Administrative Law Outline

Spring 2017
Professor Benjamin

I. Introduction
 APA (1946): procedural safeguards and judicial review as responses to the biggest problem-
administrative discretion.
o Worried about agency capture – agency has incentive to make favorable industry regulations
because the agency relies on the industry for its existence
 How to fix agency capture?
 1. Deregulate
 2. Court adjudication of agency actions- monitoring.
 *one person’s agency capture can be another person’s “appropriate response”
o Central Purposes: define and systematize formalities and rulemaking procedures and judicial
review
 Publication of proposed rules in Fed. Reg., opportunity for notice and comment
 Reviewing courts: whether administrators complied with relevant statutes and whether
agency’s action was “arbitrary/capricious/abuse of discretion”
o Selected provisions of APA pp. 993–1015
 §551 – Definitions
 agency = each authority of the government (excludes President, Congress, courts)
 “rulemaking” for rules and “adjudication” for orders
 §552 – Public Information (not covered)
 §553 – Rulemaking
 §554 – Adjudications
 §555 – (e) prompt notice of denial
 §556–57 – for formal hearings – imposes procedural requirements
 §701 – definitions for judicial review section
 §702 – right of review
 §§3105, 7521, 5372, 3344, 1305 – about ALJs – pp. 1013–15.
 Public Choice/Collective Action Theory Ideas
o 1. Concentrated interests are more effective at getting things done than diffuse interests b/c they
can organize easier.
o 2. Nobody acts in “the public interest” – really just trying to maximize the private interest
 What is administrative law?
o Implementation entails discretion to allow flexibility for what Congress did not think about.
o Often implementation looks a lot like lawmaking – so courts defer to agency’s determination.
 Ways to think of these materials:
o Steps of implementation: What are the hurdles to agency action? What is the cycle that a
regulatory initiative must go through?
o Policy influences: What are the different ways the agency head can get things done with her
policy goals in mind? What do interest groups do to make it harder (or easier, if you agree) for
the agency head to get things done?

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 o What role do we want for these unelected officials? None of the administrative agents are
elected.
o Who should have the final word? The agencies themselves sometimes make decisions that aren’t
overseen by courts.
 Sources of law
o Constitution – very limited – no constitutional mandate for agencies.
o Specific statutes governing the agency's conduct, typically authorizing its substantive work;
 Look to Organic Acts first and then the APA.
 Also, executive orders can create agencies and direct them to do specific things
o The agency's own rules and regulations;
o Standards of proper procedure, (i.e., Administrative Procedure Act); and,
o Certain judge-made law, applying, e.g., principles of administrative "fairness" (e.g., consistency),
or prerequisites to judicial review (e.g., giving reasons)
 What Do Agency Officials Seek?
o Public interest – Will they have blinders because of their agency’s limited scope?
o Power (and prestige) – Do they see to maximize their budget?
o Leisure – Do they shirk?
o Personal career advancement? – What kind of future employers are they likely to curry favor?
 Reasons for regulation
o Economic arguments – most accepted
 spillovers/externalities – regulation is more efficient than common law
 Externalities: costs that are external to the relevant actors’ economic calculations
o People directly involved don’t have to feel the costs or adverse effects
 Collective action problem – hard to organize around public interest, free-riding problem
 Gov’t regulation = group cooperation (ex. sugar lobby v. dispersed consumers)
 Free Rider Problem: markets don’t produce public goods
o Almost all benefits will flow to others
o Hope to free-ride on others efforts
 Public Goods:
o Non-rivalrous – consumption by one person does not create scarcity or
preclude consumption by others.
o Non-excludable – no one person can easily be prevented from enjoying
good
 Compensation for inadequate information – helps disclose relevant information.
 Controlling Monopoly Power – natural monopolies (high fixed costs, low marginal costs)
 Regulation aims at allocative efficiencies – try to set prices at levels that reflect
competitive levels
o Less accepted economic rationales
 Need to allocate scarce goods; controlling windfall profits (general sudden increases in
commodity profits); eliminating excessive competition (competing firms will go out of
business or there may be predatory pricing); agency problems of another person buying
for the buyer; rent control
o Noneconomic justifications

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  Redistribution (but unsure if regulations help with redistribution); collective values
(democratic aspirations); disadvantage and caste (getting rid of discrimination); planning
(have considerations that markets disregard); paternalism (gov’t knows best).
 Regulatory Tools
o Price Controls
o Screening or Licensing – gov’t can restrict access to market, requiring approval to participate
(TV, taxicab medallions)
 Allocations; professional licensing; license products/undertakings (drugs/nuclear plants)
 Cap and trade regimes
o Standards
 Health, safety, environmental regulation
 Direct requirements on the regulated activity
 Design standards – specify means
 Performance standards – specify ends
o Fees/taxes/grants/subsidies
o Provide information
o Cooperation, moral suasion, guidelines, technical assistance
 4 Constraints of Admin Law
o 1. Regulator and regulated entities are likely to be in conflict
o 2. Regulator is institutional bureaucracy – want to implement things can administer with ease
o 3. New regulatory programs copy old ones
o 4. Regulations are subject to requirements of APA
 Agency Definition in APA: each authority of the gov’t of the US, whether or not it is within or subject
to review by another agency, but does not include A) the Congress; B) the courts of the US; C) the
gov’ts of the territories; D) the gov’t of District of Columbia. §551(1)
 Principal-Agent Problem
o In the private sector, we try to overcome this by aligning the interests of the agents with those of
the principals (ex: employee stock ownership).
o In the public sector, the populace are the principals, but the populace cannot control agencies. So
with whose interests do we want the agency to be aligned?
o Congress, producers of the regulated good, and consumers of the regulated good
 What do agencies do?
o Formal Actions
o Informal Actions – not challengeable
 Investigations
 Jaw-boning (hint, hint, nudge, nudge – do this)
 Tension between: Expertise (agencies have experts that know best) & public accountability (what do
the people want)
 Handout #1
o Meat inspector example – should we pay high costs to completely get rid of problems? How do
you value costs and benefits?
 Timeline of agencies
o 1787 – Madisonian era (wanted big checks on agencies)
o 1875/87 – ICC (first major agency)
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  Progressive Movement – government is a science (value experts)
 No role for the courts – Congress and technocrats use their expertise efficiently
o 1938 – New Deal (admins need the authority to act because they know what is happening on the
ground)
 Don’t want the courts or Congress to intervene
o 1946 – APA
o 1962 – Ralph Nader era (trust of the courts and somewhat of Congress but not of agency heads)
 Public choice theory – maximize own self-interest
 Push for deregulation
o 1980 – Reagan era (cost-benefit state where the President has increased power)

II. The Constitutional Position of the Administrative Agency

 How can the combination of functions characteristic of administrative agencies be reconciled with the
Constitution?
o No explicit constitutional provision creating agencies, but some federal bureaucracy was
anticipated (appointments clause; laws be faithfully executed)
o Separation of Powers & Checks and Balances – separating the lawmaking and law-applying
bodies (to limit faction takeover)
o Youngstown Sheet: outside of certain narrow situations, Congress must authorize any intrusions
by executive officials on private liberty/property
 Handout #2
o Federalist 51 (Madison) – formalist – limited enumeration of power separated among 3 branches
 Distrusts power and desires to separate power amongst various branches to make sure no
one branch can overwhelm any other (checks and balances)
 “So contriving the interior structure of the government as that its several constituent parts
may, by their mutual relations, be the means of keeping each other in their proper places”
 Need structural safeguards to protect freedom because absolute power corrupts absolutely
 Need to guard parts of society from each other
o James Landis
 Minority view now – corporations and government should act at same speed – operate
quickly (full separation of powers is inadequate to handle issues today)
 Functionalist – wants to function efficiently
 Agencies to reflect modernization (modeled after industry/corp.) – embrace all 3 aspects
of gov’t: rulemaking, enforcement, and adjudication
 A. Nondelegation & The Agency’s Power to Legislate
o RULE: there must be an intelligible principle for delegation to executive
o Undisputed that Congress cannot transfer its legislative powers to any other institution. Debate
about scope of the rule:
 Some: statute that grants authority to executive is only a delegation of legislative power if
scope of the grant is too broad OR if it vests too much discretion in the executive
 Others: Congress can NEVER delegate legislative power when it gives authority to the
executive – it exercises legislative power by enacting the relevant statute.
 As long as executive is within bounds of statute, its good.

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  How much discretion can Congress grant and still not be deemed to have granted
legislative authority?
o History of the Nondelegation Doctrine
 Federalist 37 – there will be uncertainty about what is executive, legislative, and judicial
 The Brig Aurora: Congress may revive a law by conditioning its revival on certain
inaction by the President.
 Marshall Field: statute OK if Pres. is limited to ascertaining a “contingent” fact
 Determining what is “unreasonable” is acceptable discretion for agencies
 Grimaud: statute did not delegate leg. authority b/c it merely gave the secretary the power
to “fill up the details”
 Hampton: not a delegation of power if Congress gives the person or body authorized to
take action pursuant to an intelligible principle (still the standard today!)
o Triumphs of Nondelegation Doctrine
 You can’t delegate to a private entity – loss of political accountability
 A.L.A. Schechter Poultry Corp. v. United States (1935): Statute allowed for an “industry
advisory committee” to be selected by trade associations and members of the industry
along with the agency creating all of the minimum wages, minimum number of
employees. Basically, delegating to a private party. Court says Congress cannot abdicate
or transfer to others the essential legislative functions that it is vested. There needs to be
something clearer for what “fair competition” means and cannot just let industry leaders
decide what counts. The President cannot have unfettered discretion.
 Cardozo Concurrence – Congress cannot let the President do anything that
Congress has the power to do under the Commerce Clause.
 More worried about private parties for democratic accountability’s sake.
 After Schechter – Congress passed laws giving certain agencies the power to regulate
certain industry
o Goals of the Nondelegation Doctrine
 Political accountability: want Congress, the elected body, to be accountable for its
decisions
 Deliberative Democracy: entrusted Congress with responsibility to take away certain
liberties, make certain restrictions (keep law-making and law-enforcing separate)
 But: argument that Congress is wise, knows that it is doing when it is delegating
authority. Congress may think delegating is best!
o Unclear why more specific statutes from Congress would make anything
better.
 Federalism concerns
o Least amount of guidance that Congress can give to survive non-delegation challenge:
 NBC v. US (1943): Public interest, convenience, or necessity is specific enough and
doesn’t give unlimited power because it gives some meaningful guidance to the FCC (for
example, that under this standard the FCC consider “the ability of the licensee to render
the best practicable service to the community reached by his broadcasts.”).
o The Benzene Case: early cost-benefit analysis case. OSHA required conditions “reasonably
necessary or appropriate to provide safe/healthful employment and places of employment.”
OSHA said that for carcinogens, needed lowest technologically feasible level that will not impair
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 viability of industries regulated. Presumption that any amount of a carcinogen is bad, based on
no evidence. Holding: OSHA can make policy judgment, but needs some evidence that 1ppm
was the best, and that 10ppm (the default before) was not safe. Without evidence, cannot do a
cost-benefit analysis, can’t promulgate regulations
 Unreasonable to presume that statute gave OSHA authority to impose enormous costs on
industry and companies without any evidence of a benefit – avoid unconstitutional
problem by reading limitations into it.
 This is an early CBA case where you must show some benefits.
 Powell Concurrence: requires OSHA to determine economic benefits bear reasonable
relationship to expected benefits even though statute does not explicitly say this.
Interprets CBA into the statute.
 Rehnquist Concurrence: this is a delegation – “To the extent reasonable” is the same
thing as saying “do good.” Fundamental policy decisions should be made by Congress.
Exempting gas station employees shows that this was a legislative decision.
 Commentators considered this concurrence and emphasized the benefits of private
liberty, sound governance, and democratic accountability by forcing Congress to
more carefully consider statutes. Mashaw argued that delegation actually could
create more accountability because statutes were already long without talking
about a lot of situations.
 Stevens Plurality: used as a doctrine of constitutional avoidance. When alternate is
unfettered discretion, the Court interprets the statute to not give unfettered discretion.
Gives authority with limits (Congress gave reasonable guidance).
 Today: unfettered discretion is the standard! (never happens) Since Schecter,
no statute has been invalidated due to non-delegation doctrine
 Marshall Dissent: criticizes Court requiring CBA because not in the statute and not a
delegation. Unless we know it’s safe, you can set the level as low as you want.
 The Court should be deferential in such technical matters
o NCTA v. US (1974): Relevant language: “to be fair and equitable taking into consideration direct
and indirect cost to Government, value to the recipient, public policy or interest served, and other
pertinent facts.” There is an intelligible principle here.
o American Railroads: Amtrak case. Trade association said that FRA and Amtrak were delegated
power by being able to develop metrics over passenger train operations. D.C. Circuit agreed
because it said that even intelligible principles cannot rescue statutes empowering private parties
to wield regulatory authority because they can only help gov’tal agencies make regulatory
decisions. Reasoning of DC Cir. was that gov’t had more democratic accountability and was
more interested in the public good. SCOTUS reversed because it said Amtrak was not private,
but it did not reach the question of whether intelligible principles could help delegation to private
parties.
o Unlikely that any statute will be struck down on nondelegation grounds. Rarely comes up
o Amalgamated Meat Cutters v. Connally: not a nondelegation issue because the President is just
delineating the requirements in the statute (doesn’t have unfettered discretion)
o American Trucking: agency cannot cure a nondelegation problem by adopting an intelligible
principle – the prescription of the standard that Congress had omitted by the agency would itself

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 be an exercise of the forbidden legislative authority! An agency trying to limit itself would be an
unconstitutional delegation of power in itself.
 DC Circuit: previously said that the EPA, as an agency, was required to articulate an
“intelligible principle” – “if the agency develops determinate, binding standards itself, it
is less likely to exercise the delegated authority arbitrarily” (approach as adopted from
Amalgamated Meat)
 Overruled by SCOTUS (Whitman) – Congress makes the intelligible principles in
the statute, not the agency!
 Court: Statute is not ambiguous here – constitutional avoidance only occurs when so
 Here, there is an intelligible principle from Congress: “requisite”
 Thomas Concurrence: Legislative power can never be handed over to agencies, and we
should return to the original understanding of the Constitution instead of the overbroad
intelligible-principle doctrine.
 Stevens Concurrence: We should just call this a constitutional delegation of legislative
power. Basically, this is okay if there is some intelligible principle. (Never said before!)
o Line Item Veto: ruled unconstitutional b/c allowed President to actually change text of the law
o Today, nondelegation is not going to be the basis for striking down statutes – it is just a
statutory canon today!
 The backstop of Courts allowed Congress to be more lax in drafting its legislation.
Congress knows that Courts won’t strike down statute regardless of how vague they are!
o How else can Congress control agencies?
 1. Legislative Veto? NO! Congress used to do it all the time – said that particular agency
action will take effect only if Congress does not nullify it by a resolution in a specific
period of time.
 Goal: allow Congress an opportunity to oversee/veto agency decisions, especially
if agencies acted under statutes that gave broad discretion.
 ELEMENTS
o 1. Statutory delegation of power to executive
o 2. Exercise of power by executive
o 3. Reserved power in Congress to nullify exercise of authority
 Overruled in INS v. Chadha (1983). House passed resolution overturning the
AG’s decision not to deport Chadha. Citing the presentment clause (legislation
must be presented to Pres. before becoming law) and bicameralism (concurrence
of majority in both houses must approve of law), and considering the resolution
“legislative” in purpose and effect, Congress cannot get around the
constitutionally prescribed procedure.
o White Dissent: If Congress can give lawmaking power to legislative
agencies, how can it be prohibited from delegating to itself a check on
agency regulation (cares about political accountability)
 2. Appropriations – cut funding (BUT too much agency regulation to keep up with)
 3. Write stricter and clearer statutes (BUT must pass that statute, don’t have expertise,
can’t avoid all discretion, etc.)
 4. Oversight/Jawboning – can have hearings, have heads of agencies come before
committees to testify about what’s going on – public, ad hoc.
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  5. Casework and Constituent Services
 6. Insert certain text into legislative history – agencies look to it a lot
 If agencies go against legislative history, their budgets can get cut by Congress!
 7. Congressional Review Act – (post-promulgation) after the rule is promulgated,
Congress by both houses can disapprove of regulation – joint resolution (passage in both
+ (only for major rules > 100mm)
 Impact is minimal – only 1 regulation ever disapproved!
 8. Enactment of Regulations as Statutes
 Basically, eliminates admin law by requiring all regulation be passed by Congress
 9. Joint Resolutions of Approval- REINS Act (pre-promulgation)
 Congress makes the final call! Very time consuming!
 Contrary to the Congressional Review Act, it would require passage of a joint
resolution of approval before the regulation becomes effective
 Would make regulation more democratic, but would prevent lots of regulations
from going into effect.
 B. The Executive and the Agencies
o Intro
 There is a coordination and review problem for the President with agency decisions.
Legally, it can be difficult because the head of an agency rather than the President has a
specific power. Politically, constituencies may have more of a relation with Congress and
an agency instead of the President.
o Hiring
 Appointments Clause – President “shall nominate, and by and with the Advice and
Consent of the senate, shall appoint Ambassadors, other public Ministers and Consuls,
Judges of the supreme Court, and all other Officers of the United States, whose
appointments are not herein otherwise provided for, but the Congress may by Law vest
the Appointment of such inferior Officers, as they think proper, in the President alone, in
the Courts of Law, or in the Heads of Departments.”
 Two main questions:
 1) Who is an officer versus an employee? (Buckley)
 2) For officers, who is principal and who is inferior?
 Buckley v. Valeo (1976): FEC had 6 members where President picked two that the House
and Senate had to approve and the speaker of the House and president pro tempore of the
Senate each picked two with confirmation by both houses. Court said that this violated
the appointments clause because they were not all done by Presidential nomination, and
any appointment must align with the appointments clause. Any person with “significant
authority” is an officer. Test: you are an officer if you are exercising significant
authority pursuant to the laws of the United States. Four of the members did not allow the
President, the head of a department, or the Judiciary to choose. Congress does not have a
choice here even though it argues that it is a coequal branch here. Necessary and proper
clause does not help Congress’s interpretation.
 Morrison v. Olson: addresses inferior versus principal. Internal counsel are inferior
officers because they can be removed for cause, they have limited duties, and limited
tenure. Three factors: (1) subject to removal by higher Executive Branch official; (2)
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 can only perform certain, limited duties; and (3) appellant’s office is limited in
jurisdiction. Not directly overruled by Edmond, but you probably shouldn’t cite to it
because it is probably no longer good law.
 Scalia dissent: Inferior officers must have a superior. Inferior means subordinate
to another person. Since the independent counsel is not subordinate to anyone,
then he is principal officer that must be put through appointments process.
 Edmond v. U.S.: Takeaway: whether one is an inferior depends on whether he has a
superior. If you have no superior, then you are a principal officer. Inferior officers are
those who are supervised by someone who was appointed by the President and consent of
the Senate. “Significant authority” only draws the line between officer and nonofficer,
not superior v. inferior officer. (Doesn’t explicitly overrule Morrison)
 Free Enterprise Fund v. PCAOB: SEC picked the members of PCAOB. Court, relying on
Edmond, not Morrison, says that these members are inferior officers because they can be
removed at will (because the removal for cause provisions were improper). Because the
Commission is a freestanding component of the Executive Branch, not subordinate to or
contained within any other such component, it constitutes a Department for purposes of
Appointments Clause.
 Rule: having a superior is necessary but not sufficient (ex. Solicitor General is
confirmed by the Senate but has a superior (the AG))
 Page 7 of the supplement – Library of Congress is national library and research
library for Congress. The Librarian of Congress serves as chief librarian of all
sections of Congress (and is appointed by President). Within the Library is the
Copyright Royalty Board. Board is composed of 3 Copyright Royalty Judges who
are appointed by Librarian of Congress for staggered 6 year terms. Constitutional
only if (1) Copyright Royalty Judges are inferior officers and (2) Librarian is the
head of a Department.
 Notes
 Principal officers must be nominated by President and confirmed by Senate
 Inferiors officers can, if Congress chooses, be appointed by the President, courts
of law, or department heads
 Congress may choose who is exempt from Senate confirmation
 Each agency must have principle officer to run (Nixon Saturday Night Massacre)
o Recess Appointments
 President uses this to temporarily put someone in place when the Senate has not
confirmed him. Three doctrinal issues: (1) must the vacancy arise during the Senate’s
recess?, (2) what is the recess? – intra-session counts as long as it is not “too short”, (3)
whether Art. III judges can be recessed.
 Congress cannot usurp the power by making qualifications for particular offices too
narrow. Improper to use “legislative designation.”
 Senate can refuse to confirm nominees and there is little law on it.
 It has taken longer for presidents to fill all positions as the amount has expanded.
 Single Senator can put a “hold” on a nomination (which used to be, but not longer
can, be made anonymously).

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 
Noel Canning: Obama made recess appointments even when the Senate was in pro forma
session (meaning there was an agreement that no legislation would be passed at that
time). D.C. Cir. said no recess appointments during a session of Congress without a set
date to reconvene. Only able to fill vacancy that arose during recess. SCOTUS looked to
historical practices and says that it is not clear what “recess” means, but Presidents have
made intra-session recess appointments for a long time (not just 1 recess every 2 years).
Court uses functionalist approach and says that Senate is in session when it says it is.
 Scalia (concurrence): the text is clear, no ambiguity; no reason to look at
historical practice
 Takeaway: Recess appointments clause is still available. But, the Senate can
avoid the application of recess appointments if it chooses to stay in session via pro
forma sessions or other means. So, the Senate can still prevent the applicability of
the recess appointments clause.
o Removal: constitution is silent on the issue
 Multiple possibilities because of silence
 Power to hire and fire should run together, so firing can only happen with advice
of President and consent of Senate unless appointment is in President alone.
 President must be free to fire officials at will. Covered by “take care” clause.
Totally up to the President.
 Only by impeachment. President not involved.
 Firing agency official should be left to Congress (N&P clause).
 Myers v. United States (1926 – Taft!): Postmaster may be appointed and removed by the
President by and with the advice and consent of the Senate. President Wilson removed
him from office prior to the expiration of his term without the consent of the Senate.
Court held that Wilson could do this because the power to remove subordinate is
inherently part of the executive power, which Art. II §1 of Constitution vests in a
President. Firing of major appointments must be left to the President. Congress can limit
the power of removal of inferior officers if they vest the power in the President alone.
The Constitution does not permit a distinction between the removal of the head of a
department when he discharges a political duty of the President or exercises discretion,
and the removal of executive officers engaged in the discharge of their normal duties.
 The President gets to remove officers (has ability to control the executive branch)
 Humphrey’s Executor v. United States (1935): Distinguishes from Myers that postmaster
is not as important of a role. Roosevelt wanted to install commissioners who would be
more vigorous and ambitious in enforcing the Trade Commission Act. He tried to remove
Humphrey. Statute says President may remove commissioner for “inefficiency, neglect of
duty, or malfeasance in office.” Court says that this is a restriction of power to remove
only for those causes and that this restriction is allowed because independent agencies—
like the FTC—have to have some independence from the President. Due to part quasi-
judicial and quasi-legislative nature [but this part is no longer good law].
 “It is quite evident that one who holds his office only during the pleasure of
another, cannot be depended upon to maintain an attitude of independence against
the latter’s will.” Someone who advocates a unitary would say that’s not a bug,
it’s a feature.
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  President has the power to remove executive officers, but not one that has quasi-
legislative and quasi-judicial powers.
 Steel Seizure case had majority of justices who thought the vesting clause did not
grant the President any power in itself.
 Narrowed Myers – Myers only applies to officers with only executive powers
 Morrison v. Olson (1988): Removal focuses on interference with the executive power
(not whether it’s quasi-legislative or quasi-judicial). Here, there is no interference
because the good cause limit does not hamper the President as to interfere with the
executive power. The independent counsel is not implementing to President’s policies.
It’s investigating them. Independent counsel is an inferior officer. The determination of
whether the Constitution allows Congress to impose a “good cause”-type restriction on
the President’s power to remove an official cannot be made to turn on whether an official
is classified as “purely executive.” The good cause removal provision does not
impermissibly burden the President’s powers. Also, the Act does not violate the
separation of powers doctrine because Congress does not try to increase its own power
and the AG controls are enough for Executive Branch to have sufficient control over the
counsel.
 Scalia dissent: (“this wolf comes like a wolf”) The majority does not talk about
separation of powers enough. Gov’t investigation and prosecution are
quintessentially executive functions. Limiting removal of power to “good cause”
is an impediment to Presidential control, which should only be limited to
independent agencies. The Constitution prescribes that all executive power is in
the President (unitary executive).
 Key question – are you impeding the President’s ability to fulfill the duties of his
office (faithfully executing the law)?
 Free Enterprise v. PCAOB (2010): Odd case because there was a double “for-cause”
protection where President can only remove SEC member for-cause and SEC can only
remove PCAOB member for-cause. Court says multilevel protection from removal is
contrary to Article II’s vesting of the executive power in the President. Act’s
restrictions are incompatible with the Constitution’s separation of powers. Congress
cannot remove the power in this way so it is so remote that the President has no control.
The problem is that the President cannot hold the SEC accountable for the Board’s
conduct since the SEC cannot remove PCAOB members without cause. The mechanism
here diffuses accountability. This case doesn’t disturb for cause exception.
 Breyer dissent: Constitutional question depends on practical functioning. The “for
cause” restriction will not restrict presidential power significantly. Court fails to
show why two layers of “for cause” protection (layer one insulating
Commissioners from President and layer two from Board to President) imposes
any more serious limitation than one layer. He also thinks that functionally, this
doesn’t really hurt accountability (laying out why at p. 121).
 Kavanaugh thinks this case goes against Humphrey’s
 Bowsher v. Synar (1986): Congress cannot reserve for itself the power of removal of
an officer charged with the execution of the laws except by impeachment. To permit
the execution of the laws to be vested in an officer answerable to Congress would reserve
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 Congress control over the execution of the laws (Congress cannot aggrandize its power).
Constitution does not contemplate an active role for Congress in the supervision of
officers charged with the execution of the laws it enacts. Only executive officers can
execute the law (key is what powers a person has). Cutting of budget is only executive
function and Congress cannot remove someone who only does an executive function by
giving itself the ability to remove someone for cause.
 Stevens and Marshall concurrence – this was a legislative function.
 White Dissent – too formalistic view of separation of powers.
 Blackmun dissent – Congress’s removal authority should be held unconstitutional
and severed from the statute.
 Notes
 Independent Agencies
o President chooses chair, controls budget requests; BUT must have cause to
fire chair (different from executive agency heads)
o Directive Authority: whether the President can tell executive officials what to do – also called
“decisional” authority
 Constitutional Authority
 President has limited power – cannot dictate policy to an agency if it is contrary to
the statute under which the agency operates.
 President’s authority to dictate policy is limited in that Congress delegated
authority to the agency.
o BUT what about the “unitary executive argument” (take care and Article
II vesting clause)?
 In reality, President only entitled to oversight of agencies. No directive inherent
authority in the constitution.
 Statutory Authority
 Congress can grant power over particular officers/decisions, and sometimes does.
 When a statute does not say anything:
o 1. When its an independent agency, the President is presumed not to have
authority to direct it, since the President can’t remove officers from it.
o 2. When its an executive agency, the President may have some directive
authority over it.
 The removal powers and directive powers are linked!
 Practical Considerations
 Presidential memo to heads of departments – written as a request, not an order
 De Facto Directive Authority: what is the source?
o Unsure where it comes from – doesn’t come from the Constitution,
because then it would apply equally to executive and independent agencies
(doesn’t)
o If it comes from the power to remove, then it would apply only to
executive agencies.
 Obama Presidential Memo on Hospital Visitation: he “requested” that HHS take
certain steps, ensure hospitals participate in new regulations, request new
guidelines be issued, provide additional recommendations to Pres.
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 Supervisory Authority: Presidential Control of the Regulatory State (Executive Orders)
 Modern Era: EO 12,291 (Reagan): required executive but not independent
agencies to submit proposed and final regulations to OMB’s OIRA (Office of
Information and Regulatory Affairs)
o “Benefits must outweigh the costs”
 George Bush Senior: keeps OIRA, but then makes it overseen by the Vice
President because Congress wouldn’t confirm his choice for head of OIRA
 Clinton: EO 12,866: OIRA – has administrator (Regulatory Policy Officer),
appointed by Pres. with advice/consent of Senate. 50 young profs. on staff.
o “Benefits must justify its costs” – not outweigh
 Introduced some qualitative components
o Public communication law – doesn’t cover inter-agency or executive
communication, but does apply if a party is not employed by the
Executive.
o OIRA reviewed significant regulatory actions, defined as having an
economic impact of greater than $100 million.
 Funnel that slows down the ability to promulgate regulations.
 W. Bush: made OIRA more of a gatekeeper than a collaborator. Repealed
immediately by Obama.
 Obama: each agency may consider values that are difficult or impossible to
quantify, including equity, human dignity, fairness, distributive impacts.
o Included guidance documents – subjectt to OIRA review
o Seeks the views of stakeholders
o Periodic retrospective review of rules
 OIRA Responsibilities (only executive agency regulations)
o Make sure regulation is consistent with the law, presidential priorities
executive orders, and doesn’t conflict with other agencies
o Can only review significant regulatory actions
o Lots of public disclosure requirements to keep public informed
o Release all substantive written communications.
o Must disclose any convos that Pres. had with other people when
consulting on a matter.
 Criticisms of OIRA
o Analysis overstates costs and underestimates benefits
 Very hard to measure!
o OIRA lacks sufficient expertise OR staff (only 50 people)
 The Regulatory Impact of Centralized Review
o Try to prevent agencies from systematically overregulating
o Is cost-benefit analysis inherently anti-regulatory?
 Scope of Centralized Review
o Guidance Documents – agency documents that provide general
information about regulatory requirements but do not impose new
requirements or bind regulated entities
 Issued without public input.
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  Ways that OIRA may be changed (Trump/Sanders/Paul Exercise)
o Expanding the OIRA rule to independent agency actions would slow down
regulations – more rules must pass scrutiny. Could use “justify” instead of
“outweigh.”
o Can change language so that benefits would have to “far outweigh” costs
to uphold regulation
o Expressly quantify aspects of importance (i.e., national security, jobs, etc.)
o Can make OIRA engage in retrospective review of already existing
regulations
o Can require OIRA to take into account qualitative/intangible measures,
like income inequality.
o President can get rid of OIRA altogether. Agencies don’t like OIRA
because it’s a gatekeeper for all regulations.
 Prompt Letters: OIRA can tell agencies to make, change, or get rid of
regulations for efficiency purposes. Very rare!
 Why have OIRA?
o Clearinghouse for regulations and information
o OIRA Head does the President’s bidding. Can be removed by President at
any time.
o OIRA staff is very small – will always be dwarfed by other agencies.
o Lots of consistency in OIRA since it began (Reagan).
 Today: era of cost-benefit analysis!
o OIRA rejection of a regulation is not legally actionable or challengeable
b/c it is all in the executive branch
o May be better to be the White House Energy Czar than the head of the
EPA – Pres. sets the tone!
 Presidential Transitions and “Midnight Regulations”
 Why do they happen?
o Natural human tendency to work at a deadline
o Take as much action towards the end of an administration to make sure
that the administration’s agenda continues going forward
o Wait to take potentially controversial action until late in the day
o Delay by some external force that prevented action until then
 Objections: lack of accountability or democratic legitimacy
 Once a rule is in place, it can only be revoked through another rulemaking process
– onerouss and time-consuming – can’t just cancel the rule!
 Reform/Proposals for Change?
 Legislation (Midnight Rule Act – any rule made within 90 days before Presidency
ends can’t take effect for 90 days after the new president has appointed head of
agency)
o Congress can also pass other legislation
 APA Amendment – minimal procedures for removal/repeal
 C. Agency Structure

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o Combination of Functions and Bias at the Agency Head
 APA Section 554(d): Exempts the agency or a member/members of the body comprising
the agency from any separation of powers requirement
 Combination of Functions in the Agency – person that issues the complaint and is the
ultimate decision-maker in the proceeding
 A combination of the prosecutorial and adjudicatory functions biases commissioners
against defendants – high dismissal rate casts doubt on judgment!
 BUT: the combination of adjudicative and investigative functions does not by
itself violate due process per se
 Withrow v. Larkin (1975): District court issued injunction against holding a
contested hearing by the Examining Board of Wisconsin. Dist. Court believed that
it was unfair to take liberty or property from a doctor absent an independent or
neutral decisionmaker. The injunction was overruled because it is not a per se due
process violation for an agency to combine functions. (APA Section 554(d) said it
was ok! Congress has spoken!)
o While this was a state agency, it stands for the general proposition that it is
OK for agencies to combine functions.
o When there is demonstrated bias in an agency, then there may be a
violation of due process. Examples:
 Adjudicator has pecuniary interest in outcome Gibson v. Berryhill
 Adjudicator has been target of personal abuse/criticism from party
 Combinations of Functions Exist in Other Areas too
o Judges issue arrest warrants (based on probable cause) and they also
preside over preliminary hearings to decide whether the evidence is
sufficient to hold a defendant for trial – not constitutional barriers there!
 Forms of Bias
 Gibson v. Berryhill (1973): Alabama Board of Optometry sued optometrists in
independent practice for unlawful practice. Optometrists tried to enjoin board
proceeding on the grounds that the Board was biased and could not provide
plaintiffs with a fair/impartial hearing in conformity with due process. The Board
was acting as both the prosecutor and the judge. HOLDING: The Board was
constitutionally disqualified from hearing the charges filed against the
practitioners because the success of the Board’s efforts could possibly lead to the
personal benefit of the members of the Board.
o Proposition: those with a substantial pecuniary interest in a dispute
should not adjudicate those disputes.
 Tumey v. Ohio (1927): Judge received personal salary from fines he levied on
persons convicted in the court. It is an unconstitutional due process violation to
judge in one’s own cause.
 Not forms of bias
 When fines or sums are tied to expenses already incurred, the possibility of bias is
too remote – no DP violation
 Indirect pecuniary interest is not a per se violation. Need an individualized
assessment.
15
  Past financial connections may raise sufficient questions of bias to deny due
process (debts of gratitude – helping someone get elected)
 The “Rule of Necessity”
 Where the policy of disqualification conflicts with a litigant’s rights to obtain a
judicial remedy, it has been generally conceded that the former must yield to the
latter, trusting the conscience of the court to achieve a just result.
o If no substitute remedy available, judge must sit!
o Handout #4: Separation of Powers and Separation of Functions
 Administrative Law Judges (ALJs) are statutorily required to be independent (look like
Article III judges, hired by a list of 3 people provided by OPM)
 ALJs vs. AJs
 ALJs: have protections from APA
o Wildly different rates of affirmance
o Embodiment of separation of functions within agencies
 AJs: just chosen by agencies themselves
 Head of agency can overrule and replace ALJs – why?
 If no superior to ALJ, then ALJs are principal officers! (Edmond). If principal
officers, then they would need to be appointed by the President with Senate
confirmation – huge constitutional problem!
 Head of agencies must be able to do it all. ALJs are inferior officers.

III. Administrative Discretion, Administrative Substance, and Regulatory Performance

 Breyer: Always Tradeoffs for Regulations
o 1. Regulation may actually increase risk (put airbags in car, people less likely to wear seatbelts)
o 2. Act of complying with regulations may impose risks (asbestos in break linings needs to be
removed, but health risk to removers)
o 3. Cost of complying with regulations: over-insuring our safety
o 4. Can give people more information
 But what use is the information if it can’t be understood by the average consumer?
o 5. Externalities: making certain choices imposes costs on society
o 6. At what point does the agency just ban a good – paternalistic
 TODAY: main justifications for regulations are transparency (disclosure-information) and
externalities. NOT paternalism.
 Notes
o Accountability problem – Many experts may have no special claim to wisdom with respect to the
values at stake in agencies, so administrative expertise can hardly be a full answer to problem of
agency legitimacy
o Liberty problem – Agencies meld prosecuting, legislating, managing, and judging together.
Regulation often redistributes wealth, not only by economic class, but by favoring certain firms
over others.
 Noll – public-choice theorist
o Regulation skeptic – thinks it didn’t help stop monopolies and in some cases, created a monopoly

16
 o Allows industry (particularly large companies) to play a bigger role in regulation, and companies
may seek regulation to knock smaller companies out of business.
o Also, some chemicals, etc. have been regulated more intensely than more dangerous ones, and a
lot of money has been wasted on unimportant things.
 Sunstein – Free Markets and Social Justice
o We could save a lot of money and lives by better allocating expenditures (also Breyer – we
should care about how high the price gets)
o Problem is commanding and controlling regulation
 This is not the best way to regulate.
o Economic regulation produced unnecessary and exorbitant costs for consumers
o The government should focus on the ends, not the means
o The concern here is that interests groups have a lot of power and they can use that to stop
competitors (“the New deal has created a Madisonian nightmare of regulation by faction”)
 Viscusi – Fatal Tradeoffs
o CBA is the solution to all problems. Policy choices must be cost-effective and there must be an
appropriate balance of costs and benefits. Some ultimate costs of regulations have not been put
fully throughout the economy. Regulation is not the only influence on safety and environmental
outcomes.
 Tengs and Graham – Costs of Haphazard Social Investment in Life-Saving
o If we spent money in the most effective way, we would save 117k lives annually. We can double
our lifesaving by saving money and using it more efficiently.
 Breyer
o Use experts because they are not as responsive to public and will make good decisions without
all of the fanfare!!!!! The public has irrational fears and agencies are too responsive to what the
public is concerned about.
o Problems
 Tunnel vision (“the last 10 percent”): might pursue a single goal too far
 Reputation can increase risk (people wear seatbelts less when they have airbags).
Behavioral responses may offset impact.
 There are always tradeoffs with regulation.
 Complying with regulations may pose risks (health-health tradeoffs)
 Schoenbrod – Power without Responsibility
o The consequences of deregulation for the public can be even greater because lawmakers can use
delegation to escape blame both for failing to achieve that purpose and for imposing unnecessary
costs.
o Congress will likely build a health plan that assumes that an agency will use delegated power to
reduce healthcare costs to an unrealistic extent.
 Seidenfeld – A Civic Republican Justification for the Bureaucratic State
o Having administrative agencies set gov’t policy provides the best hope of implementing civic
republicanism’s call for deliberative decisionmaking informed by the values of the entire polity.
o Public policy: (1) congressional and judicial efforts to limit agency discretion and eliminate
perceived problems with legitimacy of agency policymaking are often misguided and (2) if
administrative policy setting is to achieve the civic republican ideal, agency decisionmaking
processes must proceed in a manner consistent with civic republican theory.
17
 o Agencies fall between overresponsive Congress and overinsulated courts. Agencies are prime
candidates to institute civic republican model of policymaking.
o Being responsible to Congress, the courts, and the President allows for checks on agency
decisionmaking that ensure politically informed disclosure and prevent purely politically driven
outcomes.
 Alternative Remedies for Regulatory “Failure”
o Deregulation – today, it is the default
o Mismatch – major source of regulatory problems arise from a failure to match the weapon with
the problem it is seeking to overcome.
o Economic incentives
o Rank Risks – force agencies to prioritize (reliance on experts and cost-benefit)
o Disclosure and simplification – great if you think that there is relevant info that actually impacts
behavior. But may lead to an informational overload
 EX, calorie lists don’t impact
o Transparency
 Ex, FOIA and Gov’t in the Sunshine Act (universally hated by agencies – inefficient)
o Behavioral nudges – change the default
o Sunset legislation (BUT gridlock issues)
o Cap and Trade – better way to do regulation
 Nobody defends command and control regulation anymore (even though we still have it).
 What matters is how to price the permits.
 May help with mismatch problems
o All Admin Law people agree that flexible regulation is better than command and control
regulation
 Cost-Benefit Analysis Concerns
o 1. We’re counting the wrong things!
 Can’t measure everything that is important
 Willingness to accept does not equal willingness to pay, so how should we assign
monetary values to life? Health?
 People value chances of living/dying in a distorted way
o 2. The reliability of data – too subject to manipulation
 People who have the best info about costs are biased (companies, etc.)
o BUT: If you don’t do CBA, what do you replace it with?

VI. Procedural Requirements in Agency Decisionmaking

 APA is just a gap filler when the organic statute doesn’t address it.
 APA 551: Definitions
o § 551(7): Adjudication means “agency process for the formulation of an order”
 § 551(6): Order means the whole or a part of a final disposition, whether affirmative,
negative, injunctive, or declaratory in form, of an agency in a matter other than rule
making but including licensing
o § 551(5): rulemaking means agency process for formulating, amending, or repealing a rule
 § 551(4): “rule” means the whole or part of an agency statement of general or particular
applicability and future effect…”
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  Problematic! Rulemaking was supposed to be general, not specific (adjudications
are specific). Courts have ignored the “particular” language and SCOTUS never
addressed it.
 2 Big Distinctions
o Rulemaking (looks like legislation) vs. Adjudication (looks like courts)
 §553 – Rulemaking (like legislatures) – Rulemaking is general and prospective. Do not
need any notice or open hearing to pass a rule; no procedural DP constraints here.
 Rulemaking “means agency process for formulating, amending, or repealing a
rule”
 §556–57 – Adjudications (like courts) – procedural constraints (need hearing).
Adjudication is specific and retroactive. Adjudication is the residual category for
anything that isn’t rulemaking
 Adjudication “means agency process for the formulation of an order”
 Licensing decisions are adjudications (established by statute)
 Rule: § 551(4): “means the whole or part of an agency statement of general or
particular applicability and future effect . . .” ← Courts ignore this
 AJ has less authority than ALJs because they have less decisional independence
and job securities.
o Formal vs. Informal
 § 553(c): “when rules are required by statute [organic act] to be made on the record after
opportunity for an agency hearing, §§ 556 and 557 [requirements for formal
hearing/adjudication] of this title apply instead of this subjection.
 § 554(a): “in every case of adjudication required by statute [organic act] to be determined
on the record after opportunity of an agency hearing, except... “
 Therefore, the way we can determine whether formal or informal is required, we look to
some other statute (usually the organic act), that says “this agency shall issue
adjudications only after hearing upon the record,” etc

Organic Statute Requires Decision on “Record” after

opportunity for “hearing”?

Yes No

Rulemaking Formal Rulemaking: Informal (Notice &

553(a), (b), (d), (e), Comment) rulemaking: 553
556, 557

Adjudication Formal Adjudication: Informal adjudication

554, 556, 557 (almost no APA procedure)

 A. Introduction to Rulemaking and Adjudication

o Five basic sources of law:
 (1) organic statute creating agency or vesting it with powers often specifies applicable
procedures

19
  (2) The agency may have adopted procedural regulations, which it must follow in
accordance with principle that agency is bound by its own rules
 (3) APA establishes procedural requirements of general applicability
 (4) The courts have created “federal common law,” imposing procedural requirements on
agencies; most of these requirements, based neither on specific statutory provisions nor
the Constitution, are designed to facilitate review. (The requirement, developed in
Chenery and subsequent cases, that agencies articulate a sustainable justification for
discretionary decisions is an example.)
 (5) Constitutional due process requirements may apply.
o Rulemaking and Adjudication: The Constitutional Distinction
 Londoner v. Denver (1908): Not having notice-and-comment does not violate due
process. When agencies adjudicate, agencies have more discretion than Article III courts,
but less than the legislature. Petitioner has the “right to support his allegations by
argument however brief, and if need be, by proof, however informal.”
 Bi-Metallic Investment Co. v. State Board of Equalization (1915): No due process rights
when agencies engage in rulemaking (acting like legislatures). Londoner was only about
a small number of persons who were exceptionally affected on individual grounds, so
they had a right to a hearing. But when there are broad rules, there is no right to hearing.
 How do we distinguish rulemaking and adjudication?
 Level of generality (most important if two aspects conflict)
o 1. Generality: more like rulemaking
o 2. Specificity: more like adjudication
 Prospectivity
o 1. Prospective: more like rulemaking
o 2. Retroactive: more like adjudication
 So,
o Rulemaking = general and prospective
o Adjudication = specific and retroactive
 Kenneth Culp Davis’s distinctions between adjudicative and legislative facts.
o Adjudicative facts = facts about parties, activities, business, properties,
etc. About who did what, where, when, how, etc. and they are similar to
questions of fact for the jury
o Legislative facts = general facts which help tribunal answer questions of
law and policy and discretion.
 Minnesota Bd. for Community Colleges v. Knight: Constitution does not grant to
members of the public generally a right to be heard by public bodies making
decision of policy. There is limited participation and nothing in Constitution
makes policymakers have to listen to citizens.
o Levels of Deference
 Amount of deference
 Complete deference – no review
 Jury standard – no reasonable person
 Abuse of discretion
 Clearly erroneous
20
  No deference (de novo review)
 Anti-deference (skeptical)
o Procedural Requirements of APA and the Interplay Between Rulemaking and Adjudication
 Adjudication: when a statute says “hearing” but doesn’t specify “on the record” or
“formal,” what to do?
 Dominion Energy Bayton Point, LLC v. Johnson: EPA permit renewal case.
Chevron deference allowed because the EPA interpreted the CWA, which has
different notice-and-comment procedures than the APA.
o Seacoast Anti-Pollution League v. Costle (1st Cir.) (cited in Dominion): if
the organic statute says “hearing,” presume it is a formal hearing.
o MAJORITY: But see Chemical Waste (DC Cir.): using Chevron, the
agency has discretion to interpret the statute reasonably b/c of the
ambiguity in the statute. Can choose to do formal or informal adjudication.
(after Chemical Waste, the 1st Cir. agreed with DC Cir.)
 Congress can force agencies to use formal adjudications by using certain words in
the statute. To give an agency maximum flexibility, Congress shouldn’t mention
any procedures in the organic act.
 Overview of Formal Adjudication
 Prehearing – agency must notify the party or parties of time, place, and nature of
the hearing, legal authority under which it is held, and matters of fact and law.
Agency is required to give parties the opportunity to settle. Discovery is much
less extensive.
 Hearing – Hearing looks and feels like a judicial trial. Cross-examination is not
automatically required and federal rules of evidence do not apply. Proponent of a
rule has the burden of proof. APA is silent about standard of proof, but SCOTUS
has held, based off of APA’s legislative history, that default standard is
preponderance of the evidence. But in some circumstances, Constitution may
require a higher standard.
o “On the record” implicitly bars taking official notice of facts that are not
in the record and any ex parte contacts.
 Post-hearing – ALJ prepares decision and then Agency approves of it or changes
it in its final decision of all material issues of fact and law.
 Informal Adjudication
 §§ 554, 556, and 557 are inapplicable, so the APA provides almost no procedures
to be followed. Lack is significant given “adjudication” is broad category.
 Persons before the agency have a right to counsel and agency must provide brief
statement of grounds for denial of any application, petition, or other request.
 Constitution, organic statute, and agency’s own regulations may impose
procedures for informal adjudications even to the point of looking like formal
hearings.
 Most agencies most of the time provide 3 central safeguards: (1) timely and
adequate notice, (2) a statement of the reasons for determination and indication of
the evidence relied on, and (3) an impartial decisionmaker.
 Informal adjudication includes things that basically require no procedures
21
 o Rulemaking
 Informal (Notice-and-Comment) Rulemaking
 APA’s single most significant innovation was informal rulemaking
 That consists of: (1) general notice of proposed rulemaking in the Federal
Register, specifying the time and place of the rulemaking proceedings, the legal
authority relied on for the issuance, and the content or subject matter of proposed
rule; (2) opportunity for interested persons to submit written comments on
proposed rule and at the option of the agency, opportunity for oral presentations,
(3) agency consideration of comments, (4) issuance of concise general statement
of basis and purpose, (5) publication of final rule in Federal Register
(requirement of §552(a)(1)); and (6) when there are “substantive rules” that
impose new requirements, delay of rule’s effective date till at least 30 days after
publication.
 §553 has broad exceptions.
 Agencies increasingly turned from adjudication to rulemaking to decide basic
issues of regulatory policy. Given modest character of notice-and-comment
procedures, this development threatened to leave much important agency
decisionmaking free of procedural requirements.
 Formal Rulemaking
 If relevant statute provides that rules “be made on the record after opportunity for
an agency hearing,” 553(c) requires that agency follow procedures set out in
§§556–57. Normally include taking evidence by ALJ.
 Formal rulemaking can be more streamlined than formal adjudication: (1) §556(d)
provides that in rulemaking, agency may adopt procedures for the submission of
all or part of the evidence in written form and (2) 557(c) permits agency to omit
the time-consuming practice of an initial or recommended decision by hearing
officer.

IV. The Scope of Judicial Review – Questions of Fact, Law, and Policy
 Question of fact: do greenhouse gases affect global warming?
 Question of law: does the statute require us to regulate greenhouse gases?
 Question of policy: is regulation of greenhouse gases a good idea in light of our broad statutory authority?
 A. Review of Questions of FACT
o Formal Adjudications
 § 706(2) (E): the reviewing court shall, hold unlawful and set aside agency action,
findings, and conclusions found to be unsupported by substantial evidence in a case
subject to sections 556 and 557 of this title or otherwise reviewed on the record of an
agency hearing provided by statute
 Pre-Universal Camera standard: if “any reasonable person” could have concluded this.
Was less than the “clearly erroneous” standard.
 Universal Camera v. NLRB (1951): interpret the words of the Taft-Hartley Act (organic
statute) as the same as the APA. Issue: what was the employer’s motive in firing
“Chairman” (the name of the person). Was it because of a quarrel or because of his pro-
22
 union views? The reason why he was fired is a question of fact. The ALJ (previously
called Examiner) blamed the quarrel for the firing, not the views. The NLRB overruled
the determination of the ALJ and thought it was the pro-union views that got him fired.
SCOTUS reviews the NLRB’s decision, not the ALJs (its an internal matter). In
reviewing the NLRB’s decision where a question of fact is at issue, SCOTUS must
consider the whole record, including the report of the ALJ, to determine whether there
is substantial evidence supporting the Board’s conclusion. On that basis, they uphold the
decision of the Board.
 2nd Circuit then gets the case back on remand and decides that there was not
substantial evidence! Very rare!
 Takeaway: could a reasonable expert have come to this conclusion? Did you
really look at everything?
 Incentives to uphold the findings of the NLRB (give deference to agency)?
o They’re experts in the field
o Board has incentive to set up rules for itself – own legal rules and factual
assumptions
 Arguments against deferring to the agency?
o The NLRB is biased! Highly politicized. Always rules against employers.
o Evidence does not support the conclusion
o The decision doesn’t require special expertise
 Allentown Mack: Court had to determine whether the NLRB’s conclusion that Allentown
had not demonstrated that it had a reasonable doubt that the Union continued to enjoy the
support of a majority of its bargaining employees was supported by substantial evidence.
But then says the standard is whether “it would have been possible for a reasonable jury
to reach the Board’s conclusion.” Conflating the “reasonable jury” and “substantial
evidence” standards! Court rules that Allentown ignored a lot of evidence to the contrary,
that it was disguising policymaking as fact-finding, and that the Board’s finding “is not
supported by substantial evidence on the record as a whole.” In reality, the court is
applying a more heightened standard – very rare for factual finding to be under this type
of scrutiny.
 There are very few cases where an agency loses based on an improper factual finding.
Universal Camera and Allentown Mack are the exceptions.
 Zhen Li Iao v. Gonzales: (7th Cir. – Posner) – Questions the integrity of the immigration
asylum application process. Says Immigration Judge’s opinion unreasoned. Remands for
a basis for fact-finding on that account.
 *Congress can always say that these standards don’t apply under the organic act*

Judicial Review of Agency Fact-Finding Under APA

Formal Informal

Rulemaking §706(2)(E): “substantial evidence” §706(2)(A): arbitrary or capricious

23
 Adjudication §706(2)(E): “substantial evidence” §706(2)(A): arbitrary or capricious

o Informal Adjudications
 Not going to care much about “substantial evidence” standard b/c it only applies to
formal proceedings, which involve a closed record. Agencies typically just use informal
proceedings for adjudications.
 706(2)(A): Arbitrary/Capricious: for informal proceedings. The actual standard of
review is substantially the same as the substantial evidence standard.
 HOWEVER, the agency is more likely to win under an arbitrary/capricious
standard because the agency has more influence over the record
 B. Review of Questions of LAW
o Basic “Statutory Interpretation” Problem: Years Before Chevron
 Notes
 Courts have long deferred to agency’s judgment unless agency’s legal
determination is “unreasonable,” “impermissible,” or “arbitrary.” Allows agencies
to have some discretion about various interpretations.
 Key determination is when to give deference.
 NLRB v. Hearst (1944): Two questions: (1) Does the common law govern in construing
the Wagner Act? Court: treats as question of law and says not limited to common law;
instead, question must be answered primarily from history, terms, and purposes of statute.
(2) If the term employee extends beyond common law, does it include newsboys? Court
treats as application of law to fact. Congress had wider mind than common law. There are
clear answers in some cases to who is included, but some are not as clear. Questions of
statutory interpretation are for courts to resolve, giving appropriate weight to the
judgment of those whose special duty is to administer the questioned statute. Board’s
determination that specified persons are employees is to be accepted if there is a
reasonable basis in the law.
 Hearst treats these as two questions involving very different kinds of deference.
For the first question, the Court doesn’t defer at all. It makes its own
determination. For the second question, the court defers.
 Packard Motor Car: Court says do not defer. The issue here involved the same term
(“employee”) under the Wagner Act. The question: were foreman “employees” under the
Wagner Act? So it was like the second question in Hearst. In Packard, the court said this
was a question of law (in Hearst they said it was an application of law to fact).
 Skidmore v. Swift & Co. (1944): This case says there’s a sliding scale of deference
depending on “1) the thoroughness evident in its consideration, 2) the validity of its
reasoning, 3) its consistency with earlier and later pronouncements, and 4) all those
factors which give it the power to persuade, if lacking power to control.” Administrator’s
policies and standards are given some respect. This is a “totality of the circumstances”
test where agency’s views are not binding but merely have persuasive authority. You get
less deference if you created a definition just for litigation, but longstanding
interpretations get more deference. Courts have the responsibility to find facts and
determine if cases are within the Act or not.
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  After this, courts looked at agency consistency and whether agency interpretation
was longstanding (ideally, adopted immediately after the statute was passed)
o Discourages agencies from changing their minds
 Difference between legislative rules and interpretive rules. Legislative rules are
product of an exercise of delegated legislative power to make law through rules
while interpretive rules are any rules on agency issues without exercising
delegated power to make law through rules.
o Legislative rules are controlling on courts while interpretive rules are not.
 Courts may give agencies discretion because the court might conclude that the
statute granted the agency discretion to decide the issue one way or the other or
because the court may accept agency’s resolution as presumptively correct
interpretation of statutory commands.
 Legislative rules are products of an exercise of delegated legislative power to
make law through rules. An interpretive rule is one that an agency issues without
exercising delegated legal power.
 Young v. UPS (2014): No deference for interpretations made up for litigation. Court says
there’s a problem of consistency and thoroughness of consideration because the
guidelines were made after cert was granted (not longstanding) and it’s inconsistent with
viewpoints the government has supported for a long time.
o Chevron: Synthesis or Revolution?
 Chevron v. NRDC (1984): Introduces the 2-step analysis: (1) Whether Congress has
directly spoken to the precise question at issue [if intent is clear, then the court and
agency must affect unambiguously expressed intent of Congress] and (2) if Congress has
not directly addressed the question, court gives deference to agency’s answer if it is based
on a permissible construction of the statute. Considerable weight is given to executive
department’s construction of a statutory scheme that it is entrusted to administer, and the
principle of deference to administrative interpretations has been consistently followed by
this Court whenever decision involves reconciling conflicting policies.
 Even though §706 says that courts review questions of law, Chevron has become
the dominant understanding of deference.
 Agencies have an edge because of accountability and technical expertise.
 Some see Chevron as creating a salutary incentive for Congress to write laws with
greater precision (see, e.g., John Manning, Textualism as a Nondelegation
Doctrine).
 Scalia defended Chevron by saying that it shows congressional intent to give the
executive primary considerations of policy and develop rules (not focused on
separation of powers or accountability). Congress may not intend a single result.
 Other arguments are that separation of powers requires it. Policy judgements are
for the executive and legislative branch and courts only interpret statutes.
o It’s not based on expertise or separation of powers. It’s based on an
assumption of what Congress would have wanted
o It’s a fictional, presumed intent
o It’s a background rule of law against which Congress can legislate

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 Economic Incentives and Chevron – Chevron arose as increasing use of economic
incentives to achieve regulatory goals. Can come through taxes or cap-and-trade
programs.
 Summary: In Step 1, the court is trying to ascertain the range of meanings
Congress could have allowed and Step 2 is were you outside that range? If the
range in Step 1 is narrow then we are done, there’s no range to apply in Step 2.
 Deference is effectively an all or nothing matter. Step 1 = no deference; Step
2 = a ton of deference
 Bottom line is that post-Chevron courts have not distinguished pure questions of
law from applications of law to fact. Doesn’t matter if it’s a pure question of law
or an application of law to fact
 Chevron invokes democratic theory
o Agencies are democratically accountable in ways that courts are not.
When there is a gap, the agency in the preferred gap-filler
o Chevron Step Zero:
 US v. Mead Corp. (2001): When does Chevron apply?
 Does Chevron apply when Customs changed a tariff classification through a
ruling letter? NO! Ruling letters do not get Chevron deference. Why?
o They can be issued by any one of 46 offices – no specified agency
procedures.
o They are not generalizable or binding on an agency, and subject to change
without notice or hearing.
 Skidmore analysis is the default.
 Chevron is the exception – applies when Congress delegates authority and would
expect the agency to fill in the gaps. Chevron will only apply when agency action
has the force of law (Step 0)
 Most of the time, notice and comment (informal) rulemaking and formal
adjudication will get Chevron deference.
o Neither of the above are necessary or sufficient.
 But, there is no bright line rule here: even with notice and comment rulemaking, if
the rule is not binding on anybody, it does not get Chevron deference. Focus more
on the intent of the agency – the more we focus on intent, though, the harder it is
to apply a bright line rule.
 Scalia Dissent: this creates confusion! Need more authoritativeness and certainty.
 Mead Summary: Skidmore is the default, Chevron is the exception.
 Step 0 Questions: 1) Did Congress delegate to the agency to make rules with the
force of law? 2) Did the agency act pursuant to that power?
 Can assume (but no bright-line rule) Chevron deference with:
o 1. Notice and Comment (informal) rulemaking
o 2. Formal Adjudication
o BUT the determining factor is congressional intent
 SO an agency may go through less hoops but still act with the force of
law Barnhart v. Walton OR agency may jump through the hoops and still

26
 not have the force of law 9th Cir. case (notice-and-comment rule with no
precedential effect so no Chevron deference)
See page 315 n. 6 for actions that don’t get Chevron deference
Agencies are more likely to push the envelope when they think they’re getting
Chevron deference.
 Christensen v. Harris County: an opinion letter was derived without formal adjudication
or notice and comment rulemaking, so there is no Chevron deference. Distinguishing
factor: did not have the force of law.
 Opinion letters, enforcement guidelines, and policy statements don’t have the
force of law and only get Skidmore deference – “does it have the power to
persuade.”
 Other Exceptions to Chevron Deference (when Chevron is inapplicable)
 1. Agency litigating positions and positions articulated for the first time in briefs.
 2. No deference when an agency is acting as a prosecutor.
 3. An agency does not receive deference if it is interpreting a statute that is
enforced by many agencies (like the APA)
 Gonzales v. Oregon: (2006): CSA regulates physicians and puts drugs on a schedule,
with rules promulgated by the AG. The AG can make regulations to prevent things
“inconsistent with the public interest.” Five factor test to determine whether something is
in the public interest. AG issued interpretive rule that drugs to help people commit
suicide is in the public interest, but it is illegal under the CSA for doctors to prescribe
those drugs. HOLDING: interpretive rules get no deference under Chevron. Did not
act lawfully because did not act pursuant to any statute under which you had authority to
regulate. Did not use the 5-factor test, and had no authority to issue the interpretive rule
you issued. You don’t get Chevron deference because you didn’t act lawfully under any
statute you could do anything under it in the first place.
 Even if the Agency had gone through notice and comment rulemaking for the
rule, they probably still would have been unable to ban it because the statute itself
(CSA) did not allow it, failing Chevron step 0.
 Long Island Care at Home, Ltd. v. Coke: Congress amended FLSA to include many
“domestic service” employees not previously under minimum-wage requirements. Gives
broad deference to agency’s interpretation of “domestic service employment” and
“companionship services” because the statute expressly tells Congress to work out the
details of these definitions. Also, gives special weight to a rule labeled “interpretation.”
 Why is this case important? This is a unanimous decision. Justice Breyer writes
the opinion. He doesn’t sharply distinguish Step 1 and Step 2. He applies
deference, indicating that Chevron applies, but he doesn’t separate the steps.
 He also mentions the agency’s careful and thorough consideration (this is more
like a Skidmore analysis)
 He basically just asks: should we defer to what the agency has done? (looks at
reasonableness)
o Chevron STEP 1: Is the statute ambiguous?
 Babbit v. Sweet Home: Issue: did Secretary exceed authority when promulgation of
regulation? What does it mean to “take” something? Act provides 3 reasons for
27
 concluding that the Secretary’s interpretation is reasonable: (1) ordinary understanding of
“harm” includes hurting (rule against surplusage), (2) broad purpose of ESA is to extend
protection against activities that cause precise harms Congress enacted the statute to
avoid, (3) Congress authorization showed that statute was meant to prohibit indirect and
deliberate takings. Points to “wrong” canons of construction that the lower court used.
Concludes that Congress did not unambiguously manifest its intent to adopt a certain
view along with agency’s reasonable interpretation are enough to decide the case.
Congress gave broad administrative and interpretive power to the Secretary.
 Scalia (dissenting): 3 features of the regulation don’t comport with the statute: (1)
interprets statue of habitat modification to say that all endangered species that are
injured are covered; (2) regulation does not require an act; and (3) encompasses
injuries on entire species instead of harming specific animals, impairment of
breeding does not injure living animals. All of the other definitions fit the normal
definition of “take” and harm should as well. There is nothing in the statute that
shows that animals on private lands are covered.
 Court sees itself as doing Step 1: was the statutory language sufficiently clear to
indicate that take includes harm? But at Step 1, the Court talks about
reasonableness and then delving into the meaning of the word take. That’s the
kind of analysis we might also expect at Step 2. The majority also looks at how to
understand the provision in context
 The more tools used at Step 1, the less you get to Step 2
o The more tools, the less likely agency will be given deference
 Handout for 9th Class – Clarity Under Step 1 of Chevron: Four Possible Formulations
 1. After using every interpretive device, and after exhausting all interpretive
efforts, an answer emerges as correct.
o If yes, then Chevron doesn’t mean much. Essentially de novo!
 2. After using every interpretative device, and after exhausting all interpretive
efforts, an answer emerges as correct with a fairly high level of confidence. You
end up fairly certain that your answer is correct. So Courts must have great
confidence in their interpretation to find a statute clear. (maybe how it’s supposed
to work?)
 3. 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.
(Text only!)
 4. 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.
 MCI v. AT&T: What did Congress mean when it said that the FCC can “modify” any
requirement? Step 1 Case
 Scalia opinion: Court looks to dictionary definitions to determine meaning.
 Dissent: wants to go beyond plain language and look at other means. Want to use
broader tools – “dictionaries can be useful aids in statutory interpretation, but they
are not substitute for close analysis of what words mean as used in particularly
statutory context”
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  Both are trying to figure out what the text of the statute means – look to
dictionaries
 Court: “modify” cannot mean “make a basic change” because “Congress doesn’t
“hide elephants in mouseholes.”
 This could easily have been written as a Step 2 case; judging “modify” to be
ambiguous, and then looking to whether the interpretation was reasonable.
o Important Case because: the more interpretive rules you use to figure out
Congress’ intent, the less often you’ll get to Step 2. Case could have been
written as a step 2 case too!
 Step 0 considerations – Congress didn’t really intend for you to make such an
important decision
o Congress wouldn’t delegate such a significant decision in a cryptic fashion
 City of Arlington, TX v. FEC (SCALIA): Court looks to whether the agency stayed
within the bounds of its statutory authority. There’s no difference between the court
exceeding the scope of its authority and it exceeding the scope of the application of its
authority, which it has here. No difference between jurisdictional/non-jurisdictional-
can’t separate them – no difference between “jurisdictional” ambiguity and “run of the
mill” ambiguity. Question of what an agency can regulate is not different from “how” an
agency can regulate. Court should defer to an agency’s interpretation of its jurisdiction
when that jurisdiction is called into question.
 Dissent: if you characterize decision as “jurisdictional,” you avoid Chevron b/c
don’t defer to interpretation in that case.
 FDA v. Brown & Williamson Tobacco Corp.: tobacco regulation by FDA. (either in
interpretive mode 1 or 2 – see Handout above). Does Food, Drug, Cosmetic Act include
authority to regulate tobacco? Congress was ambiguous, chose not to speak clearly here.
This is a step 1 case.
 Court: FDA has no authority to regulate tobacco! Why?
o Court cites Congress rejected bills that would have given FDA authority to
regulate (congressional silence/inaction).
 BUT, may have rejected those bills not b/c it was opposed to it, but
because Congress thought the FDA already had the authority to do
so. Didn’t want to be redundant.
o Looks at whole regulatory scheme – not intended to give authority to the
FDA. FDA has always said it lacked authority to regulate tobacco, and
reading the authority into the statute would require FDA to ban cigs and
tobacco – clearly not intended!
o Not just looking at words – lots of statutory tools being used here. Looks
to post-enactment legislative history and other sources, while dissenters
are focused on the text (textualism vs. purposivism)
o Says that Congress did not intend to give the agency that big of a decision.
 Dissent: FDA can regulate without banning cigs.
o No non-jurisdiction assumption with agency regulations.

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  Maj. argued that the opinion that the FDA did not have the
authority to regulate tobacco was “effectively ratified” when
Congress did not act in subsequent years.
o The literal reading of the text bans tobacco products; at that point, analysis
should be done! Also, this is just an opportunity where politics can come
in and different administrations can have different interpretations
 How sure do you have to be about method (level of confidence)?
o OK for an agency to change its mind (political changes)!
 Step 0 Issue here too (Major Questions Doctrine): They say: “As in MCI, we
are confident that Congress could not have intended to delegate a decision of such
economic and political significance to an agency in so cryptic a fashion”
o NO ELEPHANTS IN MOUSEHOLES!!!!!!
o Also see King v. Burwell
 King v. Burwell: No Chevron mentioned, this is a step zero case. Congress would
expressly delegate authority of such significance (questions of “deep economic and
political significance”). Court just makes its own determination.
 Is this “actual” or “presumed” intent?
 Massachusetts v. EPA: Chevron step 1 case – applying to definition of air pollution.
Agency picks reasonable definition and dictionary supports agency’s interpretation.
Greenhouse gases are clearly air pollutants. Congress clearly spoke to that issue. No
deference at step one. Congress wasn’t focused on greenhouse gases but they were
focused on a sweeping definition because they wanted everything to be included; there is
a requirement to regulate here and cannot disclaim authority. This is different from
Brown & Williamson: here, there’s not a history of other enactments that had been woven
in over the years. Also, banning cigarettes is different than regulating pollutants.
 Dissent (Scalia): Chevron deference applies to the EPA’s definition of air
pollution because it’s not defined in the statute. They didn’t think it included
greenhouse gases and that’s reasonable. Statute doesn’t clearly identify relevant
term, agency picks a definition that is reasonable, and dictionary supports
agency’s interpretation of that undefined term. We defer to the EPA’s
interpretation of the statute when the text is ambiguous.
o Scalia typically looks to the comprehensibility of the statute while Breyer
decides on reasonableness.
 Comparing Massachusetts v. EPA to Brown & Williamson:
o Similarities: Both are aggressive step one cases. Bringing in other
considerations to figure out if Congress spoke to the issue; both use a
capacious scope of how to interpret things at step one. Neither seems to
require a high level of confidence
o Differences: In Brown & Williamson, the Court says they don’t assume
Congress wants to defer really important decisions to agencies. But in
Massachusetts v. EPA, the Court says the agency must regulate, or at least
consider regulating, a really important thing (likely not a mousehole here).
 Clarity/Confidence at Step 1

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  NFFE v. DOI: statutory language requires agencies and unions “meet and
negotiate in good faith for the purposes of arriving at a collective bargaining
agreement.” Question: Does the statute impose a duty to engage in midterm
bargaining?
o DC Circuit: yes, there’s a requirement of midterm bargaining
o 4th Circuit: rejected a requirement of midterm bargaining
o SCOTUS: statute is ambiguous. It can’t be resolved at Chevron step one
because the statute’s language was ambiguous. It’s up to the agency.
o If you’re a SCOTUS justice and you see a circuit split, does that
automatically mean that the statute is unclear?
 Level of confidence matters and tools used to interpret meaning
matters (see Handout for 9th class above)
 2 Broken promises of Chevron
o 1. Chevron has become less clear for agencies about whether they will
receive deference
o 2. Agencies aren’t actually receiving as much deference (not finding
ambiguity as much as thought)
 Long Island Care: The Court asked whether rule was reasonable. This is a step two.
 Breyer puts step one and two in the same sentence. He’s basically asking the question
“should we defer?” Then you ask what procedure the agencies followed, what they
looked at, and whether it was reasonable
o Chevron Step 2: If Congress was ambiguous, is the agency’s interpretation
reasonable/permissible?
 Rare for a court to set aside an interpretation – must accept the agency interpretation
unless it is “unreasonable,” “arbitrary,” or “impermissible”
 “We may not disturb an agency rule unless it is ‘arbitrary or capricious in substance, or
manifestly contrary to the statute’”
 Entergy v. Riverkeeper: Can the EPA allow plants to not use the safest technology
because it would not be cost-effective to do so? The statute calls for the “best technology
available for minimizing adverse environmental impact.” What does “best” mean? Some
sections in the statute explicitly allow cost-benefit analysis, but this is not one of them –
is it permitted to do it? Scalia (Majority – treats it as a step two case): rejects expressio
unius because it leads to absurdity. EPA must be able to consider cost when making
determinations as to what is “best” here. Breyer (Concurrence): looks to legislative
history – does not require CBA, but allows it. Stevens (Dissent – treats it as a step one
case): accepts expressio unius. Statute forbids using CBA for this. Congress spoke on the
issue, so it’s done.
 National Cable & Telecom Ass’n v. BRAND X (2005): Chevron is not diminished by
agency flip-flops (changes in interpretations). Holding: “only a judicial precedent holding
that the judicial statute unambiguously forecloses the agency’s interpretation (e.g., a
previous step 1 case that found the statute to be unambiguous) forecloses the agency’s
interpretation and therefore contains no gap for the agency to fill, displaces a conflicting
agency construction”

31
  Court upheld FCC’s determination that a cable internet provider is an
“information service” and not a “telecommunications service”
 Court did not want agencies to be bound by court rulings unless the court said that
the statute was unambiguous. Court determining that an agency made a
“reasonable” interpretation of the statute does not preclude the agency from
making a different reasonable interpretation later on.
o Don’t want a race to the courthouse – want agencies to be the first arbiters,
not the courts (democratic theory and accountability)
 If the Dissent (Scalia) wins, then what’s the danger here?
o Agencies would be bound by court interpretations and ruling on
ambiguities that were intended to be resolved by agencies.
o Parties would be able to sue agencies before they make a rule, so there
would be no Chevron deference and then the court’s ruling, however it
came out, would bind the agency.
o This would lead to the ossification of large portions of statutory law by
precluding agencies from revising unwise judicial constructions of
ambiguous statutes.
 When can an agency flunk step 2? Very rare!
 AT&T Corp. v. Iowa Utilities Board: Section of statute that said that “the
commission shall consider whether access to such elements is necessary and
failure to provide access would impair the ability of competitors. Agency
interpreted “necessary” as absence increases competitor’s costs and the absence
would impair. Agency defined impair as decrease quality or increase the cost of
service, even if can get from provider or on their own.
o Scalia (Majority): the words “necessary” and “impair” are very broad, and
any reasonable interpretation by the FCC is permissible. But, the FCC
needs some limiting principle here. If Congress had wanted to give
blanket discretion here, it would have, but it didn’t – it used “necessary”
and “impair.” A super broad definition renders the words meaningless.
o Souter (Dissent): FCC should win. Since both necessary and impair are
both very broad, they can cover the meanings that the agency gave them.
Reasonable!
 Michigan v. EPA: the term “appropriate and necessary” is broad and leaves the
agency with a lot of flexibility, but you must have some attention to cost. Not a
tenable interpretation without considering cost.
 98% of the time, if you get to step 2, you win!
o Agency Interpretations of Agency Regulations
 Rule: when regulations are ambiguous, agencies get to interpret them.
 No equivalent to Mead here (everything has deference regardless of if formal)
 Seminole Rock/Auer Deference: No 2 steps – just defer to reasonable interpretation.
“The ultimate criterion is the administrative interpretation, which becomes of controlling
weight unless it is plainly erroneous or inconsistent with the regulation.” You’re
deferring to legal determinations that are the agency’s own interpretations of its rules.
Analogized to Chevron deference – defer to agency interpretations.
32
  Decker v. Northwest (supplement): discomfort with Seminole Rock
o Arguments pro-Auer deference:
 Agencies may have special insight (Scalia: thinks that the text
matters, not agency intent)
 Agency has special expertise (Scalia: irrelevant to interpretation –
about congressional intent and democratic accountability)
 Deferring to agencies on statutory construction. (Scalia: no it’s not
– can’t allow an agency to both write the rule and then interpret it.
Would violate separation of powers).
o Scalia: allowing Auer deference would incentivize agency to use broad
words in rules b/c the agency will know that it will get deference for any
interpretation it makes. Maximizes future control for the agency.
 Limits on Seminole Rock Deference
o Parroting limit (see Gonzales v. Oregon) – no deference if just repeating
Congress’ words
o Christopher v. Smithkline Beecham (supplement): Auer deference may not
be as great as we thought it was – did not give Auer deference because
doing so would undermine the principle of “fair warning” and would be an
“unfair surprise” on industry. Due process concern.
 C. Arbitrary and Capricious/Hard-Look Review
o There was pressure to increase judicial review of agency determinations, so the courts
emphasized process instead of substance. The agency employs discretion to choose among
relevant alternatives not foreclosed by statute, but it must develop why it used certain
alternatives.
o Hard look review – prevents agency capture and to make agencies show why they used their
authority the way that they did.
 §706(2)(A) – arbitrary and capricious (very low bar to pass – NBC v. US)
 Pacific States Box (1935): a statement of reasoning means it’s not arbitrary or capricious:
in the scope of police power.
 Ethyl Corp. v. EPA (D.C. Cir. 1976): procedural vs. substantive approaches to hard look
review
 Bazelon: make sure the agency took a hard look at alternatives and data
(procedural)
 Leventhal: judges have to take a hard look at details of the agency action
(substantive)
o Overton Park: Road was supposed to go through a park. This is an informal adjudication. This
act has no references to a hearing or a record, so no description of procedures. Court says that it
may review the case even though formal findings were not required because § 701 of APA
provides that the action of each U.S. authority is subject to judicial review except where there is
a statutory prohibition or where an agency action is committed to agency discretion. Uses Abbott
Labs presumptions as well. Secretary must approve the route over the alternatives that could
have been done. Substantial-evidence test only applies where agency action is based on
rulemaking or on public adjudicatory hearing. De novo review (under §706(2)(F)) of
“unwarranted by the facts” only applies where agency factfindings are inadequate or when action
33
 is adjudicatory in nature. Inquiry into facts is narrow and court looks to whether agency’s action
followed procedural requirements. The Court was not presented with the whole record that was
required as there were only litigation affidavits (“post hac rationale”) for the actions. These are
insufficient and court must have review of the full administrative record and
administrative officials who participated in the decision to explain their actions.
 There are no requirements of procedures or formal findings in the organic act or the APA.
 Formal adjudications/rulemakings look more like a trial – very procedurally rich
 Court is saying they’re not going to defer as much. It also means that procedures are
effectively required for informal adjudication. This isn’t because the law requires these
procedures, but conducting the arbitrary and capricious review from §706(2)(A) requires
the court to look at some sort of record. So, using procedures is an easier way to get that
information for the record.
 No specific procedures are required. But, the review is going to be based on the “full
administrative record that was before the Secretary at the time he made his decision”
 Basically, causes an agency to have formal findings and create a record OR have
its key decision-makers deposed.
 This case was not remanded to the agency. There was a 27-day trial with the Secretary to
figure out what the Secretary was thinking when he made this decision. At the end of this,
the district court said the Secretary didn’t give consideration to other routes, but deciding
either way would be reasonable.
 What procedures are required by Overton Park to make a record on which the court
can engage in arb/cap review?
 Have formal findings in record, OR
 Have the administrators deposed – don’t want that!
 In reality: agencies must make a formal record of findings to pass arb/cap
review for informal adjudications.
o Adjudication is arbitrary and capricious when the agency should have
considered something, and did not.
o Breadth over depth review – did the agency consider all alternatives in the
record and respond to them?
 Peter Strauss: better approach is to leave this to the political process (go to Congress)
o Motor Vehicle Manufacturers’ Association v. State Farm (1983): This case explicitly signs on to
hard look review. Agencies must consider the strongest arguments on both sides and respond to
them. Agency failed to consider why it rescinded the passive restraint requirement for cars.
§706(2)(A) is the basis for arbitrary and capricious standard/abuse of discretion. An agency
changing its course by rescinding a rule is obligated to supply a reasoned analysis for the change
beyond that which may be required when an agency does not act in the first instance. Agencies
can change policies, but they must do so through a process that is not arbitrary and capricious,
but the agency must examine the relevant data and articulate a satisfactory explanation for its
action including a rational connection between the facts found and choices made. Here, the
agency did not consider whether air bags should be utilized and was too quick to dismiss
automatic seatbelts. Agency may revoke standard if based on adequate facts. It is the job of the
agency, not the courts to explain its decision.

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  Agency says they aren’t doing anything – it’s just as if they never issued regulations in
the first place. Generally, courts don’t review us when we don’t promulgate standards
because there’s minimal review of that (Heckler – agency’s denial of a petition for
rulemaking is reviewable). Court says a decision to rescind a regulation is still a decision.
Rescinding an existing regulation is a formal action. It’s not like you had never done it at
all; you’re changing the law.
 RULE today: “Agency rule would be arbitrary and capricious if the agency has relied on
factors which Congress has not intended it to consider, entirely failed to consider an
important aspect of the problem, offered an explanation for its decision that runs counter
to the evidence before the agency, or is so implausible that it could not be ascribed to a
difference in view or the product of agency expertise”
 Rehnquist concurrence – the agency adequately explained its decision to rescind the
Standard insofar as it was satisfied by detachable belts.
o Post-State Farm
 Agency only needs to consider “significant and viable alternatives . . . not to every
alternative device thought conceivable by the mind of man” (City of Brookings Municipal
Tel. Co. v. FCC)
 Requires anticipating what the judge views as important
 Agency should respond to strong arguments from entities with an interest and
dissenting members of the Commission
 Politics can fit into the analysis as a “relevant factor.” President being involved in the
decision is a factor as well.
 Duty extends only to significant and viable alternatives, not to every alternative
that is conceivable. Failure to consider obvious alternatives has led uniformly to
reversal.
 If regulation is enacted under State Farm, then can only overturn it through notice-and-
comment rulemaking
 SO President right after inauguration stops any regulations not yet enacted
o Massachusetts v. EPA: This is not a non-enforcement decision. The agency took an action; they
denied a petition for rulemaking. This is an affirmative action (even though the agency could
have sat on it and done nothing). Judgment not to act has to be understood in light of the
statutory text (considering international negotiations, costs, etc. are not on the table). If the
scientific uncertainty is so profound, the EPA must say so.
 Key question: whether there is scientific uncertainty and EPA didn’t offer an explanation
for its refusal to decide whether greenhouse gases contribute to climate change
 EPA’s decision is arbitrary, capricious, or otherwise not in accordance with law
 EPA is arguing with the text of statute which is outside scope of policy judgments
 Scalia (Dissent) says that there should be a choice not to regulate because this is a policy
matter. There is also still scientific uncertainty.
o WildEarth Guardians v. EPA (DC Cir. – supplement)
 Agency denied a petition for proposed rulemaking because it determined that it just
didn’t have the resources for it. EPA said it was taking a common sense, step-by-step
approach to obtain most significant greenhouse-gas emissions by using the most cost-

35
 effective measures first. Court gives deference to agency to rank priorities and say
why, recognizing that that we live in a world of limited resources.
 EPA could have avoided the whole suit if they just had done nothing at all
o FCC v. Fox: Does the agency have to explain when it changes its mind on a policy question?
 Majority: FCC needs to show some awareness – candid & transparent. Just needs to
show that you believe the change is better, not that it actually is better. Just needs to
demonstrate that it knows its changing its policy. No special burdens for changing its
mind. Match what would have been the normal threshold for making a reg. Regular
hard look applies – nothing additional (makes it easier for agency to change mind)
 How much evidence does the agency have to show to change its mind?
 If only scant empirical evidence exists, then you do not need to collect further
evidence. But, if empirical data already exists, the agency must consider it.
 Should and do the same rules apply to executive and independent agencies?
 No, independent agencies are not treated differently.
 Scalia: no basis for a distinction
 Stevens: believes independent agencies should be viewed as arms of Congress.
 Breyer: (dissent): believes that independent agencies should be treated differently
because they are independent, free from executive control (and the ballot box),
and therefore should be looked at more carefully.
o What is the difference between Chevron Step 2 and Hard Look Review?: both reasonableness
questions, but looking at different things in both categories (see Arent v. Shalala)
 Hard Look – just show that you considered all the facts and arguments – the process
matters – how do you get to your result
 What did you decide, what did you reject, and why?
 Requires the agency to justify its decision
 On remand, agency can implement same result, as long as they take a hard look.
 Agencies lose at this analysis all the time! (way more than Chevron step 2)
 Chevron Step 2: the interpretation itself is unreasonable – no matter how hard you look,
it will never be a reasonable interpretation – we don’t care how you got your result – is
the agency interpretation reasonable?
 Not looking at the decision-making process at all
 On remand, interpretation was unreasonable so can’t keep it
 Just 2 cases where agencies have lost!
o Judulong v. Holder: (supplement): the gov’t urges us to instead analyze this case under the 2nd
step of Chevron (as opposed to hard look) – but the analysis with that or with arb/cap under APA
is basically the same.
o Arent v. Shalala: Chevron step 2 entrusts agencies with authority to interpret statutory
ambiguities, while APA review focuses more heavily on the agency’s decision-making process.
o Don’t allow agencies to change rules just because there was a political change in the executive –
want agencies to be able to review agency policy determinations
 D. Agency Bias in Rulemaking
o Association of National Advertisers v. FTC (D.C. Cir. 1979): Chairman of FTC wanted to ban
advertising of sugar products on children’s commercials and made a speech before proposing the

36
 rule. Congress could do this because it has no requirement to hold an evidentiary hearing. But
Cinderella rule—that disqualifies a decisionmaker if a disinterested observer thinks that he
adjudged the facts in advance of hearing it—does not apply to rulemaking procedures.
Administrators are different than adjudicators, so Commissioner can only be disqualified if there
is a clear and convincing showing that he had a closed mind. The “clear and convincing” test is
necessary to rebut presumption of administrative regularity and the “unalterably closed
mind” test is necessary to permit rulemakers to carry out proper policy-based functions while
disqualifying those unable to consider meaningfully a §18 hearing.
 Levanthal Concurrence – Courts and agencies have different functions and administrators
may have more biased views because of their role. The agency must have delved into the
subject before the rulemaking is even proposed.
 Mckinnon Dissent – Letters show that the Commissioner had a conviction that
advertising sugary products to children was wrong, making him disqualified.
 Notes
 Cinderella Rule: ONLY FOR adjudications.
 D.C. Circuit notes that members of Congress often have their minds made up
before the hold hearings, and that does not raise any due process problems (Bi-
Metallic).
 The standard is “clear and convincing evidence of an unalterably closed mind”
o This is very difficult to satisfy (courts are reluctant to find it met)
 This means there’s no space for an agency to say what everyone knows to be the
case (that its decisions are politically motivated)
 E. Review via Consideration of Risk Regulation
o Administrative law is about false positives (Type I error: tell a man he’s pregnant) and false
negatives (Type II: tell a woman as she’s being wheeled into hospital that she’s not pregnant)
 The more stringent review – more regulations struck down that should’ve been approved
 The more lenient review –more regulations approved that should have been struck down
o Considerations – safety definitions (i.e. “significant risks”), regulatory objectives, practical
problems (how much can actually be regulated), testing for risk (which factors actually cause the
problem), which experts to use (may only reach limited conclusions or may be seen as hacks of
certain groups)
o CBA – calculating and monetizing multiple effects and lives may be difficult (i.e. hard to predict
public behavior/responses), monetization of common terms may be difficult in certain
circumstances, distribution effects can also be difficult because rural areas may pay more per
capita than cities for the same policies, weighing risks can also be problematic.
 Use of private willingness to pay can help take account of various factors
o Regulating risk – how do we regulate possibilities—instead of certainties—of future harm?
Goal is to provide greatest net benefit to the public. Sometimes, agencies choose to regulate
things that may have smaller risks than other problems that society faces.
 Problems – people underestimate the likelihood of high-probability events (stroke or
heart attack) while overestimating the likelihood of low-probability events (tornados).
People also may choose some risk over lower risk (taking baby in a car instead of leaving
it for a nap). People also want to ban certain things that have great benefits (i.e. natural
gas).
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 People also may just not understand costs and benefits and be willing to pay the same
thing (and only the same thing) for two vastly different things (e.g. cleaning Toronto
lakes v. cleaning all Ontario lakes).
o Handout #7: Zeno/Parmenides Problem (see notes from 3/1)
 We have a lot more information about zeno than agencies usually have because we have
some information (though not much) on dose-response curve all the way down to 1ppm.
 Information is from 50 elderly Botswanan shepherds (exposed to between 50–100 ppm
with one person at each interval) and 4000 rats (exposed to 1000 ppm). There are
concerns that zeno may cause cancer
 Agency sets “provisional limit” at 1000 ppm of zeno inside workplace and says
OSHA must gather relevant information and expeditiously promulgate rules.
 “Appropriate” limit is a policy choice with a lot of wiggle room
 Riverkeeper and Michigan v. EPA – requires some level of cost analysis
 What does an agency have to do? (SEE NOTES)
o How can a new administration reverse the past administrations actions?
 1. If it hasn’t gone into effect, then the new administration may just stop it
 2. Actions not done through notice-and-comment rulemaking (i.e., guidance) may be
undone through new guidance
 3. Congressional Review Act – legislative repeal of regulation (BUT only used once)
 4. Implement a new regulation that counters the old regulation (see State Farm)
 BUT this is time consuming
 See FCC v. Fox – must acknowledge the change but don’t have a larger burden
than what is required to just implement a regulation

VI. Procedural Requirements in Agency Decisionmaking

 A. The Interplay Between Rulemaking and Adjudication
o Agency has complete discretion to decide which avenue to use – trend toward rulemaking
 Why choose rulemaking over adjudication?
 Fairness issues; not case-by-case; not bound by adjudications (adjudications
aren’t like stare decisis in the courts); more input=better results; more visibility;
greater ability to prioritize; binds successors
 Why choose adjudication over rulemaking?
 Addresses actual harms; faster; produces a real record
o NLRB v. Wyman-Gordon: NLRB did an adjudication that said that they were going to articulate a
new rule, prospective only, not applied to the parties before them. Court: NO! Prospective=Rule
(so must go through that process). You can’t have an adjudication that is prospective only and
does not apply to the parties at issue.
 Court here was “pushing on an open door” – between the 1960s and 1970s, agencies
shifted from using adjudications to using rulemakings.
 Rulemaking believed to be faster, more efficient – also accompanied by a move toward
hard look review in DC Cir.

Differences between Adjudications and Rulemakings

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 Rulemaking Adjudication

Procedural Less procedures; like More procedures; like a court

legislation

Application/Biding General applicability; rules stay Applies only to the named parties (small
in effect until formally changed number); based on facts/case before the court.

Agenda Agency control the agenda Agency can only discuss what is before it

Visibility More visible/fair – everyone Specific-tailored outcome for every separate

can submit comments entity; the entities not in the case may not
know about it

Flexibility Less ability to be flexible b/c More flexible b/c you can tailor your result to
rules apply to broadly the specific facts at hand

o If you did a rulemaking previously as an agency, you don’t have to give a statutorily authorized
hearing in an adjudication – agencies are allowed to limit the scope of issues at a hearing by
doing rulemaking
 FPC v. Texaco: agencies can modify pre-existing rulemaking by cabining what the
hearing can be about in the first place
 Heckler v. Campbell: Case about disability benefits in the SS Act. Did a rulemaking as to
what constitutes a disability, and what benefits you get for what disability you have.
Campbell argues that the statutorily required hearing requires him to be able to present
facts and evidence for what his case is about specifically. Court: Agency can do this! Can
use rulemaking to resolve certain classes of issues, even the most important issues.
Agency can have broader rules to classify individuals and can basically render required
hearings meaningless.
 May be a limit to this – Sullivan v. Zerbly (some issues require a hearing)
o Demise of Formal Rulemaking
 Section 554 of the APA – if the statute requires that adjudications be determined “on the
record after a hearing,” 556 and 557 apply
 Difference between formal and informal adjudication:
o If a statute says nothing about a hearing, there is no hearing requirement
o If a statute requires a “hearing on the record” then there is a formal
adjudication required (556/557)
o If the statute says a hearing but it is not clearly a hearing on the record,
then Chevron deference to what the agency decides to do.
 Section 553 of APA – notice and comment – words say that there must be a general
notice of proposed rulemaking with reference to legal authority (§553(b)). (c) says that
you need a concise statement of basis and purpose
 Like 554, provides that 556 and 557 apply if the organic act requires that
rulemaking be “on the record after a hearing”

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  US v. Florida East Coast Railway (1973): only get a formal rulemaking when the statute
requires “on the record . . . after a hearing” – you need the magic words to get it! Here,
only said “after hearing” – not enough to trigger a formal rulemaking. 556/557 not
triggered for rulemaking when it just says “after hearing.” Since the statute says “after
hearing,” you get a prefunctory hearing.
 After Florida East Coast, formal rulemakings are basically gone. They take a
really long time (Peanut Butter example). Outside of the FDA, just 5 formal
rulemakings in the last 35 years.
 What are the agency’s incentives for using formal rulemaking? Not a lot!
Agencies most likely prefer informal processes.
o Informal Adjudication: no procedural requirements, but you’re doing a
series of one-offs.
o Informal Rulemaking is where all action is! Not actually that informal.
 Notice-and-comment rulemaking (553)
 Must also consider hard look review
o Informal Rulemaking
 Agency gets to keep control of the process and the record
 Required to take evidence and comments, BUT at some point you get to stop
 Not required to disclose communications with other government officials
o See Sierra Club v. Costle
 Nova Scotia Food Products: Promulgated rule for smoking fish and botulism poisoning.
No record was made or certified at the time. The agency failed to disclose scientific data
and methodology upon which it relied, resulting in an inadequacy in the comments given.
Vital questions must be answered and comment must be meaningful. Agency has a good
deal of discretion in expressing the basis of the rule, but they do not have the prerogative
of obscurantism that legislatures do.
 Agency must say what it relied on when making the rule at the front end
o 553 requires meaningful comment process and a “concise general
statement” (agency must respond to material questions)
o Case merges 553 and hard look
 Rule also must be the “logical outgrowth” of the proposed rule (not from Nova Scotia)
 The more that we want judicial review of informal rulemaking, the more we care
about the record that goes to the judge. Yet, there is no requirement of a record for
informal rulemaking.
o So, what does the agency have to put in the record?
 Sierra Club v. Costle: Do not have to disclose communications from the White House.
Don’t think that Congress meant to include communications between agency and key
policymakers (like the President and the Executive) from conversations. Encourages
more exchanges. Court: we don’t care if the President was whispering in your ear, all we
care about was whether it was reasonable (not arb/cap) for you to rely on the data you did
in coming to the final rule.
 Proposition: agencies have to disclose hard data (studies, scientific data), but
they don’t need to reveal soft considerations (contacts between the executive and
the agencies, politics, policy).
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o Court cannot impose new procedural requirements on agency informal rulemakings outside of
procedures already established (no discovery or cross-exam required)
 Vermont Yankee: Licensing of nuclear reactor case. Courts will only rarely overrule
agencies based on procedural reasons. Absent constitutional constraints or extremely
compelling circumstances, administrative agencies may create their own rules of
procedure and pursue methods of inquiry to perform their duties. Court says that §553
does not reference or require discovery or cross-examination. D.C. Cir. was afraid of
capture, but there was not a lot of evidence that it was apparent here. The judges
intervened too much here as the public did not even try to gain a report to understand.
Courts should not intervene to try to change the agency’s decisions. There is no reason to
bog down the agency here. Agency cannot add requirements to organic act.
 NPRM = notice of proposed rulemaking
 There is tension with Overton Park, but not an overruling, because the agency just
needs some sort of record for findings, but does not need discovery or cross-
examination in every case.
 After Vermont Yankee, is there any other role for the court in their review of informal
rulemaking?
 Hard Look Review – Overton Park effectively required findings because the
court needs to review them for arb/cap standard.
o But, court has no discretion to determine the extra procedures that an
agency must use.
 What is required of NPRM?
 1. Final rule must be a logical outgrowth of the proposals for NPRM. Long
Island Care
o Most limiting requirement for an agency. The final rule can’t differ
significantly from the NPRM.
o If the agency changes its mind, it must re-start whole rulemaking process
 2. Portland Cement Rule: must include in record the scientific and technical data
you want to rely on.
o Nova Scotia – necessary to make the comment period meaningful –
“concise general statement”
 3. Give interested parties an opportunity to participate in the rulemaking process
 How do you account for new studies? The infinite loop where there’s a new study, need
to put it into the record, comment, new study, put in record, comment, etc.
 Long Island Care v. Coke: court talks about logical outgrowth. You can change
your proposal in light of new comments and new data received without having to
restart the rulemaking process.
o Standard: could a good lawyer have interpreted the final rule as a logical
outgrowth of the initial NPRM?
o Crucial issue: whether parties were put on notice that their interests
were at stake.
 Courts inconsistent as to where to look to find adequacy of notice.
 What do agency actually do today?

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  Agencies know exactly how they’re going to come out by the time they issue the
NPRM. More of a rule adopting process than a rulemaking process.
 As a result – issue ANPRM – Advanced Notice of Proposed Rulemaking (or a
NOI- Notice of Inquiry)
o Broad solicitation of comments on a general subject matter.
o Once you get to NPRM, the comments are almost meaningless.
 Informal Rulemaking: Paper Hearing. Agencies typically win on the logical outgrowth
challenges.
 Comments typically only have a traceable impact when they come from repeat
players/big orgs with power.
 E-Rulemaking does not typically have a big effect on how much the comments effect the
rules.
 But, if you’re a repeat player, you’re more likely to know what an agency is
grappling with at a given time and are more likely to provide the data that the
agency actually wants to help shape the eventual rule.
 B. Exceptions to Notice-and-Comment Requirements/C. Consequences of the
Transformation of Notice-and-Comment Rulemaking
o §553 has multiple exceptions for NPRM (major rules can take about 3.5 years plus judicial
review time so agencies want to invoke an exception)
 Not as important ones: 1. Military order, 2. Agency loans, contracts, etc, 3. Organizing
into different divisions (can change management of the agency)
 Important ones for private conduct:
 (1) “good cause” exception §553(b)(B) – most cited exception: impracticable,
unnecessary, or contrary to the public interest.
o Only other way outside of notice/comment rulemaking that can bind actors
(a substantive rule).
o Agency must show there is some exigency (requires proof)
 If Congress gives the agency a deadline
 Keep people from evading the rule
 National security emergency (pub. int.)
 (2) general policy statements
o Policy: statement of motivating factors and tentative goals
 (3) interpretative rules – not new binding regulation, just lays out what was
implicit before
o Notice-and-comment is required if it is binding (or practically binding)
o “Unnecessary exception” – if nobody cares, then can issue a final rule without notice-and-
comment because no one will sue over it
o Disadvantage: If don’t go through notice-and-comment, then no Chevron deference (Mead)
o § 552(a)(2) provides that “a final order, opinion, statement of policy, interpretation . . . may be
relied on, used, or cited as precedent”
 So an informal adjudication, as well as an interpretative or policy statement, can be
precedent for the agency only if the agency has indexed the decision and made it

42
 available for public inspection or copying, or if the party against whom the agency
intends to use the decision has actual and timely notice of the decision
o American Hospital Association v. Bowen: HHS did not take steps when creating peer review
organizations. Substantive rules grant rights while interpretive rules merely clarify positions
so as not to cabin agency discretion. Determining whether agency action is interpretive or
legislative is case-specific. When a document reminds a party of their duties instead of changing
them, it is an interpretive rule. General policy statements allow agencies to announce tentative
future plans without binding themselves. These must (1) act prospectively only and (2) leave the
agency free to exercise direction. If it affects someone only incidentally, then it is procedural.
 Statements of policy do not have (1) present binding effect or (2) cabin agency discretion.
This is the American Bus test.
 Everyone agrees that if an agency rule creates a binding norm, then it’s
legislative/substantive, not an interpretive rule or policy statement.
 The only question is what, short of a binding norm, constitutes a
legislative/substantive rule. Are there some situations in which you claim to be
doing something that’s merely interpretative/a policy statement, and it’s not
creating a binding legal norm, but in reality it ends up sufficiently cabins the
agency’s discretion? (So it’s not a binding legal norm, but it’s close to it)
o Test: as an agency, are you free to consider the individual facts of a case
and come out contrary to the policy statement? If so, then the rule is not
binding (not sub/leg rule). If agency discretion is cabined, and can’t come
out differently, then it is a legislative rule.
o Appalachian Power v. EPA: Agencies cannot use guidance documents as a substitute for notice-
and-comment rulemaking by making a rule very broad and then using guidance documents to fill
in the gaps. When agencies base their enforcement off of guidance documents, then they are
substantive rules that are for all intents and purposes “binding.”
o CNI v. Young: The FDA created a rule that has present effect and is binding, and cabins agency
discretion, that says that food producers must secure exceptions to action, and have indicated that
action levels establish a binding norm. Because the FDA cabined its discretion, it must pass the
rule through notice-and-comment rulemaking. This is not a statement of policy or an
interpretative rule.
 Starr Dissent – If doc is relied on, then it must go through notice-and-comment
o Shalala: The guidance document did not make a line-in-the-sand that removed discretion from
the agency and enforcement personnel, so not a binding rule.
o United States Telephone Association v. FCC (DC Cir. 1994): if you treat it like a rule, it may be
a rule. In this situation, in 299 of the 300 cases you applied this seeming mere guidance. It looks
like these are binding rules.
 Judge Rogers: Agency is allowed to clarify and explain. But, when the agency wants to
make new rules, they have to go through notice-and-comment.
o American Mining Congress v. U.S. DoL: Deciding whether an interpretive rule has legal effect
should be determined by: (1) whether the absence of the rule would not be adequate for
enforcement action to confer benefits or ensure performance of duties, (2) whether agency has
published the rule in CFR, (3) whether agency explicitly invoked its general legislative authority,

43
 or (4) whether a rule effectively amends a prior legislative rule. Interpretative rules can help
make something crisper and more detailed.
o Agency’s Interpretations of their own rules
 Agencies cannot change the meanings of rules after there is a firm understanding of what
they mean without going through notice-and-comment rulemaking.
 Jerri’s Ceramic Arts: Statement that for the first time brought in new class of businesses
cannot count as an interpretation
 Hoctor: Agency could not have an interpretation of a rule that a fence had to be 8 feet for
dangerous animals because there was no basis for the interpretation and choosing that
amount compared to 9 feet or 7.5 feet.
 Perez v. Mortgage Bankers Association: Court says that APA does not require notice-
and-comment rulemaking to change interpretive rules (may be done, but not required)
o Good Guidance Practice – Office of Management and Budget (put rigor into process)
 Guidance document means agency statement on general applicability and future effect
 Significant guidance document means that it will lead to an annual effect of $100M+,
creates serious inconsistency with an action by another agency, materially alters
budgetary impact of entitlements, grants, etc., or raises novel legal/policy issues.
 Gives procedures for establishing guidance documents and allows for internet access and
public feedback on them (note-and-comment)
o Rules of “Procedure”
 In reality, you know if something is procedural. You don’t really sue over it. Also, if you
care about it, it’s likely not procedural.
 Benjamin says these are things like changing forms.
 Air Transport Association v. Department of Transportation (1991): Whether something is
“procedural” or “substantive” is a functional analysis. When procedural rules encode
substantive judgments or substantially alter rights and interests of parties, there must be
notice and comment. Party has a right to notice and a hearing before being forced to pay a
monetary penalty under DPC and APA.
 Dissent: Majority’s approach assumes the conclusion by describing petitioner’s
interest in the agency’s adjudicatory procedures as if they were a substantive
right. But procedure can always affect substance.
o Interim Final Rules – effective immediately, but still do notice and comment
 Not silver bullet because sometimes you know you will win and sometimes you know
you don’t have a chance. This is only used when you are unsure if you are within a
current rule or not.
 Interim Final Rule = good cause exception + NPRM
 Interim Final Rules have the same legal effect and are judicially reviewed in the same
manner as any other final rules
o Other Rules
 Direct Final Rulemaking – Agency issues the rule directly with no notice-and-comment.
The premise the good cause exception: it’s unnecessary to have comments because no
one cares
 Interim Final Temporary Rule – immediate temporary rule before they could have a
slightly more considered Interim Final Rule to lead to an actual rule
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 o Consequences of NPRM
 Takes a lot longer than it used to complete rules
 Framework of analysis
 1. Florida East Coast – read statutes narrowly so informal rulemaking instead of
formal is applicable to most statutes.
 2. Vermont Yankee – stopped making procedural requirements overbroad but left
in place “hard look” review and “paper hearing.”
 3. Many rules, even unimportant ones, require NPRM.
 4. NPRM now only for “legislative” rules.
 Basically, courts have tried to find the appropriate level where agencies should be
held accountable balanced against efficiency, must carry out the task of
interpreting a single statute, and rules involve many different statutes.
 The consequences of this is that the informal feedback happens before the NPRM
process
 Negotiated Regulation (Reg Neg) – Rarely used
 Negotiated rulemaking supplements notice-and-comment procedures, it doesn’t
replace them
 Promised advantages (not the case though): faster notice-and-comment, less
adversarial, more creative, agency gets feedback immediately, and less litigation
 Issues (Judge Wald):
o Only some interest groups get represented; how do you pick which interest
groups get to sit around the table?
o What kind of participation from the agency is appropriate?
 Judge Posner: “It sounds like an abdication of regulatory authority
to the regulated, the full burgeoning of the interest-group state, and
the final confirmation of the ‘capture’ theory of administrative
regulation
o What procedural rules govern?
 Negotiated rulemaking has not met the promise it initially had (de-ossify, more
fluid process). For instance, regulations after negotiated rulemaking take just as
long, and are slightly more likely to be challenged in court.

V. “Common Law” Requirements

 Consistent Explanation – The Chenery Litigation
o You don’t get to make arguments for the first time before SCOTUS when you never relied on
these arguments before. Important for judges to know what the agency believed at the time.
o SEC v. Chenery Corp. I: as an agency, the only arguments you can bring up to defend an agency
action is what you considered when you were deciding the agency action. No post-hoc
rationalizations – just means that all arguments should be put in record as early as possible.
 Facts: Congress passes statute to simply ownership of public companies. Chenery saw
that under the new regime, preferred stock would run the company, so they bought a lot
of preferred stock. Bought it on the open market. SEC approved a new plan that made
every owner of preferred stock a new owner except for Chenery. SEC said they were

45
 relying on the “broad equitable principles” they have. But no precedent says what the
SEC claims it said. SEC says they’re experts in it, should defer. But that argument was
never made earlier!
 Court: can’t rely on arguments you didn’t make previously. Want to know what the
agency relied on at the time, the considerations that moved them to act.
o Chenery II: as an agency, if you want to make a new law, you can do it through rulemaking or
adjudication.
 Even though, on remand, the SEC still doesn’t make a rule, the SEC still wins here.
 Chenery argues that the agency can’t create a law that only applies to them in the context
of an adjudication – need a rulemaking to do that. Say that in adjudication, you can only
apply existing precedent.
 Court: The agency can apply rulemaking or adjudication, whichever it chooses. Every
case of first impression for the agency has a retroactive effect – that’s how adjudication
works (BUT this has been pushed back on – see below)
o Can rulemaking be retroactive?
 Brown v. Georgetown Univ. Hospital: rule cannot be retroactive unless expressly stated
in the statute
o Since then, Courts have typically pulled back from the retroactive applicability notion. When can
there be retroactive adjudication? (See DC Cir. Retail, Wholesale case)
 Whether the new rule represents an abrupt departure from well established practice or
merely attempts to fill a void in an unsettled area of law
 Whether the particular case is one of first impression
 Extent to which the party against whom the new rule is applied relied on the former rule
 Degree of the burden which a retroactive order imposes on a party
 Statutory interest in applying a new rule despite the reliance on the party on the old
standard
o Arizona Grocery Principle: an agency is bound to adhere to its existing rules when adjudicating
and may not make ad hoc exceptions or departures
 Need a new rulemaking to change old rulemaking
 An agency cannot repeal a legislative rule in the midst of a subsequent adjudication.
o A rule can only be changed by another rule.
o Agencies can change adjudications through another adjudication or through a new
rulemaking, but a rule can only be changed through a new rulemaking.

VI. Due Process Hearing Rights

 Procedural Due Process: life, liberty, or property – not a substantive right to everything – cannot be
deprived without due process of law.
o Due process is never a concern for rulemaking – only adjudication!
 Handout #8: Who should get a pre-deprivation hearing?
o Eminent domain victim wants a pre-seizure hearing: gets a hearing because deprivation of
property
 But, could argue that there’s no reason to do this hearing because the government is
definitely getting the house. All they need to figure out is the value of the house and they

46
 can do this after the government has bulldozed it. The post-deprivation remedy is
sufficient.
o Suspected shoplifter pamphlet; wants pre-distribution hearing: Maybe
 Similar to the alleged alcoholic who had a sign posted about her so couldn’t buy alcohol
(Wisconsin). But, here not actually limiting his ability to shop anywhere or buy anything
 There’s a “grievous loss” for this person. A loss that’s grievous enough satisfies the
standard, even though we can’t put it as life, liberty, or property
o Company’s safety railings are too small and company has to install new ones or shut down;
wants a pre-enforcement hearing
 Post-deprivation remedies might not make you whole – you will be shut down – and the
cost of having a pre-termination hearing is not so great
 This is just money loss. The others were reputational loss. Which is worse/more
important?
o Driver has license suspended unless she posts security to cover damages from an accident; wants
a pre-suspension hearing to show she wasn’t at fault in the accident
 Common law rights versus mere privileges or licenses: government can take away a mere
privilege/license
 Bailey v. Richardson: woman deprived of her job. Only evidence against her was her own, and she was
fired. She wants to know who testified against her. No DP required here b/c her employment was at will,
and her employment was a privilege, not a right. Privileges vs. Rights distinction.
o Joint Anti-Fascist Refugee Comm. v. McGrath: organizations were designated as communist by
the AG. Court found same outcome as Bailey. Frankfurter concurrence: not worried about
life/liberty/property here – worried about grievous loss.
o McAuliffe v. Mayor of City of New Bedford: no property right in job – no right to be a policeman.
o Cafeteria Workers v. McElroy: Court focuses on life/liberty/property and focuses on common
law rights vs. privileges. Dissent: what matters is grievous loss.
 Goldberg v. Kelly: welfare recipient wanted to contest the denial of benefits before the benefits were
terminated. Recipient was given a pre-termination review, and a post-termination hearing
o Recipient wants a pre-termination hearing, not just a review.
o NY doesn’t even argue that welfare is a privilege, not a right. Assumed that welfare is a right.
o Court: determined that welfare wasn’t a “right,” but that there was a statutory entitlement here.
 Now care about grievous loss, not rights/privileges distinction
o Dissent: concerned about the policy backlash – money will go to pre-hearings not to benefits
o Standards of a pre-termination hearing (procedural safeguards): does not have to be judicial or
even quasi-judicial
 But, the hearings must have: notice, present arguments and evidence orally, confront
and cross-examine witnesses, right to have an attorney present, right to an impartial
decision-maker, decision based solely on the evidence adduced at the hearings.
 Before Roth:
o The rights/privileges distinction is dead (Goldberg)
o No clear on-off switch when DP applies
o Not clear whether DP applies – how much process do you get?
 Board of Regents of State Colleges v. Roth: PDP requires liberty or property (foundation case going
forward – rejects Goldberg and grievous loss)
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o Grievousness of loss is relevant to how much procedure/process you get. BUT there’s still the
question of whether you have a DP interest.
o 2 step inquiry:
 1. Does PDP apply?
 2. If yes, how much due process do you get?
o 1. Does PDP apply? Look to liberty or property – separate concepts.
 Liberty: broad constitutional meaning, but it is not limited to just loss – “essential to
orderly pursuit of happiness by free men”
 Core of liberty from constitution itself.
 Must show that other opportunities have been foreclosed – that reputation has
been harmed – then get a pre-dep. hearing – “significant reputational harm”
 Wisconsin v. Constantineau: if a person’s good name, reputation, or honor are at
stake b/c of what the gov’t does to him, notice and an opportunity to be heard are
essential!
o Petitioner said that it wasn’t fair for him to be restricted from buying
alcohol.
o In addition to his reputation being harmed, something tangible was
being taken away here (the right to buy alcohol)
 Paul v. Davis: listed a non-convicted man as a shoplifter – sent his mugshot to
lots of stores. Distinguishes from Constantineau because here, the shoplifter
wasn’t actually prevented from doing anything. Just reputation. So no liberty
interest – need reputation plus something else
 Property: whether state grants you a property right as a matter of positive law.
 State law inquiry: must have a legitimate claim of entitlement.
 Perry v. Sindermann: tenure program may create a de facto property right. (i.e.,
unwritten contract)
 Bishop v. Wood: must be state positive law, not federal law.
o As a result, states are less likely to create property interests in law!
 Cleveland Board of Educ. v. Loudermill: (rejects Arnett v. Kennedy and the “bitter
with the sweet” notion) Facts: Ohio classified civil service employee was
dismissed from employment without due process. Employee sued, saying he had a
property right in employment, and that no process was given before his removal.
o State gives you the property right, but courts define the procedures for
how it can be taken away. States cannot simultaneously define the right
and then prescribe the method with which it can be taken away.
o As long as a state doesn’t give a property right, though, then it can
prescribe whatever procedures it wants.
o Now, states are even more careful about giving property rights because
they have no control as to how they are taken away.
 Prisoner Context
 Meachem v. Fano (1976): does the ordinary Roth analysis. Mass. law did not
confer any property right on the prisoner to remain in the prison to which he was
initially assigned. Therefore, there is no legitimate claim of entitlement. The only
thing he can rely on is the broad definition of liberty. Prisoner does not have any
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 liberty interest in remaining in the same prison (instead of being moved). You do
have some constitutional liberty interests, but they are too ephemeral and
insubstantial here.
o Dissent: should be grievous loss standard! (last serious attempt to use that
standard).
 Vitek v. Jones and Kentucky v. Thompson: Prisoners had a legitimate claim of
entitlement, from state statute, and therefore was required to receive due process.
 Sandin v. Conner (1995): heightened standard for PDP interest with prisoners
o Need a legitimate claim of entitlement (property interest) AND
atypical, significant deprivation/hardship
o 2. If you have a property/liberty interest, how much process is due?
 Mathews v. Eldridge (1976): SS disability benefits were statutory entitlements
representing a property interest. Plaintiff wants a Goldberg-type hearing pre-deprivation
instead of just receiving a post-deprivation review. Lots of post-deprivation review here.
 Issue: whether P should have an evidentiary hearing pre-deprivation – are the
procedures sufficient?
 Rule: 3-Factor Test for How Much Process
o 1. Private Interest that will be affected
 Court looks at the generality of cases included in the type of
interest that is being threatened here. Does not look at the specific
facts. More of an objective test based on the nature of the interest.
o 2. Risk of Erroneous Deprivation and Value of Additional Procedures to
preventing erroneous deprivation
o 3. Government Interest
 Deference given to how government characterizes its interest here.
“Substantial weight must be given to the good-faith judgments of
the individuals charged by Congress with the administration of
social welfare programs that the procedures they have provided
assure fair consideration of the entitlement claims of individuals.”
o (California has 4th factor – dignitary interest of person seeking hearing).
 Court gives little guidance about how to perform the balancing test.
o Breyer Formulation (similar to CBA): (value of additional procedures
X interest of claimant) > increased burden on the gov’t by imposing
more procedure
 Cleveland Bd. of Educ. v. Loudermill (1985): 3rd factor (gov’t interest) key here.
 Agency said it would cost a lot of money to add more procedure, but court
discounts gov’ts assertions about cost of extra procedure. Court believes that
private interest is significant here, and risk of erroneous termination is substantial.
 The more seriously that the court takes the gov’ts calculation of its interest, the
more likely the court is to defer to the gov’t.
 Walters v. Nat’l Assoc. Of Radiation Survivors (1985): Plaintiffs want the ability to have
an attorney represent them at a hearing. Court finds that a non-adversarial system here
may work just as well as an adversary system.

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  Argument here that the gov’ts interest is ZERO because the petitioners are asking
to be able to pay for their own attorneys (no gov’t expense)
 However, court construes gov’t interest broadly to include public’s interest
broadly in having an efficient system for handling disputes and indirect cost to
gov’t of having to engage in adversarial hearings instead of just non-adversarial
ones, as was currently the case.
 Ingram v. Wright: rare case where you have a liberty interest, but no process is due!
Kids want a hearing before paddling inflicted by teachers.
 Is there an 8th Amendment violation? No
 What pre-paddling procedures are necessary? None
o Gov’t interest is so high and cost of implementation would effectively end
the punishment method
o Risk of erroneous deprivation (paddling without cause) is small – usually
when kids get paddled, they deserve it.
o Able to get compensation in a post-deprivation proceeding to sufficiently
rectify interests.
 Since the state cannot determine the scope of the procedures required to deprive someone
of a right, it may be best for them to just clearly say that they are not creating a property
right – then no DP procedures required!
 The clearer the rules from the agency, the less of a reason to have a hearing and process
before deprivation (incentive to create rule grids)

VIII. The Availability and Timing of Judicial Review

 Reviewability: How do you get into court to challenge an agency action?
o Sovereignty issues
 Cannot sue a State even if authorized by Congress
 Cannot sue federal gov’t unless federal gov’t has waived immunity AND Bivens action
 Old Rule: Sovereign immunity used to be a huge roadblock to suing a state in federal
court. Way around sovereign immunity is to sue the individual charged with
implementing the gov’t action.
 Today, with qualified immunity individuals can only be held liable if:
 Clearly established constitutional law of which a reasonable person would have
been aware.
 Bivens actions- challenge to federal gov’t officials is OK under the Constitution
(implied cause of action).
o When suing an agency – “general statutory review” under 22 USC § 1331 (federal question
jurisdiction)
 APA §702: waives sovereign immunity. Gives a “right of review,” and can sue an
official in official capacity for injunctive relief (no money damages!)
 APA §703 (provides venue): bring any claim under §704 in any court of competent
jurisdiction – normally district court under 1331
 APA §704: provides a cause of action if there is no more specific cause of action

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  In challenging an agency action, sovereign immunity, cause of action, and jurisdiction are
not huge hurdles. The issues normally will be preclusion, standing, etc.
 APA is only a gap filler! Specific organic statute trumps the general APA.
o Preclusion: APA § 701(a)(1)
 American School of Magnetic Healing v. McAnnulty: Postmaster took action that was
being challenged. Nothing in the statute that provides for a cause of action or review.
Despite the lack of language, court still says that there is a presumption of reviewability
 Switchmen’s Union v. Nat’l Mediation Board: Pure question of law – does the statute
allow the Board to act to split itself? Because of the lack of language about review and
causes of action, they are precluded from bringing suit to challenge the action. Congress
intended to give discretion to the Board here – not reviewable.
 Opposite conclusion from McAnnulty. Looked at whole statutory scheme.
 Explicit Preclusion
 Abbott Labs v. Gardner: basic presumption of judicial reviewability of agency
action! Only upon a showing of clear and convincing evidence of a contrary
legislative intent should courts restrict access to judicial review.
o Courts invoke this presumption a lot.
 Tracy v. Gleason (overruled by Congress): had said that since the statute used the
words “claim for benefits,” it did not apply to administrative action terminating
benefits correctly paid to plaintiff. Therefore, reviewable! Congress disagreed,
passed a statute making it clear.
 Johnson v. Robison: Alternative civilian service member applied for veterans
benefits and was turned down because the statute provided benefits only for
veterans of military service. VA decisions are, in fact, final and unreviewable.
Constitutional claim here, not a claim under the Veterans Benefits Act. Nothing
in the Act suggested any congressional intent to preclude judicial cognizance
of constitutional challenges to veterans’ benefits legislation. No clear and
convincing evidence in the statute here that would bar a challenge either.
o Today: still unclear whether Congress can explicitly preclude any
constitutional claims
 Traynor v. Turnage: veterans who argued they had been denied educational
benefits because they were alcoholics and were unable to use their benefits before
they expired. Argued that denials violated a different statute, the Rehabilitation
Act of 1973, which says that no federal program can discriminate against a
handicapped person. Court: “no review statute” did not bar review here because it
only insulated from review decisions of law and fact under any law administered
by the Veterans Administration – not here! Here, about whether law sought to be
administered is valid in light of a subsequent statute whose enforcement is not
exclusive domain of Veterans administration.
 Bowen v. Michigan Academy: no express preclusion here even though there was
strong language – the Abbott Labs presumption does a lot of work.
 Implicit Preclusion – NOT COMMON.
 Block v. CNI (1984): low-income consumers concerned that price of dry milk is
too high, want to sue. Program was designed to benefit milk producers, and gave
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 the handlers explicit right to sue here. Court rules that consumers are precluded
from suing because there is a statutory purpose to only allow handlers to sue, and
if consumers could sue, handlers could just sue as consumers, which would make
the whole statutory review scheme meaningless. Nothing explicit in the statute
says that consumers can’t sue, but the statutory scheme leaves no room for
consumers. Handlers represent consumers’ interests.
o Outlier case – in most cases, the Abbott Labs presumption leads to
reviewability.
 Bowen v. Michigan Academy (1986): Express provisions for judicial review of
Medicare Part A, no provisions for judicial review of Medicare Part B. Similar to
Block, shouldn’t that mean that suits under Part B are implicitly precluded? Court
uses Abbott Labs presumption to say that there is no judicial review of particular
benefit determinations (a single person’s benefits), but that there is judicial review
of how the benefit determinations are made.
 Harmonize Block and Bowen?
o In Block, some group (the Handlers) could sue. In Bowen, no group could
sue about Part B. Bowen is more typical given how Abbott Labs
Presumption is used. Block looks at whole statutory structure, and Bowen
highlights that any preclusion must be really clear in the statute.
 Sackett v. EPA: (supplement). EPA argues that the statutory scheme doesn’t leave
room for Sackett’s challenge. Court: no! Statutory scheme is not undermined by
allowing Sackett’s suit. Per Abbott Labs presumption, Sackett suit is allowed.
Statute says nothing about reviewability so Abbott Labs presumption applies.
(contrast to Block, which had a stronger inference of unreviewability).
o Agency Action Committed to Agency Discretion by Law: §701(a)(2) – “no law to apply”
 Issue with “discretion?”
 § 706(2)(a) refers to “abuse of discretion.” Abuses of discretion are always
challengeable, unless there has been preclusion under 701(a)(1). But then that
would render 701(a)(2) meaningless.
 § 701(a)(2) – actions committed to agency discretion, then in theory they aren’t
reviewable for abuse of discretion. So none are reviewable? But then that would
render 706(2)(a) meaningless.
 Heckler v. Chaney: middle ground for “discretion”
 Some situations where an agency has done something that we think is unlawful or
abuse of discretion that are not challengeable
 Main Holding: If Congress has given the agency complete discretion so there is
“no law to apply” (Overton Park) and thus no judicially manageable standards,
then it is unreviewable by the courts
o Marshall (Concurrence): why can’t we just say agency discretion is
reviewable, but very broad?
 Norton v. Southern Utah Wilderness Alliance: There’s judicial review of agency inaction
when the agency has failed to take a discrete action required by law (non-discretionary
duty). Reviewable when Congress requires an agency to do something and doesn’t; even

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 stronger case if Congress puts a time limit on when it was supposed to do something, and
didn’t do it by that time.
 APA 706(1): courts can review agency’s failure to act if there is a specific
statutory requirement
 A failure to act is not equivalent to the denial of a petition. The denial of a petition is a
discrete action that can be reviewed; not acting at all on the petition may not be
reviewable (committed to agency discretion).
 Mass v. EPA: only trigger for judicial review was that the EPA took an action in
denying a petition to regulate greenhouse gasses. Majority says that denying the
petition takes it out of Heckler v. Chaney land (no dissent).
 §553(e) of APA: says you get to have a petition for rulemaking, and prompt
notice shall be given of the denial through a written application.
o How long can agency not rule on it before it becomes an abdication?
Probably a very long time. Agency can just say that they need to do more
fact-finding. Will probably get deference, won’t be reviewable.
 If an agency has an explicit duty to do something, then it is not committed to
agency discretion by law. There is law to apply when Congress told you to do
something.
 Webster v. Doe: CIA employee terminated for because he was homosexual. Statute said
termination decision was in the discretion of the agency – “. . . in his discretion, terminate
the employment of any officer or employee of the Agency whenever he shall deem such
termination necessary or advisable in the interests of the US” . Plaintiff said it was an
“abuse of discretion” for his termination to be based on his sexual identity (706(2)(a)).
Constitutional claims brought that termination violated liberty/property/privacy rights.
 Abuse of discretion claim is precluded here because there is no law to apply.
o Scalia (Concurrence/Dissent): there’s always some law to apply! There are
always some restrictions (can’t hire cousin, can’t act in private interest), so
there is some reviewability possible. Real issue is that there would be
disruptive practical consequences here.
 Constitutional claims are not precluded because precluding Constitutional claims
requires an explicit statement from Congress.
o Today, we don’t know whether Congress can prevent you from
bringing Constitutional claims.
o O’Connor (Concurrence): In some contexts, may be serious constitutional
question as to whether congress can do that – but not here, because it has
to do with national security.
o Scalia: no constitutional guarantee for review (shouldn’t be different from
statutory preclusion)
 Is there a non-delegation problem when there is no law to apply since the agency
decisions are not reviewable?
 No such claim has ever been brought, likely unsuccessful (narrower than allowing
any action whatsoever)
 During wartime, the same Matthews test for what process is due applies – habeas petition
is reviewable (see Hamdi v. Rumsfeld)
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 Preclusion Summary:
o Preclusion under § 701(a)(1) (“statutes preclude judicial review”):
 Express
 Does statute expressly preclude review? With regard to constitutional claims,
does it clearly intend to preclude them?
 Implicit
 Absent explicitly preclusive statutory language, is judicial review for these
plaintiffs plainly inconsistent with the statutory structure, or does that structure
otherwise indicate a Congressional intent not to allow these plaintiffs to sue?
o Preclusion under § 701(a)(2) (“committed to agency discretion by law”)
 If there is no explicit or implicit preclusion of review, should review nonetheless be
denied on the ground there is no law, in the relevant statute or elsewhere, by which to
assess plaintiffs’ particular claim?
o Summary – What stops you from getting into Court?
 Express preclusion: § 701(a)(1)
 Precludes statutory claims
 Can statutes preclude constitutional claims? Court hasn’t answered that question,
because it has required a clear intent and no case has come to the Court with clear
language precluding constitutional claims
 Implicit preclusion
 Block: There is a regime that is set up and if we allowed you to sue, then that
would destroy the regime. Congress set up the regime that way for a reason.
 § 701(a)(2) = something is committed to agency discretion by law
 No law to apply
 For example, Webster v. Doe (1988)
o Statute says: Director may “in his discretion terminate the employment of
any officer or employee of the Agency whenever he shall deem such
termination necessary or advisable in the interests of the United States”
o On what basis could we say that the Director violated that?
 Standing
o Standing to Sue
 Possibilities for standing
 1. Congress has sole power to determine standing
 2. Only plaintiffs with concrete and personal stakes can litigate an action
 3. Limits on standing help democracy because fora other than the courts will be
used more.
 4. People with concrete interest should be able to protect them
 APA §702 – standing belongs to any person who suffers a legal wrong or is adversely
affected or aggrieved by agency action within the meaning of the relevant statute.
 Standing is basically a threshold issue and turns into somewhat of a mini-trial.
 System we have – 2 types of standing
 Prudential/statutory standing – Zone of Interests test – did Congress confer a
cause of action on the party? – pretty easy to satisfy

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  Constitutional standing
 Once you get standing, you can attack the statute anyway that you want to.
 Frothingham v. Mellon: must be a nexus between taxpayer status and constitutional
provision invoked to invalidate the challenged statute
 Flast v. Cohen: Very limited exception for public actions. About First Amendment
establishment violation. There must be a “logical link” between taxpayer status and
statute challenged (only if exercised as part of Congress’s taxing power) and there must
be a nexus between taxpayer status and the constitutional provision invoked to invalidate
the statute.
 SCOTUS has not extended Flast beyond the establishment clause.
o Prudential/Statutory Standing – The Zone of Interests
 ZOI Test:
 Don’t ask whether Congress specifically intended to benefit the plaintiff when
enacting the statutory provision at issue
 First: Discern the interests “arguably . . . to be protected” by the statutory
provision at issue
 Second: Whether the plaintiff’s interests affected by the agency action in question
are among them
 Usually, if you have injury in fact, you are within ZOI. You have to be harmed so that
you are the secondary effect of the statute so that it you are tangentially related to it and
are out of ZOI.
 Ex: you build all of your diners next to credit unions and then a statute bans credit
unions, so all credit unions are gone. This destroys your business model so you
are injured, but you are not in the ZOI
 Scalia’s example: imagine if a statute gets rid of lots of formal adjudications and
makes them informal. That hurts transcription companies and they are harmed.
But, they are not in the ZOI because no one was thinking about the interests of the
transcribers when they wrote that statute
 Lexmark: Court finds standing for a competitor to a company that it accused made false
advertising statements because the company was within the “zone of interests,” which
requires using traditional tools of statutory interpretation. Court’s only job is to see if
there is a cause of action that Congress gave.
 Association of Data Processing Service Organization (ADPSO) v. Camp: Differs
between Art. III standing for taxpayer’s (Flast) and competitor’s suits even though they
have the same starting point. Injury in fact is a separate question from standing. ADPSO
suffered an injury in fact – they were injured. Having an injury doesn’t satisfy the
other standing requirement (ZOI = did Congress give you a cause of action?).
 Interest sought to be protected must be the sort of interest the statute was
designed to protect
 Clarke v. Securities Industry Association (1987): “Relevant statute” is interpreted
broadly, but there is potential for disruption inherent in allowing every party adversely
affected by agency action to seek judicial review. The presumption is that there can be
judicial review unless the statutory scheme provides otherwise. Court looks to the
language of the statute (not intent) to decide whether your interest is included or not. ZOI
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 test denies a right of review if the plaintiff’s interests are so marginally related to or
inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed
that Congress intended to permit the suit (Congress just had to think of you, even if just
in the background)
 Air Courier Conference v. American Postal Workers Union (1991): Outside ZOI if not
within the realm of the statute. Here, Congress’s statute did not include anything about
postal workers, so they had no right to sue. This is a rare case though; first to lose on
ZOI grounds.
 National Credit Union Administration v. First National Bank (1998): Banks had been
trying to expand their activities and were getting pushback from various competitors. In
response, they decided to push back on credit unions. Court said that banks had standing
to raise challenges under the Federal Credit Union Act, even though it only applied to
credit unions and not banks. The question at issue here was standing. ZOI requires very
little. Competitors cases enlighten this opinion. Court says that banks were in the
background of the legislated action even though it only talks about credit unions. ZOI
does not mean that the statute has to have specifically intended to cover the conduct.
Must be “arguably within” the ZOI.
 Dissent (O’Connor): the bank is a competitor and nothing more – no standing.
The anti-competition limitation was designed only for credit unions.
 If you are a competitor after this that is new to the industry (e.g. uber with taxis),
then you should argue that a taxi-competition regulation statute includes historic
competitors.
 Pottawatomi Indians case: tribe can sue even though their land is not at issue
(statute never mentions them but intended to foster Indian econ development)
 Block v. Community Nutrition Institute: 2 hurdles – 1) preclusion and 2) standing
o Constitutional Standing – “case or controversy”
 Constitutional standing is bigger than ZOI – used to prevent a flood of litigation.
 Need (1) injury in fact, (2) causation (nexus), and (3) redressability (but second two
prongs often get put together) (from Lujan)
 1) Injury in Fact: The Plaintiff must have suffered an “injury in fact” – an
invasion of a legally protected interest which is:
o A) Concrete and particularized; and
o B) “Actual or imminent, not ‘conjectural’ or ‘hypothetical.’”
 2) Traceability: There must be a causal connection between the injury and the
conduct complained of – the injury has to be “fairly . . . trace[able] to the
challenged action of the defendant, and not . . . th[e] result [of] the independent
action of some third party not before the court” (Simon v. Eastern KY Welfare
Rights Org.)
 3) Redressability: It must be “likely,” as opposed to merely “speculative,” that
the injury will be “redressed by a favorable decision”
 Most likely to lose on injury in fact and redressability (Wyoming coal mining example)
 Qui tam actions – when public has been harmed, giving the plaintiff some amount for
winning in a public action. Plaintiff can be seen as the assignee of the gov’t’s claim and
was authorized in England and in the first Congress
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 Valley Forge case: cannot argue that if I don’t have standing, then no one has standing
 Ideological harms and general stigmatic injuries do not count as harms
 Increased risks of actual injury are a type of harm, but they are not the sort of harm
compensable at common law
 Standing is a one-way street for challenge and only open to industry (keeps out
consumers)
 Injury in Fact
 Sierra Club v. Morton (1972): Party seeking redress must have an injury. “The
injury in fact test required more than an injury to a cognizable interest. It requires
that the party seeking review be himself among the injured.” Mere interest in
the cause does not count as standing even if the organization has a long-
established interest in the cause. Sierra Club wants to speak on behalf of the
environment in an ideological sense. They don’t allege that any of their members
will be hiking and have their enjoyment reduced.
o Douglas Dissent: Would allow suits for natural objects threatened by
development.
o Blackmun Dissent: Should develop “an imaginative expansion of
traditional concepts of standing” to allow organizations like the Sierra
Club to litigate environmental issues.
o Sierra Club wanted a big win here even though their members could have
been some of the ones injured. You just need to find a π who was affected.
 SCRAP case: Student environmental group could sue because they alleged that the
action would affect their interests. Anyone who is injured may sue even if there
are many people who were injured
o But, the causal connection here is really weak. Raising railroad rates
without an Environmental Impact Assessment is far-fetched. (Rare case)
o Organizations can often sue if the members could sue by themselves.
 Lujan v. Defenders of Wildlife: Plaintiffs wanted to be able to visit an endangered
species that lived in a foreign country. Court said this was not an injury in fact.
The injury needs to actual or imminent, not conjectural or hypothetical.
There were no set plans to visit these animals. “‘Some day’ intentions without any
description do not support a finding of the actual or imminent injury that our cases
require.” Citizen-suit provisions are not enough because this is a constitutional
rather than Congressional issue. Congress cannot convert the undifferentiated
public interest into an individual right to transfer the President’s job to the courts.
Individual rights do not mean public rights that have been legislatively
pronounced to belong to each individual who forms part of the public.
o Justice Kennedy (concurrence): we shouldn’t limit injury in fact so much.
Congress may have intended to include them.
o Blackmun Dissent: we should broaden doctrine
 Laidlaw case: don’t need to show actual harm, just need to show you were
dissuaded by fear of such a harm (must be reasonable concerns)
o Dissent (Scalia): must show objective harm to environment AND
subjective harm to plaintiffs
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  Court: this raises the standing hurdle higher than the hurdle to win
on the merits
 Clapper: Lack standing because no sufficient showing that communications
would in fact be monitored. Respondent’s theory of standing relied on a highly
attenuated chain of possibilities without having any proof of them (probably
different post-Snowden). Court thought the claim was too speculative.
o Dissent thought there was a high possibility that gov’t would use the
statute the way the πs feared.
o This is a fact dependent analysis. The more you can flesh out about
specific circumstances, the stronger your claim will be.
o In Clapper, there’s no certainty of harm and you can’t defend yourself
against something that isn’t really likely to happen
 Coalition for Responsible Regulation v. EPA: rare case where the regulated entity
does not have standing
o The regulation made the entity’s life better – entity wanted this thrown out
assuming Congress would then pass even more favorable legislation
 This is too speculative
o In some situations, no one can sue – those who want more regulation can’t
get the court to force it most of the time.
 Nexus, Causation, Redressability
 Causal connection: injury fairly traceable to conduct complained of
 If the causal chain is not fairly tight, then the is no guarantee that a favorable
decision will actually fix your issues
 Redressability: judicial action will have a substantial impact
 Simon v. Eastern Kentucky Welfare (1976): This case produced the causation and
redressability requirements for standing. When is denial of opportunity enough to
get standing? Here, it is too attenuated and speculative. Any economist would say:
the revenue ruling will change the incentives for hospitals and will lead to
hospitals denying care to indigent individuals. But the majority was unpersuaded
because maybe the denials of service to plaintiffs were not due to the revenue
ruling. The only defendants here were against the Department of the Treasury;
should have sued the hospital. It is speculative whether the denial of service can
be traced to the Treasury’s encouragement. There is no injury that can be traced to
Treasury.
o Concurrences – cannot litigate for tax liability of others.
o If you are the object of a regulation, you can satisfy redressability – hard
to show causal relationship between regulation and third party.
 Massachusetts v. EPA: Third parties who are not before the Court cause the harm
here. The agency involved has failed to regulate and there is a possible injury
(loss of coastline) that can happen because of failure to review. Court asks
whether there is an adequate nexus/causal connection between the agency’s
refusal to regulate automobile emissions and the loss of coastline. This is
causation because GHG causes global warming. For redressability, it is enough
that it is a tiny help in the margin
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 o Roberts Dissent – most GHGs are not affected by this regulation, so there
is no redressability. There is also no injury in fact because there is no
specific injury addressed, only a hypothetical one.
 Steel Company v. Citizens for a Better Environment (1998): There is a civil
penalty, but it doesn’t redress the plaintiff’s injury because the plaintiff doesn’t
get the money from damages – the money goes to the US Treasury. Unlike
Laidlaw, here, there is no allegation of continuing or ongoing injury, so there is
nothing to deter moving forward.
o Stevens Concurrence – Injury here was indirect and there was not a
payment to the citizen. Deterrence should be able to redress an injury in
some circumstances. Separation of powers issue should not turn on
whether a π receives monetary compensation.
o So, no redressability because you as a citizen have two reasonable goals:
 1) Plaintiff gets monetary compensation – Plaintiff gets none here
 2) Deter future misconduct – there’s none here
 Lujan: Majority says the order will not bind the project and stop the action. The
only defendant in this case is the Secretary of Interior and even if we issue an
order to prevent the Secretary from these actions, this won’t reduce the harms
you’re worried about. The funding agencies make the decisions and aren’t bound
by the Secretary.
 Laidlaw: Injury to the π – don’t have to show actual pollution. Must show that
you were reasonably dissuaded. The relevant showing is injury to the π, not
injury to the environment. The asserted defect is not injury but redressability.
Civil penalties offer no redress to private citizens unless they also offer
deterrence by being credible to be carried out. “Vindicating the public interest . .
. is the function of Congress and the Chief Executive.” “To permit Congress to
convert the undifferentiated public interest in executive officers’ compliance with
the law into an ‘individual right’ vindicable in the courts is to permit Congress to
transfer from the President to the courts the Chief Executive’s most important
constitutional duty, [the take care power]”
o Dissent (Scalia) – you need actual harm. A generalized grievance is not
enough for standing.
o Easier to show standing here because they live near the river (but how
much of a role should this play?). You should find people who actually
went to the place.
 Wyoming Ex Rel. Sullivan v. Lujan (1992): There is no standing because even if
the coal rights for Rockefeller were pulled back, there is no guarantee that it
would be leased to Wyoming instead
o If Congress wants broad standing:
 Give challengers small stake (have part of the fines go to the plaintiffs – Steel Co.)
 Pros of citizen suit provisions
o DOJ cannot get to everything (enforcement priorities)
o More consistent
o More suits – makes agencies more accountable
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  Cons of citizen suit provisions (Scalia)
o Article II – executive branch has enforcement authority, not private parties
 Ripeness, Finality, and Exhaustion – about when you cannot sue
o APA only has a finality requirement, not exhaustion or ripeness requirements
o Ripeness – competence of courts to resolve the dispute
 Abbot Labs (1967) – Congress required prescription drug manufacturers to print labels
largely. Requirement meant to encourage price competition in marketing chemical
identical generic drugs by alerting physicians, patients, and pharmacists to the identity
and discouraging manufacturers from advertising to promote a drug brand name.
 For pre-enforcement review question, Court holds that there is a presumption that
there is judicial review unless clear and convincing language of contrary
legislative intent.
 For the ripeness question, the court looks to two factors:
o (1) fitness to hear the case
 Here, the case is fit to hear because it is a purely legal question and
there is a presumption in favor of review.
o (2) hardship on the parties
 Here, there was going to be a great impact on the parties because
there could be huge criminal and civil sanctions in a big industry.
 Gardner v. Toilet Goods (1967) – No ripeness here – showed no evidence of hardship
 Notes
 Post-Overton Park, you build in the record at the rulemaking stage – pre-
enforcement cases are heard all the time now.
 This is all under APA – some statutes require pre-enforcement review anyway
(like EPA statutes)
 Statutes can get rid of ripeness concerns
o Guidance documents and policy statements do not apply here because
there is no legislative rule
 Ripeness has constitutional core, but we have never heard what exactly that is.
o Exhaustion – emphasizes the position of the party seeking review
 Myers v. Bethlehem – pre-APA – requires exhaustion even though the statute does not
 Now, exhaustion only matters if the organic act requires it
 SoCal – need to go to the agency before coming to court – agencies can respond to your
good arguments there and it is better for judicial efficiency
 APA itself does not require exhaustion – § 704: actions reviewable are final
agency actions. There is no exhaustion requirement.
o Organic Act can require exhaustion
 Ways for exhaustion question to arise – (1) review was never submitted to agency, (2)
claim that agency rejected, (3) when agency proceedings are over and where he or she did
not raise the claim (waiver problem here)
 Why require exhaustion? Exhaustion requires that you go to the agency and the agency
might be willing to give you want you want. You need to go to the agency and see if
that’s possible before you come to a court. This:
 Protects agency’s authority
 Agency’s should be able to correct their own mistakes without the courts involved

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  Don’t have the shifted power to the courts
 Much better for judicial efficiency
 Avoids piecemeal litigation
 Gives courts more true review
o Finality – has the agency reached a definitive disposition? – §704 of APA
 SoCal – canonized finality case – OPEC collusion case – FTC issued complaint that there
was “reason to believe” that company acted unlawfully. Complaint looks bad, but there is
no legal or practical effect, so it is not final.
 Even if the company thinks that the agency does not have reason to believe
anything, there is nothing you can do until the agency is finished.
o May mean that SoCal may never get to challenge the fishing expedition in
court
 Bennett v. Spear – 2-point test:
 1) Consummation of agency’s decision-making process
 2) Action determining rights or form which legal consequences will follow
 Sackett – not entitled to further review, so no finality. Nobody thought agency hadn’t
reached a resting point, but even though the next steps were costly, there is no final
agency action.
 Cannot sue at NPRM stage.
 Franklin v. Mass. – Secretary sent a recommendation to the President
 This is not final (just a recommendation)
 Also cannot sue the President (not an agency under APA)
o So no one gets to challenge the census decision.
 BUT, just because agency knows some of its actions are not final and so not reviewable,
it doesn’t just do whatever it wants
 Finality raises the issue of judicial supremacy
 Someone has to have the final say (and it doesn’t always have to be courts)

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