White, dissenting: a. Due process required an impartial pretermination decision-maker 8. Marshall, dissenting: a. The Plurality concludes that because the entitlement arose from the statute, it can be conditioned on a statutory limitation of procedural due process protections. This makes any protection inapplicable to the deprivation of a statutory benefit, which returns to the right/privilege distinction. Goss v. Lopez (1975) 1. Court held that a school district must provide high school students with a hearing before suspending them for less than ten days for disorderly behavior. 2. Because of special characteristics of school environment, student only entitled to oral/written notice of the charge, explanation of the evidence, and a chance to present his side of the story. 3. NB: This case represents the highwater mark of expansive property interest. Bishop v. Wood (1976) 1. North Carolina town could discharge a policeman without giving him a pretermination hearing. 2. Relevant ordinance says that a city employee who fails to perform work to the standard of his classification may be dismissed by the city manager who should give him written notice and reasons for his discharge. Paul v. Davis (1976) 1. Permissible to circulate picture/notice that plaintiff was an active shoplifter. Reputation is only protected alongside some other interest. 2. Expansive reading of liberty or property would enable plaintiffs to transform state law claims into Constitutional claims. Cleveland Board of Education v. Loudermill (1985) 39

xv.

xvi.

xvii.

xviii.

xix.

xx.

1. Overrules Arnett. Due Process protects certain rights, and they cannot be statutorily abrogated. Once it is determined that Due Process applies, the question of what process is due remains 2. NB: Current law. Meachum v. Fano (1976) 1. Prisoners suspected of arson not allowed to cross-examine witnesses at hearing. 2. Valid criminal conviction extinguishes a prisoners liberty right under the Constitution. 3. Here, no Massachusetts law conferring on the prisoner a right to remain where he was assigned. 4. Stevens, dissenting: a. Liberty interests are rooted in the Constitution, not created by state law. b. Prison transfer was sufficiently serious deprivation of liberty interests to warrant due process safeguards. Vitek v. Jones (1980) 1. Transfer from a prison to a mental hospital qualitatively different from a transfer between prisons. Trial type hearing required prior to transfer. Board of Pardons v. Allen (1987) 1. Statute creating provisions for parole hearing created a constitutionally protected liberty interest for the prisoner. Kentucky Department of Corrections v. Thompson (1989) 1. Prisoner did not have a protected liberty interest in receiving prison visits. 2. Prison rules that allowed prison to deny a visit if the visitors presence would constitute a clear and probable danger to the safety and security of the institution or could interfere with the orderly operation of the institution. Sadin v. Conner (1995) 1. Prisoner in maximum security prison sentenced to solitary confinement after obstructing an intrusive strip search. Prison regulation said disciplinary committee shall find guilt in particular instances. 2. Court held that inmate entitlements do not create a constitutionally protected liberty interest. 3. Ginsburg, dissenting: a. Deprivation sufficiently sever to infringe prisoners liberty. 4. Breyer and Souter: a. Some deprivations are so severe that they infringe a liberty interest whether or not prison officials authority is constrained by state law. b. Some deprivations are so minor that they would not implicate a liberty interest, even if applicable law constrains administrative discretion. c. Intermediate category: if the law cabins officials discretion to impose middle-range deprivations, the law is evidence that the deprivation is significant and that judicial intervention would not undermine administrative discretion. d. Applying the test, prisoner should have a protected interest. American Manufacturers v. Sullivan (1999) 1. Employer or its insurer must pay for reasonable and necessary benefits for workrelated injuries. 2. Insurer can request to have reasonableness and necessity of medical treatments reviewed by a URO. Claimants not entitled to be heard before a URO. 3. Plaintiffs challenged the absence of hearing before URO. Court rejected: a. URO decisions not state action. 40

b. Plaintiffs did not establish a constitutionally protected property right (have yet to demonstrate that medical treatment reasonable and necessary). 4. Seems to allow states to eviscerate rights by enacting statutes. xxi. Matthews v. Eldridge (1976) 1. Does 5A mandate a hearing before Social Security benefits terminated? 2. Three factors must be considered: a. Private interest that will be affected by the official action; b. Risk of an erroneous deprivation of such interest through procedures used, and the probable value, of any additional or substitute procedural safeguards; c. Governments interest, including function and fiscal and administrative burdens that the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. 3. Eligibility investigation: a. Administered jointly by state and federal agencies; b. State agency determines continued eligibility by communicating with the worker; c. State agency also communicates with physician; d. Agency makes final determination; reviewed by the SSA Bureau of Disability Insurance; recipient informed in writing of reasons for decision and right to seek de novo reconsideration. e. Adverse reconsideration reviewed by the SSA. Claimant then has a right to an evidentiary hearing before SSA. f. Where this hearing is adverse, claimant can request discretionary review by the SSA Appeals Council. 4. Lower courts held these procedures inadequate. Should be evidentiary hearing before termination. Recipient who prevails is awarded full retroactive relief, so interest is in the uninterrupted receipt of benefits. 5. Hardship may be significant, but less than Welfare recipient, AND, there are other potential income sources. 6. Pretermination procedure relies on medical assessment, which is focused and easily documented. 7. Value of an evidentiary hearing less than in Goldberg: here physician, not illiterate recipient, is able to communicate through writing. Disability physician also afforded access to all information state agency used. 8. Public interest: will likely cost the government if it is forced to continue to pay benefits throughout the hearing process. 9. Cost outweighs the benefits: evidentiary hearing not required prior to termination of benefits. 10. Notes: a. Threshold for due process is formalistic, the test for how much process is due is loosey goosey. b. CB editors cut portion of the case that noted substantial weight given to people the government trusted. xxii. University of Missouri v. Horowitz (1978) 1. Student dismissed from medical school based on subjective judgment of administrators. Had a chance to improve and present her views but did not have opportunity to appear before the committee that evaluated her work. 2. These procedures were sufficient. Academic evaluations are highly subjective and not easily adapted to judicial review. xxiii. Schweiker v. McClure (1982) 41

xxiv.

xxv.

xxvi.

xxvii.

xxviii.

1. Part B of the Federal Medicare Program: a. Dr sends bill to carrier; b. Carrier decides if the charge was reasonable, medically necessary, and fulfills Bs requirements; c. Claimant who disagrees can receive review determination: review of the written record by a different employee. d. If claimant loses on review, and claim is for more than $100, claimant entitled to oral hearing. e. Hearing officer receives evidence and hears arguments. 2. Satisfies due process, no need for government decisionmaker. The selected carrier must be qualified, so government decisionmaker would not add anything. Gray Panthers v. Schweiker (DC Circuit, 1980) 1. Medicare Part B claims worth less than $100: a. Hearing not required, but secretary entitled to provide informal procedures. 2. Court held that the Constitution requires further oral procedures because it provides a disincentive to render arbitrary decisions. Also fosters the notion that claimant has been dealt with fairly. Cleveland Board of Education v. Loudermill (1985) 1. Loudermill, security guard, dismissed for not disclosing conviction for grand larceny. 2. Loudermill thought conviction was for misdemeanor, not felony, so he did not disclose. Hearing examiner recommended reinstatement, commission upheld dismissal. Court found procedure unconstitutional. 3. Eldridge: a. Private interest in retaining employment; b. Accurate decision served by allowing employee to state his case; c. Affording employee opportunity to respond prior to termination would neither impose a significant burden nor administrative delays; d. Preferable to keep a qualified employee than to train a new one; e. Government employers have an interest in keeping citizens usefully employed. 4. Pre-termination hearing need not be elaborate Winegar v. Des Moines Independent Community School District (8th Circuit, 1994) 1. Teacher had physical altercation with student. School authorities heard oral testimony from teacher, and collected written statements from the student in question, other students, and a private investigator. 2. School suspended teacher for four days and ordered him transferred to another school. 3. Court held that the teacher should have been afforded opportunity for an oral evidentiary hearing, including presentation and cross-examination of witnesses. Hearing could be pre or post-termination. Gilbert v. Homar (1997) 1. State university police officer temporarily suspended without pay after he was arrested and charged with drug offenses. 2. Due process did not require hearing before suspension: Loudermill involved termination, this is suspension. Plaintiffs arrest provided an objective basis for suspension. 3. Plaintiff is entitled to prompt post-suspension hearing. Walters v. National Association of Radiation Surivivors (1985) 42

1. Veterans benefits are dispensed after an informal hearing: only claimants side is presented, and there is no formal questioning, cross-examination, or rules of evidence. 2. Statute limited the fee to be paid an agent or attorney to $10. Court found this a constitutional limitation: a. Small amount of money limits the presence of counsel and therefore helps keep the proceedings informal; b. Lawyers might be helpful where the claims are more complex, but this is insufficient to limit the claim. 3. Stevens: a. Inappropriate to limit the money a private citizen can spend on an independent counsel. Not a government benefit. Liberty is priceless, and cannot be weighed on a utilitarian scale. xxix. Penobscot v. Federal Aviation Administration (1999) 1. FAA dismissed a complaint that an airport gave lower rents to a competitor without a hearing. 2. Court held this constitutional. Eldridge test: a. Plaintiffs interest in higher profits and public interest in competition, low; b. Risk of error in procedures that allowed complaining party to submit case in documentary form, small; c. Administrative burden for providing hearings, great. xxx. Ingraham v. Wright (1977) 1. Plaintiffs paddled without notice or opportunity for hearing on the disciplinary charges; 2. Not an 8A violation; 3. Liberty interests in freedom for restraint. Eldridge test justifies use of corporal punishment: a. Corporal punishment legal in most states; b. Under Florida law, student injured by corporal punishment can bring action in Tort, and the administrator may be subject to criminal liability; c. Risk that a child will be paddles without cause is insignificant; d. Would have to enact a universal ban on paddling, which would significantly undermine the use of corporal punishment as a disciplinary measure. 4. Dissent: a. Damages remedy is inadequate: unavailable against a teacher who acted in good faith on mistaken facts; b. Damages cannot fully compensate for infliction of bodily pain. 5. Notes: a. Post-deprivation remedy is sufficient. Function of two factors: i. Purpose of the hearing; ii. Harmed through temporary deprivation. xxxi. Lujan v. G&G Fire Sprinklers, Inc. (2001) 1. California law permits state to withhold contractor payments on a public works project if a subcontractor fails to comply with code requirements. Contractor similarly authorized to withhold from subcontractor. 2. Body determined that a subcontractor violated the Code and issued a directive to withhold payment from the subcontractor. The Ninth Circuit held that failure to provide notice or hearing before issuing the directive violated due process. 3. Court upheld the statute because California law affords opportunities to pursue claims in state court. 43

xxxii. Club Misty v. Laski (7th Circuit; 2000) 1. Illinois law allowed a majority of voters in a precinct to prohibit the sale of liquor at an address. Under this scheme, an establishment at that address that holds a liquor license is void after 30 days. 2. Seventh Circuit held that the vote violates due process. Scheme endorses the idea that the democratic process should be left unhindered by law. Violates constitution. xxxiii. Jones v. Flowers (2006) 1. Petitioner bought house in 1967; paid off mortgage, mortgage company paid property taxes. After mortgage paid off, company stopped paying property taxes, and property declared delinquent. Petitioner stopped living in house in 1993. 2. Letter informing Petitioner property subject to public sale sent to home, but required signature and Petitioner not there to sign for it. Ran ad in local paper. Property sold to Flowers. 3. Due process requires the government to provide notice reasonably calculated to apprise interested parties of the action. Prior cases did not raise question of governments obligation when due process goes awry. 4. If Commission actually wanted to inform Jones, would not have done nothing when the letter was returned. Not inconsistent with the courts approach to ask what the State did when no one answered. 5. Several steps available to the State: resend the letter, post notice on the door, address letter to occupant. Did not need to search for Petitioners new address. 6. Thomas, dissenting: a. Petitioner supplied this address himself; the States actions were adequate to satisfy due process. Exceeded duty by publishing in local paper. b. Whether notice reasonably calculated to notify interested party is determined from the standpoint of the government agency when the notice is sent. c. Courts proposed methods are unnecessary, burdensome, impractical, and no more likely to provide notice than methods already employed. xxxiv. Notes 1. After Loudermill (1985), default is flipped. Begin by saying the government has discretion to terminate employment. 2. Government wants a threshold to limit claims for everyone. 3. Matthews and Roth: a. Roth grants a right, Matthews is a balancing test. Legislature determines whether or not you have an entitlement, judges figure out how much you get. b. Balancing test always leaves us in an uncertain realm. Maybe easier/cleaner to get rid of these cases. Also fear of what judges will do with Matthews. c. Balancing test is understood as a cost-benefit analysis. Advocates on both sides are not happy with the balancing test. It burdens the government and courts. d. If we only had Matthews, there would be many more cases. e. Rules v. standards: rules allow everyone to know where they stand, but eliminate the possibility for justice to be tailored to the individual. 4. State official who wants to avoid procedural due process: give him no clear rights, keep it mushy, maximize discretion; 5. If you think procedural due process should apply, clearly write out the procedure. 44

6. The hope in litigating Goldberg was to define a new relationship between the individual and the government. Roth changes this universe, but how much does it net for the claimant.

45

IX.

The Availability and Timing of Judicial Review a. Background i. What if you cannot get to court? Availability and timing of judicial review are important in Administrative Law. ii. Sovereign Immunity used to be a huge issue. Could not sue government in Tort. But, could sue government officials: 1. Federal Torts Claim Act 2. Bivens ( 1983): Direct cause of action unless a statute says otherwise 3. APA 1331 waives sovereign immunity a. 703 gives claim in a court of competent jurisdiction b. 704 gives a cause of action where there is no specific cause c. 701 applies, except: i. Statute precludes review; 1. Express v. implied preclusion. ii. Committed to agency discretion by law. d. Analysis under APA: i. General statute review; ii. If there is no specific statute on point, cause of action and waiver of sovereign immunity. 4. Federal Courts Claims Act waives Sovereign Immunity iii. Venue: At a minimum, venue in D.C. or where you live iv. In general, big barriers have fallen by the wayside. Question now is did Congress intend to let you bring suit? v. Court has never determined circumstances in which Congress can preclude constitutional claims. vi. What is committed to agency discretion by law that does not preclude judicial review? Possible interpretations: 1. Means nothing. Simply reminds courts that agencies have broad discretion. Abuses of discretion are always reviewable, this reminds courts that not everything should be reviewed. 2. Congress sometimes meant agencies to be their own arbiter of what is lawful. Courts have no ability: committed to agency discretion and agency determines whether it acted lawfully. Presidential pardons are unreviewable. 3. Scalia in Webster: refers to a variety of situations: foreign affairs, judicial review undesirable. 4. Court ends up in position 2. b. Reviewability i. American School of Magnetic Hearing v. McAnnulty (1902) 1. Plaintiff ran a mail-order business that the postmaster deemed fraudulent; directed post office not to deliver mail. 2. Postmasters action was not justified: a. Business is based on the idea that the mind can cure physical ailments; this cannot be claimed as fact or fraud. b. Plaintiffs acted within the law. 3. Postmasters actions were not within the law. Individual should not be left to the unfettered and arbitrary action of an administrative officer. 4. Complainants have a legal right to have their letters delivered to the post office 5. Notes: a. Statute says evidence of fraud satisfactory to postmaster; b. Court says this is not appropriate because reasonable persons disagree about fraud. 46

c. Does not say where it found jurisdiction. ii. Switchmens Union v. National Mediation Board (1943) 1. Brotherhood wanted to represent the yardmen; Switchmen contended that yardmen should be permitted to vote in a system-wide election. Board reached a decision and the Circuit Court of Appeals affirmed. 2. District Court did not have the power to review the action: a. History of the statute highly relevant; b. Few legal sanctions in the act; c. 2 of the Provision of the Railway Labor Act enacted to facilitate collective bargaining; d. If Congress wanted to give the federal courts the burden of having the final say, it would have been apparent in the statute. 3. Mediation Board has not subpoena power, makes no order, and has only a certificate for its findings of fact. 4. Congress provide for judicial review in a highly selective manner: a. Adjustment Board can make awards, and those awards can be brought in federal district court; b. Under 9, Congress allows an arbitration panel award to be impeached in court; 5. Thus, because Congress authorized action in court in other instances, it gave administrative action under 2 a finality when it determined that administrative action could be taken under other sections of the Act. iii. Block v. Community Nutrition Institute (1984) 1. Secretary of Agriculture sets the minimum prices milk handlers must pay for milk. Higher priced milk is reconstituted milk. Consumers challenged this designation because it made reconstituted milk uneconomical for handlers, and thereby deprived consumers of a source of less expensive milk. 2. Congress did not intend to preclude judicial review of the Secretarys milk market orders. 3. Congress did, however, intend to preclude consumers from participating in the determination of market orders: scheme is complex and consumers not named. 4. Respondents argue that challenges initiated by consumers were simply intended to begin in the courts, not the agency. There is no basis for attributing this distinction to Congress. 5. Allowing consumers to sue the Secretary would disrupt the complex scheme Congress established: would allow handlers to evade their administrative remedies. 6. Presumption favoring judicial review of administrative action can be overcome by specific language or legislative history, contemporaneous judicial construction, etc. 7. Because there was no direct statutory language or legislative history, Court of Appeals found the presumption favoring judicial review controlling. Here, the legislative intent to preclude judicial review is apparent, so the presumption does not apply. 8. Handlers can represent the interests of consumers in the administrative process. iv. Bowen v. Michigan Academy of Family Physicians (1986) 1. Association of family physicians filed a claim challenging a regulation that set a higher reimbursement level for board certified family physicians. They claimed this violated the Medicare Act and 5A. 2. Strong presumption of judicial review of agency actions: 47

a. Congress that passed the APA remarked that statutes rarely withhold judicial review because that would preclude checks and balances. b. Statute must give clear and convincing evidence of intent to withhold judicial review. 3. Section 1395ff is an explicit authorization of judicial review: just because some acts are reviewable, does not mean those that are not explicitly reviewable preclude judicial review. 4. More complicated in Medicare: a. Aggrieved by delayed/insufficient payment, under Part B, have opportunity for fair hearing by the carrier; b. Aggrieved under Part A, hearing by the secretary and judicial review; c. In Erika, court concluded that failure to authorize further review provides evidence that Congress intended to foreclose further review. d. Confirmed by the legislative history. 5. Challenge to the method by which Part B amounts are determined not foreclosed by the statutory construction from Erika. 6. Legislative history reviewed in Erika shows that Congress did not preclude review of the method by which Part B awards are computed. Legislative history shows fear of burdening courts. Thus, preclusion limited to Part B awards. 7. Government claims that 405 (h) incorporated by 1395ii. Legislative history shows that Congress only meant to foreclose review of amount determinations. Judicial review for method by which decisions determined is not foreclosed. v. Bowen and Block: 1. Unanimous decisions, two years apart; 2. Bowen: allow challenges. No review of benefit determination. Yes, review of method 3. Sue against rules, not application. 4. Harmonize these cases: Block, someone always able to sue. Maybe it is about making sure someone can bring action in court. 5. Block is the unusual case where the presumption in favor of judicial review did not apply. vi. Johnson v. Robinson (1974) 1. Plaintiff was conscientious objector who completed civilian service and was turned down for veterans benefits. Question is whether 211 (a) bars federal courts from deciding the constitutionality of veterans benefit legislation. 2. No explicit provision of 211 (a) bars judicial consideration of appellees constitutional claims. Prohibitions that appear are aimed at review of decisions of law or fact that arise in the administration of a statute providing benefits. Challenge is not to any decision of an administrator, but to Congress decision to create a class entitled to benefits that does not include conscientious objectors. 3. Legislative history does not demonstrate congressional intent to bar review of constitutional questions. No review clauses date to 1952, when these were purposes; a. Prevent benefits claims from flooding the courts; b. Ensure complex policy decisions adequately and uniformly made. c. Legislative history of 1970 amendment shows intent to preserve these purposes. d. DC Circuit Court subsequently interpreted claim to limit 211 (a), Congress perceived this as a threat to the no-review clause: i. Increase litigation and burden the courts and the VA; ii. Involve the courts in day-to-day determination 48

e. 1970 amendment intended to overrule the Court of Appeals interpretation. f. Constitutional challenges do not contravene purposes of the no-review clause. g. Construction of 211 that does not extend the prohibitions to actions challenging the constitutionality of laws providing benefits for veterans is the most reasonable construction. No clear and convincing evidence of Congressional intent to preclude review of Constitutional challenges. 4. Notes: a. Seemed clear that Congress wanted courts to stay out, but the court said that the constitutional question did not arise under any law administered by the VA. vii. Heckler v. Chaney (1985) 1. Texas, Oklahoma, and other states planned to use drugs that had not been approved for human executions for those purposes. Respondents requested the FDA take investigatory and enforcement actions to prevent violations. FDA refused to take these actions. DC Circuit found this refusal to act arbitrary and capricious. 2. What does it mean to be committed to agency discretion by law under 701(a)(2)? a. In Overton Park, court distinguished (a)(1) from (a)(2): (1) applies when Congress expressed intent to preclude judicial review; (2) applies when, even though Congress has not precluded review, review is not to be had when there is no meaningful standards against which to judge the agencys exercise of its discretion. b. This construction avoids conflict with the abuse of discretion standard in 706. 3. Overton Park involved an affirmative act of approval, not an agencys refusal to take requested action. Agencys decision not to act is generally committed to an agencys absolute discretion: a. Complicated balancing uniquely within agencys expertise; b. Agency is better equipped than courts to order its priorities; c. Refusal to act does not infringe on liberty or property rights; d. Similar to prosecutors decision not to indict 4. Rebuttable presumption not to review an agencys decision not to act. Nothing in the FDCA rebuts the presumption of non-reviewability. 5. Marshall, concurring: a. Refusals to enforce should be reviewable in the absence of clear and convincing evidence to the contrary. Refusals warrant deference when there is nothing to suggest an agency has abused that discretion; b. As long as the agency is choosing how to allocate finite resources, its choice will be entitled to substantial deference; c. Court responds to various lower court approaches with a blunderbuss, not a scalpel; d. Courts presumption relies on positive law, and ignores the background understandings against which the APA was enacted; e. Under this rule, the court will always have to inquire into the agencys reasoning to determine if the presumption applies. 6. Note: a. Cited for non-reviewability for agency decisions not to act. Hard for courts do evaluate agency priorities and does not deprive person of rights and liberties. 49

viii. Norton v. Southern Utah Wilderness Alliance (2004) 1. Wilderness Alliance filed action against the Bureau of Land Management for its failure to act to protect public land in Utah from off-road vehicles. 2. Failure to act is properly understood as limited to a discrete action. 3. The only agency action that can be compelled under the APA is legally required action. 4. 1782 (c) is mandatory as to the objective to be achieved; it leaves BLM discretion in deciding how to achieve it. 5. The APAs purpose is to protect agencies from undue judicial interference with their lawful discretion and to avoid judicial entanglement in abstract policy disagreements which court lack both the expertise and information to resolve. ix. Webster v. Doe (1988) 1. Director of the CIA dismissed plaintiff because he was gay. Plaintiff challenged on the grounds that the dismissal exceeded the directors authority and deprived him of liberty, property, and privacy. 2. Standard in 102 (c) allows termination of an agency employee whenever the director deems such termination necessary or advisable to the interest of the United States. This exudes deference and forecloses judicial review. 3. Structure of the NSA supports the deferential reading. 4. Constitutional claims, however, are reviewable. 5. Scalia, concurring and dissenting: a. No law to apply does not provide the full scope of the area from which courts are excluded. b. Committed to agency discretion of law makes sense when it is compared with the statutes preclude judicial review provisions of 701(a)(1). Common law embraced within 701(a)(2). c. Committed to agency action by law means unreviewable; when agency action is in the courts, abuse of discretion is grounds for reversal. d. It is not true that the court has no law apply, merely the court following the common law. e. When the Court considers the reviewability of a dismissal, this distinction will become crucial. 6. Notes: a. Casebook editors cut the portion where the court says, is there any law to apply? This questions whether there is any meaningful judicial standard; b. Scalias point about respect for functions of other branches distinguishes him from the majority. He thinks agencies are part of the executive. x. Notes: 1. Mass v. EPA is not like Heckler because action was denial of petition to initiate rulemaking, not just refusal to act. 2. No law to apply is like non-delegation. So much discretion that nothing you have done is legal. No way for judges to have way to figure out you violated obligations. 3. 701 (a) (2) there can be no law to apply but there can be an intelligible principle. 4. Lower court cases generally construe law to apply capaciously. Heckler holding is narrow. 5. 706 authorizes judicial review only where agency has taken action required by law. 6. Fear is court getting involved in all kinds of agency decisions. Courts might be swamped. Sometimes, agencies commit abuse under 706 (2)(a) but the action is committed to agency discretion under 701 (a)(2). 50

7. Implicit preclusion in Block: complexity and completeness of Congressional scheme v. Congress gave so much authority that there is nothing to review. 8. Implied preclusions: there is a legal standard but Congress never wanted you to do anything v. 701(a)(2): committed to agency discretion. So loose, no law to apply. Congress writing so broadly, no law to operationalize. 9. For constitutional claims, clear indication Congress intended preclusion. We do not know what would happen if Congress passed a statute that precluded both statutory and constitutional claims. 10. Analysis: a. Cleanest question: does the statute preclude judicial review? b. Implicit preclusion. Review plainly inconsistent with statutory structure. c. Even if no express preclusion, no judicially manageable standard. No law to apply. Clarity of congressional intent. c. Standing i. Background 1. Many historians say public actions existed in England and America at the time of the framing. Standing doctrine is a recent innovation. Landis: should not just be able to run in and block agency action. 2. Frothingham v. Mellon (1923): Taxpayer challenged federal funds for childcare. 3. Flast (1968): Taxpayer status grants standing because taxpayer dollars are needed to violate the Constitution. 4. Zone of interests: If harmed, have enough stake to challenge statute. If subject to regulatory regime, maybe you will only challenge the parts that hurt you. 5. Fears: policy debates pushed into courts; regulated parties have standing when the people who have an interest in regulation do not. 6. Article III has been interpreted to require case or controversy. Congress cannot confer standing on anyone. As a constitutional matter: a. Injury-in-fact i. Cognizable interest ii. Concrete and particular iii. Actual and imminent b. Causal connection c. Harm likely redressed by judicial decision 7. Justifications: a. True adversaries, do not allow bystanders into court. b. Direct benefit by favorable resolution. c. Minimizes friction when the judiciary has to tell other branches what to do. d. Prevents the government from setting its own enforcement priorities. 8. Fletcher: Standing law is like Lochner, court going off the rails. 9. In some cases, no one has standing. The argument that if I am unable to sue, no one will be able to sue is not a winning argument. 10. Two elements of standing: a. Did Congress intend to allow you to bring suit? b. Even if Congress allowed you to bring suit, case and controversy requirements of Article III. 11. Recently, there has been a lower statutory standard for standing, and the constitutional hurdle has been raised. 12. SCRAP: Far-fetched causal connection. Cannot knock it out on summary judgment. High-watermark of where the court would go. 51

13. Laidlaw: Reasonable concerns of environmental harm are enough to satisfy standing. For success on the merits, do not have to show injury to individual and do court. 14. If Congress wanted to allow anyone to bring environmental claims: a. American people have a property interest; b. Government can give individual stake. ii. Association of Data Processing Service Organizations v. Camp (ADAPSO, 1970) 1. Petitioners challenge ruling that bank may make their data processing services available to other banks; 2. Article III: question of standing is related to whether the dispute sought to be adjudicated will be presented in an adversary context, in a form historically viewed as capable of judicial resolution; 3. Plaintiff alleges financial injury: competition might entail future loss of profits, and the Bank was performing or preparing to perform services Plaintiff had previously contracted to perform; 4. Court of Appeals focused on legal interest test. Legal interest test goes to the merits. Standing concerns whether the complaint in question goes to a zone of interests protected or regulated by the statute or constitutional guarantee in question. 5. Problems of standing are subject to a rule of self-restraint; 6. As far as statutes are concerned, the trend is toward enlargement of the class of people who protest administrative action; 7. 4 was a prohibition for banks to participate in nonbanking activity. This arguably brings a competitor within the accepted zone of interest. 8. Whether the Act gives petitioners a legal interest that protects them from violations of the act, and whether respondents violated those acts, are questions that go to the merits of the case, and should be decided below. Plaintiffs had standing. 9. Notes: a. Question is not just injury in fact, but did Congress intend to allow you to sue; b. Injury that gives you standing can be different from the legal interest asserted. iii. Clarke v. Securities Industry Association (1987) 1. Association of securities dealers sued the comptroller for exceeding his authority when he permitted two national banks to offer discount brokerage services. Alleged that it violated the McFadden Act which limits the general business of a national bank to its headquarters, limits branches to in-state branches and defines branch as a branch of business; 2. In Data Processing, the Court interpreted 702 broadly; implicitly recognized potential for disruption in allowing everyone adversely affected by agency action to seek judicial review; 3. Zone of interest test demonstrated by Investment Company Institute: investment companies sough review of Comptrollers regulation. To grant standing, it was enough that Congress had forbidden banks to compete by entering the investment company business. 4. Block: presumption in favor of judicial review is overcome when congressional intent to preclude review is evident in the statutory scheme; 5. Zone of interest denies right of review when plaintiffs interest are so marginally related to the statute that it cannot be assumed Congress intended to permit the suit; 52

6. Reviewability does not end with the zone of interest test; 7. Congress rejected attempts to allow national banks to branch without regard to state law; Congress was concerned with equalizing the status of state and federal banks and with preventing the perceived interests of unlimited branching; 8. Asserted interest has a plausible relationship to the policies underlying the National Bank Act: Congress has shown concern to keep national banks from gaining monopoly control over credit and money through unlimited branching; 9. No indication of Congressional intent to preclude review. Respondent is property party to bring lawsuit. 10. Notes: a. Two acts potentially grant standing. Court finds no under Glass-Segal, but yes under McFadden. Under Glass-Segal: i. Presumption is that the party has statutory standing, but it is so marginal that Congress did not allow it. iv. Air Courier Conference v. American Postal Workers Union (1991) 1. Private Express Statutes grant post office monopoly over carrying letters but allows this to be suspended when the public interest requires; 2. Postal service suspended monopoly to allow private couriers to give letters to be delivered in other nations to postal services in other nations. Postal Workers Union challenged exception. 3. Court held that the union lacked standing: postal workers injured, but interests did not fall within the zone of interest protected by the PES, which was designed to protect cream skimming on highly profitable routes. Later statute could not satisfy the zone of interest because there was no evidence of a linkage between the statutes. 4. Notes: a. So far outside the zone of interest, not even arguable. v. National Credit Union Administration v. First National Bank & Trust Co. (1998) 1. Section 109 of the Federal Credit Union Act: federal credit union membership shall be limited to groups having a common bond of occupation or association, or to groups within a well-defined neighborhood, community, or rural district. 2. National Credit Union Administration has interpreted 109 to permit federal credit unions to be composed of multiple unrelated employer groups. Five banks and the American Bankers Association have challenged this interpretation. 3. NCUA changed its interpretation in 1982. In 1990, NCUA approved a series of amendments to ATTFs charter. Respondents brought action challenging the interpretation of 109. 4. Respondents interest in limiting the markets that federal credit unions can serve is within the zone of interests protected by 109. Inquiry is not whether Congress contemplated these plaintiffs. Inquiry starts with the interests protected by the agency action in question. 5. One of the interests protected by 109 is an interest in limiting the markets that federal credit unions can serve. This is the affected interest. NOTE: Because the statute was written in the shadow of banks, banks are intertwined with the interests involved. 6. Petitioners argue that there is no evidence that Congress was concerned with the competitive interests of commercial banks when it passed the FCUA; court rejected similar arguments in Data Processing and Clarke. 7. This case is not like Air Courier: there, the purpose of the statutes was to increase the revenues of the Post Office and to ensure that postal services were provided in a manner consistent with the public interest; the interests of the Postal Service 53

employees were not within the zones of interest of the statute. Here, respondents have a competitive and direct interest protected by 109. 8. OConnor, dissenting: a. Injury respondents complain of is loss of their customer base to a competing entity; b. Under the courts approach, every litigant who establishes injury under Article III will satisfy the zone of interests requirement; the courts conclusion means little more than that respondents have an interest in enforcing the statute. c. In prior cases, the Court established that the injury the plaintiff complained of fell within the zone of interest protected by the relevant statutory provision; d. Here, the terms of the statute do not suggest a concern with protecting competitors business interest; there is no indication in the text of the provisions that the membership limitation was designed to protect the commercial interests of the competitors; e. In this case, customers who lack an adequate bond with members of a particular credit union can receive financial services from a different credit union, whereas in earlier cases the statutes operated to bar banks from participating in a particular market. 9. NOTE: This case all but eviscerates the zone of interest requirement. vi. Dismas Charities, Inc. v. US Department of Justice (6th Circuit, 2005) 1. Bureau of Prisons altered its interpretation of a statute governing imprisonment policy, curtailing the circumstances in which federal prisoners are eligible to serve their sentences in a community center. Dismas, a nonprofit that owns and operates community corrections centers, sued because the new policy had a severe impact on its operations. 2. Court held that Dismas lacked standing on zone of interests grounds. 3. Statute was to benefit prisoners by allowing them to go to the community correction centers; not to benefit the corrections centers themselves. 4. Court held that Dismas did have standing to challenge the Bureaus failure to comply with the APA. vii. Sierra Club v. Morton (1972) 1. US Forest Service approved Disneys proposal to develop a ski resort. To access the resort, California proposed to build a highway through Sequoia National Park. Sierra Club brought suit as a corporation with a special interest in the conservation of national parks. 2. Injury is that the road would destroy or otherwise adversely affect the scenery, natural and historic objects, and wildlife of the park. This may be an injury in fact sufficient to satisfy the APA. The test requires more than an injury to a cognizable interest, it requires that the party seeking review is among the injured. 3. Sierra Club failed to allege that it or its members would be affected in any of their activities by the development. 4. Trend has been towards recognizing that injuries other than economic harm are sufficient to bring a person within the meaning of the statutory language. Broadening the categories of injury is not the same as abandoning the requirement that the party seeking review have suffered the injury. 5. If the Sierra Club b was authorized to commence this litigation, there would be no basis upon which to disqualify other special interest organizations. 6. Requirement that a party seeking review must show that he is adversely affected puts the decision as to whether review will be sought in the hands of those who 54

have a direct stake in the outcome. Rule Sierra Club asks for is a rule that would allow organizations to vindicate their value preferences. 7. Douglas, dissenting: a. Would grant standing to those with a meaningful relation to a natural object; b. Congress is too remote to give meaningful direction and its machinery too ponderous to use often; c. Forest Service has been notorious for its alignment with lumber companies. 8. Blackmun, dissenting: a. Would approve standing if Sierra Club agreed to amend its complaint; b. Would permit expansion of standing to enable Sierra Club to litigate environmental issues; c. Any resident of the area is an unlikely adversary because the situation may benefit him economically. 9. NOTE: a. Sierra Club probably did not claim that members hike because the claims asserted would crate a broader precedent. b. After this case, must say more than this bothers us. viii. Hein v. Freedom From Religion Foundation, Inc. (2007) 1. Office of Faith-Based and Community Initiatives created to eliminate unnecessary bureaucratic, legislative, and regulatory barriers that could impede charitable/religious organizations effectiveness and ability to compete for federal assistance. 2. Executive Department Centers for Faith-Based and Community Initiatives was created within several federal agencies and departments. Charged with ensuring that faith-based community groups were eligible to compete for federal support without impairing their independence or autonomy; 3. Freedom From Religion Foundation brought suit contending that petitioners violated the Establishment Clause; 4. Taxpayer standing does not exist: would allow the judiciary to assume a position of authority over acts of a co-equal department; 5. Expenditures in Flast were made pursuant to an express congressional mandate and specific congressional appropriation; challenge there was to congressional action. 6. Link is missing here: there is no specific congressional action or appropriation. Expenditures resulted from executive discretion. 7. Declines opportunity to extend Flast to executive action. Extending the Flast exception would subject every federal action to Establishment Clause challenge by a taxpayer in federal court. 8. Scalia, concurring: a. Flast should be repudiated: it is irreconcilable with Article III restrictions. b. No explanation of why the factual differences are material; c. Flasts adoption of Psychic Injury should be addressed head-on. 9. Souter, dissenting: a. Taxpayers merely seek to apply Flast; b. No difference between review of an executive decision and evaluation of a congressional decision; c. Establishment Clause applies to executive uses of money. ix. Lujan v. Defenders of Wildlife (1992) 1. Plurality: 55

a. Endangered Species Act divides responsibility for management of endangered species between the secretary of the interior and the secretary of commerce. Joint interpretation of the act applied it to actions taken in foreign nations. Secretaries repealed interpretation. Wildlife groups challenged. b. When a plaintiffs asserted injury arises from the governments unlawful regulation of someone else, more is needed to establish standing. c. District court relied on affidavits of club members who observed harm to endangered species when they traveled to Egypt and Sri Lanka. These affidavits did not reflect threat of imminent injury. Plaintiffs plan to return to these places, but plans are not concrete; d. Ecosystem nexus theory: person who uses any part of a contiguous ecosystem adversely affected by activities has standing even if the ecosystem is far away. Inconsistent with Lujan, which held that plaintiff must use the affected area; e. Animal nexus: anyone who has an interest in studying or seeing the endangered animals can sue; vocational nexus: anyone who has a professional interest in studying the animals can sue. Beyond reason: anyone who goes to the zoo can sue; f. Court of Appeals found that plaintiffs suffered a procedural injury. The citizen-suit provision of the act provides that any person can initiate a suit to enjoin any person who is alleged to be in violation of a provision of this chapter. Court held that the injury-in-fact requirement had been satisfied by congressional conferral of an abstract, self-contained right to have the Executive observe the procedures required by law; g. To permit Congress to convert public interest in executive officers compliance with the law into an individual right is to permit Congress to transfer the Presidents duty that the law be faithfully executed to the courts; h. It is still true that Congress recognizes injuries in statutes; 2. Kennedy, joined by Souter, concurring in part and concurring in the judgment: a. Agrees with the courts assessment of this nexus theory, but not with any preclusion of the nexus argument; b. When Congress defines injuries and articulates causes of action, it must identify the injury it seeks to vindicate and the class of persons entitled to bring suit; c. Requirement that the party brining suit has been injured in an actual and concrete way is not an empty formality: ensures that legal questions will be resolved in a concrete factual context. 3. Blackmun, joined by OConnor, dissenting: a. Court demands formality: no substantial barriers prevent Plaintiffs from buying plane tickets; b. Courts demand for a detailed description of future conduct will resurrect a code-pleading formalism; c. Effect of foreclosing judicial enforcement of agency procedures is to transfer power to the Executive at the hands of Congress; d. Majority draws distinction between substantive mandates and procedure, but in complex areas, Congress routinely legislates in shades of gray; e. Endangered Species act is an action-forcing statute; f. Shades of gray allow maximum Executive discretion in attaining Congress goals; 56

x.

xi.

xii.

xiii.

xiv.

g. Here, Congress is not delegating executive power, but is strengthening its procedures; h. Prior cases have justified relaxed review of delegation to the Executive because the delegation is subject to judicial review. This opinion expands the Executive; i. Over time, Court may acknowledge that some procedural duties are so enmeshed with the prevention of substantive harm that a plaintiff may demonstrate likelihood of injury through breach of that duty. Laidlaw and Lujan: 1. Maybe proximity of river v. animals are far 2. Post-Laidlaw, harm ban be I love x and I am dismissed from doing x 3. Environmental claims are classic examples of the margins of standing Allen v. Wright (1984) 1. Parents of black students brought a class action suit against the IRS for not denying tax-exempt status to private schools that discriminate on the basis of race; 2. Suit was based on the theory that the policy harmed students who were attending schools undergoing desegregation; 3. Court held that the plaintiffs would have to show that they had been personally denied equal treatment by discriminatory conduct; 4. If abstract injury were cognizable, standing would extend to every racial group, and the federal courts would become a vehicle for the vindication of values of interested bystanders. Northeastern Florida Chapter of Associated Gneral Contractors v. Jacksonville (1993) 1. Ordinance required that 10% of the money spent on city contracts be set aside for minority business enterprises. Contractors association comprised of nonminorities brought suit, claiming that the set-aside violated equal protection; 2. Injury in fact in an equal protection case is the denial of equal treatment resulting from the imposition of the barrier, not the ultimate ability to obtain the benefit. In the context of a set-aside, the injury in fact is the inability to compete on equal footing in the bidding process, not the loss of the contract. Simon v. Eastern Kentucky Welfare Rights Organization (1976) 1. IRS Revenue Ruling 69-545 exempted a 501(c)(3) hospital from accepting indigent patients to the extent of its financial availability. Plaintiffs alleged incidents of financial deprivation, and brought suit against the department of the treasury; 2. Standing turns on whether respondent has established an actual injury; 3. Injury at the hands of a hospital does not justify suit against the treasury; 4. Alleged complaint is that the ruling encouraged hospitals to deny services to indigents; 5. Speculative whether the exercise of the courts remedial powers would make services available in this case; 6. Stewart, concurring: a. Cannot imagine a case where a person whose own tax liability was not affected could have standing to litigate someone elses tax liability. 7. Brennan, joined by Marshall, concurring: a. These plaintiffs failed to allege that the hospital they would use was similar to the hospital in the IRS ruling; b. If small but certain harm is a sufficient basis for standing, lesser probability of suffering a greater harm should be too; c. Court places its holding beyond congressional power to rectify. Duke Power Co. v. Carolina Environmental Study Group (1978) 57

1. Environmental organization and members who lived near a nuclear power plant challenged the Price Anderson Act, which limits the liability of privately owned nuclear plants in case of accident, violated equal protection and due process by depriving them of tort remedies; 2. Court found standing: a. Injury in fact: plaintiffs suffered from the environmental and aesthetic consequences of the thermal pollution of the two lakes in the vicinity of the disputed power plants; b. Causal connection: utilities might not be able to build facilities without protection from the act; c. Redressability: if the courts declared the act unconstitutional, plants would not be built and lakes would not be harmed. 3. Stevens, dissenting: String of contingencies is too delicate. xv. Steel Company v. Citizens for a Better Environment (1998) 1. Environmental protection group sued a Chicago manufacturing company for past violations of EPCRA; 2. Citizen-suit provisions authorizes civil penalties and injunctive relief; 3. Petitioner notified EPA that company violated EPCRA, EPA failed to bring action; 4. Declaratory judgment about failure to follow EPCRA can be dismissed summarily; 5. Civil penalties are payable to the US Treasury. In requesting them, respondent seeks vindication of rule of law; 6. Investigation and prosecution costs cannot grant standing because a plaintiff cannot achieve standing to litigate a substantive issue by bringing suit for the cost of bringing suit; 7. Request to give respondent authority to inspect facilities is injunctive , and is only supported by deterrence, which is insufficient for Article III; 8. Government seeks an injunction because of presumption of future injury. This presumption cannot be a stand-in for a presumption of present of threatened injury; 9. Respondent lacks standing. 10. Stevens, joined by Souter (I, III, IV) and Ginsburg (III), concurring in the judgment: a. Redressability is a judicial creation of the past 25 years; b. Redressability usually limited to government action/inaction; c. Redressability usually invoked where injury to plaintiff was indirect; d. Court does not explain why payment to the respondent would redress injuries, when payment to the Treasury does not; e. Injury usually redressed by compensatory damages or sanctions; f. History supports the idea that punishment or deterrence can redress an injury; g. It is hard to see how this impinges on the Executive; h. Respondent would have had standing if Congress authorized payment; i. Unclear why the separation of powers questions should turn on monetary compensation: why is there if different result when Congress directs payout to the Treasury than to the individual; j. Departure from precedent. 11. Ginsburg, concurring in the judgment: a. Congress did not authorize citizen suits for past actions. No need to expound on what Congress might have done, but did not do. 58

12. Notes: a. For Scalia, the question is whether relief for past actions will affect future conduct. Majority thinks it will have a deterrent effect. It must have a deterrent effect to be credible. Does not have to be certain that you will get redress. xvi. Friends of the Earth, Inc. v. Laidlaw Environmental Services, Inc. (2000) 1. In the Clean Water Act, Congress authorized suits initiated by a person or persons having an interest which is or may be adversely affected. After litigation commenced, defendant achieved substantial compliance, but district court awarded substantial penalty; 2. For Article III standing, the relevant showing is injury to the plaintiff. To insist on injury to the environment raises the standing hurdle higher than the showing for success on the merits; 3. Sworn statements that people stopped going to the river after Laidlaw started dumping chemicals adequately documented injury in fact; 4. This is consistent with Lujan because Lujan rejected averments that the building might negatively impact areas members might use. Affidavits and testimony presented here had a direct impact on plaintiffs use of the park; 5. A plaintiff must demonstrate separate standing for each form of relief sought, but it is not true that plaintiffs never have standing to seek civil penalties; 6. Civil penalties have some deterrent effect. Dissent distinguishes availability from imposition of civil penalties. Misses the mark: a. Interdependence of availability and independence; b. Reasonable to conclude that award of penalties brings deterrence over and above prospect of penalties. 7. There may be a point where the deterrent effect of a claim for civil penalties is so insubstantial it cannot support standing; 8. Steel Co held that private plaintiffs cannot sue to assess penalties for past violations. Did not reach the issue of standing to seek penalties for violations that are ongoing at the time and could continue in the future. 9. Scalia, joined by Thomas: a. Averments cannot carry the plaintiffs burden of demonstrating that they have suffered a concrete and particularized injury; b. Plaintiff cannot assert that harm to the environment injures him because the District Court concluded that the permit violations did not result in any health risk or environmental harm; c. In a normal case a lack of demonstrable harm to the environment will translate into a lack of demonstrable harm to plaintiffs; d. By accepting plaintiffs allegations of concern about the environment, the court makes the injury-in-fact requirement into a sham; e. Generalized remedy that deters all future unlawful activity against all persons cannot satisfy the remediation requirement; f. By seeking to overturn the injunction tradition by giving plaintiff the power to invoke a public remedy, Congress has converted an undifferentiated public interest into an individual right; g. Desire to benefit from deterrent effect cannot establish a case or controversy. Plaintiffs rely on deterrence through the marginal increase achieved by adding federal penalties for past conduct; h. This decision gives private citizens the function of enforcing the law. Availability of civil penalties disproportionate to the individual injury gives citizen plaintiffs massive bargaining power. 59

xvii. Massachusetts v. EPA (2007) 1. Various groups challenged EPAs denial of their rulemaking petition, which sought the regulation of greenhouse gas emissions from new cars; 2. The gist of the standing question is whether petitioners have such a personal stake in the outcome of the controversy as to assure that adverseness which sharpens the presentation of issues on which the court depends for illumination; 3. Significant that the party seeking review is a sovereign state and not a private individual; 4. States are not normal litigants for the purposes of federal jurisdiction. Massachusetts owes stake in this case is sufficiently concrete to warrant the exercise of federal judicial power; 5. Because Massachusetts has a procedural right to challenge the rejection of its rulemaking petition as arbitrary and capricious and Massachusetts stake in protecting its quasi-sovereign interests, it is entitled to special solicitude in the courts standing analysis; 6. Harms associated with climate change justify Massachusetts interest in this case: rising seas have begun to swallow Massachusetts coastal land; 7. EPAs refusal to regulate rests on the assumption that an incremental step cannot be attacked in a federal judicial forum. That premise dooms most challenges to regulatory action; 8. Because of the enormity of the potential consequences associated with man-made climate change, it is irrelevant that the effectiveness of a remedy might be delayed. 9. Roberts, joined by Scalia, Thomas, and Alito, dissenting: a. Redress of grievances such as those presented here is the function of Congress and the President; b. Relaxing standing requirements because the asserted injuries are pressed by a State has no basis in jurisprudence. Under this law, Congress treated public and private litigants the same; c. Court relies on Massachusetts sovereign standing, but hen talks about the loss of coastal property. In other contexts, the court has characterized land ownership as a nonsovereign interest; d. Status of Massachusetts as a state cannot compensate for petitioners failure to demonstrate injury in fact, causation, and redressibility; e. Reliance on Massachusetts loss of coastal land creates insurmountable problems with respect to causation and redressabilty: desired emission standards might reduce only a fraction of 4% of global emissions. Petitioners cannot trace their injuries to the amount of emissions that might have been limited with EPA standards; f. Redressability is also problematic: petitioners cannot predict what will come of the 80% of greenhouse gas emissions that originate outside the United States. When standing depends on choices made by actors not before the courts, party must present facts supporting assertion that actor will proceed in such a manner; g. Petitioners fail to establish why reducing carbon dioxide in the air will redress Massachusetts loss of coastal land. d. Ripeness, Finality, and Exhaustion i. Background 1. Addresses when you are able to bring suit; 2. Three doctrines: a. Finality: definitive disposition of a matter. 60

b. Exhaustion: Is there something more you can do? c. Ripeness: Courts position. Can it resolve issues now without further factual developments? 3. APA contains no ripeness requirement. Does not require litigants to exhaust administrative remedies. 704 does require finality. 4. There is back-and-forth about how easy/hard Abbott Labs makes it to get review. 5. Counter: ripeness is judicial fiction. If finality and you can show harm, you are in court. 6. World has changed since Toilet Goods because what is available to courts has changed: hard look, logical outgrowth. OSHA. Courts can review regulations preenforcement. 7. Court has said there is a constitutional core to ripeness, but decisions take about prudential considerations not mandated by the Constitution. 8. Exhaustion v. finality: a. Protect agency authority. Agencies get another crack at issue. Judicial efficiency. 9. Cisneros: a. Supreme Court says no exhaustion required in the APA; b. Congress chose not to require exhaustion; c. If organization actually requires exhaustion, there is exhaustion. 10. Frank v. Mars a. Secretary of Treasury only makes recommendations to the agency. President can approve/disapprove, no one can sue. 11. When agency heads know they are the final arbiters on certain issues, they may be more careful. ii. Abbott Laboratories v. Gardner (1967) 1. Congress required prescription drug manufacturers to print the established (generic) name for a drug half at least half as large as the drugs brand name. Purpose of the requirement was to encourage price competition; 2. Pursuant to statutory authority, the commissioner of the FDA issued regulations requiring the established name of the drug company to accompany each appearance of the drugs proprietary name; 3. Pharmaceutical Manufacturers Association brought an injunction, claiming the rule exceeded the statutory authority; 4. Judicial review of final agency action will not be cut off unless there is persuasive reason to believe this was Congress intention. There is evidence of congressional intention to cover a broad spectrum of administrative action; 5. We must inquire whether in the context of the entire legislative scheme the existence of the circumscribed remedy evinces congressional purpose to bar agency action; 6. Nothing in the Food, Drug and Cosmetic Act precludes action; 7. Basic rationale of ripeness is to prevent courts from entangling themselves in abstract disagreements over administrative policies and to protect agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties; 8. Issues presented are appropriate for judicial resolution: a. Purely legal issue; b. Not subject to the commissioners discretion because expertise of the commissioner is relevant to passing upon the validity of the regulation; c. The regulations are final agency action within the meaning of the APA; 61

9. If the regulations are within the Commissioners authority, they have the status of law and violations of them carry criminal and civil sanctions; 10. Impact of the regulations upon petitioners sufficiently direct and immediate to render the issue appropriate for judicial review: must change all their labels, advertisements and promotional materials to comply; 11. Where the legal issue presented is fit for judicial resolution, and where a regulation requires an immediate and significant change in the plaintiffs conduct of their affairs with serious penalties attached to noncompliance, access to the courts under the APA and the Declaratory Judgment Act must be permitted, absent a statutory bar or some other unusual circumstance; 12. Preenforcement challenge is calculated to speed of enforcement; 13. Threat of multiplicity of suits: courts are well equipped to deal with eventualities; 14. Cannot be doubted that a court would refuse to postpone effective date of agency action if government could show that delay would be detrimental to public health or safety. 15. Notes: a. Presumption in favor of review if: i. Final agency action ii. Aggrieved party. b. Fitness for judicial review and hardship to parties of withholding consideration. iii. Myers v. Bethlehem Shipbuilding Corp. (1938) 1. Purpose of the National Labor Relations Act is to diminish the causes of labor disputes burdening and obstructing interstate and foreign commerce; 2. Board filed compliant against Bethlehem Shipbuilding asserting it was engaging in unfair labor practices; 3. District Court was without power to enjoin the Board from holding the hearings: a. There is no claim that the provisions and rules of procedure for such hearings are illegal, that the Corporation was not accorded ample opportunity to answer the Boards complaint, or that opportunity to introduce evidence of the allegations will be denied. 4. District Court is without jurisdiction to enjoin hearings because the power to prevent any person from engaging in unfair practice affecting commerce has been vested by Congress in the Board and Circuit Court of Appeals; 5. Board only has jurisdiction if complaint concerns interstate or foreign commerce; 6. No one is entitled to judicial relief for a supposed or threatened injury if they have not exhausted the administrative remedy. This rule is repeatedly acted on where the contention is that the administrative body lacked power over the subject matter; 7. Rule requiring exhaustion of the administrative remedy cannot be circumvented by arguing that the complaint rests on a groundless charges and the hearing would result in irreparable damage. iv. FTC v. Standard Oil Co. of California (1980) 1. FTC issued a complaint against eight major oil companies, asserting that they had engaged in unfair methods of competition in connection with the OPEC oil boycott. Oil companies moved to dismiss: filed as a result of political pressure, failed to develop information that might sustain its chargers, charges had no basis in fact, reason to believe requirement had not been satisfied; 2. Court held that the commissions denial of the motion to dismiss was not final agency action and was not subject to judicial review; 62

3. Issuance of the complaint averring reason to believe has no legal force comparable to the regulation in Abbott Labs. Burden of responding is substantial, but it is different in kind from the burdens attending what has formerly been considered final agency action; 4. Effect of the judicial review is likely interference with the proper functioning of the agency and a burden for the courts; 5. Judicial review to determine whether the Commission decided it had reason to believe would delay resolution of the ultimate question whether the Act was violated. Judicial review of the averments should not be a means of turning prosecutor into defendant before adjudication concludes. 6. Expense and annoyance of litigation is part of the social burden of living under government. 7. Notes: a. Judicial review will impose enormous costs; b. Exhaustion of administrative remedies: i. Yes, Standard Oil did everything, but there has been no final agency action. Preliminary decision would preclude agency determination.

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