I. THE INTERPRETATION OF STATUTES A. Reading the statute 1. Statutory Interpretation Forms of statutory interpretation: 1.

Intentionalism- A judge should try to reconstruct as best as possible the likely intent of the legislature- what the legislature would have specifically intended if confronted with that particular question 2. Purposivism- Courts should read specific statutory provisions to advance the purpose or general aims of the legislation 3. Textualism- Interpreters should strive to discern how reasonable people would understand the semantic import or usage of the precise statutory language. Similarities: Same tools of construction Legislative supremacy judges must act as Congresss faithful agents and determine legislative intent, which is derived from the idea that the object of interpretation is to enforce a decision that is attributable to the legislature. 2. Spirit of the Law Spirit of the Law > Letter of the law Rational interpretation allows judges to decipher the legislative intent from probable and rational conjectures and reasonably infer intentions not expressed in a statute in determining the law. The Absurdity Doctrine- If a literal construction of the words of a statute be absurd, the act must be construed as to avoid the absurdity. Determining intent: Title of the Act In the evil that the statute is designed to remedy: -Contemporaneous events -The situation as it existed -The situation as it was pressed upon the attention of the legislative body 3. The TEXT The Text: The starting point for interpreting a statute is the language of the statute itself Scientific vs. Ordinary Meaning The meaning of words is determined by the shared understandings and expectations of the relevant linguistic community words can have specialized meanings and conventions within each community Interpretative presumption that the ordinary meaning of the statutory language expresses the legislative purpose Ordinary Meaning: Colloquial Meaning vs. Dictionary Meaning When a word is not defined by statute, we normally construe it in accord with its ordinary or general meaning Context of statutory scheme 4. Legislative History Source of information: Specialized meaning Industry practice Problems being addressed by the legislation Externally verifiable facts about the world Legislative history clarifies context 1

B. Legislative Process and Legislative History 1. Legislative Process Constitution: Checks and Balances Deliberation and Cooling Off Congressional Rules of Procedure: (i) Introduction of Bills and Referral to Committees (ii) Committee Consideration (iii) Floor Debate and Amendment (iv) Reconciliation 2. Legislative History Textualist Critique of Legislative History: Debatable utility of legislative history as a window into collective legislative intent The text is law and legislative intent a clue to the meaning of the text, rather than the text being a clue to legislative intent Constitutional concerns of bicameralism and presentment requirements Judges impermissibly acquire added policymaking discretion by relying on legislative history 3. The New Synthesis Modern trend: The SC generally first tries ascertain whether the statutory text speaks clearly to an issue and does not treat legislative history as the primary indicum of legislative intent or statutory meaning Extrinsic materials have a role in statutory interpretation only to the extend they shed a reliable light on the enacting Legislatures understanding of otherwise ambiguous terms. Vulnerabilities of legislative history: Often ambiguous and unclear Legislative materials may give unrepresentative members power/ability to manipulate legislative history to circumvent Article 1 process. C. The Judicial Power and Equitable Interpretation 1. Judicial Power What roles does the Judicial branch have in shaping legislation? Faithful agent model Junior partner model 2. Tools of Statutory Interpretation Semantic meaning of the statutory text The rationality of the statutory scheme Inferences from statutory structure 3. Equitable Interpretation Equitable interpretation- The judicial power vested in federal courts by the constitution includes the ability for judges to deviate from the text/intent to further the judges conceptions of justice or wise policy. D. Canons of Interpretation 1. Canons of Construction- interpretative principles or presumptions that judges use to discern or construct statutory meaning. Semantic canons- a form of textual analysis in which generalizations about how the English language is conventionally used and understood are used to decode statutory terms Substantive Canons- judicial presumption in favor/against a particular substantive outcome

2. Semantic Canons Expressio unius canon- the expression of one thing implies the exclusion of others the principle that when a statutory provision explicitly expresses or includes particular things, other things are implicitly excluded In pari material (on the same subject)- Presumption favoring consistent meaning- that a word/phrase has the same meaning in different sections of the same statute Noscitur a sociia canon- a word is known by its associates a words meaning can be clarified- and often narrowed- by the words around it Presumption against surplus language disfavors interpretations that would render certain statutory language redundant or superfluous Ejusdem Generis Canon (of the same kind)- interprets the general residual term more narrowly, so that it encompasses only things that are similar to the items that are specifically mentioned 3. Substantive CanonsProtecting State sovereignty and autonomy Federal Regulation of State government functions Federal Preemption of State Law Supremacy clause: Federal law > State law Types of Preemption cases: (i) Express preemption (ii) Implied preemption a) Conflict preemption b) Obstacle preemption c) Field preemption

II. THE STATUTE AND THE ADMINISTRATIVE AGENCY A. Delegation 1. Constitutional Backdrop Inferences from Constitution: Text and structure Historical understandings of the nature and purposes of the Constitutions allocation of powers as a source of insight Montesquieu- preserves liberty Historical context- perceived failures of state government systems Formalism vs. Functionalism Formalists- view the C as drawing sharp distinctions between the power/responsibilities assigned to each branch and as adopting rule-like allocations of powers Judges must enforce those rules rather than abstracting the purposes behind them Functionalists- view the C as leaving a great deal undecided- such as the exact administrative powers of each branch- and it is therefore sufficient if an administrative scheme leaves intact the core functions of each branch and preserves an appropriate balance of power and creative tension among the branches. Defining the 3 Powers: i. Legislative Power- making and altering the general rules of society ii. Executive Power- the execution of these general rules iii. Judicial Power- the interpretation and application of the laws...

2. Delegation of Legislative Power Virtues of Delegation: Agencies have specialized expertise Administrative Process > Congressional lawmaking: Congress agenda is overcrowded- less time to study/address various issues Legislative Process is slow/cumbersome- making it difficult to react quickly to new/changed circumstances Daily pressures of partisan and distributive politics may inhibit sensible, pragmatic application of the best available information at hand Vices of Delegation: BUT, these arguments seem to reject the systems fundamental commitments to democratic accountability and the separation of powers Legislative activity is supposed to be slow Regulatory policy decisions perhaps shouldnt be insulated from politics democratic accountability 3. Constitutional Status of the Non-Delegation Doctrine Intelligible Principle Doctrine- When Congress confers decision-making authority upon agencies, Congress must lay down an intelligible principle to which the person or body authorized to act is directed to conform. [Whitman v. American Trucking Association] An agency must interpret statutes as to provide an intelligible principle in guiding its exercise of authority. B. Rulemaking under the APA 1. Role and Function of Administrative Agencies Located in the Executive Branch Promulgation and application of regulations that translate general statutory directives into concrete requirements or prohibitions with which the public must comply. 2. Administrative Procedure Act (APA) 551: Definitions 553: Rule Making 554: Adjudication 556: Hearings; Presiding Employees; Powers and Duties; Burden of Proof; Evidence; Record as Basis of Decision 557: Initial Decisions; Conclusiveness; Review by Agency; Submissions by Parties; Contents of Decisions; Record 3. The Regulatory Process: Notice-and-Comment Rulemaking Procedural Requirements for informal or notice-and-comment rulemaking: (i) 553(b): Notice (ii) 553(c): Opportunity for comment (iii) 553(c): Concise statement of basis and purpose accompanying the final rule Paper Hearing Requirement When the basis for a proposed rule is a scientific decision, the scientific material used to support the rule should be exposed to the view of interested parties for their comment [United States v. Nova Scotia] (i) 553(c)s requirements that outside agencies have a meaningful opportunity to commentwhich must include revealing the evidentiary basis for the proposal. (ii) 706(2)(A)- A court should strike down agency action as arbitrary if the agency failed to consider all the relevant factors in making its decision.

The test of adequacy of the concise general statement is if it enables the court to see what major issues of policy were ventilated by the informal proceedings and why the agency reacted to them as it did. There does not need to be a new commenting period on data/studies generated during or after the comment period that do not lead to any fundamental changes in the agencys proposal. Court rulings are less clear when the new material generated in response to comments adds genuinely new information Ossification hypothesis- Rulemaking has gradually transformed from the simple and speedy practice contemplated by the APA into a laborious, seemingly never-ending process. The courts expansive reading of 553 procedural requirements has transformed so-called informal rulemaking into a much more elaborate and formal process- a paper hearing that includes extensive and often repeated notice. Judges are uncomfortable with the idea that agencies can make important policy decisions without adequate procedural safeguards. C. Adjudication under the APA 1. Agency Actions Concerns on notice-and-comment lawmaking: Increasing procedural costs may defeat the purpose for which Congress delegated rulemaking authority to agencies in the first place- to create a flexible, efficient process for agencies to use in addressing complex social and economic problems. Increasing procedural costs gives agencies stronger incentives to find other, less costly ways to pursue their policy objectives through forms of policymaking that have fewer safeguards. Benefits to notice-and-comment alternatives: Allows agencies to respond quickly and flexibly to new situations. Allows agencies to fill in gaps or ambiguities in existing rules without incurring the costs and delays of formally amending those rules. Types of Alternatives: (i) Administrative adjudication- when agencies announce a new principle in the context of issuing an order in a specific case (ii) Agency policy statement- the APA expressly exempts from 553 general statements of [agency] policy. (iii) Interpretative rules (vs. legislative rules) Agency action: (i) Rulemaking (ii) Administrative Adjudication Application of existing law to specific facts Announcing general principles that are treated as precedent for future cases 2. Adjudication: Chenery Chenery I: A court reviewing any agency action will consider only the basis for that action proffered by the agency in the rule or order at issue; agencies may not offer additional post hoc justifications during litigation. The court refused to consider SECs alternative argument of fair and equitable standards since, when the SEC had rejected Federals plan, they had relied only on the assertion that existing judicial doctrine would have prohibited Chenerys behavior, and the SECs order had to either stand or fall on that rationale. Chenery II: An effective administrative process must allow an agency the power to deal with problems on a case-by-case basis, and the choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency. 5

Chenery: Whether, or under what conditions, an agency may announce a new policy decision in an adjudicative order rather than through a rule-making? When judicial review occurs in agency action it is based solely on the reasons the agency has given (SEC wins 2nd round because it changed its reasoning) IF the organic statute under which the agency is given authority authorizes it both to write rules AND to conduct adjudications the agency gets to choose per issue whether to proceed by rulemaking or adjudication Adjudications can be retroactive in some circumstancesRule is PROSPECTIVE vs. adjudication- RETROACTIVE Bell Aerospace v. NLRB: SC reemphasized Chenery IIs recognition of broad agency discretion to choose between rulemaking and adjudication. However, there are still legal limits on an agencys freedom to announce general principles in adjudicative orders, as the court recognizes that there may be situations where the Boards reliance on adjudication would amount to an abuse of discretion under 706(2)(A) of the APA. Bell Aerospace reaffirmed the Chenery II balancing approach to retroactivity, requiring a showing either of substantial adverse reliance on the past agency policy, or the imposition of some penalty (e.g. fines or damages) for past conduct that was consistent with the agencys thenprevailing policy. If a new agency policy implicates substantial reliance interests or subjects regulated entities to new liability, an agency cannot announce that new policy in an adjudication since it would be impermissibly retroactive under Bell Aerospace if applied to the parties in dispute. D. Agency Guidance 1. Exceptions to 553 Exceptions to the notice-and-comment procedures of 553: U.S.C. 553(a)(1): Matters pertaining to a military or foreign affairs function of the U.S. U.S.C. 553(a)(2): Matters relating to agency management or personnel or to public property, loans, grants, benefits, or contracts. U.S.C. 553(b): (A) to interpretative rules, general statements of policy, or rules of agency organization, procedure or practice; or (B) when the agency for good cause finds... that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. Agency Exemptions: Good cause exemption General statements of policy Interpretative rules 2. The Good Cause Exemption 553(b)(B): An agency need not go through the ordinary notice-and-comment rulemaking process if that process would be impracticable, unnecessary, or contrary to the public interest. (i) Unnecessary if the rule in question is a routine determination, insignificant in nature and impact, and inconsequential to the industry and to the public. This is a narrow exception, limited to cases in which there is no controversy about the rule. Some agencies utilize this exception through direct final rulemaking in which they announce an interim rule which it expects to be non-controversial and thus immediately effective pursuant to 503(b)(B), and simultaneously solicits comments on the interim rule as if it were an ordinary notice of proposed rulemaking No adverse comments rule remains in effect 6

Adverse comments interim rule is withdrawn but agency nonetheless completes the rulemaking as it would in the ordinary course of things (ii) Impracticable if there is some kind of emergency situation that makes the delay associated with the ordinary notice-and-comment process intolerable Usually posed as a temporary rule while the agency simultaneously initiates the regular notice-and-comment rulemaking process, using the emergency rule as the proposed final rule Many courts have indicated that the interim rules temporary status is a necessary precondition for upholding the agencys use of the 553(b)(B) exemption as legitimate. e.g. FAAs new regulations for speedier revocation of pilots licenses that pose a security threat after 9/11 (iii) Contrary to public interest if advance notice of the proposed rule would prompt undesirable anticipatory behavior by affected parties e.g. price control regulations

3. General Statements of Policy 553(b)(A) states the notice-and-comment requirements dont apply to an agencys general statements of policy. A policy statement (or guidance document) is an official declaration by the agency of its agenda, its policy priorities, or how it plans to exercise its discretionary authority. Rule vs. Policy Statement [PG & E v. Federal Power Commission] Two methods for an administrative agency to formulate policy with the force of law: (i) rulemaking procedures by which it promulgates substantive rules (ii) adjudications which constitute binding precedents A general statement of policy is neither- but rather functions as an informational device: Formal method that encourages public dissemination of the agencys policies prior to their actual application in particular situations Facilitates long range planning within the regulated industry and promotes uniformity in areas of national concern The Force of law test: The critical distinction between a substantive rule and a GSP is the different legal status each has in subsequent administrative proceedings: Substantive rule establishes a standard of conduct that has the force of law in subsequent proceedings GSP does not establish a binding norm and cannot be relied upon as law since it merely announces an agencys tentative plans for the future. When an agency states that in subsequent proceedings it will thoroughly consider not only the policys applicability to the facts of a given case but also the underlying validity of the policy itself, then the agency intends to treat the order as a GSP. Scope of Judicial Review: Since a GSP is adopted without the rulemaking process a reviewing courts grants it less deference than a decision expressed as a rule or an adjudicative order. Criteria for GSP: [Chamber of Commerce v. Dept. of Labor] (i) has only a prospective effect, and (ii) leaves agency decision-makers free to exercise their informal discretion individual cases 4. Interpretive Rules GSP v. Interpretive Rules: Both collectively referred to non-legislative rules Both lack the binding legal force of a legislative rule GSP- preliminary announcement by the agency of how it intends to exercise its discretion in some future case 7

Interpretive rule- declaration of how an agency interprets an ambiguous statute or rule An agency document may qualify as an interpretive rule even if it narrows agency discretion or exerts a coercive effect on regulated parties since it is an agencys declaration of what it thinks some statutory/regulatory command actually means. Legislative rules vs. Interpretive rule [American Mining Congress v. Mine Safety & Health Admin.] Whether a purported interpretive rule has legal effect turns on: (i) Whether, in the absence of the rule, there would not have been an adequate legislative basis for enforcement or agency action to confer benefits of ensure the performance of duties, (ii) whether the agency had published the rule in the Code of Federal Regulations, (iii) whether the agency had explicitly invoked its general legislative authority, or (iv) whether the rule effectively amended a prior legislative rule. If the answer was yes to any of the questions, a legislative, not interpretive rule was found.

III. POLICYMAKING IN THE ADMINISTRATIVE STATE A. Justification and Strategies for Legislation or Regulation 1. Correcting Market and Government Failures Generic policies- various types of actions that the government can take to deal with perceived policy problems Goal: Identify the policies with the best prospects for improving social conditions, as assessed in terms of the specific goals and criteria Categories of generic policies: (i) freeing, facilitating, and simulating markets (ii) using taxes and subsidies to alter incentives (iii) establishing rules (iv) supplying goods through non-market mechanisms (v) providing insurance and cushions (economic protection) 2. Cost-Benefit Analysis Regulatory failure- when the costs of a regulation exceed its benefits Cost-benefit analysis involves the creation of artificial market for things- like good health, long life, clean air- that are not bought and sold. Mechanics: Estimating costs Monetizing benefits Contingent valuation- form of an opinion poll Indirect inference- from observation of peoples behavior in other markets Discounting the future- what is the present value of future benefits? In general, the appropriate benefit measure for risk reductions is the willingness to pay to produce the particular outcome. The selling price for changes in risk establishes the value for risk increases. IV. JUDICIAL REVIEW OF AGENCY ACTION A. APA 701: Application, Definitions 702: Right of Review 704: Actions Reviewable 706: Scope of Review

APA 706(2)(A): The reviewing court shall hold unlawful and set aside any agency action, findings, and conclusions found to be arbitrary, capricious, and abuse of discretion, or otherwise not in accordance with the law. B. Hard-Look Review 1. The Arbitrary and Capricious Standard: Competing Approaches Forms of Judicial oversight: Enforcing statutory procedural requirements Interpretation of substantive statutory provisions Ensuring agency decisions are not arbitrary or capricious 706(2)(A): Arbitrary and Capricious Standard It empowers courts to invalidate an agency action as arbitrary even when there is no specific statutory or constitutional provision forbidding that actions p. 719 textbook