Raechelle C. Yballe
Spring 2003
Prof. Wm. Jordan
University of Akron School of Law
ANALYSIS
i. must give prompt notice of denial
ii. must provide a brief statement of the grounds for the denial
i. Time agencies take to make decision subject to a rule of reason
ii. If Congress has provided a timetable or other indication – statute must supply substance for the rule of reason
iii. Economic regulation? Human health and welfare regulation?
1. delays in the former that are reasonable may not be reasonably in the latter
iv. Effect of expediting delayed action on agency’s competing activities
v. Nature and extent of interest prejudiced by delay
vi. There does not have be a finding of impropriety lurking behind the agency’s unreasonable delay
i. Postponing review until conclusion of agency proceedings allows the agency to develop a factual record, to apply its expertise to that record, and to avoid piecemeal appeals
i. Narrow review
ii. Is limited to ensuring that agency has adequately explained the facts/policy concerns it relied upon
iii. That facts have some basis in the record
iv. Presumes the agency action is valid
v. Does not shield agency action for thorough review
i. General exceptions - § 553 does not apply to rules involving
1. Military or foreign affairs
2. Agency management or personnel
3. Public property, loans, grants, benefits, or contracts
ii. Exceptions to Notice and Comment
1. What’s exempt
a. Rules of agency organization, procedure, or practice
b. Interpretive rules
c. General statements of policy
d. Other rules for which N/C would be impracticable, unnecessary, or contrary to the public interest
2. AGENCY’S RULE: § 553’s exemptions cover agency
actions that do not alter the rights or interest of parties even though they may
alter the manner in which parties present themselves or their viewpoints to the
agency
a. Need for public participation in RM process is too small to warrant N/C
b. PURPOSE OF EXEMPTIONS: they are housekeeping measure design to ensure that agencies retain latitude in organizing their internal operations
3. CHALLENGER’S RULE: rules that substantially
affect civil penalty defendant’s rights to avail themselves of an administrative
adjudication fall outside the scope of the exception (Air Transport Ass’n v.
DoT)
a. Reflect Congress’ judgment that informed agency decision-making requires agency decisions to be made only after giving interested parties an opportunity to communicate their views to the agency
b. Openness and participatory democracy assures the legitimacy of the administrative process
4. CHALLENGER’S RULE: Where nominally
procedural rules encode a substantive value judgment or substantially alter the
rights or interest of regulated parties, the rule(s) must be preceded by N/C.
(Air Transport Ass’n v. DoT)
5. CHALLENGER’S RULE: Procedural rules often
impacts on outcomes (affects substance); the court, therefore, must identify
which substantive effects are sufficiently grace so that notice and comment are
needed to safeguard the policies underlying the APA. (JEM
Broadcasting)
iii. GOOD CAUSE EXCEPTION – §553(b)(B)
1. AGENCY’S RULE
a. Requires agency to find the N/C are impracticable,
unnecessary or contrary to the public interest
b. Situations covered by good cause
exception
i. Advance notice will defeat agency’s regulatory objective
ii. Immediate action is necessary to reduce/avoid health hazards or some imminent harm to person/ppty
iii. Inaction will lead to serious dislocation in gov’t programs
iv. Secrecy is an important component (e.g. rules from Federal Reserve
2. CHALLENGER’S RULE: the good cause exception should be
construed narrowly.
a. Agency could simply recite “good cause” and exception would swallow up the rule
i. Very rare
ii. Subject to §§ 556-557
iii. § 553 provides that when rulemaking is required by statute to be on the record after an opportunity for an agency hearing, then § 556-557 apply
iv. Statute does not have to explicitly say “On the Record”
i. Allegheny-Ludlum = statute said “after hearing” èdid not require RM to be on the record
ii. Florida East Coast RR = statute spelled out the hearing required
1. although “hearing” was required by enabling act, the statute did not require it to be on the record
2. RULE: When Congress uses the same term in two different but related statutes and does not expressly distinguish between the use of the word in each instance, Congress intended to give the term the same meaning in both statutes.
iii. Vermont Yankee
1. Deference to agency
2. Basis for deference is the agency’s expertise (this changes in Chevron when the reason for deference becomes delegation of power)
3. AGENCY’S RULE: In the absence of constitutional constraints or extremely compelling circumstance, an court may not impose RM procedures beyond those required in § 553
4. AGENCY’S RULE: Unless the language of the enabling act states otherwise, an agency, in the exercise of its discretion, is free to require additional procedures, and a reviewing court may not impose procedural rights agency if agencies have chosen not to grant them.
iv. Analytical Framework
1. What does the language of the enabling act require?
2. If more than N/C à then agency must follow enabling act procedures
3. If no language requiring more than N/C è go to § 553
i. GENERALLY
1. Most rules are made by informal RM
2. Informal RM Subject to N/C
3. Must include a statement of basis and purpose when they are promulgated
ii. NOTICE
1. § 553(b) requires that a general notice of proposed RM be published in the Federal Register
2. notice is not required if persons subject to rule are named or are served or have actual notice of RM
3. publication in Federal Register is constructive notice of a rule is legal sufficient even if an affected or interested party is unaware of the notice
4. § 553(b)(1) requires that notice include time, place,
and nature of public proceedings à
this enables a party to participate in those proceedings
5. must also indicate
a. the legal authority under which the rule is proposed and
b. either the terms or substance of the proposed rule OR
c. a description of the subjects and issues involved.
iii. LACK OF NOTICE
1. CHALLENGER’S RULE: Agency does not have carte blanche to establish a rule contrary to its original proposal simply because it receives suggestions to alter it during the comment period
2. CHALLENGER’S RULE: Notice of proposed RM must contain terms or substance of proposed rule or a description of the subjects and issues involved; if the final rule materially alters the issues involved in the RM or if the final rule substantially departs from the terms or substance of the proposed rule, notice is inadequate.
a. Requirement of notice and fair opp’y to be hear is basic to administrative law
b. To allow agency to benefit from experience and input of parties who file comments
c. To see that agency maintains a flexible and open-minded attitude toward its own rules
d. Encourages public participation in the administrative process
e. Public participation provides for agency accountability
f. Open nature of procedures gives agency’s decision legitimacy
g. Educates agency and ensures informed agency decision-making
3. CHALLENGER’S RULE: When an agency fails to make
the necessary disclosures, a court should remand a final rule to an agency for a
new notice and comment period.
4. AGENCY’S RULE: An agency may promulgate a final rule
that differs in some particulars from its proposal; notice is adequate if the
changes in the original plan are 1) in character with the original scheme AND
the 2) the final rule is a logical
outgrowth of the N/C already given. (Chocolate Mfrs. v.
Block)
a. Efficiency concerns – we don’t want to force the agency to begin a new round of N/C when it learns from the initial comments on its proposed rule.
b. Would discourage agencies from making any changes and would defeat the purpose of comment period which is to inform/educate agency of what rule is appropriate
c. N/C in RM is really a fact gathering process and is not adjudicatory in nature; as such fairness and due process are not concerns in RM
d. In some instances, a party could have commented but failed to do so
e. All we care about in N/C is that the agency explain fully enough so that issues can be fully address
f. COUNTERVAILING CONCERN: may create incentive for agency to draft broadly so that it will be able to promulgate a different final rule
5. EXAMPLES of changes in final rules that were allowed
a. Reversal of agency’s initial position
b. Elimination of compliance options contained in NPRM
c. Collapsing or adding more subcategories of regulated entities established in proposed rule
d. Exemption from coverage of final rules
e. Changing method if calculation/measurement
iv. Opportunity for Comment – Ex parte
Communications
1. § 553 does not expressly prohibit ex parte communications
2. CHALLENGER’S RULE: DP prohibits ex parte contacts
when RM involves conflicting claims to a valuable privilege (Sangamon
Valley). If the information
contained in an ex parte communication forms the basis for agency action, then
that information must be disclosed to the public. Once NPRM has been issued, any agency
official/employee who is reasonably expected to be involved in the RM process
should refuse to discuss matters relating to the proposed
rule.
a. Basic fairness
b. Other party does not know of XPC content and cannot address those issues raised. RM benefits from an adversarial discussion among the parties.
c. There is always the possibility that the final rule was shape by back room deals and compromises à this undercuts the agency’s legitimacy
d. This essentially emasculates the APA’s requirement of opp’y for comment
e. Agency secrecy would stand in the way of a court’s determination of whether an informal rule is arbitrary and capricious
3. AGENCY’S RULE: Only information gather ex parte that
becomes relevant to rulemaking should be disclosed. Informal contacts are appropriate so
long as they do not frustrate judicial review or raise serious questions of
fairness. (HBO v. FCC).
i. Agency should select convenor
ii. Convenor should inquire into whether reg neg group should bre empaneled to develop a proposed rule
iii. FACTORS TO CONSIDER
1. need for the rule
2. limited number of identifiable interests that will be significantly affected by the rule
3. reasonable likelihood of a committee with a balanced representation of persons who are proper representatives – no single interest should be able to dominate (does not apply to representatives of the agency)
4. representatives are able to negotiate in good faith
5. negotiation process will not delay promulgation or implementation
iv. At least one person on the committee must be from the agency
1. but representative cannot bind the agency
2. must be identified in FR notice
v. To ensure appropriate interests have been identified and represented è agency must publish in FR notice that it is thinking about developing a rule by negotiated RM
vi. Committee may be able to close its meeting to the public
1. HOW DOES FACA/Sunshine affect this aspect of NRM?
vii. Agency should publish committee’s proposed rule in its NPRM
1. if it does not publish the negotiated text è must give reasons
2. if agency wants to modify the negotiated text è agency should do so in a way that public can distinguish between agency and committee
viii. Committee should have opp’y to review comments received so that they can determine whether their recommendation should be modified
ix. AGENCY HAS FINAL RESPONSIBILITY FOR ISSUING RULE
i. CHEVRON ANALYSIS
1. Has Congress directly spoken to the precise question at
issue?
a. If Congressional intent is clear, that is the end of the
analysis
b. Court as well as agency must give effect to the
unambiguous expressed intent of Congress
c.
If Congress’ intent is unclear, court may not impose its
own construction of the statute
2. If the statute is silent or ambiguous with respect to
the specific issue, the question for the court is whether the agency’s answer is
based on a permissible construction
of the statute
ii. POLICY CONSIDERATIONS
1. Congress has expressly delegate a gap-filling function to the agency
2. if choice represents reasonable accommodation of conflicting policies that were committed to agency’s care by Congress à court should not disturb unless agency stepped out of its delegated boundaries
i. 2 types of substantive decisions
1. what are the relevant facts based on the evidence available to the agency
2. what type of rule is appropriate in light of those facts
ii. § 706 – reviewing court shall hold unlawful and set aside agency action, findings, conclusions that are
a. arbitrary and capricious (normally applies to informal RM)
b. abuse of discretion
c. not in accordance with law
d. unsupported by substantial evidence in cases subject to §§556-57
iii. Scope of Review
1. Substantial Evidence
a. Uphold rule if decision is reasonable OR
b. Record contains relevant evidence such that reasonable
minds may accept as adequate support a conclusion (Consolidated
Edison)
c. Agency has BoP
d. Evidence = testimony and documents in the record
2. A/C = arbitrary and capricious
a. Standard of review is narrow
b. Court may not substitute its own judgment for that of the agency
c. Agency must
i. examine the relevant data and
ii. articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made (Motor Vehicle Mfrs. V. State Farm)
d. Agency acts in A/C manner if
i. It relies on factors which Congress has not intended it to consider
ii. Failed to consider an important aspect of the problem (THIS IS THE KEY!! KEEP IN MIND that you should not challenge the agency’s findings of facts but rather you should challenge the agency’s RM on the basis that it did not consider some fact)
iii. Offers an explanation for its decision that runs counter to the evidence before the agency OR
iv. Is so implausible that it could not be the product of agency expertise
iv. RM Record
1. FRM – testimony and documents in the records
2. Informal RM
a. in RM facts tend to be about what will happen in the future
b. Unknowable facts are reviewed with great deference to the agency
c. This is because the decision will rely to a greater extent on policy judgments rather than purely historical facts.
d. Agency is really making predictions in its area of expertise
v. Adequate Explanation
1. if agency does not give adequate reasons for rule = A/C
2. courts will remand, recognizing that agency may be able to give adequate reason if given an opp’y to defend its rule
i. You don’t always appeal
ii. See page 186
ADJUDICATION
i. An adjudication on the record
ii. If § 554 applies à §§ 556-57
i. Generally
1. The words “on the record” are not required
2. must look at the substantive nature of the hearing Congress intended to provide (Seacost v. Costle)
ii. CHALLENGER’S RULE: Unless a statute states otherwise, an
adjudicatory hearing subject to judicial review will be presumed to be on the
record
1. If a statute requires an adjudicatory hearing, it may be implied that the decision must be in accordance with the evidence adduced at that hearing (judicial review!)
iii. AGENCY’S RULE: In the absence of the words “on the
record,” Congress must clearly indicate an intent to trigger the formal, “on the
record” provisions of the APA
iv. CHEVRON ANALYSIS – applies to an agency’s interpretation of whether a statute requires “on the record” hearings
i. §§ 555 & 558 applies
ii. due process requirements
iii. statutory requirements
i. Time, place, manner of hearing
ii. Legal authority for hearing
iii. Matters of fact and law asserted
iv. If there is a D, D may be required to reply to the notice
v. RULE: Where ALJ sua sponte raised issues not contained
in the complaint, challenger did not receive proper notice.
vi. RULE: purpose of notice requirement is satisfied if the party against whom the agency is proceeding understood the issue and was afforded a full opp’y to justify his conduct. (Southwest Sunsites)
vii. RULE: Adequate notice must contain enough information to provide the respondent a genuine opp’y to identify material issues of fact. (Copanos)
viii. RULE: When an ALJ chooses to go beyond the testimony adduced at the hearing in order to make a determination, the ALJ must also afford the claimant 1) oppy’ to comment and to present evidence and 2) opp’y to cross-examine the authors of the post-hearing report. , Must reopen the hearing for that purpose, if rehearing requested.
i. § 555(b) provides for interested parties to appear before an agency if “orderly conduct of public business permits”
ii. if person has standing to appeal agency action, then that person can also intervene
iii. But DC Cir. has said that maybe standing and right to intervene are not governed by the same standard à but this was a Chevron question!!!
i. separation of functions (prosecutorial vs. adjudicatory)
1. § 554(d) prohibits investigator/prosecutor from participating or advising in the ALJ’s decision
2. exceptions (no prosecuting function in agency)
a. initial licensing
b. validity/application of rates of public utilities and common carriers
c. head of agency not prohibited from engaging in prosecutorial and adjudicatory functions
3. assures independence
ii. Disqualification of ALJ – similar to federal judges
iii. ALJ cannot second guess the agency è bound by agency’s legal positions
i. Burden of persuasion
ii. Proponent has BoP
iii. Hearsay evidence OK
iv. Evidence just can’t be irrelevant, immaterial or unduly repetitious