Administrative and Regulatory State (ars) Outline – Rascoff, Spring 2009 – Jason Hardy

A. The Relationship Between Congress and Agencies


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A. The Relationship Between Congress and Agencies

  • 1. The Nondelegation Doctrine (1136 & CP 36)

    • Background:

      • Congress creates agencies through “organic statutes” which describe the issue/mischief to be addressed, provide for funding, and provide some guide for how to proceed.

      • Congress necessarily delegates relatively broad authority to the agencies; otherwise, if it were to delegate more specifically, it would have no reason to delegate in the first place.

    • Constitutional Problem: Congress, being vested with “all legislative powers” Art.I, §1, cannot delegate that power to anyone else without providing specific standards (“an intelligible principle”) that the administrative agency shall apply in administering the delegation.

      • Example: The Economic Stabilization Act of 1970 authorized the President “to issue such orders and regulations as he may deem appropriate to stabilize prices, rents, wages, and salaries at levels not less than those prevailing on May 25, 1970.” In a case challenging this delegation, the D.D.C. court upheld the statute because the Executive had promulgated standards that limited its actions under the statute. Furthermore, the court constructed standards to guide implementation of the statute from:

        • (1) legislative hxy, which revealed the purposes of the law,

        • (2) prior price control statutes, and
        • (3) judicial power to elaborate on implicit statutory terms, such as a “fairness and equitable” standard, enforceable through judicial review of the executive implementation decisions. Amalgamated Meat Cutters and Butcher Workers v. Connolly, (1971), 1136’3.

      • Alternative viewpoint: If Congress approves of a delegation, then it does not violate the separation of powers principle. See Clinton – C2 (Breyer’s dissent, noting that Congress passed the “line item veto” legislation). Counter: This viewpoint creates a slippery slope.

    • The Nondelegation Doctrine is no longer considered an enforceable constitutional doctrine; since 1930, the Supreme Ct. has not invalidated any statutes using this doctrine.

      • Canon: However, the Ct. has used the doctrine as a canon of statutory interpretation that statutes should be construed narrowly so as not to delegate authority too broadly. See American Trucking – C24 & Benzene case – C23.

      • According to American Trucking, an agency cannot “cure” an improper delegation.

      • Outsourced legislative task to a judicial commission: Upheld in Mistretta (CP157) because Congress provided detailed standards for the commission. (Scalia dissented on the rationale that the task of the Sentencing Commission was wholly legislative and was “completely divorced” from any executive or judicial function that would normally involve inherent delegation.)

    • Policy considerations:

      • In favor of nondelegation:
        • Political accountability, as provided for in Art.I, §7: According to a p.c. perspective, a legislator’s main motivation is to get re-elected, an achievement that is furthered by helping constituents but could be jeopardized by taking positions adverse to the interests of constituents. Thus, legislators prefer to “pass the buck” and delegate the controversial and difficult decisions to bureaucrats. This is problematic because bureaucrats are not democratically elected. Furthermore, if the agency is “captured” (beholden to interest groups), its decisions are biased; if it is not captured, its decisions are likely to be timid so as not to significantly upset interest groups.

        • Deliberative democracy – The Legislature, as a republican representation of the people, allows for public involvement.

        • Rule of law – need for predictability. See [Cardozo] in Schechter Poultry.

          • How is a judge to review an agency decision if the judge has no standard in the statute to compare against? (See Rehnquist in Benzene Case, CP143).

      • In favor of delegating to agencies (Jerry Mashaw, 1137z):

        • In response to formalistic separation of powers concerns, “a hermetic sealing-off of the three branches of government from one another could easily frustrate the establishment of a National Government capable of effectively exercising the substantive powers granted to the various branches by the Constitution.” Benzene case (Rehnquist concurring), CP139. According to Scalia, the unconstitutional delegation debate is one of degree, not of principle, because “no statute can be entirely precise” and some judgments “must be left to the officers executing the law and to the judges applying it.” Thus, “a certain degree of discretion, and thus of law-making, inheres in most executive or judicial action.” Mistretta (CP157).

          • Delegation takes advantage of the expertise and flexibility of agencies.

          • Agencies may be more responsive to public desires by being able to act more quickly than Congress.

        • Agencies are accountable to the national electorate just as the President is.
        • Broad delegation to agencies inhibits vote-trading and deal-making in Congress, so it may actually reduce rent-seeking by interest groups. “Once power has been delegated to an agency, lawmakers find it more difficult to offer bargains in that issue arena, and administrators cannot make tradeoffs on issues outside their jurisdiction.”

    • Cases:

      • Schechter Poultry – C22

      • Benzene case – C23

      • American Trucking – C24

      • TARP – according to Rascoff, it does not appear to have any standards to guide its implementation.

  • 2. Legislative Control over Agencies (1142)

    • (A) Oversight

      • Types of Oversight:

        • Formal Committee Hearings

        • Informal discussions and development of policy

      • History: The Legislative Reorganization Act of 1946 signaled a new commitment to legislative oversight and provided for additional personnel to accomplish oversight.

      • Strategies of Oversight:

        • Police patrol –

          • Pros: regular monitoring; perhaps best for areas where not many interest groups would sound alarms.

          • Cons: very time-consuming; time spent engaged in oversight is time not spent fundraising or working on positive legislation to benefit constituents.

        • Fire alarm –

          • Pros: Not as time consuming b/c action is initiated by concerns voiced by interested parties.

          • Cons: Not as effective for areas with less interest group activity.

      • Problems with Oversight

        • It can be used for partisan purposes: more critical oversight when Congress is controlled by a different party than the President’s party and less critical oversight when Congress is controlled by the President’s party.

        • For legislators, time spent engaged in oversight is time not spent fundraising or working on positive legislation to benefit constituents.
        • For agencies, time spent dealing with oversight is time not spent engaging in regulatory activity, undermining the agencies’ efficacy.

        • If an oversight committee is controlled or influenced by the regulated industry, the agency may be pressured to be less intrusive (and efficacious) in the industry.

        • It has, in the past, infringed upon individual rights. E.g. the Congressional witch hunts of suspected Communists by the House Un-American Activities Committee is one example (1144n2).

        • Executive privilege has been invoked to argue that agencies do not have to cooperate. E.g. EPA’s refusal to disclose information about its enforcement of the Superfund program.

        • In the case of the Dept. of Homeland Security, it reports to 87 committees.

    • (B) Budgetary and Appropriations Power

      • “Power of the purse” is authorized by A.I. § 8, which gives Congress plenary power to determine how the U.S.’ money will be spent.

      • Since funding bills are usually passed separately from organic statutes, the Legislature maintains a “backdoor legislative veto” by its ability to limit the funding for a particular agency (“underfunding”). Because funding usually must be renewed annually, Congress maintains ongoing influence.

      • Congress can also direct how money is spent by:

        • Line items contained in the reports that accompany spending bills. Although such directives are not legally binding, agencies are likely to suffer political consequences if they do not comply with them.

        • Substantive restrictions, which are legally binding because they meet the constitutional requirements for laws.

    • (C) Legislative Veto (1148)
      • A legislative veto is a statutory mechanism that allows for further legislative review or control, usually for a specified time period, of agency decisions and actions.

        • “A negative veto provision (the typical one) stipulates that administrative decisions will be effective, unless the legislature or its designated subgroup actually disapproves the decisions.”

        • “A positive veto provision requires legislative approval of the administrative decisions before it becomes effective.”

        • Hybrid – A “laying over” provision allows for a specified time period for legislative consideration of proposed decisions.

      • But INS v. Chadha, U.S. (1983), 1150 – C1 held that the legislative veto violated the Constitutional separation of powers because it bypassed the bicameral and presentment requirements for legislative lawmaking.

    • (D) Personnel/Appointment Power (1160)

      • “Congress can directly influence agency officials through the appointment and removal process.”

        • “(1) It may legislate a means by which ‘inferior Officers’ are appointed.” A.II § 2 cl. 2.

        • “(2) Although the President must name ‘other Officers of the United States,’ the President can only do so ‘with the Advice and Consent of the Senate.’” A.II § 2 cl. 3.

        • “(3) The House may impeach and the Senate may remove any ‘civil Officer[] of the United States.’” A.I § 2 cl. 5; A.I § 3 cls. 6-7; A.II §4.
      • Congress can exercise direct control over officials that implement “quasi-legislative” or “quasi-judicial” duties. Humphrey’s Executor v. United States, U.S. (1935): “[T]he Supreme Court upheld a statute preventing the President from removing an FTC Commissioner unless for cause. Characterizing the independent agency as performing both adjudicative and ‘quasi-legislative’ duties, the Court reasoned that Congress could restrict presidential power over such officers in ways it could not do for officials with purely executive functions, as in Myers v. United States, U.S. (1926).

    • (E) “Hard-Wiring” - Design of Agency’s Structure and Procedures to Control Policy (1166)

      • Ex ante method, known as “hardwiring” an agency, to control policy by carefully designing the agency’s procedure, jurisdiction, and composition when creating the agency. E.g. EEOC.

      • Examples:

        • Pro-industry design assigns the agency a relatively small clientele and regulatory turf that is shared with other agencies.

        • Anti-industry design assigns a more wide-ranging clientele with competing interests and exclusive regulatory turf.

        • Industry- or politically-independent agencies can be shielded from personnel changes by established tenures for agency heads.

        • The FTC was required to go through increased procedures to promulgate rules.

        • Congress sometimes requires certain allocations of decision costs and resources.

      • Problems with this approach:

        • An agency may not grow up and turn out to be as expected.

        • Agencies are not “designed” just by their organic statutes, but mature over time and develop in response to other conditions.

B. The Relationship between the President and Agencies

  • 1. Appointment and Removal

    • Background:

      • Myers (see above under Personnel/Appointment Power) – C25 held that the President has inherent power to remove executive officers without Congressional approval.
      • Humphrey’s Executor (see above under Personnel/Appointment Power) – C26 qualified Myers and held that the President does not have inherent power to remove executive officers who perform quasi-legislative or quasi-judicial duties, but only “purely executive” officers.

    • Morrison v. Olson – C27 essentially overruled Humphrey’s and provided that the President has inherent power to remove an executive officer whenever restrictions on that removal power “are of such a nature that they impede the President’s ability to perform his constitutional duty....” In other words, a statute cannot restrict the President’s removal power if the restrictions impede the President in his exercise of executive power (e.g. take care to execute laws faithfully). This is a nebulous inquiry into whether the agency moves into the constitutional power reserved for the President.

    • Policy Issues:

      • The president should be able to set policy, and a key part of setting policy is having the ability to appoint (and remove) high-level officials to implement that policy.

      • On the other hand, some positions, such as the Federal Reserve Chairman, are viewed as relatively apolitical and should not be subject to the changing political winds.

    • Application of Humphrey’s standard:

      • In Wiener (CP179), where the statute at issue contained no provision for removal, the Court [Frankfurter] held that the President improperly removed a member of the War Claims Commission because his functions were quasi-judicial in nature.

  • 2. Other Mechanisms of Presidential Control

    • (a) Executive Orders

      • Generally

        • Unilateral directive by the President, not necessarily occasioned by a statute, like a signing order. In fact, sometimes they result b/c the President was not able to get a law passed.

        • Authorized by Constitution or statute, depending upon the issue.

          • E.g. Pres. Obama issues an order re: Gitmo due to Art. II “Commander in Chief” powers.
        • An EO can be struck down by a court. Steel Seizure case; Hamdan.

      • EO 12,333 (CP205) created the Intelligence Community in 1981. It also stopped the CIA from experimenting on humans (with things like LSD), from assassinating people; and from trying to influence American political elections.

        • Substantially revised in 2008 as a reaction to a Congressional law which created the Director of National Intelligence. The DNI was above the CIA director (who used to be in charge but didn’t really do a good job of it).

        • Note that all these things were done by the President, not by Congress, and it involved policy for an enormous budget and tens of thousands of employees.

      • EO 12,291 (CP214), issued by Reagan within a month of his election, required all agency proposals to be submitted to a cost-benefit analysis (CBA) through the Office of Regulatory Impact Analysis (OIRA), a division of the OMB. If the benefits did not outweigh the costs, the regulation would not be allowed.

        • Deregulation: Reagan was elected, in part, to deregulate the economy. The CBA was supposed to expose the high cost of regulation – the idea being that if agencies have to show these costs, people would understand that regulation is bad. (Not everyone agrees with this. See Revesz’ book excerpt, which argues for the benefits of CBA for pro-regulatory interests.)

        • Unitary Executive: Reagan also sought to centralize power.

      • EO 12,498 (CP217), issued at the beginning of Reagan’s second term, further consolidated power by requiring agencies to submit to OIRA annual plans of planned regulation, not just regulations that were currently in the pipeline to be issued.
      • EO 12,866 (CP219), issued by Clinton, maintained the system established by Reagan.

        • Many expected Clinton would undo the President’s consolidated power over agencies, but he saw CBA as a practical tool to administer a large bureaucracy, although CBA would not be the only measure of regulation. (P.C. analysis – Everybody likes power, regardless of political affiliation.)

        • “Clinton came to view administration [(administrative agencies)] as perhaps the single most critical – in part because the single most available – vehicle to achieve his domestic policy goals. ... Clinton also showed that presidential supervision of administration could operate, contrary to much opinion, to trigger, not just react to, agency action and to drive this action in a regulatory, not deregulatory, direction” (Kagan, CP251). (e.g. FDA’s attempt to regulate tobacco).

      • EO 13,422 (CP228), issued 6 years after G.W. Bush took office, made some slight changes but mostly maintained the system.

        • It required that the agency prove that there was a market failure before regulating.

    • (b) Cost-Benefit Analysis

      • Controversial b/c it attempts to put a value on human health and human lives.

        • Counter-arguments in support of CBA by pro-regulatory Revesz:

          • The system is not necessarily the problem, but rather the problem is its implementation. Pro-regulatory interest need to “get in the game” b/c, otherwise, they will not be able to influence the CBA process, which continues to be a viable component of the administrative state.
          • Pricing does not necessarily lead to commodification. “After all, many of the goods we hold dear are openly traded on markets, including pets, homes, fine art, medical care, wedding rings, and nature preserves” (CP241).

          • Most political decisions involve CBA on some level, and subjecting them to open CBA will increase the transparency and accountability of the government (CP239). “[C]onducted properly, cost-benefit analysis can help quantify areas of uncertainty to improve decisionmaking” (CP241).

          • CBA also “imposes structure on the vast discretion that is given to administrative agencies” (240).

          • In response to the criticism that CBA unfairly distributes regulatory benefits b/c poor people are not able, and thus willing, to pay as much for some benefits; “[t]he appropriate remedy for this problem is the adoption of redistributional policies, not the abandonment of cost-benefit analysis” (241).

          • “Environmental protection is not only the moral thing to do, it also maximizes wealth” (by contributing to better health and less health care costs) (244).

      • How are such intangibles calculated? Methodologies often focus on sudden deaths; but how does a slow, painful death compare? Are older people worth less than younger people (see CP231)?

      • Future lives are discounted (e.g. pollution like carbon dioxide may not be worth regulating now, but what about its long-term consequences?)

      • Ancillary costs: We generally account for ancillary costs (e.g. reductions in income as a result of regulation or the possibility that deaths by fire or ineffective car brakes could result from regulating asbestos) but not ancillary benefits (e.g. regulating one pollutant often ends up helping reduce other pollutants).
        • Bagley and Revesz argue that OIRA’s review functions as a “one-way ratchet” where regulations are rejected when the costs outweigh the benefits but does not concentrate on maximizing net benefits (CP265).

      • CBA and Homeland Security (CP232): Civil liberties were thought to be worth $0 before being subjected to CBA, per Nader. How are benefits priced? How is the cost of a catastrophic attack calculated? Concern that subjection to CBA will slow down process of protecting the public.

C. The relationship between the Judiciary and Agencies

  • 1. Agency Exercise of Judicial Authority

    • What are the constitutional limits of Legislative (via Agency) intrusion into judicial power? Schor – C28 test:

      • (a) Mischief – What led Congress to depart from the requirements of Article III? (e.g. attempt to allocate broad jxn or attempt to create an inexpensive and efficient system which protects individuals and the separation of powers?)

      • (b) What is the nature of the right/claim being adjudicated? (e.g. is it a limited claim or a broad claim normally the province of CL?)

      • (c) To what extent does the ALJ “exercises the range of jxn and powers normally vested only in Art III courts”? What is the relative allocation of powers between the ALJ and AIII cts?

        • “wholesale importation of concepts of pendent and ancillary jxn” may be a problem.

    • Policy issues:

Advantages of...

Art III Courts

Agency adjudication (ALJs)



& Independence (due to life tenure and guaranteed salary)

Democratic Accountability (in contrast to a tenured AIII judge)

Reputation/Legal Scholarship & Experience

Specific/technical expertise

Procedural protections (due process)

Art III cts have review power upon appeal

    • Case study: ILJs (immigration ALJs)

      • To address a backlog of appeals, Ashcroft (CP288) instituted “streamlining” procedures that reduced the level of appellate review by the Board of Immigration Appeals regarding decisions by immigration law judges (ILJs). Posner argues that, as a result of ILJ bias and/or imcompetence, “adjudication of these cases at the administrative level has fallen below the minimum standards of legal justice.” Benslimane – C29.

        • The Washington Post (CP302) published an article indicating that ILJs under Bush were selected based upon political ties rather than subject-matter expertise.

      • While the backlog in the BIA decreased, the workload of reviewing cases essentially just shifted to the federal appellate courts, who often receive only 1-word BIA opinions to review.

        • For a response by the DOJ, see CP297.

  • 2. Due Process and Administrative Agencies

    • (1) Threshold questions for due process analysis:
      • (a) Is the Agency acting quasi-judicially (i.e. a small number of individuals are affected, as in Londoner v. Denver – C30) rather than quasi-legislatively (i.e. a large group of people are affected, as in Bi-Metallic – C31)? or

      • (b) Per Prof. Davis, is the Agency’s decision based upon adjudicative facts (i.e. individual knowledge) rather than legislative facts (policy and law issues that individuals can provide less insight on)?

    • (2) If yes, is the government depriving the person of a property or liberty interest?

      • Property interests:

        • statutorily-created entitlements, such as welfare benefits, per Goldberg v. Kelly (see below).

        • possibly objectively-based expectations of employment. See Perry v. Sindermann – C35.

      • Liberty interests:

        • freedom from bodily restraint,

        • freedom to contract, “’to engage in any of the common occupations of life, to acquire useful knowledge, to marry, establish a home and bring up children, to worship God according to the dictates of [one’s] own conscience,

        • “and generally to enjoy those privileges long recognized... as essential to the orderly pursuit of happiness by free men.’”

        • freedom from gov’t actions that (unjustifiably) threaten “a person’s good name, reputation, honor, or integrity.” Roth – C34 (quoting Meyer v. Nebraska above).

        • freedom from retaliation as a result of an exercise of constitutionally-protected rights (e.g. right to free speech under 1st Am). Perry v. Sindermann – C35.

      • Note: Although due process does not protect purely subjective expectations, it may protect expectations that are engendered by the policies and practices of the government. Id.
    • (3) If yes, due process is required. To determine what process, use the Matthews v. Eldridge balancing test; consider:

      • (a) individual interests (e.g. losing one’s benefits)

      • (b) the risk of erroneous deprivation by the procedures and the value of alternatives (e.g. what is the probability of erroneous deprivation compared to the marginal cost of greater procedural requirements?)

      • (c) the governmental interests (e.g. efficiency, cost minimization, providing for the welfare of its citizens). Note that “’no governmental interest is more compelling than the security of the nation.’” Nt’l Council of Resistance of Iran – C37 (quoting Haig v. Agee, US).

    • Notes:

      • “’Procedural due process rules are meant to protect persons not from deprivation, but from the mistaken or unjustified deprivation of life, liberty, or property.’” Hamdi – C33 (quoting Carey v. Piphus).

      • Theoretically, due process serves for individuals as a substitute for the power of the political process that a larger group can exercise. See Bi-Metallic – C31.

        • Thus, due process protections are required when a non-legislative body makes a decision that affects a small, discrete group, Londoner v. Denver – C30, but not when a legislative body makes a decision that affects a large group. Bi-Metallic.

        • But we know from p.c. theory that small, well-organized groups can have a disproportionate political influence compared to larger groups, which suffer from the “free rider” problem and from the tragedy of the anti-commons (too many cooks in the kitchen).

      • Welfare benefits qualify as property for the purposes of due process analysis because they are entitlements, not gifts or privileges. Goldberg v. Kelly – C32.
        • Policy issues:

          • Pragmatic, based upon the specific circumstances: The court recognizes the practical problems facing welfare recipients in being able to engage with the bureaucracy – if your benefits are terminated before you have a chance to effectively challenge the termination, you will not have the resources to survive or to mount a challenge.

          • Dignitarian rationale: defending and respecting human dignity.

          • Utilitarian rationale: Due process helps us achieve the right balance between cost and benefit.

          • Endowment effect: A loss of something which has been heretofore possessed causes more psychological harm than if the thing had not been conferred in the first place.

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