JD Administrative Law Module 1

Hello and welcome to Administrative Law. My name is Carlton Waterhouse and I'm the instructor/developer of this course. Administrative Law is a course which governs how federal agencies are required to function in the American society. In particular, administrative law looks at the legal rules and requirements that government agencies are obligated to follow. This is developed through a legal mechanism rooted in the Constitution as well as in what's known as the Administrative Procedure Act which will be discussed later in this introductory lecture. Administrative Law can be a subject that some students find difficult to understand. I know when I was a student, personally, I have a great deal of trouble trying to grasp exactly what administrative law was all about. Part of the reason for that was I had a difficult time relating administrative law to my personal experiences. For that reason I have designed this course and will provide instruction in this course, in a way that breaks down concepts into ideas that students, I believe, can understand. In that regard, my hope is that in taking this course, you will find that you have a much better understanding of the relationship between the federal agencies and actually state agencies as well and the legal constraints that limit what they are allowed to do within the broader society To accomplish that, we will both go over materials in the reading and also materials that I will highlight for you through PowerPoint presentations throughout the different modules that make up this course. We also will have to do assignments that draw on problems that are given in the textbook and many of the materials that you find that you read in the textbook will also be set up materials or background materials to enable you to effectively answer the problems that are assigned for that particular model. The reason we use that approach is to help you see how administrative law applies and how it relates from the very beginning of the course so that you're not just struggling trying to carry in your mind these big ideas but can see how they play out through real world questions and examples. The same kinds of questions and examples that any lawyer would have who is engaged in administrative law practice.

So let's get right to it, administrative law grows out of legislation that is drafted by United States Congress and that is passed into law. That legislation will create agencies and authorized agencies and direct agencies to carry out particular responsibilities and their missions. That enabled legislation also becomes the bedrock for what federal agencies are required to do in terms of the procedures that they must follow in fulfilling their mission. So the first source of administrative law to any particular federal agency is going to be its enabling legislation. It not only lays out the substantive requirements of what the agency does be it, Department of Transportation and addressing issues of the nation’s highways and roadways or United States Army Corps of Engineers in handling the preservation of the nation's waters, but it will also include the procedures that these and other federal agencies have to follow in carrying out their responsibilities so enabling legislation lays the groundwork for all federal agencies procedural requirements. Some examples for that could be how the Social Security Administration which is responsible for administering Social Security to citizens but also is itself constrained by the Social Security act of 1935 and subsequent legislation that guides the social security administration in carrying out their responsibilities. In the same way, most of us know of the Internal Revenue Service, which is actually a part of the Department of the Treasury and which was created through the Internal Revenue Code. Internal Revenue Code represents the enabling legislation for the activities that the Internal Revenue Service carries out.

The other legal source of procedural obligations for any administrative agency is going to be found in the Administrative Procedure Act. The Administrative Procedure Act which is included in your textbook as an

appendix and I encourage you to become familiar with it, establishes the next source of procedural obligations that agencies must follow. It provides procedures for all federal agencies to follow in the way they carry out their responsibilities and it lays out both how persons are able to relate and interact with federal agencies and also the way federal agencies are guided in the performance of their obligations and the way that they relate with persons in carrying those obligations out.

So what are some examples of the kinds of procedures that the Administrative Procedure Act lays out for federal agencies? Well there are three here that are really going to be the beginning and end of this course, that is the agency's going about to develop and make the rules that will substantively guide its performance of its mission. Next it will be to carrying out of agency enforcement obligations, so I mention Internal Revenue Service earlier you can think about how the Internal Revenue Service enforces the Internal Revenue Code by bringing actions against taxpayers who default on their tax obligations. A very famous one is how the Internal Revenue Service was responsible for convicting a very famous mobster and he would not been caught for his illegal activities but he had been caught for failing to report income that he had generated, although it was ultimately generated unlawfully, it was income that was generated and unreported and that enabled the Internal Revenue Service to bring a case effectively actively against him and to bring about his conviction and incarceration. That's the adjudication function, it is not typical that federal agencies are going to be responsible for bringing people into jail, although there are those federal agencies that have that responsibility, most do not. And then we also learn in course about how the federal courts actually will review the decisions that agencies make and that's considered judicial review. So the procedure, the Administrative Procedure Act, basically the layout rulemaking, adjudication and judicial review, as the primary aspects of administrative law, in turn, the way this course will be carried out for your purposes and learning, will be that you will learn about rule making procedures, you learn about the procedures that govern agency adjudications, and you will learn about the procedures that govern how courts review the decisions that agencies make. Those represent the three primary components of the course and so if you're ever trying to figure out where we are in this course, refer back to whether you're learning about rule making, or whether you are learning about the adjudication process or whether you are learning about judicial review and that will always help you to locate yourself on the course map, so to speak, because the map will run from rule making through judicial review and then that represents the totality for the most part of administrative law.

Now one of the things that is important to understand is that the third source of administrative law is United States Constitution. so the United States Constitution, like the administrative procedure act and like the enabling legislation of already spoken about, provides a set of legal constraints on any agency activity. So agencies may not behave in a way that is considered unconstitutional and so when you think of it that way, you can understand from the administrative procedures standpoint, if you want to know how agencies must behave, all you have to do is look at three sources of law; the Constitution of United States, the administrative procedure act itself, which is contained in the appendix of the textbook, as well as the enabling legislation that each federal agency is going to have that particular to it and that enabling legislation will represent the most narrow and specific set of procedures for an administrative agency and the constitution, in contrast, provides the most broad set of restrictions or the most broad set of legal requirements that any agency has to follow. Ultimately, what does the Constitution do, the Constitution presents the requirements that agencies have to follow in order to prevent government actors from violating the rights and liberties of persons.

So we already said it but I want to reiterate it because repetition is the key to learning, we have three sources of administrative law that agencies must conform to and those are the ones who articulated from the most broad, the Constitution to the most narrow, the enabling legislation which authorizes the particular agencies to act.

JD Administrative Law Module 2.1

Hello Class! This is our third installment of rulemaking and this will complete our first lunge, for lack of a better word, into the rule making and you'll see that our previous lectures which have looked specifically at the idea of the petition for rule making and exception to rule making, all go to something other than what rulemaking actually requires. Rather than starting off with an overview rule-making, we start off diving right into the exceptions to rulemaking to show when rulemaking is not required as well as discussions of the petitions for rulemaking explaining what causes rulemaking to be required and how courts deal with the agency fails to respond to a request for rule making. Or when an agency outright denies a request for rulemaking. So you might've been wondering through those previous lectures, I'm learning about everything but rulemaking, so now we actually take time to talk a little bit about rule making but really in the most brief, abbreviated fashion. I'm really just going to give you a very quick overview and we will be done with this, and then in our next module that’s where we will really get into the nuts and bolts of rulemaking. So let me just give you this quick overview and this overview will help us set up our lecture that will come in module three.

Let's get going, so one, in rule making it's important that you understand that there are different kinds of rulemaking required by the APA. The first rule-making required by the APA is known as formal rulemaking. Now formal rulemaking is exceedingly rare, very rarely happens, but it does happen on occasions, so when formal rulemaking is under ball, it happens pursuant to a statutory dictate that says, enabling legislation that an agency shall hold on the record rule making. If there is no dictate from the legislation, the enabling legislation for agency, then there will be no formal rulemaking process. Again, formal rulemaking only happens when enabling legislation directs an agency to have “on the record rulemaking”. Note, it will not say formal rulemaking, it normally will not say rulemaking pursuant to the APA sections XYZ, it will merely say “on the record rulemaking” and that means formal rulemaking.

Now, when formal rulemaking does take place, it's done pursuant to the Administrative Procedure Act, specifically at sections 554, 556 and 557. Again you have that in the appendix of the textbook, I would recommend you take a look at those sections, just have a chance to glance over them to get a rough idea of what formal rulemaking entails. You don't have to go to in depth or try to memorize it, or outline it, or anything like that at this point, we really want to just kind of get you exposed to what formal rulemaking looks like. Just to lay that out for you, formal rulemaking looks a lot like having the trial. It establishes, under those provisions that are cited, many of the same kinds of things that are required at a trial. Formal rulemaking process is a process by which the government is trying to get information, using the same kind of techniques that courts use when they hold a trial to try to make a determination about law and facts. So in the formal rulemaking process, there will be often witnesses that will testify, maybe cross- examination of those witnesses, subpoenas may be issued, a lot of the formal procedures that you are used to, based on your courses that you have taken in say civil procedure. Those are the same kinds of procedures, some of them that you will actually find in a formal rulemaking process.

The other kind of process of rulemaking we have is informal rulemaking. Informal rulemaking takes place pursuant to section 553. And you will see specifically at 553(b), that there's a requirement that agencies

send out a general notice of the proposed rules that they're going to publish or issue, and those are required to be issued from the federal register as a general matter. We won't go into a lot more details, we will talk more about those next time, but one 553(b) in an informal rulemaking process requires that the agencies provide notice, that's what you need to recognize. Agencies are required to provide notice to the general public before they engage in a process of informal rulemaking pursuant to 553 and that general notice that they provide is normally through the federal register. Now agencies also have a very neat process by which they go through this process online and persons are able to go to a federal government and agency websites to see all of the proposed rules that are currently out there and also they can go to the process of issuing comments to proposed rules through that online website and they can review the documents that agencies have posted, with regard to the proposed rules. So we see the informal rulemaking process requires that agencies provide notice of the proposed rule and when you get the notice of the proposed rule, they are also required to give other information about the rulemaking proceedings including the legal basis for the proposed rules, in terms of what authority they have to issue it, as well and this kind of the details about the proposed rule, like the what, when, and where, actually when is the rulemaking going to occur, how can persons comment on the rulemaking, etc. They also have to provide a description of the proposal as well and the substance of the rule itself. Those are all things that are required to be in their notice of the proposed rule.

Now the next thing that has to happen is what's called the opportunity to be heard and that means that persons’ who are interested, have to give an opportunity to provide comments to the proposed rule, so this is the idea of the notice and comment rulemaking which I referenced in the earlier lectures. So agencies have to be ready to listen to what persons have to say about their proposal rule, so section 553(c) of the APA, establishes that agencies have to give people an opportunity to participate in the rule making process and allowing them to submit arguments as well as data, their views and other written information to the agency that the agency is required to then consider as it goes through the rulemaking process. So we have the notice requirement that agencies have to give out under the informal rulemaking process and we also have the opportunity to be heard. In some occasions, agencies will actually hold a public hearing and when agencies hold a public hearing then persons are able to come and give oral testimony, that's not always required and if it is required it's going to be articulated where? Exactly, in an agency’s enabling legislation. The only time an agency is required to undergo public hearing is when enabling legislation dictates that the agency undergo a public hearing, when is undertaking the rulemaking process, otherwise agencies are able to merely allow persons to be heard through the submission of written information when they have an informal rulemaking that they are undertaking and that is articulated in section 553 (c).

And then the last leg of the informal rulemaking process is that when agencies make a determination of what their rule is ultimately is going to be, they have to articulate that in a way that provides a basis and purpose for the rule that they have ultimately issued. So it's required that they issue a statement of basis and purpose, a general statement of basis and purpose, and that general statement basically means that the agency is supposed to explain why it issued the rule. So the agency in ultimately adopting the rule has to articulate why it adopted the rule ultimately that it has adopted. And in providing that information, that concise and general statement of the basis and purpose, the agency is required to consider the information that was given to it through the comment process, and let go back to that for second. So you saw in section 553 (c), that in the informal rulemaking process, agencies have to give persons the opportunity to be heard. Normally there's a minimum period in which persons will have to provide comments and that’s normally going to be roughly a thirty day period. You can find that articulated in

553(d), where it’s established and normally an agency won't issue a final rule until 30 days have elapsed, from the time that it was issued as a proposed rule. That means the general public is going to have at least 30 day, in most cases, to provide comments on the proposed rules. Many times, agencies will have longer than 30 days, they’ll announce in the general statement published in the Federal Register that there is a proposed rule that the public will have 60 days, 90 days, 120 days, 180 days etc. to actually provide comments to the proposed rule and so we see how this all works together.

So the notice will go out, it will say how persons are required or able to provide their comments, when the comment period will close, what the proposed rule is, and it will also provide some basis as to why the agency is proposing the rule, then the public will have a time period of at least 30 days, in most cases, to provide their written comments to the proposed rule recommending, in some cases, the rule be followed, recommending changes to the rule in some cases, and opposing the rule in some cases, so different persons will provide different comments. The agency is then required to consider all of the substantive significant comments that they received in actually issuing their final rule. And when they issue their final rule it has to have their statement of basis and purpose, meaning this is why we adopted the rule and this is what we want to accomplish through the rule and to acknowledge the kind of comments that they received and to respond to those comments. That means the agency’s going to have to actually articulate in the final rule that issued, pursuant to 553 (c), not only why they chose the rule but why they chose the rule in light of the comments they received. So they’re going to have to basically explain themselves and respond to the significant comments they received about the rule. Ultimately, if a court reviews an agency's rulemaking decision, they are going to review the agency's explanation for why they chose the rule, in light of the comments that were received. And so we’ve learned about the formal rulemaking process, we also just now gone through the informal rulemaking.

And I will remind you again that at 553(d) it's laid out in the APA that the agency, as a general matter, is to provide the public at least 30 days before making any of their rules final. So that concludes our discussion of the overview of the rulemaking process, explaining what formal rulemaking is, explaining what informal rulemaking is. As a general matter, that concludes what you are expected to know for this module. In the next module, coming soon, won't be long, it’s right around the corner, we're going to dive deeply now in that module and in that video lecture into the idea of rulemaking and look at some of the nuts and bolts. We look forward to talking to you then.

JD Administrative Law Module 2.2

Hello Class! This is our second lesson for administrative law. Today we will begin our discussion of rulemaking and in looking at rulemaking I want to remind you that it is the first rather I should say, of the three large sections that we will cover under the subject of administrative law. These sections are rulemaking, adjudications and judicial review. It's the best way to organize this material and understand how administrative law functions. So when you think about administrative law, one thing to think about is what are the processes that are the processes that are being undertaken by the government and then you can order the material you're learning with in the governmental process and so there are two primary governmental processes that agencies undertake rulemaking and adjudications. The judicial review which represents our third section of administrative law that we learn, is actually how the courts review the agencies actions under the first two categories. So how do courts review an agencies rulemaking process and how do courts review and agencies processes of adjudications? And that covers really administrative law, so today we embark on looking at the first component of administrative law and that is rulemaking. And rulemaking represents the process that agencies go through when they are establishing what the rules are that, they and others, will follow in carrying out their missions and obligations under the legislation which established them. You will recall from last class that that legislation that establishes an agency or gives the agency a particular task is called enabling legislation. So rulemaking is undertaken pursuant to an agency's enabling legislation all agencies do not have rulemaking authority but most of them do. There are different ways that rulemaking can be initiated, in this lecture we will talk about how rulemaking is initiated, particularly focused on the petition process that a person can file in order to request that an agency begin a rulemaking process, along with petitions however, agency rulemaking can also be initiated as a result of a specific directive from Congress in the enabling legislation of the agency and rulemaking can be initiated as a result of an agency staff member having a revelation or the idea that a rule should be undertaken, or a rule should be repealed and that can come to that agency staff member as result of new scientific discoveries, changes in the market, societal changes or other kinds of factors, that may influence a staff member to recommend that rule-making begin. So for the rest of our discussion at this particular lecture however, we will focus in on the idea of petitions for rulemaking as mentioned in your reading.

So, the rulemaking process under the Administrative Procedure Act, includes the ability of a person to petition for an agency to review a consideration of the rulemaking process and that is done pursuant to the Administrative Procedure Act under section 553(e). Again, the APA is included in your textbook in the appendix, I would recommend you take a look at section 553 which governs the informal rulemaking process. We, in a few lectures will talk about the difference between informal and formal and hybrid rulemaking which you would have seen covered in the first chapter of the text. We're going to come to a further and more in-depth discussion of those different kinds of rulemaking processes that are discussed in reading but for now we begin with the idea of the text is rulemaking and the petition for rulemaking under

section 553(e) and that section of the Administrative Procedure Act establishes that when an interested party makes a petition to the agency that it will either change the rule by amendment, or issue a new rule, or repeal a rule, the agency has the obligation to then make consideration of that petition. Specifically, the agency is allowed to grant a petition to begin rulemaking process, and agency also has the ability to deny a petition to decide not to initiate the rulemaking process, or the agency actually failed to act whatsoever. The agency could ignore the petition. However, as a matter of law, agencies are not allowed to indefinitely ignore petitions, they are required under the APA to respond to petitions for rulemaking.

If we look at section, in the APA as listed, at 555(e) it lays out that agencies are required to provide a prompt notice of their denials in whole or in part of a petition for rulemaking. That means that an agency has not the right, or agencies are not lawfully able, to just ignore petitions for rulemaking. Now they don't have to actually provide notice if they're going to initiate a rulemaking process under this Section, but they are required to provide notice if they decide to deny a rulemaking request.

Now they're supposed to not only in establishing a denial of a petition for rulemaking, to provide notice. They are also required when they do deny a petition for rulemaking that they explain the basis for the denial. And that is something that is a legally, actionable requirement so because it is legally actionable, that means that when an agency makes a denial of a petition for rulemaking and it fails to explain the basis or grounds of denial, then that can be challenged as a violation of the agency's obligations under the APA. So, it's necessary that the agency be clear what its grounds for the denial are and the grounds for denial can further be challenged in the court itself and that challenge is not insignificant. When a denial occurs or when an agency fails to respond to a petition for rulemaking, judicial review is then allowed, and that judicial review is governed by the APA section 702.

At 702, it establishes that any person is able to then bring a case to obtain judicial review when an agency’s action or inaction actually has aggrieved them adversely within the meaning of a particular statute. So, when a person has a right to bring a claim and that right is based upon an agency behavior which is caused them to suffer a legal wrong, showing that it has adversely affected them or aggrieved them when that legal wrong has taken place, they can attain judicial review. So just to be clear again, under 702, an agency's decision to not respond to a petition for rulemaking or an agency's decision to deny a petition for rulemaking, can be reviewed by the court.

And when that happens, you’ll see that a failure to respond to an agency's petition rulemaking is governed specifically by section 551(13) and 701(b)(2). So we see that under the APA, agencies petition for rulemaking reactions are fully governed if they failed to respond at all, it's governed, and if they respond in a fashion of a denial is also governed by the APA. Moreover, section 706 of the APA establishes that a review court is able to compel an agency action that is unlawfully withheld or unreasonably delayed, and so that means not only have we seen that the court has the authority to review the matter pursuant to 702 on the previous slide, 701(b)(2) as listed above this line but in light of its ability to review the agency action, the APA gives the court the ability to compel that the agency act to respond to a petition for rulemaking by either acting on it, as has been mentioned or by granting a petition for rulemaking that had previously been denied. Now in the reading you had a number of cases that looked at this very issue and in looking at this issue, one of the things that you can see in the cases comes out in the telecommunications research and action center the Federal Communications Commission case and in that case the court was dealing with a challenge that was brought up against the FCC in 1979, asking the FCC to look at potential overcharges that have been made. The FCC went forward and issued a notice of inquiry asking for public comments on the issue before deciding whether or not to take action. And then after it receives public comments the FCC failed to act after almost a five year. So, the petition that went forward was going forward saying that the FCC had unreasonably delayed its response to the petition for rulemaking and they claimed that they should find that it was an unreasonable delay under the APA section 706. In considering the case, the court looked specifically at some judicial standards that were used to try to determine when in fact unreasonable delay should be found on the part of an agency. That's discussed in your text on page 65 at the top, in that first full paragraph. There they are the lay out six factors that the court should consider to try to make a determination. However, they don't apply those factors in this case, why don't they? It's a fair question, essentially what the court says is that the FCC had in the past, put forward a schedule of when they would go forward with that process and then the FCC failed to meet that schedule. Then when this case was brought, which was ultimately when it was being heard, in that same year, the agency said that they expected that someone will come forward with an answer. They failed to do so before this hearing actually occurred. Ultimately the FCC made assurance to the court during the trial, during the appellate process, I should say, that they were going to come forward with the response and the court basically took the FCC on its word. Having to the FCC on its word, the court did not apply those factors that were listed. More or less, one way of understanding this case is that the court is actually giving the FCC a warning ticket. They're saying to them, I'm not going to give you a ticket for violating the law, however, I'm issuing you a warning. How do we know the court is issuing SEC a warning here? Well they provide them what the standards are, at the top of page 65 and then they say in the middle of the second paragraph of page 65, in light of the commissions failed to meet its prior deadlines, they believe that the delays that the FCC has actually been guilty of, suggest a warrant that the court withhold jurisdiction of the case. Effectively that means that the court does not find them in violation but the court says, we are actually going to continue to watch to see whether or not you do address this petition in the immediate future. And if you don't address the petition in the immediate future, you can expect us to apply the standards above to your case. And the court telegrams to the agency that they probably will find that the FCC was in violation of 706, so effectively the court uses its persuasive ability to try to encourage the agency to get done what they're required to be done. And I should just note here one interesting thing about this case and it helps us to understand a little more about the relationship between the federal courts and agencies, particularly DC circuit

that does hear a great number of administrative action cases, and that is that even if the court was to have found that the agency was in violation, the court normally would remand the case back to the agency to carry out its order, and that means the court would basically tell the agency, respond to the petition in x number of days. So by issuing, in this case, a decision that says they're not going to find them in violation but that they are going to retain jurisdiction, basically says we want you to fix this and fix it soon or else we are going to issue an order that’s going to set a timeline effectively for when you’re going to have to get this done. So the court has not really even slapped the agency on the wrist, more or less, it issued them a warning in this decision and so what this helps you to see is that the courts relationship with the agencies is in this case is to try to move the agency forward with regards to responding to the petition. So the next thing we're going to deal with is the idea of what happens when a petition is denied. So not only do we have cases where an agency just fails to respond at all, we also have cases where an agency has denied a petition and as I mentioned to you on the prior slide,

I'm going to go back to that quickly so you can review that standard, that whether the agency has denied a petition, they have an obligation to give a prompt notice of denial under 555(e)

and that that notice have to include a statement of the grounds for the denial. So we have two cases in the reading that address this whole question of a denial. The first one is the case of Arkansas Power and Light Company, the Interstate Commerce Commission and in that case you had someone who had issued a petition to the Interstate Commerce Commission that they would undertake a rulemaking to gather data and to implement its rulemaking to use this data to have a better understanding for what the railroad rates should be that we're being charged for what they called captive shippers. So the ICC at that time only regulated the rates that railroads could charge for goods and commodity shipments but not for the other types. So the petitioner asked that the ICC undertake rulemaking in order to set or determine what those standards should be. So the court is now considering whether or not the denial issued by the ICC was appropriate. And so in making this determination the court looks at the ICC's response to the petition for rulemaking. As I said previously, the APA requires that there be a response giving the statement and grounds for denial. Whenever you look at a petition for a rulemaking case, and the courts potential of reversal of that decision to deny a rulemaking petition by an agency, you can expect the court is going begin by reviewing the reasons that the agency gave for the denial in the first place. And in this case the ICC had said that Congress had not shown any intent that it wanted to have any rulemaking process with regards to these kinds of carriers.

Instead they said that the legislation had suggested that an annual carrier by carrier or commodity by commodity study would be used to determine whether or not a carrier could improve its profitability on a given route by changing his price structure. So they agency says no we don't think rulemaking is appropriate, we think we should make these determinations on a case-by-case basis instead. And so this agency basically says we didn't undertake rulemaking because we are going to do the same thing that is being asked of us through a rulemaking process through process of adjudication and agencies have the authority to develop what its

information is going to be and even what its policies going to be though the mechanism of adjudication and effect on a case-by-case basis. In the same way that we consider our caselaw system establishes what the law is under common law on a case-by-case basis. We see common law has developed torts and contracts and property law. In the same way agencies have the ability through its adjudication process to develop particular approaches and responses to issues that are raised and so in this case the agency argues they should be able to develop the standards that are appropriate for ratemaking through adjudications rather than a rulemaking data collection process that creates a national database. The court looks at the agency's decision and holds that the agency decision was reasonable and that they found it appropriate and the court explained this decision by saying, that the ICC could reasonably conclude that it would be a lot of unnecessary work and it would take a lot of extra time for them to create a national database as is been recommended by the rulemaking. And in fact they would find said that it may not always be the most productive or efficient way to gather that data. Ultimately, they believe when the agency says that it's going to use this adjudication process to get the data that's being sought otherwise through rulemaking. And since the court was pleased that the ICC has adequately explained why rulemaking was going to be unnecessarily burdensome and how they could accomplish the task more effectively through adjudications, the court held that there was no need for the agency to engage in rulemaking and that the denial of the petitions was acceptable. And so here we see another case where a court is reviewing an agency determination with regards to the petition for rulemaking, and in this case what we see that the court says that since the agency has adequately explained why they made the decision to deny the petition, there was no basis in the record for the court then, to compel the agency to undertake a rule making and that the general position that courts take regards to agencies decision-making, they look at the decision and justification the agency makes, and they make a determination about whether or not agencies given a reasonable basis for action in light of its obligation. And the court finds here that the agency’s explanation why no rulemaking was going to be undertaken was justifiable and therefore the court went forward and upheld it. The next denial of the petition for rulemaking is found in the case of Massachusetts versus EPA. And in the case of Massachusetts versus EPA, we see the court dealing with the issue of climate change, a major issue that we're dealing with as a global matter, in fact in society. And in that case, which is brought back in 2007, there was a petition for rulemaking that had been presented to EPA by the state of Massachusetts and other parties, asking that the agency making determination about whether or not greenhouse gases posed a substantial endangerment to human health and the environment, under the clean air act. The agency had heard that petition and without actually moving forward on the petition, so when the petition was filed in 1999 or following the petitions filing in 1999, the EPA decided almost 4 years later to undergo a decision, or issue a decision, to deny the petition for rulemaking after it had received comments,and those comments have been received in large numbers maybe 50,000 or so, and that this following the opening up of a notice and comment period. The agency based its decision to deny the petition for rulemaking, by saying that one, it could not regulate greenhouse gases under the clean air act and number two, if it could regulate greenhouse gases under the clean air act, it would be unwise. So the court then considers these two reasons that the agency has provided for why it denied the petition for rulemaking and the court explores the legitimacy of those reasons. In looking at the first reason, the court actually says the problem

with the agencies answer is that the petition was actually not for it to regulate greenhouse gases under the clean air act, it was merely for the agency to make a determination of whether or not greenhouse gases posed a substantially endangerment under the clean air act. The court argues that if the agency did go forward with making determination that there was a substantial endangerment posed by the greenhouse gases under the clean air act, that the agency would definitely then have the authority under the statute to regulate those gases. So the court basically disagrees with the agency's argument that it would not be acceptable for the agency to regulate those greenhouse gases as an air pollutant when the agency would have gone through a substantial and endangerment finding under the statute, that will then show that there was an endangerment by those pollutants and as a result of that endangerment, the agency couldn't have the authority to go forward with regulating those pollutants. You don’t need to understand this case from standpoint of air pollution law or the clean air act, what you need to understand from the administrative law standpoint is, that the agency as a matter of law, made an argument that it would lack legal authority. The courts do not defer to the agency's views of what statutory authority it has. The court feels it has the ability to make determinations when legislation is clear about statutory authority. In this case, the court finds that the statutory authority is there to address greenhouse gases or other kinds of pollutants under the clean air act, when they actually pose an endangerment and therefore the court finds that the agency's determination, that it can't undergo rulemaking because it couldn't regulate greenhouse gases, is incorrect.

The second reason the court finds that the agency's denial of the petition for rulemaking is inappropriate, is that the agency argues that it would just be unwise for it to undertake rulemaking. The court rejects this argument that the agency makes about being unwise because it buys, there's nothing in the statute with regards to the rulemaking process that suggests that an agency should not determine whether or not a pollutant causes a substantial endangerment to the human health of the environment based on whether or not it would be wise. Instead, the court says the statutory requirements to make determinations about what's necessary to protect the human health in the environment, the decision to determine whether or not there is a substantial endangerment, is distinguished from the decision about how to respond to that substantial endangerment. So the court argues that the agency is incorrect in relying on its policy arguments about whether or not it would be wise to regulate greenhouse gases from making a determination about whether greenhouse gases pose a substantial endangerment to human health and environment. So the court also rejects those arguments and remands the case to the agency to grant the petition for rulemaking and in this case, this petition for making does not mean the agency is now going to pass a rule concerning the regulation of greenhouse gases. The petition for rulemaking that’s granted merely establishes that the agency is to make a determination which is a strictly scientific analysis of whether or not these greenhouse gases are a threat to human health and the environment. So now we have two cases, we see one case where a denial of a petition for rulemaking is actually upheld but the court is going to look closely excuse me, we see one case where a decision, not to respond to petition making is not overturned but the court actually decides to look closely and watch closely, as the agency seeks to honor its promise to respond to the petition for rulemaking very soon. We see another case where the denial for petition for rulemaking is upheld by an agency, because the court finds the agency's actions were reasonable in light of the burdensome process that it would take to undergo rulemaking and the limited benefit that would come from using that approach versus using adjudications as a way to obtain the same information, and then lastly in this case, we find that the courts have actually overturned an agency denial for a petition, of a petition for rulemaking, making the determination that the agency's reasons for why it denied the petition for rulemaking were not justified. So that brings us back to the slide again, that agencies are required to give a notice that are accompanied by a brief statement of the grounds for denial and whenever you're looking at a petition for rulemaking, the court will make its determination primarily based on the agency's explanation as to why it didn't grant the petition for rulemaking. So rather than courts really second guessing substantively whether or not a rulemaking should take place, what courts do is review the reasons that the agency gives for legitimacy. If the court finds that the reasons the agency gave for why it didn’t grant the decision for rulemaking, it will not disturb the agency's decision. When a court finds that the reason that the agency gives is not acceptable then the agency will find its decision overturned. And that ends our discussion of the petition for rulemaking. When we return, we will have a further discussion about rulemaking from the standpoint of the exceptions which are available. We’ll talk to you then.

Script_M02_Rulemaking Exceptions Video JD Law Administrative Law

Hello class, today we will have our discussion now, of rulemaking and its exceptions. In the earlier lecture on rulemaking, we talked about the petition process under which persons are able to make a request that agencies engaged in rulemaking. Of course engaging in rulemaking could mean repealing a rule or proposing a new rule. But today we’re looking at the exceptions to the rulemaking requirement, that's present in the APA, these exceptions mean that agencies are not required to undertake rulemaking at all. Before we get into a discussion of those exceptions, I just want to highlight the different kinds of rulemaking that governs agency actions.

So we don't just have one kind of rulemaking for all agencies, because we have three kinds of rulemaking that are part of the APA. The first one is the formal rulemaking process and the procedures associated with formal rulemaking are established at the APA in the sections listed in the slide. That's at 556 and 557. But then we also have the informal rulemaking process and the procedures that go along with all informal rulemaking are established at section 553 of the APA. And that establishes and requires that there be a notice and comment for all informal rulemaking that occurs and that the agency provides a statement of basis and purpose for the rulemaking that it undertakes. We saw in our last session we discussed petitions for rulemaking that this procedure at 553 also includes the agency's ability to deny rulemaking petitions and so the informal rulemaking process also establishes that agencies may deny rulemaking petitions and decide that they will not undertake rulemaking. As we saw in that presentation, courts are able then to review an agency's decision not to go forward with a rulemaking petition pursuant to section 706 of the APA. Also we saw in our last session that when an agency fails to respond to a rulemaking petition altogether, courts have the authority to require that agencies go forward and respond to the rulemaking petition and all of that relates to informal rulemaking. The third kind of rulemaking that agencies undertaken and all of these are described in chapter 1 of your text, is the hybrid rulemaking process and hybrid rulemaking, is rulemaking that is a mixture of procedural requirements based on mandated, statutory, procedural obligations that an agency has from its enabling legislation coupled with the requirements that are in the APA. Now these are the three different kinds of rulemaking that agencies undertake.

When you talk about exceptions to rulemaking, we are exclusively talking about exceptions to the requirements of informal rulemaking that are found at 553, because the formal making process is governed by a separate set of sections in the APA. So under 553, we find establishes when no informal rulemaking process is required, in terms of the notice and comment period that was mentioned earlier, so we find that as a general exception to the rulemaking obligations that are laid out for informal rulemaking, agencies are not required to undergo the informal making process when there is a matter that relates to foreign activities of this country, or military

actions, or if it has to do with the way the agency is managed internally, or it has to do with the personnel of the processes of an agency, in terms of personnel management, or if it has to do with how agencies deal with public property, or the process of issuing loans, grants, benefits or contracts. These do not require that the agency undergo rulemaking before making changes.

Now we also find that the rulemaking requirements that are laid out at section 553, also do not apply to certain kinds of rules. One of those is the interpretive rule, what is in the interpretive rule? The interpretive rule is a rule that an agency makes but it is not establishing a new regulation, it is merely stating what it understands the requirements of any pre-existing rule to be. That is considered to be an interpretive rule and an agency is not required to undergo any kind of formal or informal rulemaking when it is in fact merely interpreting a pre-existing rule or a pre-existing regulation.

It also is not required to undergo any notice and comment rulemaking process, when the agency is merely providing a statement of what its policy will be. An example of that would be to let say, the agency says that in fact it is our policy that we won't pursue enforcement for violators of the Clean Water Act who have discharged less than one microliter of pollutant into the waters of United States. That policy statement merely indicates that an agency doesn't have any intention of engaging in certain kinds of activities. It is not a regulation, it doesn't actually govern what regulated entities are required or not required to do, it’s merely a statement of what the general policy would be.

Further agencies also do not have to undertake rulemaking when they are are merely articulating what the agency’s internal rules are going to be, what its internal practices are going to be, what its internal procedures are going to be. And so that would be exactly where , let’s say, the director of the Internal Revenue Service's office of collections, gives a statement to Internal Revenue Service agents, saying that our procedure for pursuing collections shall not include making phone calls to taxpayers workplaces of business. That statement or directive that would have gone down maybe from the director of the office collections to all the internal revenue service agents who are engaging in collections, would not be a rule that would require any kind of notice and comment rulemaking. Instead it will represent merely an agency practice, if the director said our procedures for undertaking collections shall be that we will give taxpayers notice that we intend to garnish your wages at least 30 days in advance. That decision, that they were going to get 30 day notice before garnishing wages would be, again, an agency procedure, it will be an internal procedure, unless the statute had dictated that the agency promulgate some set of rules concerning the collections process. So generally we were talking about the agencies internal procedures, or we’re talking about agencies practices or if we’re just talking about the organizational structure of an agency, those rules that govern those matters not required to undergo any kind of notice and comment rulemaking.

So the way to distinguish these kind of rules as I’ve mentioned, focused on internal operations from other rules that do require some kind of rulemaking, would be that rules that require an informal rulemaking process pursuant to the obligations of section 553, and I want to encourage you to look at 553, contained in the APA section 553 of the APA, contained in the index in the textbook, but also find it online. You'll see that these internally focused rules are distinct because they don't relate to the rights of a regulated person. So we're not talking about, even if were saying that there is a certain way that Internal Revenue Code agents will decide they're going to be in contact with a person, that doesn't actually affect their substantive rights. The agency has certain discretion in enforcing the law and when the agency chooses to use one approach over another, when it has discretion to make those decisions, the rules that govern that decision are not then required to be carried out pursuant to section 553's notice and comment rulemaking process.

Now if you want to kind of figure out if you have an example or a hypothetical question that requires you to figure out whether or not a rule is actually going to have to undergo notice and comment versus meeting one of these earlier exceptions to the notice and comment requirement, is that you want to look at what courts have called the substantive effects of the rule and so if the court finds that there's going to be significant, substantive effects from the decision that the agency has made or the rule that the agency has carried out, or that the agency is putting in place, then the court would say that that rule warrants going through the notice and comment rulemaking process found at 553, and so you can see in my examples with the Internal Revenue Service, there's no substantive impact on the tax payer, there’s no change in what the taxpayers obligated to do or what the tax payer is obligated to pay. There is no substantive effect that would warrant notice and comment rulemaking in those examples, when there is a substantive effect to notice and comment rulemaking then to noticing something to do for, excuse me, to a rule that an agency has proposed, that's when a notice and comment rulemaking is going to be required.

So one way of thinking about this would be to look at what courts are going to ask if they review one of these kinds of propose rules that the agency has not been made available to the public for comment pursuant to the requirements of 553 and the informal rulemaking process. The court is going to ask the questions listed on the slide above and then asking a question, they're going to look specifically at whether the interest promoted by public participation are going to outweigh the needs for the agency to have an efficient and effective process that is cost- effective as well. So the court is basically going to weigh the agency's ability to get his job done in a cost-effective and efficient manner with the benefits that come from public participation and when the interests that are promoted by public participation do outweigh that need for efficiency, that’s when the court will take one of these ambiguous cases where is not so clear whether there is a substantive effect or not, and make an ultimate decision about whether this fits an exception to the rulemaking requirement.

But let's think of example for a second, just to kind of see how this plays out if we were to give the real world hypothetical. So the slide basically lays out what if we had a situation where the Food and Drug Administration which goes by the acronym FDA, had issued a rule that required that the inspectors who were going to inspect food were to refer to a checklist that the FDA had prepared in advance whenever they were undergoing the site inspection. And so the question would be would that require a notice and comment rulemaking under 553, and the answer is no that would not require a notice and comment in formal rulemaking process as laid out by 553.

In fact it would meet the exception, because it would merely be an internal practice Let’s now contrast that example with a proposal by the FDA that would say that if someone wanted to appeal one of the findings that the agency had made with regards to their food inspection within a set period of time, or the proposed rule was to eliminate a parties ability to challenge an FDA determination, both of those examples would likely require that the FDA undergo an informal rulemaking process and effectively that the FDA would then follow the 553 notice and comment procedures. You’ll see in contrast, the first rule was merely one that was guiding agents and how to carry out their tasks. That's an area that the agency has discretion and what agency says agents are going to use a checklist to go about carrying out their job, that's an internal protocol, not one that this isn't required to follow the notice and comment rulemaking process, pursuant to the exceptions that we articulated earlier. In contrast then, this rule that says a time period for appeals, then goes to a much more substantive effect because if the person or pursed party is not able to make an appeal within the time period required, or fails to make the appeal within the time period required, or if the agency eliminates the person's ability to make an appeal, that will have substantive effect on that person, potentially ending their ability to challenge the agency's determination. Rather than being in an internal operation related rule, now this is a rule that actually impacts the interest and the benefits or rights, rather of a party.

So your right to appeal an agency decision is affected by this rule, in contrast with those earlier rule examples that we had. So we see ultimately that the idea of these exceptions to rulemaking, layout for us the ways in which agencies are actually able to avoid the 553 informal rulemaking requirements when they meet the exceptions that are also articulated at that section.

The last example that we see of when an agency is no longer required to comply with the notice and comment provisions of 553 comes in what is known as the good cause exception and that exception basically lays out that an agency is able to make a finding of good cause, that there is no need for them to undergo a rulemaking, informal rulemaking under the notices, provisions laid out at 553. And the reasons that articulated for why an agency could find it they have a good cause not to do so are basically that doing so would prove to be contrary to public interest, or merely unnecessary, or impractical activity.

And that is going to incorporate the finding that it has made and the reasons for the finding that it made, in the rule itself. So that second requirement means that an agency basically is going to still provide a statement of basis and purpose for why the ruling was issued and the reasons it has decided to issue it in the way it is being issued at this time, that has to be contained in the rule and the agency also has to have made a determination that it was otherwise impractical or unnecessary for you to comply with the notice and comment rulemaking requirements at 553.

Now this good cause exception is found in 553 itself as the other exceptions are also found in section 553, so I want to encourage you to look again at 553 where you'll be able to see not only this exception but the prior two sets of exceptions that I've also articulated as well. So with that that covers the exceptions to the informal rulemaking requirements that we've articulated at the beginning of this lecture and return to talk about rulemaking one more time in a third installment, when we will look at an overview of what the rulemaking process is.

In the meantime there were in fact three cases that were also covered in your reading and we want to take time to say something about those cases as well.

The first case is the American Hospital Association versus Bowen case and in that case a consideration is being made about whether or not a notice and comment rulemaking procedure should've been followed before the Health and Human Services department went forward with the issuance of certain procedures for evaluating a medical services with regards to the delivery of Medicare related activities. And so these procedures that were put in place, were put there to determine whether the services and items that were being provided by the doctors or hospitals, were reasonable and medically necessary for government reimbursement under Medicare. So what HHS did was to put these procedures in place and give their agents who were doing the reviewing process, the directive to go and review these particular programs under a set of instructions and guidelines. How the American Hospital Association didn't like the fact that these inspectors were given guidelines to use in evaluating the programs without those guidelines going through a notice and comment rulemaking process first. So the courts try to determine in this case whether or not the Health and Human Services has in fact circumvented the requirements of section 553 under the APA. So they respond saying they weren't required to meet the obligations of 553, in fact, because this was, in fact, some rules of agency organization and procedure. So there was a particular a directive PRL manual image 5–2, that it laid out an enforcement strategy for how HHS contracts were supposed to be evaluated by these inspectors. And it required, for example, that the person who was doing a review, look at at least 5% of all hospital admissions selected at random. And so the court looked at this kind of procedural obligations and made the holding and determination that these transmittals of guidelines and instructions were classical procedural rules that were exempted under section

553. The court said that they basically established the kind of frequency and focus of the review and told enforcement agents where they should concentrate their time and resources based on what the agency felt would be the most fruitful way to carry out their task. And so the court said, this kind of procedural requirement didn't prove any new burdens on hospitals that would

warrant the use of some kind of notice and comment review process, right. Instead they said that these are the kind of procedural rules which 553 was put in place to except from the informal notice and comment rulemaking process.

The other case is the Air Transport Association of America versus the Department of Transportation case and in fact in that case, what happens is there's a requirement that is put in place by the Department of Transportation with regards to the change their penalty rules for persons who don't follow the established requirements. Now in determining whether or not there is a violation here, the court examines the new penalty procedures that are put in place by the Department of Transportation and they're looking specifically at the Federal Aviation Administration in the Department of Transportation. And they trying to figure out whether not notice and common procedure should've been followed before these penalty rules were in fact issued and in making the determination the court looks to the 553 guidelines giving the exception that we talked about earlier in this lecture, to say are these rules of agency organization procedure or practice or do these represent activities that and procedures that are going to substantially alter the rights or interest of the regulated parties? In this case the court looks at two specific aspects of the rules that are being argued by the FAA who said that they did not have to go to notice and comment rulemaking. The first argument the FAA makes is that this is in fact, excepted from notice and comment rulemaking because they are procedural. And the court looks at that it says well the issue is not whether or not they're just procedural on their face, but other not going to substantially alter the rights of all the parties and we talked about this earlier in this lecture, we used a term substantial effects. So the court is looking to see whether they're going to substantially affect the civil penalties that the defendants are themselves going to be subject to under the administrative adjudication. The court holds that in fact they are outside the scope of procedural rules for that very reason. In another words, these are procedures but these are not strictly internal procedures, these are the procedures that decide substantively, what kind of penalties parties who are not part of the agency are going to be subject to. And because they are penalties that are going to affect the interest and rights of the regulated community, the court finds that these are the kinds of procedures that warrant a notice and comment rulemaking and therefore fall outside the scope of 553(b)(a), also the court looks at something else we talked about earlier, which is the idea of the good cause exception. And examining whether or not they meet the good cause exception, the court is looking at the fact that the agency had a mandatory deadline under its enabling legislation saying how quickly or how soon, they were required to promulgate these penalty rules and procedures. So they said because they have such a short window, it was not fair for them to actually have to come up with an answer or come up with the procedures so quickly. The court looked at the idea of the good cause exception and held that the penalty didn't fall within the good cause exception and that they were going to have to actually go through notice and comment rulemaking. The reason the court said that, was that they didn't feel that the agency had shown that getting those rules promulgated within the timeframe the legislation gave them was an insurmountable obstacle. They argued that as a general matter, section 553 is to be complied with and that it's has a significant impact potentially on persons and therefore the notice and comment rulemaking process is not want to be dismissed lightly, or taken lightly with regards to meeting

that obligation. They further argued that, when looking at the time period they had, the agency was not incapable of actually meeting the time period. In fact, they argued that one of the problems was that the agency had in fact, needed some nine months before moving forward with this obligation to get these penalties in place. They further felt that the agency could meet in fact the obligation to promulgate these penalties based on the requirements of their enabling legislation, if they had undertaken what's known as an expedited notice and comment procedure. And that at least by doing an expedited notice and comment procedure, it would give them some opportunity for notice and comment to parties who were going to be impacted by these penalties. As it is, there is no opportunity for notice and comment and they felt that was inappropriate. So, taking those things in consideration, the court found in this case, that these penalty policies were in fact matters that require, or should require, notice and comment rulemaking and that the agency met neither the good cause exception, nor were these exempted from notice and comment because they were procedural rather than substantive.

Lastly the next case is the JEM case and in that case which is JEM Broadcasting Company versus the Federal Communications Commission or the FCC, you basically find that the JEM broadcasting company is upset and is complaining that there was a change in the rules that the FCC follow and receiving applications for establishing an FM radio station. The way the FCC changed the rules it did not allow persons who made an application for a station to make corrections to mistakes that were included in the application. Instead it said that agencies had the ability to then dismissed applications that came in with errors. Now as long as the application was rejected the parties complained that they had lost certain substantive rights in terms of their ability to try to get a license. The court felt though, that in this case, there was no rule in place that was not really procedural. Their argument was that the agency always had a time limit during which applications had to be submitted and they had to be complete and so by shifting the time limit to when an application had to be submitted and complete to the beginning of the application process rather than the end of the application process, the agency had really made any significant change to its procedures that would have unfairly or improperly altered the substantive rights of the parties. Instead they argued that there is no right any applicant had to have a free shot at making an amendment to its application. So the court argued that the procedural exception was firmly, or squarely, properly applied here, because embraced cases like this one where the interest promoted by public participation in rulemaking process was outweighed by the consideration of effectiveness and efficiency and reduction in expense by the agency. In other words, the agency was trying to get through numerous FM radio station applications and to expedite that process they didn't give applicants so many bites at the Apple that they could correct errors and so they said that if you have one and done application process, if it was wrong it didn't have necessary information they had the ability to dismiss any applications that were not complete. And the court found that was perfectly acceptable. So you see in those three cases, how this idea of exceptions is dealt with by the courts, the court is ultimately trying to figure a balance, you know, what is a procedural change that is internal, from a procedural change that is going to have an impact, substantively, on parties who are external to the agency. So in these cases we see directive and guidelines for agency employees is considered internal and falls within the exception and that is the general rule. We see a a penalty policy which is found to fall outside of the exception in which the court tends to back up on a little bit in it's a discussion in the JEM case of that holding, yet at the same time that case is not overturned and then finally we see the JEM case itself where the court argues that a change to the application process that says the applications have to be complete when it first submitted rather than parties having a chance to make amendments to them over time is not the kind of change that requires a notice and comment rulemaking because it focuses primarily on the internal protocol. So you can see some of these cases are close calls, like the JEM cases but close call because it does impact a person's ability to get their license from the FCC. However, it doesn't substantively change what the FCC is looking for in a license, it merely changes how quickly a person has to have that material in place for the application. And as the court says the FCC always have the ability to say you have to have a complete license by X date and so it's not really that drastic a change, to change what that date is to say you have 30 days at the time you make application is not that drastic. The court found in this case therefore that this was not a requiring notice and comment rulemaking.

Script_M03-Informal Rulemaking Video JD Law Administrative Law

The class, so today we embark on our discussion of informal rulemaking. As I mentioned in the lectures from the prior module our informal rulemaking that we examine today, will be more closely aligned with the nuts and bolts of the informal rulemaking process found at APA 553, and in going through this material we're going recover some of the material that was discussed in the prior section when we provided you an overview of the rulemaking process. We will hurry along through that material and focus our discussion on more of the new material that looks more closely at the requirements.

So, as we mentioned in our last lecture at 553(b) establishes that there is a proposed rulemaking obligation that agencies provide notice when they are undertaking proposed rules or creating proposed rules. The exceptions to that at 553, also establishes though that agencies don't have to undergo this process when they have noticed that has been given to persons who are specifically named and served or otherwise are aware that the proposed rule is being made. So in another words, the section says 553(b) that a general notice shall be made in the Federal Register that means it goes out to any and all persons who review the Federal Register and also as I mentioned previously, there's a lot of, and as mentioned in your reading, there's a lot of online opportunities now to look at proposed rules through federal government websites. However, that general notice that you find in the Federal Register and online is not actually required every time a rulemaking occurs when specific notice is provided to particular parties who are named and are personally served or who otherwise have knowledge of the proposed rule. Now when this occur, it normally occurs only in instances where rulemaking only effects a limited or small number of parties and in those cases, agencies may choose to send direct notice to those parties who are involved, rather than sending out a general notice that goes to the public.

Now all notices that go out more broadly have some things that they have to include. Primarily we find that they have to meet these three obligations which are laid out at 553 of the APA and that is as I mentioned in the last lecture, you have to inform the public of the time, the place and how the rulemaking proceeding is going to occur. So that means you're going to have to say rulemaking proceeding will open up for comments on X date, persons can submit comments to various particular locations in these particular formats and the nature of the rulemaking is to allow people to submit comments in writing as opposed to in person, or it may articulate in person opportunities to submit comments. Notice further, should discuss what legal authority is the basis upon which the agency is providing the rule and you will recall that I mentioned that when agencies are created and when they're empowered to act, they also are going to always have enabling legislation. That enabling legislation is what provides the agency with the legal authority to issue a proposed rule if the agency has the legal authority it's going to be present in their enabling legislation. And then thirdly, the agencies notice has to articulate what the specific terms of the proposal are, as well as, whether or, providing the actual substance of the proposed rule or a description of what the proposed rule would be about and the issues it entails. So that lays out three different ways that an agency can meet their obligations under APA. They can either give the particular terms or substance of the proposed rule, they can provide a description of what the proposed rule is going to be about and any issues that are associated with it. Typically, agencies provide a very expansive notice and they actually included the text of the proposed rule in most cases. And as your text articulates sometimes that is the result of the agency being given specific directives in their enabling legislation of what they are proposing must include but as a general matter, the APA under 553, establishes only that the agency has to meet one of these three criteria.

Now in looking at the adequacy of notice, challengers of agency rules will normally appeal or challenge agency rulemaking on the basis that their notice was inadequate. Courts then are required to figure out whether or not the difference between the rule as it was proposed and the rule as it was finally promulgated, is one that is inadequate, as the difference between the proposal is so substantially different than the final rule, that can present a problem for agencies, in terms of whether or not people had adequate notice in the proposal that the kind of rule that came out finally would be what they will ultimately arrive at. We see some examples of that, we have a case that we're going to discuss that also teases out that issue. So to make the determination about whether or not there should be sufficient notice found, when the substance of a final rules differs from what was in the proposed rule, courts have developed a standard of saying that, well the notice that is initially given by the agency should fairly apprise interested parties of the issues involved. In other words to determine whether or not the notice is adequate, the court is going to determine the information provided in the proposal rule really let people know when they review that rule, what their issues are that were relevant to the rule and allow them therefore to provide meaningful comments about those issues.

So to make a specific application of that standard, courts normally applied was known as the logical outgrowth test or analysis and that means courts will look at the final rule and compare it and contrast it with the proposed rule to see if it could be argued that the final rule is truly a logical outgrowth of the proposed rule. In other words, does the proposed rule lead naturally to the final rule? And one way of thinking about that if we were to make an example is, what if you have an agency like the Internal Revenue Service to develop a proposed rule that says that they are going to delay collections of back taxes for a two or three years period before bringing any kind of enforcement action. If that kind of proposed rule was to be in place, now normally that would be something that would be done through the policy statement, however agencies have the authority to issue an informal rulemaking around things that otherwise they could really do as a statement of policy. And so that the Internal Revenue Service was interested in developing a more binding requirement on how enforcement was to be done, it could propose a rule that would say, there will be a two-year delay on any enforcement action with regards to any back taxes. So, if that was a proposed rule and then the agency came out with a final rule that said in no cases would the agency in anyway delay any collection of back taxes, the question the court would have to answer, is that final rule a logical outgrowth of the proposed rule?

And going back to the earlier standard, would persons have been fairly apprised of the issues involved when they looked at the proposed rule that said it would be a two-year delay in collecting or in bringing any enforcement action. And a final rule that said there will be no delay in bringing an enforcement action.

The court would grapple with whether or not that would be what you would call a logical outgrowth and you should think for yourself and particularly in light of the Joplin Manufacturers Association case which we're going to discuss, whether or not the proposed hypothetical I’ve given you should be considered a logical outgrowth. So in making determinations, courts normally say that this is something that has to be

done on a case-by-case basis and that it's very context specific and depends a great deal on the facts that are involved. And so what the court will do with looking at a case-by-case basis, decide whether or not the interested persons who were complaining about the final rule that was promulgated and arguing that they didn't have sufficient notice, that that final rule could've been a development whether or not they were unfairly prejudice, that's the real issue. Were people unfairly prejudiced in the comments that they were able to offer based on the change in the rule? Effectively, if I was not adequately informed by the proposed rule that certain issues were on the table then why not provide comments I'm not going to mention those issues and if I don't mention those issues that could have a prejudicial effect on the comments that I'm able to offer the agency. So it maybe that I have important information about one of the issues that's involved, if the agency doesn't raise the issue in the proposal rulemaking time period then I also would not present that information and therefore I would have been unfairly prejudiced potentially by an agency final rule that considers an issue that wasn't raised by the proposed rule.

So in making this determination, the courts will sometimes look at the relationship of the challenging party and the agency as well, to decide whether or not that particular party was prejudice. As we said earlier it is fact specific, context specific determination that the courts make on a case-by-case basis. And in some cases the court is going to look at the sophistication of the party complaining along with the relationship that they have with the agencies involved, to decide whether or not there was an unfair prejudice of which to place.

So to look at this more closely and how this applies, let’s take a look at to the Chocolate Manufacturers Association case from your text. So you’ll recall in that case, the court is wrestling with this question about the effectiveness of the notice, what's going on in that case factually is that the Chocolate Manufacturers Association is complaining that they did not get sufficient notice that flavored milk would be deleted from the list of approved items under the federal subsidized nutrition program for women, infants and children. And get them from that and this would potentially impact their sales, because as long as that's one of the things that people are able to buy under the federally supported program, that means they are going to get more income. So Chocolate Manufactures Association is concerned that they are going to lose revenue as result of being removed from the list of approved items. The court notes that the organization, the particular administrative agency, which is a part of the Department of Agriculture, specifically the Food and Nutrition Service of the Department of Agriculture. Provided a general preamble and some discussion of the proposed rule, explaining that there was a greater concern by Congress about having a lot of sugar in the approved items and that that could be an unhealthy practice and so they were seeking ways to reduce the amount of sugar because it could also lead to bad eating habits in the future. So along those lines the proposed rule considered reduction in sugar more generally in its nutritional value of making that reduction. They also talked about the fact that juices are approved and that juices can have high sugar. But said specifically they would not address the juices because of the technical difficulty associated with that. But they made no mention of high sugar content associated with flavored milk. During the notice and comment period, a number of people commented, I think something the facts would indicate almost 80 people commented that it was a bad idea to have flavored milk included on the list because it is a high sugar item and has minimal nutritional value. And so the final rule that was promulgated through the agency had deleted flavored milk. Chocolate Manufacturers Association is concerned that this final rule that deletes flavored milk was not something that they could have possibly anticipated. They argued that from the original language of the rule, because it didn’t say anything about flavored milk as a potential that was one that was bringing high sugar content that the agency was concerned about. The court considered this question and really was dealing with the issue of

the effectiveness of the notice. So to address that they basically worked through information provided notice to see whether not they felt that that information would've probably made the Chocolate Manufacturers Association aware that this product may potentially be removed, and therefore led them to provide comments to support the continued use or the continued inclusion of the product in the agencies list. So the court holds ultimately, that the, CMA, or Chocolate Manufacturers Association was not fairly treated and that the administrative rulemaking process was not served by the change of the proposed rule to the final rule and that the final deleted flavored milk and a proposed rule made no mention of the possibility or likelihood, or even consideration of flavored milk. So, the court justifies its decision by arguing what we've already mentioned, right, which is, that there has to be a logical outgrowth from the proposed rule to the final rule and the reason for this is that interested parties, the court says, have been alerted by the notice of possible changes that may be adopted as a result of even the comment period.

So it's not that changes to propose rules as result of comments are not acceptable, it is that the proposed rules will have to include some information that would trigger the awareness among interested parties that as a result of comments be it certain sections of the rule may be changed. And so that the court says is what's necessary to get interested persons, a fair opportunity to comment and participate in the rulemaking. So the court says when the final rule substantially departs from the terms or the substance of the proposed rule that notice is inadequate. In this cas,e the court feels that the final rule has substantially departed from what was concluded in the proposed rule, in deleting flavored milk and so they ultimately say that they felt there was insufficient notice that the deletion of flavored milk from the program would've been considered if adverse comments have been received and for that reason, persons were interested like the Chocolate Manufacturers Association didn't have a fair opportunity to contribute to the rulemaking process by providing their own comments that arguably would've defended the continued use of flavored milk. Okay and that kind of covers the way in which we see notice playing itself out in practice, so practically notices something that is frequently challenged by people who feel that the notice that the agency gives was inadequate. One way that notice might be argued to be inadequate, is that the proposed rule and the final rule are not found to be sufficiently similar, so as to provide people with adequate notice that the proposed rule would lead to issues that are raised by the final rule.

And so the next issue we go to away from the question of notice is the idea of the opportunity to be heard. So after the agency has fulfilled its notice requirement at 553, it then has to also make sure that fulfills the opportunity to be heard requirement, and that means that persons who are interested should have a chance to participate in the rulemaking and that can be done, as we mentioned in our prior lecture, by allowing them to provide written data, arguments, or their views on issues and that can be done at the agency's discretion as the language says on the slide, with or without an opportunity for all presentations. So in some cases agencies will require a public hearing and in some cases agencies will not provide a public hearing. In some cases agencies provide a public hearing because the statute dictates that they provide public hearing. For example the National Environmental Policy Act, or NEPA, requires that agencies hold public hearings in certain circumstances. Some cases an agency may not be required to hold a public hearing under the statute but it may choose to do so because it feels that there is sufficient interest that hearing from local persons may be a valuable part of gathering information. With irrespective of those decisions by an agency, it has to divide an opportunity for people to be heard under 553(c).

Now in terms of that opportunity to be heard, the statute does not lay out a specified time period, but it does lay out at 553, that you have to have 30 days between the time a rule is proposed and when that rule becomes effective. As a result, the minimum time period for offering comments under the APA, is normally taken to be 30 days. And there are exceptions to that 30 day, kind of, minimum time period

which are articulated on this slide. So certain kinds of rules may not get a full 30 day period. We already know that there is no opportunity, no obligation for agencies to have to provide any opportunity to be heard for these kinds of rules. So, as we went over last class, specifically these are exceptions to the rulemaking requirements and these exceptions to the rulemaking requirement, means that the agency does not have to give the public an opportunity to be heard when these types of rules are being made.

Now one of the real central items for any kind of rulemaking is going to be the idea of the statement of basis. Now that statement of basis and purpose is articulated at 553(c) says that whenever an agency is going to go through an informal rulemaking process, they have to include in their proposed rule, the concise general statement that presents what the basis of the proposed rule is and what the purpose of the proposed rule is. That simple statement of basis and purpose is laid out at 553 normally becomes, as the reading says, a very extensive defense by the agency of its proposed rule. It includes a great deal of evidence and information, normally hundreds of pages are involved in providing background materials to support these proposed rules. That's because agencies have learned that courts are going to scrutinize their statement of basis when determining whether or not they've met the rulemaking requirements. In some cases the more extensive record of agencies included with the propose rules as a result of requirements of specific statutes that the agency is required to follow. That's the enabling legislation again that I mentioned to you that will also dictate certain information that the agency may have to include when it undergoes a rulemaking process.

So courts, in looking at the statements that agencies promulgate have made some of requirements clear that agencies are going to have to meet it or survive judicial scrutiny. One of the most important ones is that the agency statement of basis and purpose has to relate to the final rule to what the enabling legislation has identified as the goals or the language that is of use in that enabling legislation. So in other words if the agency is going to go to the rulemaking process and it provides a statement of basis and purpose, it is going to have to say that this rule is authorized by a particular statute and a particular section and they are going to have to say how the rule is related to the goals of that statute and the goals of that particular language and/or section, or is a direct outgrowth of the goals or the language which identifies the priorities that the Congress has in issuing in that particular statement or section of the statute.

Further courts have argued that agencies will have to provide a detailed explanation of his reasoning from the statute to the rule in other words agencies can't simply provide a citation to the statute to say this proposed rule is based on statutory section XYZ. They have to explain why they feel the rule that they're proposing is a reflection of what the statute authorizes the agency to do. Further they're going to have to provide factual evidence about how this rule meets the statutory expectations or requirements. And then finally they also are going to have to talk about alternatives that they may have considered and/or rejected they're going to have to talk about what they expected outcomes of the rule will be when it's implemented. And they also have to respond to major comments and that's an important issue. When agencies failed to respond to major comments they are viewed as actually violating their obligations under the APA. So every major comment that the agency receives it is expected that the agency is going to provide some response to that comment and the failure to do so can be the difference between the agency having a rule that the court will uphold and having a rule that the court overthrows. So as we said before, agencies are scrutinized by courts through this process based on this general statement of basis

and purpose which also has to include a response to comments, citations to the statute, explanations of how our rule meets the congressional directives in the enabling legislation. When agencies failed to do so they will find that the courts will normally vacate the rule and then send the case back to the agency to redo the process over again which can be very timely and very expensive process for agencies. So they try to avoid that finding by providing very, very detailed and very, very lengthy sets of information and statements in support of the rules that they propose.

So let's see how this plays itself out in terms of some practical issues through cases. So we have two particular cases that look or address this specific issue and they come out in different ways. The questions in both these cases are really speaking to it and all communication are presented to an agency that are outside of that normal notice and comment period whether or not that should be considered a violation of the APA requirements or other requirements of administrative law. So what we see in this case is that we have or what we see in these cases is that we have circumstances of what's called ex parte communications and ex parte communication means any communication which takes place that is off the record but is with a decision-maker. So you basically have someone who is having a communication, sending a letter, or a transmittal, or sitting down and having a meeting or discussion or making a presentation to a decision-maker with regard to the rule and then that information is not necessarily reflected in the record or maybe the information was given outside of the proper notice and comment procedures by allowing meetings and then subsequently placed on the record. So we have both of these kinds of issues which are present in these two cases. We are going to see how the court deals with very similar set of issues in two different ways in the Home Box Office versus the FCC case and the Sierra Club versus the Costle case. The first case was the Home Box Office versus the FCC case and that was a case that involved the Federal Communications Commission in their decision to allow cable providers like HBO to expand the level of content which they were going to be providing the general public. When they did that they wanted to also not destroy the traditional television market and so they had a proposed rule that was going to loosen how restrictive the FCC's regs were on these new cable providers. Well before that final rule occurred there were a number of meetings which took place between commissioners and the industry representatives who had their own beliefs about what the rule should say. These communications were all off the record communications and they included a lot of presentations that were made that were part of the information that was used to try to influence the commissioners and their ultimate determination. And so that kind of factual basis then caused the court to have legal concerns about this process because they felt that in fact the process was not one that allowed a real fair consideration to the public. In fact the court held that in written documents or a summary of all communications had not been placed in the public record for the rule-making docket after the communication was received so that interested parties could comment on it. It would then subsequently be a violation of the requirement that the public have an opportunity to consider the same information that the agency was able to consider, so that they could offer potential comments on that information that would potentially influence the outcome of the agencies process. Moreover the court makes the determination in the case that agency representatives should not meet with persons who are in fact seeking to provide discussion to them with regards to the ultimate disposition of a matter. So that meant that they should not talk to attorneys, or lobbyists, or other parties who are interested, or agents or persons who are interested in the agency's decision so in that case they said one, there shouldn’t be meetings during the decision-making process with persons by persons who are decision-makers within the agency and then to they found that anytime there were discussions or conversations that had taken place prior to the agency's ultimate decision, those things should be written down and then they should be put in the public file, right after that communication had occurred and then it will be an opportunity and eventually an opportunity should be provided for the public to comment on those documents as well. So we see in the Home Box Office case the court takes a fairly narrow view of what is allowed with regards to ex parte communication. Now it is clear in a formal rulemaking process as your reading would have mentioned that you would not allow the ex parte communication to occur. In informal rulemaking, it's a little less clear, partially because the statute at section 553 really doesn't say anything about ex parte communication, but it does lay out what the agency should base its decision on. So much of this discussion of ex parte communication is really about whether an agency has based its decision on the record which is created under the notice and comment rulemaking process and if the agency is not basing his decision on the record created during the notice and comment rulemaking process, then 553 is been violated. So even though there is no specific reference to ex parte communication, there are some outlines at 553 about what kind of information should guide the agency and so these cases are really parsing out when the inclusion of certain kinds of information would be an affront to 553 and when it would not. The HBO case which takes a pretty hardline case, is really disavow to some degree by later incarnations of the Federal Circuit, so they don't directly overturn it but it is treated in fact as a case that may have to narrowly defined and what 553 actually allows. The Sierra Club versus the Costle case helps us to get a better idea of where the courts are today in terms of their view about ex parte communications. One note, difference between the Sierra Club vs. Costle case in that Sierra Club because it is not based on administrative procedure act. The Sierra Club versus Costle case is really a case that is rooted in the clean air act which is administered by the Environmental Protection Agency. In the clean air act, in a set of amendments that are occurring to the clean air act of 1977, the agency is authorized to go through a rulemaking process with regards to some specific information and some specific standards that are being used for air pollution control. So the agency is actually being challenged on whether or not ex parte communications which occurred outside of the process for notice and comment rulemaking laid out in the clean air act actually are in violation. And to make that determination, the court is really looking at whether or not the particular communications which occurred after the close of the notice and comment period that therefore would have been a violation of the requirements in the clean air act that the agency consider the comments that are received and that they make the decision based on the record that's collected in the comment period. So the court really breaks this down the Sierra Club versus Costle case, to two issues. So one issue is whether or not late comments that were received, that were written comments of which there about 300 of them on the proposed rule should have been allowed, that the EPA should have accepted those late comments and actually entered those late comments into the record. That’s one challenge is that they should not have allowed late comments into record because they didn’t tell people that after the comment period ended that they would consider to receive and consider comments. The second issue that's been considered is whether or not these different meetings that EPA actually had with persons who are interested in the outcome of the case should themselves be considered a violation of the notice and comment period because these were meeting that weren’t generally open to the public and therefore the information that was conveyed in them was not information that was available to the public that they could comment on. So in considering these two issues, the court went through an analysis to get down to the heart. The first thing that the court considers is whether or not this inclusion of information by the agency in the post comment period was a violation. So to make that determination they looked at what the statute in the clean air act or whether what the clean air act statute required and they found that there was nothing in a statute that prohibited the agency from including post comment period communications nor was there anything in the statute that required them to include post comment communication, so we could use that to argue to some degree that there was a certain level of deference and discretion that the agency was due and making a decision about what information to include in the record that have been submitted. They ultimately argued that the agency had no requirement to guarantee that every single piece of paper or a phone call that related to the rule after the comment period closed was going to actually be entered into the docket. So that meant that they could have some instances but they had no requirement to do it in all instances. So ultimately they found that that was a very lawful process that the agency underwent with regards to making a determination about what written comments that were received after the closed comment period should have been put into the public docket. Ultimately though, you should keep in mind is did the agency make its determination based on information that's not in the record? That never acceptable, not under 553, and not under the formal rulemaking process, at 556 and 557, and almost never under enabling legislation, so agencies are required as a general matter to make their decisions based on the information in the record. And so the court says here in this rationale ultimately around this issue about the post comment documents that were received and entered, that this is not a case of documents that were vital to the agencies support of this rule were submitted so late as to preclude any effective public comment and they argued basically that information that was included in the record still allowed some opportunity for public comment when it was something that was relied on by the agency. So therefore they find here in this case, that there is no violation of the requirements of the clean air act in terms of the informal rulemaking process and the opportunity to be heard by the inclusion of late comments in the administrative record. The second issue is a little more challenging in that these are not documents that were ultimately included on the record but this is a situation where we are really talking whether or not meetings that were actually held with the EPA and other individuals who are not part of the agency in which persons were lobbying or presenting oral testimony about what the final rule should be, that occurred after the close of the comment period were themselves a violation of the requirements of administrative law. The court goes specifically to the statute that is the enabling statute that guides the agency in this process and they say the statute doesn't explicitly treat this issue of whether post comment period discussions with individuals outside of the agency would be a violation. In fact they argue that the statute prohibits any such communication anytime or any place. So therefore they argue that even though informal rulemaking is important in the context of public policy is not clear that it's anyway inappropriate to have ex parte communications occur in that informal rulemaking process as a matter of definition. So in the formal rulemaking process, the definitionly of ex parte communication is disallowed and they are arguing in the informal rulemaking process, there is no definitional exclusion of ex parte communication. The real stand that the court looks at is whether or not the agency has provided the basis of this decision on the record. So they go further to discuss the clean air act procedures and they argue that under the clean air act procedures, the promulgated rule cannot be based in part or whole on any information or data which was not being placed in the docket. Thus the EPA must justifies its rulemaking solely on the basis of record it compiles and makes public. So, in this case the issue is not whether or not any informal meetings occurred that weren’t on record, the issue is whether the agency made a decision about issuing the rule that is not supported in the record, so what's the difference? So let's say the evidence in the record argues that the agency should repeal a pre-existing regulation and maybe scientific information in the record argues that repeal will be acceptable, maybe economic information collected indicates that a repeal would have economic benefits. If the agency decides contrary to all the information in the record that it is not going to repeal the regulation then it has to have some information that it is relying on and if it can’t point to information in the record that supports his decision and it made the decision because it was influenced by conversations with persons outside of the agency, that's a violation of the clean air act provisions regarding the rulemaking process and it would also be a violation of the 553 requirements, as well as the 557 and 556 requirement. So basically what you should understand is that agencies have to make decisions based on record evidence and the uniform standard pretty much for any informal rulemaking and formal rulemaking for that matter is going to be that the agency doesn't make decisions that aren't supported by information in the record. In contrast, if the record evidence could support a decision one way or the other, it's not a violation of the informal making requirements to have conversations with people who want to try to influence you to actually make a decision one way or the other in light of information that’s in the record. As long as the information in the record is the basis of the decision then having a conversation, the court is saying with someone after the comment period is over, about what they think you should do, is not a violation. They say specifically that the agency has authority to make decisions to make determinations about what information it feels was of central

relevance to its ultimate decision and therefore he can do the same thing with regards to all communications that it has. If there's oral communications that It has been essential to the decision-making then needs to put that information in the record and that information in the record can be a decision basis for the ultimate world that the agency will promulgate. There's a third issue however the court also considers in this case, and that has to do with a particular kind of meeting. In this case, the agency also met with folks from the White House who had some opinions about the issue as well. So one of the things the court was also try to determine was whether these oral communications with White House staff and with the president had to be put in the docket on the rulemaking record. So we just say generally that the agency has discretion to have these meetings and it also has discretions determine when information coming from an oral meeting needs to be placed on the docket. So now it’s asking the question whether an oral meeting with the president or the White House also has to be placed on the docket and in this case the court holds that the fact that you have an executive branch meeting during the post comment period and that you didn't docket that information that involved the president, doesn't violate the procedures mandated by the clean air act nor of due process. Of course as we said this is not a hearing is done under 553 so you won't find the court citing 553 in this case and they basically support the decision based on the idea that, I'm going to give you the language specifically, the courts says the purpose of a full record review which underlies the need for disclosing ex parte conversations in some settings, does not require the courts know the details of every White House contact, including a presidential one ,in this informal rulemaking setting. In other words, they're saying that as a court this record is being developed which they can then review in full to determine whether or not the agency's decision was one that can be upheld, doesn't mean that every time they spoke with someone from the White House who sought to give guidance and direction about how the agency should proceed in a particular rulemaking has to be on the record. The court argues basically that with or without any discussions from the White House that is going to try to influence them one way or the other, there have to be facts in the record that support their decision, that's what the court is interested in. The court is interested in the information, factual information, legal information, and other information that’s contained in the administrative record that provides the basis for their decision. The fact that they meet with a high- level officer maybe even the president of the United States, who tries to influence them or even direct them to make a decision, one way or the other, is not the concern of the court. The concern of the court is whether not the decision they ultimately make, is substantially and adequately supported in the record. Which means that the final rule is going to have to be explained based on the record evidence, the final rule is not going to be explained based on the meeting with the president, if the final rule is explained based on a meeting with the president then the information that came out of that meeting with the president would need to be included in the record. So the court is saying as long as the explanation of the final rule is not based these oral communications that happened in these meetings, then these meetings don't then violate the requirements of the clean air act in the Sierra Club versus Costel case nor in a similar fashion the 553 APA requirements. That ends our consideration of informal rulemaking, kind of at a nuts and bolts level. The next module we will have a conversation and that lecture will consider now distinctions between formal rulemaking, informal rulemaking and hybrid rulemaking and so we'll look forward to talking with you about those issues in the next presentation for the next module.

Script_M04_Formal and Hybrid Rulemaking Video JD Law Administrative Law

Hello class, now we begin our discussion of formal and hybrid rulemaking in contrast with our discussion in the last class or lecture about informal rulemaking. So I'm looking at the cases of formal and hybrid rulemaking, I want to refer you back to our prior lecture, way back in module two, when we discussed what formal rulemaking required. Also this is been mentioned in chapter 1 of your textbook, which was the first early reading assignment.

So let's look at what we have in terms of requirements of formal and hybrid rulemaking. So in some cases as I have already said a statute may not make any comment with regards to rulemaking requirements. So the enabling legislation for an agency that authorizes an agency to act in a particular case with regards to rulemaking doesn't mention anything about the rulemaking process, then section 553 of the APA governs that rulemaking. For example we might want to consider the fact that the APA has no requirement for public hearings for informal rulemaking. However section 553 that I’ve mentioned to you while 553 does not require public hearings. The National Environment Policy Act Formal, NEPA does require a public hearing.

What I'm saying is that while the APA governs when a statute or enabling legislation is silent about what's required, the specific provisions of the statute govern when they require more than the APA. So in our example what we see is where the APA does not require a public hearing, however there is a requirement of a public hearing in a specific statute of the National Environmental Policy Act and so that means that a public hearing is required, in addition to any of the other minimal requirements that 553 requires. So the idea of a hybrid rulemaking means, that an agency is obliged to follow the specific directives of a statutory mandate about rulemaking and where the statute is silent, then the agencies required to follow the provisions at 553 informal rulemaking. For formal rulemaking, then the agency would be required to follow what is in the statute and then when the statute is silent, it would be required to follow 556 and

557. So when you think about hybrid rulemaking, you should see it as being a case where an agency is bound to follow specific procedures required that are articulated in a statute but those things that are not mentioned in the statute, the agency is obliged to follow the requirements of the APA and when it comes to informal rulemaking that means following requirements of section 553 of the APA.

So it a case of the NEPA example I’ve just giving you, that means that there has to been an environmental hearing or a hearing to discuss the environment impacts that might come from a significant major federal actions under NEPA and those who will require a public hearing and when that public hearing is held that's considered a hybrid rulemaking process.

So we think about formal rulemaking as we’ve said in previous slides now. Formal rulemaking has to do a compliance with sections 556 and 557 of the APA.

That requirement of 556 says that there has to be taking of evidence in a formal fashion by an administrative law judge or by one or more other agency officials, that means that the rulemaking really as I’ve said previously looks more like an adjudication, it looks more like what we are used to in regards to a trial because there is a very formalized process in which evidence is going to be taken of a factual basis.

And that means also as we mentioned previously, that would people come to provide evidence at the formal hearing, pursuant to 556, there's going to be the taking of oaths, people can bring subpoenas, there could be depositions in advance of the hearing, and all kinds other formal hearing procedures that we’re more used to seeing in the trial are actually part of the formal rulemaking process.

Now when we think about formal rulemaking, informal rulemaking and hybrid rulemaking, then we want to refer back to our last lecture where we went over informal rulemaking in the nuts and bolts requirements of section 553. We’ve outlined for you, just briefly, some of the formal rulemaking requirements at 556 in this lecture. We will say more about formal rulemaking requirements when we discuss formal adjudications in subsequent lectures because formal adjudications and formal rulemaking follow the exact same procedures under 556 and 557, you’ll get a fuller development of what those requirements are for rulemaking when we look at formal adjudication. This is the same approach that your authors of the textbook take and we're following their example in the way we’re covering the material here. So now you've learned about informal rulemaking in the previous lecture, you've learned about formal rulemaking, at least some of the specific requirements in this lecture, and then you’ve learned about hybrid rulemaking in this lecture. Again hybrid rulemaking is when an agency has certain requirements that are silent in terms of its rulemaking process it follows the APA if its statute is silent.

However, if the statute has some specific requirements, it follows the requirements of the statute. So I with the regards to the NEPA example that we've used earlier, it basically means that NEPA establishes that a hearing has to be made for undertaking their notice and comment period, but the APA at 553 still provides directives for that agency in the notice and comment process. So it's a hybrid because the agencies required to follow some the basic minimum requirements of 553 in aspects of the rulemaking process that are not otherwise discussed in this enabling legislation. So therefore it's a mix of following some things in the enabling legislation and following some things from the APA hence there's a hybrid. So that brings us down to three cases in particular that going to explain for you more or less, how we've come to where we are with what the basic rulemaking requirements are. As I said to you previously the idea of a formal rulemaking is a rare one and it only occurs when statutes say that the hearing that an agency holds, has to be an on the record hearing and so unless you see that language saying that there has to be an on the record hearing, there is normally not going to be a requirement that an agency holds a formal hearing for rulemaking as opposed to informal rulemaking process. And so you have three cases that are going to help us understand what the basic minimal requirements for holding rulemakings that may require hearings and whether or not they have to be pursuant to 556 and 557. So the first case we think about it is the United States versus Allegheny-Ludlum Steel case that's covered in your text, and that case is basically dealing with the question of whether or not the legislation that created the Interstate Commerce Commission, now a defunct commission, which is called the Esch Act, required that commission to hold a hearing pursuant to sections 556 and 557 of the APA before they were able to promulgate any rule. The court considered that question and looked specifically at the fact that the legislation had authorized the commission to develop rules after a hearing and so because the language said “develop rules after a hearing” the parties felt that meant that a 556, 557 Administrative Procedure Act hearing had to be applied. The court considered that question and argued that the language of the Esch Act did not invoke the requirements to follow 556 and 557, why not? They said that the Esch Act said that the agency was authorized to issue its rules after a hearing and so the parties who were arguing it felt that the language of issuing rules after a hearing, meant that hearing had to comply with 556 and 557, the court says no, you only have to have a 556 and 557 hearing where the language of the statue says that the hearing has to be on the record. So that case really just holds up the principle I just mentioned to you earlier, that you only had to comply with 556 and 557 in your formal rulemaking process when the language of an enabling statute says that there has to be an on the record hearing. The next case we deal with is United States versus Florida East Coast Railway case and in that case we are really looking at the same agency, the ICC, and now we are looking at whether or not the ICC Esh Act hearing requirement basically meant that that procedure that was being held, was adequate in light of what the hearing was that was offered. So they are basically looking at the same agency and they're saying okay so it didn't have to be at 556, 557 hearing but there did have to be some kind of hearing. The question is what kind of hearing is required by the Esch Act if the court has already said it doesn't have to be a hearing that is consistent with the requirements of 556 and 557. A quick side note, I want to encourage you again to look at your appendix and take a look at the APA, look at 556, and look at 557, and look at the outline and list of the requirements that have to be made available when you're going to have a hearing to complies with those statutory obligations. In this case the court said well we already know you don't have to meet the requirements of 556 and 557. Because we’ve already made a decision in United States versus Alleghany Ludlow Steel, but what is the hearing kind of what is the contours, what is requirements of hearing, that will satisfy the Esch Act because the Esch Act does say that rules can be promulgated after the hearing and the court basically says that the word hearing in the Interstate Commerce Act doesn't necessarily embrace the right to present evidence orally and to cross-examine opposing witnesses or the right to present an oral argument to the agency decision-maker. The court looks at the language of the statute and considers the fact that the kind of information that is being sought, is the kind of information that is not specific to the individual parties and so because the kind of information is not what we call trial type facts, is not based on trial type facts, facts that are particular to individual party but are what is called legislative facts, that means that these are facts to general policy decisions as the effective broad-base with people. Because they're not adjudicative facts, the kind of facts where you need to have a finder of fact or an Administrative Law Judge oversee the hearing, and that person needs to be able to take specific evidence and it needs to be depositions in advance, and there should be the ability to have subpoenas issued in advance, and so because we're not soliciting the kind of formalized factual evidence that 556 and 557 make possible, then the courses says the kind of hearing they need to have doesn't need to comply with those kind of rigorous intense obligations. So not only does the hearing not have to comply with 556 and 557, the hearing doesn’t even have to comply, they argue with the receipt of all evidence, cross- examination of witnesses, or even have the idea of presenting all arguments to the decision- maker. So they basically say, what does the hearing require? It doesn’t require any of these things, in fact they make a decision that particularly suggests that meeting the basic requirements of 553 is the only kind of hearing that people have a right to under the Esch Act and so basically read the Esch Act to only require that people have the opportunity to comment that comes with a normal 553 in formal rulemaking process. So in the Florida East Coast Railway case, you see how this looks like it might be hybrid rulemaking instead the court reads the Esch Act as not requiring anything other than compliance with section 553 of the APA. And so this basically takes on a basic informal rulemaking posture. The next case and the last case we talk about is the Vermont Yankee Nuclear Power Corporation versus Natural Resources Defense Council case. In this case what's going on is the court is trying to figure out whether or not the complainant’s inability to have discovery cross-examination in a rule proceeding that is taking place is a denial of its meaningful opportunity to participate in rulemaking and the natural resources defense council is arguing because they couldn't cross-examine folks and because they couldn't do discovery, they couldn't meaningfully participate in the rulemaking process and the court argues that in fact the procedures which were followed during the hearing that was held by the agency was in fact adequate. They argued that unless the particular constitutional constraints are completely or specifically compelling, administrative agencies can hold whatever kind of hearings they want to hold as long as they're consistent with the language of the statutes so Vermont Yankee is an important case in administrative law because prior to this decision courts would often review the kind of hearings and rulemakings that agencies undertook and decide well we don't think this was adequate or we think you the agency should've done this or done that. The Vermont Yankee case represents a decision to get much more discretion the agencies and argues that the only thing judges should review is whether or not the agencies met their statutory requirements in terms of the hearing process or the rulemaking process they underwent. Therefore the courts now only look at the administrative procedure act and enabling legislation and as long as the basic minimum requirements that are presented in the Administrative Procedure Act that are presented in enabling legislation are followed, the courts have to uphold the process the agencies undertake and find them as being adequate so if an agency holds a hearing, prior to a rulemaking, the way that hearing is conducted is going to be determined based on what the statute requires for the hearing. If the statute doesn’t require that people be able to cross-examine witnesses or have discovery, if the statute merely says as NEPA does, that the agency shall have a hearing prior to its issuance of a final environmental impact statement then the agency really has to have an opportunity for the public to come forward to present oral testimony. They don't have to have a certain amount of period of time that people have to have to testify. I mean they don't have to have an hour, they don't have to have 35 minutes, the agency can constrain testimony within a certain window of time in light of the number of people who are present and what would be considered reasonable. They don't have to let them they don't have to make agency personnel answer questions at the hearing that is all the discretion of the agency. The court is saying, so ultimately when you're looking at a hearing in the adequacy of the hearing then the only standard that the court is going to look to is what does the statue require? In the case of the APA, the statute requires one “on the record” hearing, the provisions listed at 556 and 557. If it's an informal hearing, the only thing that has to happen is an opportunity to be heard pursuant to 553 on the APA and then otherwise if it’s a hybrid rulemaking, and the agency is basing its hearing on the enabling legislation then only the specific requirements of that legislation with regards to the hearing which is mandated have to be met. And this wraps up our discussion of hybrid rulemaking and formal rulemaking. So now we covered in informal rulemaking, we’ve covered hybrid rulemaking, we’ve covered formal rulemaking, we will say a little more about formal rulemaking when we talk about formal adjudication, but for the most part now we’ve kind of gotten our hands wet and we’ve gotten our feet firmly implanted administrative law in the first section of the course which is rulemaking and as you think about that, we now will move into our next lecture to talk about judicial review of rulemaking. I look forward to talking to you then.

Script_M05_Judicial Review of Rulemaking-Chevron Deference Video JD Law Administrative Law

Hello class and welcome to our discussion of judicial review of rulemaking, part one. In this lecture, we’ll discuss the idea of Chevron deference, Chevron is a case that's covered in your text, in the reading, and you'll remember from last class that we explained that rulemaking was the first section of a three-part review of administrative law. The second part of that review is adjudications and the third part of that review is judicial review. The reason we're talking about judicial review of rulemaking right now is because judicial review applies to rulemaking and to adjudications. So, as we end our discussion of rulemaking, we discuss judicial review and when we complete our discussion of adjudications, we’ll also discuss judicial review. And then we'll move into a separate discussion of judicial review in that separate discussion of judicial review, toward the end of the class, then we're going to focus on some of the more prudential requirements that the federal courts have put in place before parties are able to bring claims.

Those requirements are created by the courts or by the Constitution, as opposed to being created by the administrative procedure act. So, as we look at judicial review in today's lecture we’ll be talking about how the administrative procedure act and the courts have put requirements on agencies behavior in terms of the rulemaking process. We’ll also look at the same thing with regards to adjudication in about 4 or 5 lectures from now and then ultimately, we’ll explore what the requirements are that courts of the Constitution put on litigants who actually want to challenge or obtain review of agency decision making.

So that said, I’ll just say a little bit about the Chevron case itself and then we will dive into what makes this case so important. So, Chevron Resources Defense Council which is covered in your textbook, is one of the most important if not the most important administrative law case. The reason being is it's the most cited administrative law case and it has a broad range of influence over courts regular reviews of agency decision-making. In the specific case and I'll only talk about it very much in brief just as an overview, you can read the case yourself, in the original case what happens is the Environment Protection Agency is being challenged by the Natural Resources Defense Council, an environment group that believes that the agencies rule with regards to the decision that a facility is able to increase its emissions from a new source at a plant as long as it decreases emissions from existing source at a plant is unacceptable. So the Natural Resources Defense Council, known as the NRDC, says that that rule that the agency is following is not acceptable and so they challenged the rule in court.

And so the court then is trying to answer the question as to whether or not the EPA's interpretation of the clean air act that defines pollution to be the entire facility or entire plant is a lawful interpretation of the statute and so basically from an administrative law standpoint, we are looking at the rulemaking process and whether the agency's creation of that rule is in fact lawful. So, to do so, the court basically explored this whole question of what its relationship should be to an agency’s rule that is put in place and that leads to the complete idea of Chevron deference. Alternately the court held that the agency's interpretation of the clean air act that allowed for a source to be identified as an entire plant rather than an individual polluting stack, was a permissible one and was a reasonable one and so the court upheld that interpretation because it felt it was reasonable. That led to the whole idea of Chevron deference because in explaining why it made this decision, the court explains that in all decisions where the federal courts are overseeing the behavior of an administrative agency, there should be this idea of a deference to decisions by administrative agency from the standpoint of the separation of powers under the Constitution. And so that's what we're going to take some time to explore now.

So to begin with, when an agency is actually going to the process of implementing a statutory provision it qualifies for receiving Chevron deference from the federal courts, when it appears that the Congress had delegated specific authority to the agency to either make rules or to make an interpretation of the statute that the agency has been charged with carrying out. Because the agency has been given that either that explicit or implicit authority by Congress to implement certain aspects of the statute which includes addressing certain levels of ambiguity in the statute, the courts decided that there should be some level of deference that they should give to their corresponding executive branch part of the government in order to recognize that the agency, rather than the courts, have expertise in implementing the law, And so Chevron deference is really about a constitutional separation of powers argument that the executive branch has responsibility to implement the law and is not the responsibility or job of the judicial branch to tell the executive branch how to implement the tone of the law. Rather the argument in a case by the court is that it is the courts job to find out whether the way the executive branch agency has interpreted and implemented the law is reasonable in light of what the statute says. So, Chevron deference is about courts taking a step back from second-guessing whether agencies have used the “best approach”. Use best in air quotes, for a determination of whether or not agencies have used a reasonable approach. So, in fact the way courts are able to provide deference is consistent with the way that Congress ultimately has delegated or assigned authority to an agency and so Congress has delegated authority to an agency to conduct an adjudication or to go through a notice and comment rulemaking process, or to some other mechanism that indicates that Congress had the intention that the agency would have this authority, then the courts would deference to that activity that the agency is carrying out when they find that there was some ambiguity in the statute.

So, the approach that the court uses in Chevron is a very basic one. They take two steps it is called often in cases the Chevron two step. They take two steps to make the determination when and if deference is required, the first step is to look at the language of the statute and to see whether or not there was any ambiguity in the statute or whether the statute was silent on the particular questions at hand. In the actual Chevron case the court looked at the clean air act to see whether or not the clean air act specifically defined source to include an entire facility or to be limited to the individual stack which has pollution coming out of it. In the past, the agency had interpreted the statute in a way that would limit a source to stack and the new rule, the bubble rule caused the source to be defined as the entire agency. So, the court looked at the statutes to say that clearly identified in the statute whether or not a source should be the smaller one stack or if it should be the entire plant. In looking at a statute, the court found that it was silent, because it was silent it meant that the EPA has a responsibility to define what a source was. That means that the agency has pre-understood responsibility and when I say pre-understood, I mean pre- understood by Congress, that the agency has responsibility to fill in particular gaps in the legislation and the idea of the agencies filling in gaps in legislation is a very important and fundamental one. It's based on the recognition by Congress, because Congress doesn't actually know how to answer all the problems that have to be addressed to carry out legislation. When legislation is written, it is written only in general and broad ways and then they're going to be individual decisions that have to be made by the person who is executing the laws. That means that the laws don't always provide exact definitions of all the terms that are included and those definitions are important in terms of the implementation and caring out of the law. The lack of a definition or even if the definition is given if it's a general broad definition that still has to be applied in specific cases. So there's an expectation that agencies are actually required to make those interpretations. So step one of the Chevron deference approach is to figure out whether a statute

explicitly defines or addresses the question or language which is considered unclear. If there is specific

definition, if there's a specific definition of the legislation which the court feels is clear or if there's specific directives, if there are specific directives in the legislation about how an agency should address the problem and the court feels that those directives are clear, then that means that the courts will stop in the Chevron process and will decide there is no ambiguity, the statute actually has addressed the question, and because the statute has addressed the question that no deference will be required. The court sees itself as being an expert when it comes to understanding clearly legislative directives, however it says that when there is ambiguity then the expertise of an agency that's made up of professionals in contrast with a bunch of lawyers who are judges, the agency is in a better position to interpret and apply the statute. The same thing also goes to the court deciding that deference is proper because the agency has experience normally implementing a statute and years of experience that the agency has presented in a better position to decide what's the best way to implement the statute. For that reason, the court decides to the defer when the legislation is unclear and leaves some ambiguity. When there is no unclearness, when there is no ambiguity in the language of the statute itself, based on the courts reading, then there will be no Chevron deference. The court will review the agencies determination and decide if it's consistent or inconsistent with the legislative directive itself.

To say about the first step of Chevron deference so when the court gets into its analysis, it goes through two distinct determinations. The first one is to read the statute to see is this exact question addressed by the statute in the case of Chevron it was that exact question about whether or not a source should be defined as a single stack or if you could be define it as an entire facility. And so the first up is to say is does that the precise question and issue get answered by the statute? So in the Chevron case they said no. Another part of this analysis, however that I referenced implicitly but we'll talk about now explicitly, is the court making a determination of whether Congress's intent about a particular question is unambiguously clear? So in other words, the court looks to see whether or not Congress’s desire about how to resolve an issue is if it's clear vision of how Congress must resolve certain issues, then the court will not provide any deference to an agency's resolution of those issues instead it will look good it feels Congress’s clear intent is and determine whether or not the agency's actions are consistent with that Congressional intent.

So, after going to that first step of Chevron to see whether or not there's any ambiguity or whether the legislative intent is clear or whether the legislation is dealt with that issue, we move on to step two. Step two of Chevron's deference is to say whether or not the agency's interpretation of its legislative authority and the ambiguities in the statute, is a permissible construction, in other words the court looks to see is the agencies approach a reasonable one, in light of the language of the statute? And that reasonableness is the determining factor of whether or not the agency will receive deference by the court. If the court finds the statute was silent or ambiguous and they find that the agency's interpretation or construction of its directive in the statute is allowable or permissible then ultimately deferred to the agency's interpretation and so what this means is that in the Chevron case itself, the court found that the agencies use of source to mean an entire plant as opposed to individual stack, was a reasonable interpretation of the statute. The court didn’t decide it was the best interpretation of the statute, it didn't decide it was the wisest interpretation of the statute, it merely decided that in the light of economic considerations was the most it was a reasonable interpretation of the statute and that's all Chevron deference requires of agency is that they act reasonably. So, in that particular case and in the long line of cases that followed, you will see courts apply Chevron analysis to assess whether or not the agency's actions and in this case we’re talking about agencies with the agencies rulemaking interpretations or agencies interpretation of the statute in it's carrying out of this rulemaking process, is in fact the reasonable. That ends the analysis and our discussion of Chevron and judicial review of rulemaking. I will talk to you next time as we go to part 2 of judicial review of rulemaking. Look particularly at the scope of review and what the APA requires the courts consider to decide whether agencies rulemaking has been appropriate. We’ll talk to you then.

Script_M05_Judicial Review of Rulemaking Part 2 The Scope of Review Video JD Law Administrative Law

Hello class, today we will continue our exploration of the judicial review of rulemaking. This is part 2 of judicial review rulemaking. We focus specifically on the idea of the scope of review. By way of review you will want to recall that in the last lecture. we were looking at judicial review from the standpoint of Chevron deference and the Chevron deference test, which the court establishes that guides it in its review of agency action. In this class we turned directly to the APA and the guidance in 706 of the APA, that directs courts in how they are to review the decisions of administrative agencies.

Now this is called the scope of review. It is the scope of review because it establishes the standard that is used by federal courts who are reviewing the rulemaking process of a federal agencies, so the APA establishes the legal standard that federal courts are to use when they are reviewing the rulemaking process that agency has undertaken. And using the standards from the statute, the court will make a determination of whether the agency has acted appropriately. And there are three primary standards that the court looks to, there are traditional standards in section 706 that you can review, but these three are the primary ones that come into play. The first is called the arbitrary and capricious standard. And the arbitrary capricious standard basically as you see listed on the slide, identifies that agency action that is considered arbitrary, capricious, or an abuse of discretion, or actions that are otherwise outside of the law, are actions that the court is directed by the statute to overturn. The arbitrary and capricious standard we are going to say more about shortly. The other primary standard is used coming from 706 is the substantial evidence standard. And the substantial evidence standard is the standard that is applied when the agency is undergoing one of its formal rulemaking procedures and we've already talked about those formal rulemaking procedures and that those procedures are in fact, according to 556 and 557 of the APA. And this standard at 706 of the statute establishes that when there is an on the record hearing that is conducted pursuant to section 556 and 557 as part of a formal rulemaking process, the ultimate rulemaking decision that the agency promulgates has to be supported by substantial evidence on the record. When it fails to be supported by substantial evidence on the record that the court is directed under 706 to overturn it. The third standard that is addressed at 706, that is the primary one that is of consideration, is the idea that when an agency’s process of decision making in a rulemaking procedure is ultimately leading to a conclusion that is unwarranted by the facts so significantly, that the court has to have what's known as a trial de novo. And that basically means that the agencies administrative record is so poor that the court has to allow people to come and provide testimonial evidence even though this is an appellate level proceeding rather than being a trial in which facts are to be found. So the 706 scope of review has these primary areas. The third one we just covered is the idea of trial de novo and trial de novo is the standard the court uses when the agencies administrative record is so spotty or so inadequate that the court has to actually take testimony with regards to facts.

Now, under 706(2)(A), that’s where the arbitrary and capricious statement is found and at that standard as the slide indicates, the court is directed to hold that the agencies rulemaking process is unlawful or to set aside the actions, findings and conclusions, that an agency issues that are themselves arbitrary, capricious and abuse of discretion or otherwise out of accordance with the law. And this standard is the one that is used for informal rulemaking that is conducted pursuant to section 533 and in that regard, it means that any time an agency goes through an informal rulemaking process, pursuant to 533, then arbitrary and capricious standard is one that courts use in determining whether or not the agency has properly promulgated that informal rule.

In formal rulemaking in contrast, where the agency is undergoing a rulemaking process pursuant to 556 and 557, as well as in hybrid rulemaking cases within the statute, the enabling legislation, establishes that an agency is to conduct an on the record hearing, then a reviewing court is going to actually use a different standard to decide if that rulemaking process was held improperly. Rather than using the arbitrary and capricious standard which works with rulemakings that are conducted under section 553, instead we see the agency is going to use an substantial evidence standard that is associated with rulemaking that's done pursuant to 556 and 557. So when there is an on the record hearing required by enabling legislation, then you're going to see that the substantial evidence standard, is the standard that courts use to determine whether or not that rulemaking process was done properly.

The reviewing court is directed under the next standard to hold unlawful or set aside, which is the trial de novo standard. The court is directed to hold unlawful or set aside any of the findings, actions or conclusions, that an agency’s undertaken in the rulemaking process, that are in fact not warranted by the facts to the degree that the record evidence in the proceeding is so inadequate that there needs to be development of facts at the level of the reviewing court and that's the trial de novo standard. So whatever the record is so poor that the court itself is going to have to take testimony then the court uses this trial de novo standard. In my experience, the arbitrary, capricious standard is standard that is most frequently used, the next standard that would be used would be the substantial evidence standard. And of course as I’ve said, formal rulemaking proceedings are rare so it is actually rare that you’ll see the substantial evidence standard used with regards to formal rulemaking and then it is more rare that you’ll find the trial de novo standard. So for all intents and purposes, as a matter of most administrative law practice, your ability to work with, understand and apply the arbitrary capricious standard is going to be sufficient for the vast majority of cases that you are going to potentially see.

Alright so as we’ve already just said, most actions are going to flow out of the informal rulemaking process because there won't be enabling legislation that requires an on the record hearing. As such, arbitrary capricious is the standard that is most frequently applied by the courts. Now it was a very important case that dealt with this whole issue of agencies, processes and what review in court should do to determine whether or not agencies processes were sufficient. That case is called Citizens of Overton Park, it’s not provided in an edited version in your text, although there are some references to it. In that case, the court really established that there's a requirement that agencies provide adequate reasons for their decisions. And so when a court is going to make a determination whether or not agency is providing adequate reason, it needs to find something in writing that it can review. That record of the information that the agency considered in making their decision. Now the reason that a written record is what is normally referred to, is that otherwise the court might have to call the head of an agency or the commissioners if it was a commission, to actually come to court and testify as to the basis for their decision, if nothing is provided in writing. And in the Citizens of Overton Park that’s what the Supreme Court held, and as a result of that case and that decision, agencies regularly provide a written administrative record that provides the explanation and the basis of every decision that they make and

that reflects rulemaking decisions as well as what we're going to come to in our next section, adjudication based decisions, as well.

Now one of the things that come out of this judicial review of agency actions, is what's known as the hard look doctrine and I like to use this picture to represent the Hard Look doctrine because it reflects the idea that sometimes you can get more than one impression from the same information. And so agencies are directed to give a hard look to the evidence that they have in their records before they make a decision to make sure that they are making the best reasons, are providing a solid reason decision. In the picture that you have, there are normally two different images that are described by people who see it. One is the image of a fairly young woman who's wearing a necklace and who is looking over her right shoulder and has a what looks like a feather coming out of her hairstyle on the left. And you can see if you look at the picture what might be a small impression for eyelash coming out of the left side of the picture and a very small line for a nose for that image. However others look at this picture and see an older woman who is looking down and she isn’t noticeably wearing jewelry like the necklace which the other one was wearing but instead it looks like the necklace on the other woman is the mouth of the older woman. What looks like it was the ear on the left side of the face of the younger woman is actually the eye, the left eye of this older woman and so this old woman has what looks like a feather coming out of her hair as well, but it is coming out of the right side of her hair in the front rather than the left side of what seems to be the younger woman. Both women seem to be wearing something over their hair. What looks like an old woman to be kind of a scarf of some type that covers her hair from left to right over the top and for the younger woman looks like a scarf of some type actually that doesn't cover the left side of her hair but just covers the middle to the back. And so the hard look doctrine, like this picture, requires that there should be probing and thorough and in-depth review on making a decision about agencies actions. So that means that that be probing and thorough and in-depth review used by the courts to decide whether the agency has engaged in reason decision-making and in the process of formulating judgments about the significance of the evidence in the record. The court is ultimately looking to the determine whether or not the agency supported this decision with the reasoned analysis, now let me just say two things about the hard look doctrine, or one thing about two aspects of the hard look doctrine. One is that the hard look doctrine is the idea that the courts should review agency decision-making with a thorough probing and in- depth review as mentioned on the slide. However another aspect of the hard look doctrine is the idea that agencies should themselves engage in a process of reasoned decision-making and they should always support decisions with reasoned analysis. So courts to make sure that that happens are going to apply a hard look to what the agency has actually said as its explanation for its decision and that's what hard look doctrine reflects.

Now when a court has used a hard look doctrine or examined an agency decision-making process and its explanation for that process and they find that they have not supported that decision with what’s known as a reason analysis, that's when a court is going to decide that the agency's action was arbitrary and capricious. So in many ways if you want to understand the arbitration and capricious standard, one that understand it is it's the standard that the courts use to decide that agency has failed too support its decision with the appropriate explanation and reason analysis. And when the court says that an agency hasn't adequately explained itself in light of the evidence in the record, that's when a court finds that the agency's action was arbitrary and capricious. So when that happens though, it's not the end of the road for agencies rather it merely reflect that the agency is going to have a do-over. It means that the court is going to remand the case back to the agency and direct the agency to reconsider the decision they’ve made based on the opinion that the court has provided it, identifying weaknesses and it's acclamation for

the lack of evidence in the record to support his decision. It then asks the agency to revise its explanation of why it made its decision or to make a different decision.

Now we have an example of this in the Motor Vehicle Manufacturers Association versus State Farm Mutual Automobile Insurance Company case provided the second part of your reading. Now that case is a case that concerns the National Highway Traffic Safety Administration and in the case what we find is that the administration had rescinded a rule concerning the use of what are known as passive restraints and passive restraint reflected two types of devices o automobiles. Passive restraints reflected two types of devices on automobiles, airbags and passive seatbelt, passive seatbelts don't require that you actually buckle them, they automatically buckle on themselves when a person gets in the car and shuts the door. There was an election which took place and after that election of 1980, when President Ronald Reagan was elected, the seatbelt issues in the late 1970s under the Carter administration was reconsidered. In fact the administration then decided they wanted to rescind the seatbelt rule and that's what this case is about. A subsequent administration coming along deciding they didn't like the decision of the prior administration and then seeking to rescind that rule. What this case shows us is that administration don't get to really rescind rules that they disagree with. Whenever agency goes to the process of rulemaking, it’s a formalized legal process. When a new administration comes in if they don’t like the rule, they have the ability to rescind a rule but they have to go to the same notice and comment rulemaking procedures, accept comments, review those comments and the explain on the record, why they want to rescind the rule. That's what's happening in this case, the new administration has directed the Department of Transportation and the National Highway Traffic Safety Administration, as a part of the Department of Transportation, to go to that process of reconsideration and ultimately rescinding the rule. So the issue is whether or not that rescission of the rule was arbitrary and capricious on behalf of the National Highway Traffic Safety Administration. Now there’s some good meaty things in this case and I’m going to take a second and explain it, but I will try to keep it concise, because you all have the ability to read the case

yourself so I'm just going to highlight a few things that stand out. One I am going to highlight on page 178, toward the bottom of the page a second paragraph, about the three quarters of the way down the paragraph. What you’ll find is that the court does a very good job of articulating what factors the court will consider in determining whether or not an agency action is arbitrary and capricious. So I want to point you attention there, to make sure you pay attention to that language, because it's not that often used by courts. That’s one of the reasons why I think this case was selected by the authors of text, because it does a good job of laying out a very thoughtful analysis of the agency actions, in light of the arbitrary capricious standard. So you will look at that language where the court says that normally an agency rule will be arbitrary capricious, if the agency has relied factors which Congress has not intended to consider. And then it goes on and lays out some of those factors like it entirely failed to consider important aspects, it offered an explanation for decision that was counter to the evidence in the record, or the decision was so implausible that it could not be explained based on a difference of views in light of the record evidence or product of agency expertise. So these are some of the factors the courts look at in deciding if an agency’s actions are arbitrary and capricious. The most important one you need to understand is the court looks for a reasoned explanation for the conclusions that the agency has reached in light of the evidence in the record so in many ways it is sort of like writing the law school exam. When a court is reviewing agencies explanation for why you chose to issue the rule it chose, the court is looking like a law professor to see whether or not the explanation connects the issues which have been identified with the rule of law and with the reasons for why that rule should lead to a certain conclusion. In the case of the court and agency the court is looking at whether or not the agency is adequately explained how all of the facts that are present in this in this administrative record lead to the conclusion that it ultimately reaches. So in this case there are really two separate issues that the court looks at. One issue is whether or not

the agency's total rescission of the rule which means rescinding the rule that required the use of passive airbags as well as rescinding the rule that required to use passive seatbelts could be explained based on the evidence in the record. The first issue is more or less a slam dunk, in that regard the court considers whether or not the agency had a basis for eliminating airbags from its requirements and the court basically holds that it was an arbitrary and capricious decision for the agency to remove both of these types of passive restraints, but specifically in the first section of the opinion it talks about the fact that the agency rescinded the rule with regards to airbags really without any consideration of the fact that they could use airbag technology as a way of reducing or increasing traffic safety and reducing injuries resulting from traffic accidents. So the court basically says that the agency gave no consideration to modifying the standard to require airbag technology be utilized, they just rescinded the entire thing without any consideration that they could eliminate the use of passive seatbelts and retain requirements that airbags be used. So that was thrown out as capricious because the agency didn’t provide an explanation for why the airbags were not included in the final rule. The second issue that the court looks at is the idea of a passive seatbelts, and the removal of passive seatbelts, they found also that agency was arbitrary and capricious in eliminating use of passive seatbelt because they said the agency really failed to explain how the evidence in the record that did suggest that passive seatbelt inclusion would have some benefits was disregarded by the agency because the argued that there was some uncertainty to exactly how great the benefits would be from the use of passive seatbelts. This was in light of the argument the agency made that you couldn't be sure how many people would actually continue to use a passive seatbelt system and not detach them and so the courts argued or found the agency was arbitrary capricious specifically by saying that the agency failed to analyze how the seatbelt use, the automatic use of passive seatbelts without requiring any person to do something, could it actually increase the likelihood that people continue to make use of the passive seatbelt restraints. In other words, under a regular seatbelt system, the agency said people don't always fasten their seatbelt, sometimes because they don't want to, sometimes they don't think about it, and so that means that there's uncertainty about the use of seatbelts. Under the passive seatbelt system, a person would have to affirmatively act to remove a seatbelt and so the court says that they didn't even consider how the fact that someone would have to affirmatively act to remove a passive seatbelt, might mean that some persons who would not ever fasten one, also might not engage in the active process to remove one that was automatically fastened and so ultimately the court found that the agency's explanation for rescission of the passive seatbelt restraint requirement was insufficient to lead to his conclusion to rescind the entire rule. So we see here now an example how that arbitrary capricious standard is used by courts, the court overturned the agency's decision, ultimately they require the agency to go back, they remanded to the agency and require further consideration. Alright that end our consideration of a judicial review of rulemaking part 2.

Script_M06_Adjudicaiton Part 1 Video JD Law Administrative Law

Hello class, today we embark on our next module which addresses the issue of adjudication. As I mentioned in previous lectures adjudications is the second of the three components of this course. The first component is rulemaking and we've undertaken that in the last several models we discussed. Now we move into adjudication after we cover adjudication, we will examine a judicial review of adjudication and then we will move into judicial view. And so here we are in the second component and we’ll explore what adjudication means. As the reading indicates, adjudication as a matter of administrative procedure act is everything that’s not rulemaking under an agency’s directive. And so the adjudication term reflects even the process that the agency goes through in issuing licenses as those are considered orders and the process of issuing orders is considered an adjudication. So we see adjudication is a very broad term but in most cases adjudication refers to the proceedings that an administrative agency holds pursuant to sections 55, 566 and 557 for a formal adjudication, and then pursuant to section 555, for an informal adjudication. Alright there's a lot of material here and quite a few slides so we're going to jump right into them, when we get to the end of our slide presentation, we’ll come to our last slide and that will discuss the four cases that are at the end of the assigned reading. For those of you who are interested, I'm going to give a brief synopsis of those cases and point out some important issues, however for others if you feel comfortable in your ability to read those cases and make sense of them, then you can stop listening after I finish the last slide.

So, adjudication, as we said in previous lectures, the idea of having adjudication that is formal is consistent with the legislature in the enabling legislation indicating that the hearing should be on the record. As you will recall, the idea of an “on the record” rulemaking meant that there would have to be a formal rulemaking. Well the idea of an “on the record” hearing means it would have to be a formal adjudication and when there's a formal adjudication 554, 566 and 557 are the three primary provisions that guide what's necessary for that adjudication. Section 555 is the section that governs informal adjudication, now you know on the slide that I indicate that 555 is also part of what's necessary for an “on the record” hearing and I mentioned that, only because 555 which is titled ancillary matters, sets out the minimum standard that's required to be complied with for any adjudication pursuant to the APA. So really if you have a 554, 556 and 557, based adjudication they are also going to comply with what’s laid out as the minimum standards at 555, so that's why I had it listed there just highlight for you the minimum standards are all that’s required for an informal adjudication via 555. And then 554, 556 and 557 layout what’s required for a formal “on the record” hearing and those will encompass everything that's listed in 555 explicitly. I also want to mention for you at looking at this whole idea of a formal and informal adjudications that the agencies will proceed to give more rights to parties, greater opportunities the parties, than what's required by the APA. The APA only sets up what the minimum is that agencies have to do in all of these cases. Agencies are always able, if they would like to, to provide more rights to the parties who are participating in adjudications than the administrative procedure act requires. The administrative procedure act sets a floor not a ceiling on what proceedings an agency can have.

So has been mentioned before 555 establishes certain minimum rights that are necessary at all adjudications that includes the right to counsel as well as subpoena power. That subpoena power right basically means that the Administrative Law Judge or the person who is presiding over the hearing has the ability to issue a subpoena upon request of one of the persons who is a party and the showing that the subpoena should be issued.

Further, you can see that under section 555 that a person who been compelled then by an agency to appear, is entitled to also bring along with him accompaniment and/or representation as including counsel or other qualified representative if the agency allows it. So agencies must allow counsel to come with a party to any hearing a party or an adjudication that a party is compelled to appear in and in some cases an agency will allow another qualified representative other than attorney, you might think about someone appearing before the Internal Revenue Service and bringing an accountant.

Also in any agency proceeding, the persons who are part of that proceeding, have the right when it is an adjudication to appear in person, to appear by counsel, to appear with counsel, meaning that the attorney can come instead of them, or they can come with the attorney or again as I said, they can come by or participate via a qualified representative. Again an example of having an accountant appears before the IRS on one’s behalf.

We said something about subpoenas earlier here's a little more specifics with regards to subpoenas and that basically means that a party has the ability to request a subpoena that's been authorized by the statute and when is required by rules of the procedure. If the party actually makes a showing or a statement that shows the relevance and the reasonable scope of what is being sought through this subpoena power. As I said earlier, agencies have the ability to give more rights and more process for party members than are required by the APA. The APA section 555 merely establishes a minimum.

Now in a formal adjudication the listed items are all rights and all provisions and procedural requirements that must be offered. So in a formal adjudication, everyone who is a party has a right to counsel, subpoena power, to get notice of the charges that are being brought against him, to have an opportunity to be heard, to respond to those matters that are being raised in adjudication, to have a person who oversees the proceeding who is considered an impartial officer, in other words, the person who is responsible for bringing enforcement action against a party, cannot be the same person who oversees a hearing concerning that party, so that person has to be considered impartial. Also you have a right in a formal adjudication have a prehearing conference meeting there could be a meeting in advance of the formal hearing as well as the right to engage in alternative dispute resolution.

Now 554 is the provision that sets up formal hearings or formal adjudications that are conducted pursuant to 556 and 557 and this is what 554 requires that every formal adjudication make available; one, timely notice of agency hearing and that timely notice of agency hearing is very important because if there's a failure to give adequate notice of the hearing, it could be the basis to throw out a hearing, in the same way that if there's a failure to give adequate notice of a rulemaking, it can throw out a rulemaking process. You will recall how we’ve already seen that take place in rulemaking context. Further, in terms of determining whether or not notice is adequate, the court is going to look to see whether or not the notice of the hearing has specifically articulated both the time, place and the nature of the mattes that are going

to be addressed in a hearing. And they’re going to look very closely at the agency's articulation of their legal authority and jurisdiction under which they're holding the hearing. When I was working previously for an administrative agency, one of my responsibilities as an attorney, was to review the documents and letters and notice that were being sent out to parties who were having enforcement actions brought against them, to make sure that they had the appropriate legal authority and jurisdiction cited.

Additionally, every notice of a violation and a subsequent call for an adjudication or hearing has to also identify the matters of fact and law that the agency is asserting. So that notice has to have a lot of information in it and if some of that information is missing that's the basis of the claim that the person has not received adequate notice, that the notice was insufficient because it failed to specify the legal issues involved, the factual issues of being asserted, as well as the legal authority that were relevant.

Also, the notice as a general matter has to be the kind of notice that would adequately apprise the parties involved of they have to address and give them reasonable amount of time to prepare a defense. When it is shown that a party had actual notice, even though the written notice that was sent to them was inadequate, a court will decide not to invalidate adjudication, right, so if it's basically a situation where let’s say a party met and was given a written identification by an agency of all the things that are required in the formal notice and then was told, we’re going to send you a formal notice that lays these things out and the formal notice failed to include some of the information and yet the informal notice that was given to the parties prior did lay out and present all the information and the party show up at the hearing and the agency is able to show that the parties did have the informal notice and were made aware of everything that was necessary. It is likely that the court would not throw out the hearing merely because there was there were some omissions from the formal notice, because it could be shown that the parties had actual notice. So the key thing is did the parties know what they needed to prepare for the hearing, you can show they knew what they needed to, the fact that the formal document which provided them with notice was somehow lacking is not considered the basis of throwing out a hearing. Further if you look at 554 specifically at (c), we’ll find that the APA says that agencies have to give all interested parties an opportunity to be heard and this opportunity to be heard is specified through these provisions which are cited here on this slide. So that opportunity to be heard means that they can submit facts and arguments, they can offer to settle the whole matter with the agency, they can propose that there going yo be adjustments to the proceeding when it's actually something that can be made and done consistent with a public interest. Further to the extent that there is an inability to make a determination about the controversy by consent, in other words, if there can't be an agreement or settlement, then there has to be allowed to the parties an opportunity for a hearing and a decision compliant with the provisions of 556 and 557.

Further, when you move from 554 which sets up what's necessary in terms of letting people know about a hearing that’s going to be held under 556 and 557, we move to look at 556 in specifics to see what does it require and one of the things that 556 establishes is who's going to oversee the hearing, who's going to oversee the adjudication, and so we're talking about 556 of the APA so we know we're talking about what kind of adjudication? A formal adjudication, that's right, this is talking by formal adjudication, so if there's a formal adjudication, there has to be someone who is overseeing the formal taking and receipt of evidence. So 556(b) lays out what parties are eligible as a matter of law to be those persons who oversee or the person who oversees the receipt of evidence and therefore oversees the adjudication. So the options are the agency itself, which can be the actual agency administrator, or director, or someone designated by the agency, to oversee it. Also could be when the agency is a commission like the Federal Communications Commission which means it consists of a board of commissioners rather than one

individual and a host of bureaucrats. Then the full board or other commissioners, can actually be the person who oversees that actual hearing. Also 556(b) allows for one or more members of the body which makes up the agency or in the example of the Federal Communications Commission that would mean one commissioner or two commissioners, or three out of the total commissioners, could also oversee and adjudication process under 556. Lastly you could have an Administrative Law Judge or multiple administrative law judges who’ve been appointed to oversee the adjudication, also be the one, or ones, who preside over a hearing. 556 also establishes that when a person is responsible for presiding over one of these hearings, that they have to be impartial, so if the agency designate someone to oversee the hearing, as was mentioned earlier, that person who they designate to make a decision has to do so in accordance with section 557in an impartial manner. So they can't make a decision based on what their boss who is responsible, for example, for the enforcement of cases, tells them to do, they have to consider all the facts, weigh the evidence without some interest or stake in the outcome. If an employee doesn't feel that they're able to do that, they have the authority under the section to disqualify themselves and be removed.

556 also establishes that that person who is presiding over the hearing has the authority to act just like an ALJ, just like a judge, even if they aren't actually an Administrative Law Judge and they’re an employee say, for example, they’re designated by the head of an agency, or their commissioner or their multiple commissioners, as was indicated earlier at 556(b).

They all have the ability to administer oaths and affirmations, issue subpoenas that the law authorizes, rule on offers of proof and receive into evidence information is being provided by the parties, take depositions or have depositions taken when they would serve the interest of justice. They can guide the hearing in the way that is being conducted, they can hold settlement conferences, or they can get people to agree on certain issues to try to simplify the case or they can encourage people to make use of alternate dispute resolution, they could let the parties know about alternate means of dispute resolution, and encourage them to avail themselves of those means, they can tell parties they have to come to a conference, and they have to potentially send parties to a conference to try to negotiate and resolve the controversy, they can address procedural challenges and procedural requests that are raised by the parties, and they can ultimately at the end, make a recommended decision following the dictates of 557. So ultimately every person presides over adjudication, or persons who preside over an adjudication, have to come out with a recommended decision. That authority is given at 556(c)(10) and 557 lays out more of what that decision has to include.

Further, 556(c)(11) says that they are authorized to take other action that the agency's rules allow for.

Now when you look at an agency's decision, it has to meet certain requirements and so decisions that come out from the agencies that are decisions relevant to an adjudication, in many ways are sort of like the outcomes of a case that takes place in a judicial branch. So it’s much the same way that a judge writes opinion, an Administrative Law Judge, a presiding officer, a Commissioner, an agency director, all of them will also issue a right, an agency decision. And that agency decision is composed of four particular ingredients that have to be present in order for that decision to be adequate. One, it has to be on the record and identify the record evidence that the basis of the decision. It needs to articulate what

the burdens of proof are with regards to the presentation of evidence. It needs to lay out what the findings of fact and conclusions of law are that the decision-maker is relying upon and it also has to articulate how and what opportunities there are for appeals. Now the burden of proof under 556(d) is put on a proponent of a rule of order. In other words, the agency who is the one who has brought a complaint normally against a party and that’s the basis of having a formal adjudication is the one who has the burden of proof. In some cases, however private parties are going before an agency, say for example, they want to license or they want a permit, in those cases, they have the burden of proof to make a prima facie case showing why a license should be issued to the them or why a permit should be issued to them and if they make a prima facie case with that showing then burden is going to shift the agency to show why they should not receive that license or permit.

Now when there isn't a statutory requirement or rule of practice the Supreme Court has said that the standard proof that’s going to be used is a preponderance of evidence. Unless there's a particular statutory provision that says there should be some other standard of proof this is used in a proceeding, an adjudication that is, the Supreme Court has said preponderance of the evidence is the standard and that's the same standard that's used by the courts around the country in dealing with most common law kind of cases.

So 556(e) also establishes that there's going to be a transcript that's going to come out of all of the information that's presented at the adjudication. That's going to be comprised of all the persons who spoke, all of the written documents that are submitted and also all of the other papers that are filed. All of that constitutes what’s known as the “record” for the decision, so the agency decision-maker is supposed to make the decision based on the record and that's the same way that when there's a rulemaking that we’ve learned about already, we see that that rulemaking is supposed to be made based on the information in the administrative record. In the formal adjudication, just like it will be in a formal rulemaking, the record for the decision is based on all of that information that has been cited. And that's the record evidence that a decision-maker should referred to, to support their findings of fact and conclusions of law. When a decision-maker says that their decision is not based on something that is in the record, but they are making notice, you know, like you have a judicial notice of the fact, there could be notice of an agency when you have a decision-maker. When that person issues notice and takes notice of something that's not in the record, that's factual, then a party to that adjudication has the ability or has to be given the ability to challenge that fact upon request. So if an ALJ says hey we’re going to take notice of the fact that all of these proceedings, factual determination at issue, were based on an occurrence that took place on February 2. And on that day, let’s say it was 20°. So the court takes notice of the fact that it was a certain temperature on the day. When a court does that and that has relevance to the case, then the party to that matter has ability to say, hey this notice that the court has taken that it's 20°, I actually want to refute that and that party has the ability to make a request to submit information to challenge the matter that the notice was off and they can submit evidence to show that effective that date wasn’t 20°, it was unseasonably warm, it was 40 or 50°, and I'll be relevant to whatever factual determinations an agency inspector or other things that might have occurred on that date would prove important.

So under 557(b) further guidance is given to the person who is presiding over an adjudication. That person has responsibility to decide the case, however, in some cases the agency may decide it wants to certify a record for its decision and when that happens, the decision is actually made at a higher level in the agency and the record that is compiled is certified and sent to another agency official. Under 557 (c) before you get a final, initial, or a tentative decision from agency, person overseeing the adjudication, there has to be given an opportunity to the parties involved to submit their own proposed findings of fact and conclusions of law and reasons that will support those findings of fact or conclusions of law. So in the same way that the ALJ is going to write up findings of fact, in terms of the testimony and the evidence presented and conclusions of law that they're going to reach, parties have the ability to submit their own version of what the findings of fact and conclusions of law should be along with reasons why they think those other appropriate findings of fact and conclusions of law. From a practice standpoint it’s very important because you get to influence, arguably, the decision-maker to say here's what we think you should find and why and so that decision-maker can look at those submissions from the parties involved.

Now when there is initial decision that's made by presiding officer or others that are overseeing an adjudication that becomes ultimately the agency decision without any further activity being necessary. Now it won't become the agency decision when there is an appeal from that opinion, or from that initial decision or recommended decision to hire a body in the agency. For example, the Environmental Protection Agency has what’s known as an Environmental Appeals Board and so if there's a decision made by presiding officer and an adjudication. That decision can be appealed to the Environmental Appeals Board. So when that presiding officer or that ALJ makes an initial decision or proceeding, it becomes a final decision of the agency unless there is an appeal, or if there is a request or a motion request on a matter that is going on in the hearing and that request requires someone other than the presiding officer to make a decision, that would also prevent that decision from becoming final until that information on that motion is received.

So when there has been an initial decision issued by presiding officer or ALJ, then there is the power within the agency to actually make that initial decision just as if it was the original decider on the case. So in other words, the person who is reviewing the matter on appeal can make a decision just like it was making the initial decision. The only thing it can't do is limit the issues that were considered earlier on in the matter. That means that the agency has the authority to basically start from scratch and requiring all the facts to be re-presented at the next level. So that could be a matter in which a person could be very happy because they feel like some of their factual evidence was not adequately considered or received by the ALJ or by the presiding officer or it could be a matter of frustration because it may have taken them some effort and subpoenas to get people to show up to provide testimony and when the appeals process requires a complete rehearing about evidence, that may mean that persons may be prejudiced in not being able to get persons to come back and testify again.

557 also requires that before the decision of an agency or the review of a decision an employee of an agency who makes a determination for an agency, the parties are supposed to have an opportunity to submit their findings of fact and conclusions of law as well as their exceptions to the decisions or recommended decisions and their supports for those exceptions to those decisions. So that basically means that 557(c) whenever there's a formal adjudication and it's going to be reviewed by a higher level entity within the agency or being reviewed by an agency director or an agency administrator in particular, the parties have ability to submit information to a person who's doing the review. We’ve mentioned already that the statute provides that the parties can submit findings of fact and conclusions of law to that

presiding officer or Administrative Law Judge who is making initial decision. This provision just establishes that they have the right to do the same thing when there is a process that is being undertaken reviewing the decision of a presiding officer.

So also, 557 establishes that the record has to show for every ruling that's made what the judge or what the officer found, what the conclusions of law was, or what the exceptions were that were presented. So that means for every issue, there needs to be, every question, that’s raised is a question of fact, they need to be a finding of fact for every question of law there needs to be a finding of law and then there need to be conclusions of law with regards to all of those issues that were particularly raised and that needs to be on the record of the ultimate decision that comes out of the proceeding.

Further, the statute establishes that all of these decisions whether their initial decisions issued by presiding officer, or recommended decisions, etc. they have to be part of the record and as we've already said, since they are part of the record they have to provide the findings of fact and conclusions of law, the reasons for why the decider or decision-maker made the findings and conclusions on each issue of material fact the law, and any discretion that they feel they were given and used on the record. And then ultimately it also has to include the appropriate order, sanction, relief or denial thereof that basically means that after the findings of fact and conclusions of law are provided, the decision-maker also has to say I therefore rule this way, I order the following, the following sanction is being issued, I grant the following relief, I did not grant the following relief. So there has to be a statement that is identified as a rule, or an order or a sanction, or a grant, or denial of relief. That's what the statute ultimately provides for the formal adjudication process.

That was a fairly quick run through of the requirements of the adjudication, there are really numerous, they are all found in section 554, 556 and 557 that I cited as we went through those previous slides and I will encourage you to go and take a look at those sections and identify, highlight, annotate, list, all the things that those sections require those are the standards for all federal agencies that are having a formal hearing. Where I told you that formal rulemaking processes are rare, you should know that formal adjudication processes are much more common. So the need to understand how these sections 554, 550 and 657 relate to full adjudication is a very important one, because there are formal adjudications which take place and it’s important for you to understand how those provisions govern. Likewise there are quite a few informal adjudications which occur as well and those are governed by section 555. The last I want to note before we get into the case discussion is the fact that there are three kinds of adjudications, ultimately. You have the adjudications which are considered APA adjudications because they either comply with 555 for informal adjudications or they comply with 554, 556 and 557 for formal adjudications. The non-APA adjudications as your author indicates are those adjudications which actually are taking place pursuant to specific statutory provisions within enabling legislation. So, just as we mentioned to you previously, how you have what's known as hybrid rulemaking when rulemaking has to follow the dictates of the administrative procedure act and also specific provisions in the enabling legislation, we also find adjudication will often be dictated by what is laid out in specific provisions of the adjudication. Your textbook author suggested that be considered or called non-APA adjudication. That means that the adjudication was governed by a statutory provision rather than being governed by the APA. As we look at the four cases that are going to follow for those of you who are going to continue listen, we’ll see how some of these different provisions of the APA and of enabling legislation play out. So at this point those of

you who read these cases and feel comfortable with your findings and understanding of those cases, you can really stop here. For the rest of you all, we are going to just take a few minutes to say a little something about each of these cases. We're not going to go in depth into the facts, I think those are straightforward with regards to these cases and we are just going to identify a few things that come out of them.

Script_M06_Adjudicaiton Part 2 Video JD Law Administrative Law

Alright class, now let's get onto these cases. The first case is National Labor Relations versus Local Union Number 25, International Brotherhood of Electricity Workers and what we see in this case is that there was a particular matter that was a union matter, where a worker complained who was a nonunion worker, complained that he was not able to get a referral. The court considered that and found that the union did properly decide not to give him a referral because there was an article that was part of the collective-bargaining agreement that indicated that the persons who would be given preference, for one year following termination, would be union members. So the administrative law judge Suaponte, made a decision that the firing was appropriate but for, this provision and that therefore since this provision was in place, the not firing, excuse me, the lack of referral, was appropriate, but for, this provision and that the reason this provision was in place was because there have been an agreement of collective-bargaining between management and labor. The judge on their own accord made a determination that Article 11, which was provisions which call for a preference for union members, was itself unlawful, and therefore that an order should be issued, as such, showing that it was unlawful. The court considered whether or not Administrative Law Judge acted outside of the scope of the judge's authority by making this determination. The key issue from an administrative law adjudication standpoint and when you're reading these cases, you always have to read them from administrative law standpoint as opposed to the substantive issue of law that is actually what was governing the administrative agency’s determination.

That's a little tough, I know, maybe to get used to but we're little further along in the cases now so I hope you picked up from our earlier discussions how our focus is really on how does this case help us better understand administrative law. So in this case the judge’s decision to make a ruling on the lawfulness of that article 11 was one that the parties did not know was going to be up for consideration as result administrative law question is whether or not the parties had adequate notice that the legality of article 11 was going to be in dispute. And if they didn't know that article 11 was going to be in dispute then they would not have brought forward evidence, or made oral arguments, or submitted briefs that indicated that it was lawful to have article 11 in place or to argue that article 11 was a due exercise of the authority of the party who signed the agreement. Therefore, the court held that in fact the judge’s opinion which ruled article 11 was unlawful as favoring union members was itself unlawful and the court used a rationale, the fact that there was inadequate notice under the APA of the issues that were going to be involved in the decision. And since there was inadequate notice, under the APA's requirements, we find that under 554, there wasn’t a proper notice and therefore the judge’s actions were unlawful. So now we see section 554 at play in terms of the notice provisions that we mentioned earlier in the presentation. The next case is Southwest Sunsites, Inc. versus FTC, and in that case you had to deal with the argument by the Federal Trade Commission that there was an organization that had made representations and had failed to disclose properly, certain information about land that it was selling. So the argument was that there was undisclosed representations, there was deceit in some transactions that occurred. The question that the court actually had to decide with regards to this case was whether or not the FTC use of a new deception standard violated 554 because there wasn’t arguably timely information to the parties, to the matters of fact and law that were being asserted. So what had happened here was this Florida Company that was making this sale of land was being challenged as engaging in unfair and improper practices. And so the agency said, while the adjudication was being carried out that they will then apply a new standard as to this company on whether or not it engaged in deception under the existing requirements. And so since the organization, or the agency said, they were going to use a new standard, the company complained that therefore under 554 of the APA, they weren’t timely informed of the matters of fact and law that were going to be brought against them and that kind of makes reasonable sense, right, if in the middle of adjudication an agency decides to use a standard that they didn't tell you about before the adjudication began, you would feel that you had been prejudiced or biased. So the court is reviewing the case to determine whether or not they received timely notices required of the 554 of the standard. Ultimately the court holds that they did receive timely notice in accordance with the standard and the reason was, that the standard that was being used was more favorable toward the party than the old standard. It basically had a lower burden for the party to meet, to actually show that they had not violated the requirements and it had a higher burden for the agency to meet, to show that the party had violated the requirements, the factual issues were the same, the legal issues were the same, the only question was how great was the burden, the information it would've needed to be present at the hearing was the same, and so the court basically found that based on the fact that it involved the same matters of fact and law and really just changed how lenient, or how strictly the standard was going to be applied against the agency, in terms of their burden of proof to show that the violation that occurred. The court found that there was no prejudice against the party to the proceeding under 554's notice requirement. The next case is John D Copanos and Sons Inc. versus the FDA, this case involves the food and drug administration and an organization that was involved in manufacturing drugs that were being injected and this manufacturer had been reviewed by inspectors on multiple occasions and was found wanting in their drug manufacturing process. So the question that is being brought up is, whether or not, the notice of the upcoming proceeding that the party received was really adequate as to be matters that were factually at issue. The party basically alleged that they weren’t given sufficient information by the agency to prepare for the hearing and again, getting back to that same issue of notice that I mentioned to you previously, is one of the key challenges to any administrative hearing that takes place. So basically, as a procedural matte, they gave information saying that they were going to go to a process and remove the party’s opportunity to continue to manufacture drugs. They also issued an opportunity for anyone to hold a hearing to make a determination about whether it would be appropriate to remove this party's authorization to manufacture drugs. Well when the party went forward to request, the agency denied the parties request for the hearing and the agency said that they denied the request for the hearing because there was no information which the party was submitting that would be relevant in terms of making a factual dispute. So the issue before the court is whether or not the Food and Drug Administration's notice of an opportunity for hearing that the party received, gave them sufficient notice as a basis of having a summary judgment. In other words, the agency said we don’t even need to have a hearing about these matters, even though we gave an opportunity for hearing, because the information that was submitted by Copanos and Sons did not raise any genuine issues of material fact. Copanos and Sons said, hey you didn't tell us in your notice for hearing what kind of information you would need to receive for us to show that there was a genuine issue of material fact. The court really had a field day with that, they were that they argued that the notice of opportunity of hearing offered in detail the facts and the evidence that form the basis for the agency's proposed withdrawal of Copanos and sons ability and authorization to manufacture drugs. They also said the document gave adequate notice of the kind of information that will be necessary in order to show that a hearing was warranted and appropriate. And because of that the court went forward and made the decision that it actually failed to provide any information to show why in fact a hearing would be warranted and further they failed to identify any evidence or type of evidence that it might've presented at the hearing if it had received better notice. So the court basically asked the parties, is there any evidence you can show us that you would have been able to present at a hearing, if you had known what they were going to talk about in advance, that would show that these violations they claim that took place, had not taken place, and because the agency had given them the opportunity to do so, and they failed, and because the court subsequently had given an opportunity to do so, and they failed, the court found that there really was no legitimate material issue of fact which is what these hearings are designed to solicit.

And since that couldn't happen that there was no real bias that it happened in terms of the notice, because the notice was sufficient there just was a lack of any factual information that the company had that could show that somehow the withdrawal of the authorization for those drugs was improper. One other quick note on this case, is there's a bit addicted in the case that is a little interesting. Doesn't have as much to do with the company as it had to do with the relationship between the agency and the court, that's because the court was dissatisfied with the way the FDA prepared the information it submitted. It gave the court a record of the factual matters that were in dispute presumably it gave the same information to the company, but the court didn't feel that it did a good job of identifying the relationship between the facts that it found and the legal conclusions that it reached and because it felt that it didn't do a good job, the court really cautioned the agency, that if they came in with additional cases like this, where they had to do the work to piece together the relationship between the facts and the ultimate findings that they had made, that they would probably overturn them and so it wasn't so bad that they found that it was a violation of the parties rights of John D. Copanos and Sons rights, but they did argue that it was so bad that it gave additional work requirements on the court that were unacceptable. The last case that we talk about is the Wallace versus Bowen case, it’s probably the most important case in terms of looking at all of these four cases. It’s the most important case in terms of what it rules from an administrative law standpoint. In the Wallace versus Bowen case you have a Social Security Administration complaint and you have a party who’s alleged that they should be receiving disability from Social Security Administration because of illness and injury, and they ultimately are denied your claim for disability and the denial is based on an administrative law judge making a determination that a doctor who served as a consultant to the court's determination that they didn't meet the specific requirements of the regulations that say when a person should qualify for disability governs the decision and it based on the doctors report they deny the claim for disability. The rule issued from the administrative law point is whether or not it was appropriate for the Administrative Law Judge to consider information that was not made available at the hearing. The doctors who were consultants to the court were only consulted after the hearing had already occurred and the court based his judgment according to the findings of fact and conclusions of law, submitted by the ALJ based his judgment on those doctors’ reports. Because the doctors’ reports did not allow the claimant for disability to cross-examine the doctors who gave the reports and you’ll remember that cross-examination is one of the basic requirements of 555 but also in this case the Social Security Act specifically stated that the secretary and that is the person who is making a determination about whether or not security rights should be allowed, may not rely on post hearing reports without giving the claimant an opportunity to cross-examine the authors of such reports when such cross-examination may be required for full and true disclosure of the facts. So the specific language of the Social Security Act prohibited an Administrative Law Judge from making a decision based on a doctors’ report that comes after hearing is taking place and that is not been made available for cross- examination by the particular party who is claiming that they are disabled.

Because of that and the argument that the act further compels the decision-maker to make his decision on the basis of evidence adduced at the hearing, right, because the Social Security Act specifically says that, the court found that this was a violation of the proper administrative procedure because it didn't follow the requirements of the social security act and the procedures at the Social Security act and that it denied the party the right to cross-examine the doctors. And that cross-examining the doctors could be very important in terms of understanding why the doctor made the determination that the parties shouldn’t receive the disability benefits, or didn't qualify or classify, as a person who is disabled under statute, and therefore entitled to disability benefits. The court ultimately says the reports that the physician gave were substantially relied on by the ALJ in making his determination and that because there was no ability

cross-examine, there was no opportunity for the Administrative Law Judge, excuse me, for the party, the

claimant, to ask the doctors why they made a determination they made, how strongly they felt about the determination they made, why they chose to say that the medical condition did not meet the listed medical condition, and those were factual questions which would've been relevant to understanding if the ALJ should rely properly on the doctor's judgments, so because of that the court held that the denial of cross-examination in this case for the doctors who were submitted evidence that was ultimately used in the record as the basis of decision, was also a denial of the proper administrative procedure process that was required by the Social Security act. So that wraps up the case and so we see three cases that are proceeding according to the requirements of the formal adjudication proceeding and in the last case which is a non-APA case which also raises issues that are consistent with the APA on the importance of allowing cross-examination of information. So with that said that wraps up our discussion of adjudication, we look forward to talking to you next time when we will understand how ex parte communications related to adjudication.

Script_M07_Ex Parte Communications Video JD Law Administrative Law

Hello class as we continue our examination of adjudications we now move into our second section or our second model of examining adjudications. In this context we're going to talk about ex parte communications. Ex parte communications are defined in the administrative procedure act at section 551, paragraph 14, as a slide indicates these are either oral or written communications that are off the record and they are taking place with regards to the decision-maker or the person overseeing the adjudication and I should say person or persons because there can be more than one person overseeing an adjudication. It explicitly excludes status report requests that may go to Administrative Law Judge or other persons overseeing a matter which is simply to ask what's the status of the adjudication?

Now there are two sections of the APA specifically that govern ex parte communication. That is at 554(d) and five 557(d)(1) and as you see according to the slide, these are both sections that exclusively relate to formal adjudication. So we see as we mention ex parte communications under rulemaking that there was no particular provision that explicitly talked about ex parte communications under rulemaking, I mean under informal rulemaking, we’ll see when there's a formal rulemaking going on pursuant to 556 and 557 that ex parte communications are then addressed. As we mentioned to you previously, if you have a formal rulemaking that it proceeds in accordance with the provisions of 556 about 557, just in the same way that formal adjudications proceed with regards to the provisions of 556 and 557. Therefore we see that there are no particular ex parte communications that are allowed, during neither a formal rulemaking nor, under a formal adjudication. So 554(d) establishes is that the person that oversees that adjudication is not allowed to have a consultation on facts that have not been the result of notice given to all the parties to the adjudication. Further they're not allowed to be responsible to, or supervised or directed by persons who are engaged in that investigation or prosecution for the agency. This is intended to make sure that they're able to retain their independence as a decision-maker overseeing the adjudication. So the first one helps to make sure that there is no information that is not included in the record which should be part of the record and the other one is to make sure that persons are not being improperly influenced who should be neutral.

Further at 554, you see the requirement exists that if you are involved in prosecuting a case or investing a case you are not to be involved advising of a decision or a recommended decision by an agency or that other factor related case, except if you are being called upon as an attorney to represent the agency or someone, or as a witness. So basically they try through this section to keep the separation of the functions which are often carried out within an agency of both investigating and adjudicating and ex parte communications is one of the ways that the APA controls the distinction between the investigator and the person who is actually overseeing an adjudication.

557 also puts an additional restriction in place under (d)(1)(A), there is says the people who are outside of the agency should not be making ex parte communications that are relating to the relevance or merits of a matter to a person who is involved in the decision-making process or who is suspected to be involved.

That basically means that there shouldn't be lobbying by persons outside the agency to persons were inside the agency who are going to be decision-makers.

When you look at that same provision under paragraph (B), you see the people who are involved or were expected to be involved in the decision-making process of a proceeding are to be kept from making or knowingly causing to be made any ex parte communication themselves that are relevant to the merits of the proceeding with anybody outside the agency. So as you looked at the previous slide, you see that 557(d)(1)(A) prohibits persons who are interested outside the agency from reaching out to people inside. 557(d)(1)(B) restricts people who are inside the agency from being involved in reaching out to people who are on the outside.

If you look at the same provision and go down now from paragraph(B) to paragraph(C), you’ll see that when paragraphs (B) or (C) have been violated, then there's an obligation of a person who is presiding over the proceeding that they will put on the record, all the communications that happened, any written memoranda or rather that they would create memoranda that establish what those communications were, those that were oral and if there was anything in writing, that that thing that was written should also be made available on the record.

Under the next paragraph, (D), the APA establishes that when there has been a person who is presiding over an adjudication and they receive an ex parte communication, they have the ability to require that person who was responsible for making ex parte communication to show why their claim should not be dismissed or adversely affected otherwise. And so we see in one of the cases that we have for today how that is actually considered by the court. So this provision at (D), is a way of providing a punishment or a hook that penalizes persons who attempt to engage in ex parte communication.

(E) of the same provision then establishes that the starting period for when ex parte communication are prohibited goes no later than the provision of notice of hearing. Although as soon as an ex parte communicator becomes aware hearing will happen, if that's before notice goes out, ex parte communications are still prohibited. And that basically means if a person outside the agency is aware that John Doe is going to be the adjudicator of a hearing even though it hasn't formally been announced, then that person outside the agency who is interested, is not allowed to communicate with John Doe about the matters or merits of the particular case. That is what the ex parte communication prohibition at 557 and 554 makes unlawful.

So to flesh this out, we have two particular cases to consider that address and show us how the courts, federal courts, deal with this question of ex parte communications. The first one is the Professional Air Traffic Controllers Organizational, or PATCO, versus the FLRA, the Federal Labor Relations Authority. And in that case which is a very long extensive case, this is the basic thing that's going on, and I should note at this point, if there's somebody who's already read these cases and you feel comfortable basically going over these cases on your own, you can basically stop listening here. I'm going to take a few extra minutes and just bring some highlights from these cases for any students were interested in continuing to

listen. So in the PATCO v. FLR case, what's going on is that the union is now challenging the decision- making that is taking place with regards to their union members being fired. And the federal union and the union organization, being the decertified as an authorized organization to appear before the Federal Labor Regulations Authority representing any union and so are representing any members and so in light of that there is this hearing which occurred and that hearing related to whether there were improper communications that took place between the deciders of the dismissal of the air-traffic controllers and the elimination of the union from being authorized and any persons who were interested. And so there's a very lengthy discussion of numerous ex parte communications which occurred but it turns out that the court is only paying attention to the three because there was an ALJ, who had a hearing below and that hearing was called an evidentiary hearing and often this will happen that an agency will have an ALJ do an evidentiary hearing, the purpose of that hearing is to solicit facts and to get factual information and then the agency will act on that further factual information. In this case there was an ALJ who did an investigation and found basically that there were numerous ex parte communications that occurred, only three of them had the potential to actually qualify as relevant, and then the ALJ went through those three and then the court goes through those three. What the court finds with those three occurrences is that they either involve a matter of procedure, for example, the first one has to do with whether or not they can get an expedited hearing that would take place and that is not rising to the level of requiring that somehow the decision to be thrown out or be considered invalid. The next one goes to the level of the procedure, but goes to whether or not the ex parte communication which occurred had any impact or influence. So the next discussion that took place is a pretty substantial violation of the ex parte communications prohibition when there was in conversation with a one of the decision-makers, was part of this larger group, and a personal friend who is also the head of another union, not the PATCO union but another union and they specifically did talk about this case. And so they found that even though there was an attempt to lobby and influence the decision-maker, that the communication was not so significant as to warrant any change in the proceedings or a new proceeding. Particularly because the person didn't change their minds so the person who was experiencing ex parte communication, this decision-maker, both the same way after being lobbied as they did before being lobbied so because there wasn't any actual impact on the outcome of that person's decision-making, the argument was made by the court but that doesn't then require any further action. In general, the court finds in these cases, ultimately that even though they were ex parte communications, and even though those are prohibited, the consequences of ex parte communication, in terms of what the resulting outcome should be, is a discretionary decision up to the court and the court looked at the incidents in each case and just did not find that the incidents were sufficient to warrant any kind of overturning of the decision by the federal labor relations authority. There was another incident where there was a discussion that took place between the General Counsel of one of the agencies who is related to this labor matter, I think it's probably secretary of transportation and one of the labor relation authority members, and they say that it was an accidental or passing reference to the case when one of their workers came in and discussed a memorandum that related to the merits of the case and so the court saw that it occurred but they felt that that occurrence was not so significant again as to warrant any kind of consequences. So I think what we find here in this case is that after going through three examples of ex parte communication, you can see how the court is reluctant to actually find that an ex parte communication warrants any kind of substantive change or the provision of a new hearing. And that's because even though the ex parte communications occur, the statute is pretty clear that there has to be a decision by the court whether or not a finding should be made that there should be some punishment or penalty as result of the ex parte communication, which means that it's a discretionary matter and the court is supposed to look at how significant, and how substantial, the ex parte communication was in deciding what the consequences should be. This actually a reflection of how ex parte communications work in practice. If the court doesn't find that there’s any significant consequences to the ex parte communication, they normally identify it and they direct the agency to add the documents to the record, that relate to the communication which occurred. My experience working for an agency as I did see ex parte communication occurred potentially, sometimes initiated by the decision- maker and opposed to one of the parties and the consequences was for the party member to make a memorandum to the record indicating that there was this communication and specifying exactly what the communication was. That’s the normal remedy for dealing ex parte communication is at the record get supplemented. The next case is the Stone versus the Federal Deposit Insurance Corporation case, or the FDIC and in that case there was a matter of a termination proceeding being brought against an employee and there was a recommendation for the employee to be terminated by two persons who were actually not parties to the proceeding, and they provided written documents to influence the decision- maker about the termination. Those written documents they provided were not made available to the employee who had rights under the Merit Systems Protection Board to be informed of all of the charges that would be brought against him and all of the information that was relevant to his potential termination. In this case, rather than focusing on provisions that are required under the APA, the court looked specifically to the constitutional provisions that are required that provide protections. I think this is important because our next section is going to be one about procedural due process. So to kind of give you a little preview, the authors, that is, give you a little preview of what’s coming in the procedural due process section and that is to say that when you have an adjudication, there are constitutional rights that are invoked if the adjudication relates to a party who has either a property interest or a liberty interest under the Constitution. In this case the court argues that the party has a property interest and we’ll say what those interests are when we get into the next module, concerning procedural due process. Suffice it to say for ex parte communication purposes, that the court found that the person had a constitutionally protected interest. That constitutionally protected interest to procedure due process meant that he should have been made aware of all of the charges that were brought against him and all the information that was being considered by the decision-maker in ruling on his case. Because there was information about the charges against him, that he was not made aware of, the court ultimately held that it was a violation of his procedural due process rights, to withhold this information from him and, therefore, the ex parte communication which occurred, in terms of giving information to the decision-maker, but excluding out information from the party, was prejudicial against him, violating his procedural due process rights and therefore requiring that a new proceeding occur and that the information that was used against him or at least considered by the decision-maker in making a ruling, also be made available to him. And the reason being, is that when a person has an adjudication, they have a right to have an opportunity to be heard on all the matters that are being considered by the decision-maker. When there are memos, or information that is being used by the decision-maker that the party has not had an opportunity to respond, to that's going to be a violation of that person's opportunity to be heard. And so you see it's the kind of ex parte communication, which is prejudicial, and so we'll note the distinction with the PATCO case earlier as court found that none of the ex parte communications were prejudicial against the parties involved.

Whereas it this case this ex parte communication was prejudicial because it reflected a limited ability of the person who had the rights at play to be heard on the matters that were under consideration. That was absent in the previous PATCO case and therefore the court found that there was no significant problem resulting from ex parte communication. Whereas in this case it was a procedural due process violation, and therefore a new hearing had to occur that allowed those procedure due process rights to be acknowledged and supported. So with that said, that concludes our discussion of ex parte communications. Next class we will jump right into a discussion of procedural due process, it's something that goes along with adjudications. Not only do you have the protections of the APA, which we covered in our last lecture but you also have upper sections of the Constitution, so jump right into the next module and you’ll get a chance to hear about those procedural due process rights.

Script_M08_Procedural Due Process Requirements JD Law Administrative Law

Hello class, today we begin our discussion of the procedural process. Now procedural due process is an examination of how a person’s constitutional rights are protected in adjudications. So as you’ll recall in the last class, we will begin our conversation or our discussion of next section of administrative law which is adjudications. And it that class, we learned about the adjudications that were covered by the APA, formal, informal adjudications and non-APA adjudications. In this class, we learn what are the minimum protections that should be guaranteed in any administrative adjudication? Those are the protections that come from the Constitution itself and that's why this is a lecture on procedural due process.

So, as we mentioned at the end of our last class, procedural due process relates to certain constitutionally protected rights and protected rights are identified on this slide as protected interest. They are particularly the liberty interest and the property interest. Now these issues are the basis for determining that there are minimum due process rights that are necessary and so these procedural rights however, coming to play when a property or a liberty interest has been implicated.

So wheredo liberty interests comes from? Liberty interests come from governmental activities that threaten to actually provide a physical restraint or an injury on a person, further when a person is impacted in their ability to engage in certain activities. Say for example, engage in a profession, because governmental activity has impacted their reputation adversely then a liberty interest is implicated. So when you think about liberty interest, you might want to think about how governmental actions may create a stigma that prevents a person from being able to engage in a profession or other activities within the society. If you lose your ability to engage your profession or potentially other activities in a society, based on the basis of the governmental stigma then a liberty interest is likely at stake.

Property interest, in contrast, are interests that relate from a federal or a state statutory or common-law set of rules or policies that create an expectation or a claim that someone is entitled to something. So a state law establishes that there is an entitlement to a benefit, or a privilege, that comes from a certain relationship then that creates a property interest. If a statutory, a federal statutory law, establishes that you are entitled to certain benefits or privileges, that creates a property interest. Some examples might be, how the federal government, the court found that entitlement to certain welfare interests were property interests, in fact. The fact that you are entitled to certain welfare benefits was found to be a property interest so that you could not be denied the receipt of those benefits without due process of law. Often used example of a property interest, potentially coming from the fact, that person is a student at a state institution and that student in going to that institution is given a handbook that establishes what the rules of what matriculating at that institution are. In some ways that student handbook creates a set of expectations that that student should be able continue to matriculate through the school as long as they follow the rules that are identified in that handbook. When a student is required to be dismissed from the school and they have not violated anything that is in the handbook and there is an interest that they are going to lose, that's a property interest. So if that property interest in continuing to matriculate at the university or at the college, is removed then the college in removing it, has an obligation to allow for a hearing. So that means something other than you didn't pay your tuition or academically you didn't have a high enough grade point average. This goes to normally disciplinary proceedings that might be pursued against the students who is in good academic and financial standing and therefore before that person can be found to be in violation of the disciplinary code at the university, there needs to be some kind of hearing that takes place. That's because the student has a property interest in their continued matriculation. So most property interests are going to be based on certain kind of state law, created rights, and those state laws created rights are going to be the basis of someone's property interests in most cases. Think of, for example, a student who is matriculating through the K-12 education process, state laws can establish that students have a right to attend certain public schools. That then will be the basis of a public school student having a property interest in their continued matriculation through the K- 12 school system of their state.

So that covers the kind of big picture issues with regards to due process, procedural due process, in particular, and so now we have a series of cases and in this section of these cases are sometimes important because they elaborate on the principles that we just talked about in terms of what procedural due process is required, what raises a procedural due process right, when you have procedural due process proceedings that are going forward, what does that entitle persons to, these are all issues that are elaborated on the cases that are provided in your text. So now I'm going to proceed to have a conversation about those cases, as I have in previous lectures, the most recent previous lectures, I’m going to do it again. If you feel you have a complete and clear understanding of those cases, you don't need me to provide you an explanation you can stop the lecture here and then move on to doing your assignment and answering your discussion question. I will now take time to go through these cases, there are a number of them in this chapter, and I'll take time to kind of give you a case summary and the highlights that come out of these different cases. So if you're going to be stopping here, we’ll talk to you later, those will continue on, let's go ahead and dive in. So the first cases, we see our cases that help us get a sense of when procedural due process rights are actually implicated. And so in the first cases, I should say, the Londoner versus Denver and the Bi-metallic Investment Company versus the State Board of Equalization case. In both of those cases, the same thing is going on, the courts trying to figure out when is it that persons have a right to procedural due process, when they're part of a class that has been somehow adversely affected by some governmental decision and the court came to the conclusion that in one case, procedural due process was required, in the other case it was not necessary. The basic synthesis that comes out of those cases is that when you have a small group of persons who seem to be especially affected by a governmental decision in a way that is different than most people, on an individual basis, then those persons actually are likely to have a right to procedural due process, they have a right to be heard about the conditions that make them subject to this governmental action. That's different then governmental action that affects everyone, so if there's a special tax, for a small subset of a state population, that is much more likely to raise a procedural due process right than a general tax, like an income tax for everybody in the state, right, there so there will be no procedural due process rights when a state establishes an income tax, but if the state establishes a specialized tax for small set of persons who qualify, that specialized tax may actually raise procedural due process rights because it may have special burdens on certain individuals that represent a very small group of people and it could be meaningful that those persons have an opportunity to be heard in terms of making a demonstration that they are properly falling within that group. The other case that we talk about initially here is the Paul versus Davis case. And Paul versus Davis is a case that not only looks at the question procedural due process but more importantly it looks when a liberty interest is actually implicated in a set of circumstances. So in the Paul versus Davis case, we’ll see a person had been identified by the police as an active shoplifter and the police had published something identifying this person as an active shoplifter

without the person having gone through a trial and being found guilty, so the person complained that the police should not have done that and that the person should not have been identified as such, and that identifying a person without giving them a right to hear the charge against them and to present evidence and to be heard on the validity of that charge is to deny that person procedural due process rights. That was the argument that was made and so the court is trying to figure out, one is there a liberty interest that that person has in not being labeled as an active shoplifter, so the question is does that it does that governmental action, the publishing of that list with this person's name on it, as an active shoplifter, raise a sufficient stigma to the person's reputation, such that they should be able now, to show that they have a liberty interest that is now being trampled on by the governments activity. So here the court looked at this behavior that the government had engaged in, the state government, the local body, and the court argued or considered, whether or not, it was appropriate to take the stigma that was associated with this designation and raise that stigma to the level of a constitutional protections and the court ultimately decided that no, it would not take every potential defamation by a state agency, as raising to the level of a constitutional violation. Instead the court argued that there needed to be something more than just a generalized stigma, there needed to be something that suggested that there would be a harm on the other side of the stigma and that harm sometimes called, stigma plus, would be the basis of the person's showing that they had a liberty interest. So, for example, if the person was attempting to get employment in a certain field and because the name had appeared on the list of persons engaged in shoplifting, then that inability then to engage in that field of work because of that designation as an active, would be likely found to be a liberty interest. That's because now what it is done is it has prevented the person from having the freedom and, liberty and freedom are closely connected synonyms, it prevents that person from having the freedom to engage in a certain occupation and so the liberty interests is found when stigma prevents you from being able to engage in certain kinds of pre-established activities like occupations. The next set of cases that we have are wide ranging and they cover everything from the kind of process that persons are entitled to, to the kind of decision-maker that you're entitled to, in light of that procedural due process, so we will take each of these cases now really in turn. In the Codd versus Velger case, what we have is a person who was formerly involved in law-enforcement and in their history they had a matter in their record that stigmatized them, they argued and the matter was that they had supposedly or allegedly placed a gun to their head in an apparent suicide attempt and so that being part of their record, they argued, was going to prevent them from being able to get employment in law enforcement and so the person argued that they had a procedural due process right, to challenge that information in their record and that they should be able to have a hearing so that they could have an opportunity to be heard with regards to the legitimacy or validity of that information. And so the court heard this and they did find that there was a potential liberty interest because the court agreed that this type of information in a person's record could prevent them from being able to get appointment in law enforcement. However, the court also found that the person did not dispute the validity of the information in their personal record and so they said, procedural due process hearings are necessary when there are factual matters that need to be addressed. When there is no facts that need to be addressed and so there's no dispute as to the legitimacy or the validity of the information that's going to have an adverse reputational impact or a stigmatizing effect, then there is no procedural due process rights. So the court holds here that the absence of a factual allegation disputing the claim of the suicide, attempted suicide, itself, was fatal to being able to show that there is a liberty interest. So a liberty interest that rises to the level dictating that procedural due process be provided, only will be found when there is an allegation that the information that is the basis of the stigma is actually false or incorrect, and therefore needs to be refuted. The next case the Cleveland Board of Education versus Loudermill case is an interesting case because it has a similar set of circumstances but the court comes out on it in a different way. In that case an employee was also going to be in a security function and had applying to become a security guard had informed the employer on their application that they in fact had not been ever convicted of a felony and so it was later during routine examination of personal records, discovered that the person had in fact been

convicted of a felony, and so they summarily dismissed the person without providing them an opportunity to be heard. The person challenged it and they requested that, as a basis of procedural due process, they had a liberty interest that guaranteed them a right, before they were terminated to be heard about that matter, with regards to them having a felony conviction. The court considered the case and came out in the opposite way, rather than saying that there is no dispute as to the legitimacy of the validity of the fact that the person had a felony conviction, the court felt that the person was entitled to a pre termination procedural due process hearing, because even though it may be the fact that the person did have in fact a felony conviction, it's not clear as to whether the person was dishonest in answering or filling out their application and the person did raise facts that show that they did not believe they had a felony conviction because it was suspended and they didn't have to serve any time. And that led the person to believe that there actually wasn’t a felony conviction in light of the consequences for the action. And so they did feel that, the court felt, it was relevant that the person had a legitimate reason as to why they believed there was no felony conviction and that might've had some relevance in terms of whether or not dismissal was the punishment for having an error in the way they filled out the application. So the court argued that actually procedural due process was implicated there. So that's an important case it comes out differently than the Codd v. Velger case and what it does, is show that in some circumstances liberty interests can be found when you have again an impact of reputation, a stigma associated with the past conviction, and the failure to disclose their conviction, leading to the dismissal and inability to engage in certain profession and the court finding that there is a liberty interest, even though there may not seem to be a factual dispute, as to whether or not the person had a felony record. But what the court did find was that there could be a dispute as to why the person put the information down that they did and that that itself warranted a pre termination hearing. So next case we come to is the Shanes versus City of Kennett case and there's an auto correct error here, let me raise to your attention, it says Shades versus City of Kennett, that actually is the Shanes versus City of Kennett case discussed on 257. So in the Shanes versus City of Kennett case, we had some persons who were acting as firefighters and who were dismissed from their work based on claims that they were insubordinate, and those claims of insubordination came forward without those persons ever having an opportunity to refute them and they were also made to the press. And so the persons who were dismissed and had this information put out about them, in terms of their insubordination, felt that it was wrong for that to happen to them without them having a procedural due process hearing, the concern being, that now their reputation was injured in ways that would potentially prevent them from being able to move forward in this type of work. In other words, that there was a stigma that had been attached to them, that was then got it impact their ability to engage in a future work of this type. And so the court considered their claims and came to the decision that the statements that were made alleging insubordination, were not at the level to create the kind of stigma that implicates a constitutionally protected liberty interest. So again is looking at whether liberty interest exists, the court says here to stigma associated with being identified as insubordinate is not sufficient stigma to rise to the level of constitutionally protected liberty interest. They said instead a liberty interest is going to rise in the level of the employer’s accusation is so damaging that it will make it difficult or impossible for someone to escape the stigma. The kind of stigma that they had found that rises to that level in the past, was associated with being alleged as being engaged in dishonesty, immorality, criminality, racism, or the like. General allegations of misconduct, they said, don't rise to the level of a constitutional stigma. They further go on in explaining their decision saying that the plaintiffs have to establish, to show that, there is a protected liberty interest. City officials, in charge with their discharge, made untrue charges against them that would stigmatized them so much that their standing and association in the community would be so lowered as to foreclose their ability to take advantage of other employment opportunities. So here we look back again at the kind of stigma plus allegations, saying that you have to show not only that their stigma but the stigma is so high that you potentially then lose your ability to engage in certain occupational activities. Now Matthews versus Eldridge represents one of the central cases in procedural due process. And in the Matthews v. Eldridge case, what we have is someone who is experiencing the denial of benefits under Social Security. And so the question that was being raised was whether or not that person was entitled to a hearing before those benefits were going to be removed. The case is important because the court in reconciling the interests of the party, with the interests of the government, establishes this idea that determining what procedural due process is required has to be done on a case-by-case contextual basis. So it looking at what procedural due process rights a person has, after we have found that there is a property or liberty interest involved. The court says that there is no one-size-fits-all approach instead the court says that it is going to look at the specific facts of the case and from those specific facts, make some determinations. And the key factors which is what this case really stands for, are what the private interests are that are going to be affected by official action, the risk of an erroneous deprivation of those interests, through the procedures of the government plans to use and the probable value, if any, of additional procedural safeguards. And then finally what interests the government has, and the fiscal and administrative burdens, that the additional or substitute procedural requirements, would entail. So those three factors are the due process factors that come from Matthews v. Eldridge, which is still very good law and which establishes ultimately how courts will balance this idea that someone wants more process and the government wants to save money. The ultimate idea is that the government has limited resources and the government has limited personnel, and so how does the government carry out his responsibilities, in light of its limited resources and personnel. And so to do that, they can't give everyone a full trial every time it action in a way that may impact someone’s benefits or someone's liberty or property interests, therefore the court will look at the specifics of each case and determine if in that particular case, more process is due than what the government is providing. So one of the important rationales in the court came up with this case to defend its decision to say that there was no right for a pre-termination of benefits hearing, indicates was that there would in fact be an administrative process the person could participate in after having their benefits terminated. So there was some process the person would be provided, already, and the court was trying to figure out if more process was due and this is how the court ultimately reconciled what was going to be required and it’s an important ruling not only for this case but other cases. They say the essence of due process is a requirement that a person in jeopardy of serious loss be given notice of the case against them and an opportunity to meet them. All that's necessary, they say, is that the procedure be tailored in light of the decision to be made to the capacities and circumstances of those who are to be heard to ensure that they're given meaningful opportunity to present their case. So the court really says, this is ultimately what we're looking for on every procedural due process case, is to make sure that people have an opportunity to be heard, as we balance the interest that the government has to have in doing things efficiently with the interest that individuals have of being heard before they lose their property or their liberty interest. So Matthews v. Eldridge stands out for those due process factors that were articulated for you earlier. The next case we deal with is the Board of Curators of the University of Missouri versus Horowitz and in looking at that case, we would now begin to see a series of cases that are routed around universities and disciplinary proceedings against students. And that's an interesting situation because here you have these public schools and as I mentioned to you, there's often a property interest that's found to be present when a person is a student in a state school or other public school. And that's exactly what we see in the Board of Curators of University of Missouri v. Horowitz’s case. And that case what you find is that there's a student who is up for disciplinary proceedings, and the student is alleging that they should have the right to have present with them a protection of certain kinds of procedural opportunities, and so specifically the court is wrestling with this question of whether the student who is at a medical school and who's been academically dismissed, is entitled to greater procedural due process than she has received and in the case the student makes the argument that she has a liberty interest in continuing in the medical school program and that her academic dismissal will prevent her from engaging in certain kinds of practices, or getting into another medical school, or the ability to practice medicine otherwise, or work in the medical profession. And the court says, well you know, maybe she has a liberty interest, maybe she has a property interest as a student, but it doesn't matter ultimately they argued, because the

question is whether or not she received sufficient due process before she was academically dismissed. The court goes over the procedures that she was afforded in terms of being evaluated by her professors and students who also work with her in the program and been being evaluated by practitioners who also had an opportunity to evaluate her and getting consistently low evaluations from everyone. In light of those low evaluations, the court feels that she had sufficient due process that she's not entitled to a judicial hearing about an academic dismissal. The court argues that the university and other educators feel that academic judgments are those that are properly given to faculty to be made and they require a certain level of subjectivity and that they should not be the basis of having formalized hearings and having judges make determinations. So therefore they felt that she received all the process she was due, they contrasted the procedural due process a student is entitled to based on a disciplinary dismissal versus an academic dismissal and so they find and holds that an academic dismissal does not warrant any more procedural due process than having a decision-maker such as a faculty member or in this particular case a group of faculty members, make a judgment about the students preparation for advancement and when they make that determination based on past evaluations of the students preparedness then the court feels that no more due process is warranted from them on behalf of the student. So the next case we come to is the Gabrilowitz versus Newman case which is another university case and let's dig right into that one. So we're going to talk about the Gabrilowitz versus Newman case, we will also along with it are going to say something about Olstein v. Hilley, we will talk about the two of them together. Now the Gabrilowitz versus Newman case is a disciplinary procedure at a university and a dismissal associated with an allegation that the student was involved in inappropriate abusive activity, particularly sexual assault. And that is result of that, student should suffer a dismissal. The student alleged, or argues rather, that they should have the right to have counsel present because if they didn't have counsel present, it would be a deprivation of their property interest and that they had a procedural due process right because they were facing a criminal charge as well as the disciplinary dismissal at their academic institution. And so because they were facing that charge, they felt that they needed to have an attorney present in order to guarantee their due process rights and they specifically said they wanted attorney present in the university’s dismissal proceedings because they could make a statement in that disciplinary proceedings that would bias or prejudice them in the criminal proceeding that they were facing. And so they sought the assistance of counsel, only to be able to confer with them, before they made certain statements that could have an important and negative, adverse effect on their ability to defend themselves in the criminal proceeding. So the issue was whether not that student was going to be deprived of their due process right because they would have to make a decision about what information they would convey and could convey without the benefit of an attorney to say to them you should refrain or you should feel comfortable going forward making these statements and so therefore they would not know what the potential adverse impacts would be in the subsequent criminal case. So they argued that due process required that they be allowed to have an attorney present to confer with. The court agreed with them, the court felt that because of the pending criminal case, the denial of their ability to have a lawyer present, only for them to consult with and advise them, during the university's disciplinary proceeding would deprive them of due process and the court felt that that was a really important right that they could be protected and they shouldn’t be put in a position where they have to either give up the rights to protect themselves in the later criminal proceeding or give up their ability to defend themselves in a university disciplinary proceeding and so they felt that allowing them to have an attorney present would be the appropriate procedural due process that they would be entitled to, so that they could confer with that attorney only. That attorney would not be allowed to make arguments on their behalf or to engage in cross-examination. The attorney is only there for them to ultimately confer with and they basically defend that by saying, only a lawyer is competent to go to cope with the demands of an adversarial proceeding that's held against the backdrop of a pending criminal case that involves the same set of facts. They argue and they state the risk is involved in participating at the hearing at the university level, is substantial even with an attorney present, in other words, it can have a substantially prejudicial effect on

their defense of their claim in a criminal court and then they say without an attorney present, that is going to be an enormous risk and so they felt that the presence of the attorney would not eliminate all risk, but it would enable them to make an intelligent informed choice so they felt that procedural due process would allow for an attorney to be present in the limited role and that that would not adversely impact the disciplinary hearing at the university level. Now we talk about that together with the Olstein v. Hilley case because the in the Olstein v. Hilly case, you have someone arguing who has been also brought up on disciplinary charges because of their engagement a certain kind of violent activity. They are arguing that they should be able to have an attorney present. And so the court in considering this person's case and the fact that they're going to be temporarily suspended as a result their behavior, and that they would potentially lose the right to their athletic scholarship, the court felt that they needed to consider whether or not this also rose to the same level of procedural due process protections that the Gabrilowitz versus Newman case did. Ultimately, the court tries to balance the interests of the student, who's facing the temporary expulsion, along with the interests of the university in trying to run an efficient proceeding that doesn't get taken over by having a trial type atmosphere because the has an attorney present. And so, they in doing so, they basically did consider, whether or not any student was facing potential criminal charges, whether or not an attorney should be allowed to be. And they mentioned that Olstein, in this case, was charged with two counts of aggravated battery, but it wasn't clear what the disposition of that claim was. And so that made this case a little different than the Gabrilowitz case. In the Gabrilowitz case, we knew that the person was facing a criminal charge and that there was an upcoming and pending trial. In this case that is actually not clear and so because that wasn't clear the court dealt with this in a little different fashion than was dealt with in the prior case. So ultimately the court argued that in the Olstein case, the fact was that they were arguing that the person should be able to have an attorney present and that that attorney would be able to act as an attorney typically does in providing some level of defense for Olstein rather than the argument that it made in the Gabrilowitz case of merely having an attorney present for conferral purposes. The court said that even if a student has a constitutional right to consult with counsel, we don't think the student is entitled to be represented in the sense of having a lawyer who is permitted to examine or cross-examine witnesses, to submit an objective documents, and to address the tribunal and otherwise perform the traditional functions of a trial lawyer. They argued that if those kinds of rights were given to students with attorneys in university proceedings, then the university would have to hire its own lawyer and then they would have to move this from being a primarily kind of community- based decision-making process to a quasar legal process and that would actually change the entire nature of the proceedings. So in that sense, the court began to use the Matthews versus Eldridge factors to decide what the appropriate process was that was due. So they considered the cost of the additional procedures, the idea that the student should be able to have an attorney representing them, the risk of the error if an attorney wasn’t going to represent them, the consequences of the error if that error did take place, the cost associated with having an attorney available for students to represent them and therefore an attorney would need to be present for the university and they felt that that was non-trivial and that the risk they said of an error that the student was going to somehow get the wrong judgment, in terms of their sentencing was minor. So in light of that, they argued ultimately, that there was no need for the student to be able to have that right to counsel and that there was no constitutional right to counsel in a student disciplinary proceeding and they defended it by basically saying that it was a nonpermanent expulsion, that the student would have the ability to come back to this school or to attend another school, and in light of the fact that they can attend either this school or another school, there was no right to additional procedural protections because it wasn't the same kind of substantial liberty or property interest at stake. So here we see in Olstein as opposed to Gabrilowitz versus Newman that the court finds that there is no right to counsel generally in a university-based disciplinary proceeding. The last case we will deal with is the Withrow versus Larkin case. Now that case moves us away from deciding specifically what the procedural due process rights are for an individual and looks more at what is the responsibility of the institution that is running the adjudication, in terms of the kind of decision-making they have. And this is

labeled in your book, a neutral decision making. The argument is basic that, anybody should have the right to a neutral decision-maker when they have a procedural due process right that has been implicated. And so in the Withrow v. Larkin case, now you're dealing with a situation where an authority is actually making a judgment about the medical license of a medical practitioner and there's been a claim against that practitioner that has put their license at risk. So there's an examining board that has been authorized in the state in question, to warn, reprimand, and temporarily suspension the doctor's license and to institute criminal action to revoke the license when it finds probable cause under criminal or revocation statute. So in this case there was an examining board that did an investigation of allegations of inappropriate conduct by this medical practitioner, or by this person I should say, because if someone is being charged with practicing without a license. And so there were a number of charges that were brought against this person and the examining board was charged with both investigating whether or not the allegations were legitimate and valid, and then the same examining board was responsible for conducting a hearing against this person. And so there was a question about whether or not the same person who does the investigation should be allowed, the same person, to actually oversee the adjudication. So that raises the question about aren’t you entitled to a neutral decision-maker? So in this case what we see is going on is that this board is going to do this investigation, as well as the adjudication, as well as the ultimate sentencing or punishment of the individual. And so the individual claims that this is a violation of procedural due process, Federal District Court judge agrees and issues a restraining order to prohibit this state body from acting. The court ultimately finds the issue that they have to grapple with is whether or not the authority given to this board to both investigate the positions, present charges to, rule on the charges, and impose the punishment, at least to the degree that they temporarily suspend or reprimand the individual violates their due process rights. The court rejects that reasoning by the District Court, the court holds that the fact that the same group of persons who make up a board, conduct all of these functions, is not itself necessarily a violation of procedural due process. They cite to the formal adjudication procedures at 554 and they note that even though those procedures called for a different body to investigate and adjudicate matters at section 554 in the APA, that there is an exception and that exception says that when you have an agency as a whole, or a member or members of the body that comprise an agency, they actually do have the ability to go forward with both investigation and adjudication. So that means for example if you have an agency like the EPA, that someone from the agency is allowed to both investigate and adjudicate. What you can't have under the APA, is the same person do the investigation and adjudication, however if you have a board like the National Labor Relations Board or presumably something like a board that makes up the agency where you have a number of persons who have been appointed as board members and the agencies comprised of those board members. Then you actually can be both board members, those board members have the ability to serve in the functional overseeing an investigation, and overseeing an adjudication, and issuing whatever the penalty of punishment would be. That’s the exception from the formal adjudication prohibition on having the same person investigate and adjudicate under the APA in a formal adjudication. And however, as I mentioned previously, the procedural due process rights represent the floor, statutory rights of the administrative procedure act, actually are higher than that floor, therefore Congress might have said in the matter of administrative agencies who are governed by the APA, you need to have a neutral decision maker accepted in case we have a board, that doesn't mean that a non-APA adjudication that takes place at the state level and state-level adjudications are non-APA because the APA only applies to federal agencies, that doesn't mean that state-level board or state-level agency, has to comply with the APA. Therefore the question is does procedural due process dictates that they have the certain protections, and the court says No, that even the APA has an exception for boards that this is a board and the courts said something very interesting, the court says we don't think that there is an unacceptable risk of bias based on the process that the board uses, they say that investigative proceeding was closed to the public, but that the party charged and their attorney were able to attend, and they did attend, and they heard what the information was it was presented to the boa and that there was no specific

information that was introduced that showed that the board was prejudiced by the investigation or would be unable to hear and decide what the adjudication results would be in a hearing. So in light of that without showing somehow that there was a bias that resulted from the fact that there was an investigation and the adjudication would be done by the same group, the person was not entitled to anymore neutral a decision-maker than the board, and so they found that the District Court was in error in issuing a restraining order and that it is constitutional for the board to move forward, with holding a hearing, even though it is the same board that actually conducted the investigation. So here now we’ve gone through all of these cases and they’ve helped us to understand when is a procedural due process implicated and that it is for a small select group of persons versus the general public. We also learned about the importance of a property interest and a liberty interest, in terms of you being able to show that you're entitled to due process and then we began to learn about what kind of process was due for persons who do have a liberty or property interest implicated and we close that out with understanding the right to a neutral decision-maker. With that said that wraps up our consideration of procedural due process and the case following. I will talk to you in the next module.

Script_M09_Scope of Judicial Review for Adjudication Video JD Law Administrative Law

Today we move into our next module, examining adjudication and as we mentioned previously, there are three large sections of administrative law, and you should conceptually be able to always locate where you are in the material. For the first section of administrative law we addressed was rulemaking. We learned about the different kinds of rulemaking. Now we are in the second section of Administrative Law and we're deep into it, in fact we’re past the middle of the course, getting on toward the end, we're now looking at the question of adjudication. Now today's class looks at the scope of judicial review for adjudication. As you recall within adjudication there are different types and yet notwithstanding how those different adjudications take place and what those procedures are depending on whether it’s a formal adjudication conducted pursuant to 554, 556 and 557or an informal adjudication conducted pursuant to

555. We have certain ways that the court under the administrative procedure act, reviews the way that adjudication took place and in terms of going over or examining that review, we begin that with this lecture.

So as you learn previously and as you recall we were learning about rulemaking, we learned that 706 establishes what the scope of the courts review of an agency rulemaking is. Well now that we are looking at the way judicial review relates to agency adjudications, we learn that section 706 of the APA does double duty, it both gives the courts direction on how they're supposed to review agencies rulemaking, but it also gives courts direction on how they're supposed to review agencies adjudication. So the same three primary standards of review, used by courts to address challenges to agency rulemaking, are also used by courts to address challenges to agency adjudication. They are the arbitrary and capricious standard, the standard of substantial evidence, and the trial de novo. The same standards that we examined under rulemaking in terms of the way the court review an agency’s rulemaking process for adequacy under the APA, we see also apply to the courts review of an agency’s adjudication for adequacy under the APA, coming from the exact same provision of the act.

So as we go back to 706, we see that under 706(2)(A), the court is directed to hold unlawful and to set aside any agency finding or conclusion or action that was arbitrary and capricious. And so the arbitrary and capricious standard we see at 706(2)(A), is one standard that guides the court to overturn any agency decision that is found to be arbitrary and capricious.

Then when we look to 706(2)(E), we see that reviewing courts are also directed to hold unlawful and set aside any agency actions, findings, and conclusions that are found to be unsupported by substantial evidence, as we said previously.

Finally at 706(2)(F) the same directives occur with regards to the agency holding unlawful and setting aside, agencies actions as well as findings and conclusions, that are unwarranted by the facts. So to the extent the facts are subject to trial de novo by the reviewing court. So, in another words, when the factual record, as we said previously, is so poorly established within the agencies proceedings, that the reviewing court has to gather its own facts, that is the trial de novo standard and when that has to happen then the agency's findings are set aside.

Now we want to say something a little more about the substantial evidence standard and the arbitrary and capricious standard. These are the two most commonly applied standards by reviewing courts and arbitrary and capricious standard is the most heavily applied standard, and substantial evidence would be next. We will talk about the arbitrary and capricious standard after we finish this discussion on substantial evidence. So what is the substantial evidence standard? So as we’ve said previously with regards to a formal rulemaking process, the court has to find that the on the record rulemaking is supported by

substantial evidence. In this case we're not talking about formal making we’re talking about formal adjudication. Well the same standard applies to formal adjudication's that apply to formal rulemaking that means that the factual findings that the agency develops in a formal adjudication have to be supported by substantial evidence on the totality of the record. That means that anything that the Administrative Law Judge or the person presiding over the adjudication finds as a fact, has to be supported by substantial evidence. When courts fine that an agency's factual findings in a formal adjudication are supported by substantial evidence and the courts will defer-defer-DEFER to those factual findings. Even at the court finds or decides within itself, that it would not have made the same factual findings based in the record they will uphold the agency's factual findings, as long as they have an adequate support in the record. So that means that when the court reviews the work that the agency has done governing and adjudication, an agency comes to certain factual determinations based on the transcripts, the evidence that submitted, the testimony that's been received, then the court says, well we may not of made the same factual finding that the agency has made with regards to the consequences of this evidence, but as long as we find that there is substantial evidence in the record to support the factual conclusion that the agency has drawn.

We will uphold it by saying that it is supported by substantial evidence.

Now the next standard which is the most commonly applied standard in all formal adjudications is arbitrary and capricious standard. Let me back up, I said in all formal adjudications, I should've said, is the most commonly applied standards in courts review of agency adjudications, that's what I meant to say.

And so arbitrary and capricious review of agency adjudications, is what's used whenever there's an informal adjudication that the courts have undergone and when there’s an informal adjudication, 706 directs the court to use the arbitrary and capricious standard to make sure that the agency's findings can be upheld. Now some courts have argued that the arbitrary and capricious standard is really the same as the substantial evidence standard, but one way to really best understand it is the arbitrary and capricious standard means that there has to be a rational basis between what the agency ultimately finds, and the conclusions that it draws, and the evidence in the record. So you remember that whenever an adjudication occurs, there has to be a findings of fact and conclusions of law, which are issued by the person presiding over that adjudication. And so you also recall that there is an administrative record that is created associated with any kind of agency rulemaking. The administrative record consists of all the evidence taken all of the data provided, all of the testimony received in that rulemaking process. Well the same applies to agency adjudication. Whenever there is an agency adjudication, there is an administrative record that is created. That administrative record consists of all the testimony that is provided, all the evidence that's received, all of the exhibits that are submitted into evidence, all of that information that relates to the adjudication is provided by the agency and provided by the party or parties to the adjudication, makes up the administrative record. So where a court is reviewing the agencies adjudication it's going to look at all the information in that record and it's going to look at the findings of

fact and conclusions of law that is issued by the decision-maker in the adjudication. And the arbitrary and capricious standard means, that the court will uphold the findings that the decision-maker and makes as long as the court can connect those findings of fact and conclusions, with evidence in the record, using a rational basis. So there's a rational relationship between the finding and conclusions and the evidence in the record then that meet the arbitrary and capricious standard.

The trial de novo standard basically is where we see that the courts are freed up from the obligation to accept the agency's findings that they have drawn and then the court itself acts like a trial court. It becomes a factfinder itself, it takes testimony, it sees evidence so when that happens the court then is empowered to substitute its judgment for any of the preceding findings or conclusions that the agency is made. So basically the trial de novo is a do over where the court basically acts like the agency adjudicator and makes a determination. The court does not have to overturn all of what the agency found, but it has the ability based on the inadequacy of information in the record, to shore up specific parts of the agency's findings, or information that it has in the record or it could just completely substitute its judgment for everything that the agency has done.

Class so in continuing our discussion, we now move into our discussion of the cases. So we have three cases that were part of this assigned reading, they are Torres versus Mukasey, Jackson versus The Veterans Administration and Citizens to Preserve Overton Park versus Volpe. We will have a very short discussion of Citizens to Preserve Overton Park versus Volpe, last, it goes to the arbitrary and capricious standard and we talked about it previously in an earlier lecture. But we begin the case discussion with Torres versus Mukasey and Jackson Versus Veterans Administration, and as I said previously, these cases I think are fairly straightforward so for those of you who feel comfortable with the cases based on what you’ve read and your understanding of them, you can stop listening now. For those of you want to hear on my synopsis and breakdown of what's important from the cases, just go ahead and keep listening so in the Torres versus Mukasey and Jackson Versus Veterans Administration cases, we basically have a similar issue going on and that issue is whether or not the evidence that's been collected and that's been provided in these adjudications, should be upheld by the court. In the Torres v. Mukasey case, we have a situation where an immigration judge is overseeing someone’s request for asylum and so as the judge is listening to the person give their testimony regarding the request for asylum, the judge begins to interject their own opinion and their own knowledge of the country into the discussion and testimony that's given. Further, as the judge continues to discuss the matter with the person making the application, the judge in the way, seems to almost cross-examine the witness. That's not the appropriate approach for asylum proceedings and so the court is very critical of how this immigration judge acted in these proceedings.

The court ultimately have to make a determination of whether or not the findings that the judge has found are adequate in light of the way the judges interjected himself into this entire process. The court will ultimately is uncomfortable with what the judge is done because the judge has acted in such a way, that the judges doubts of the witnesses credibility are not based on information in the record. They concluded ultimately that when the judge decided that the witness was not credible, it wasn't based on what they called specific cogged reasons that bear legitimate nexus to the findings. Accordingly they found that the judge’s decision to deny the petition for asylum and withholding the witness’ removal and protections under the convention against torture’ were not supported by substantial evidence. As a result they went ahead and vacated the order and remanded it for additional proceedings consistent with their opinion. So, in this sense they are finding that there wasn't substantial evidence in the record to support the judge's conclusion’s that the person applying for asylum was not credible. They said that was not sufficiently supported and directed because the judge spoke to what were alleged inconsistencies in the records or in

the testimony that the court found was actually not in the record. The information that led to the inconsistencies was merely the fact that in some cases, the person had provided additional information in providing their oral testimony that was not included in the affidavit. The court found that the additional information that was given any oral testimony was not substantially different than what was given in the affidavit it was just a more specific and detailed. The court found then therefore that the decision by the immigration judge that the fact that this additional information was given at a level of detail that was absent from the affidavit, was not supported by evidence in the record with the judge found that made the witness not to be credible. So the court overturned it because it did not feel there was substantial evidence in the record to support it. IN other words, the court did not feel that there was a rational relationship or a reasonable determination by the judge to say the witness was not credible, simply because the oral testimony was more detailed than the affidavit. In the Jackson v. VA case, or Jackson v. Veterans Administration, here we see a person being brought up on charges of sex assault. And there were two specific incidences that would be considered by an administrative law judge that were now being reviewed by the court. In each of those instances, had something to do with a supervisor who was working with a woman who was a subordinate and that supervisor either asked for a kiss in one instance or actually physically kiss the person in another instance. In that case, the presiding officer over the matter found that there was not a preponderance of the evidence to withhold the finding that the supervisor had in fact acted inappropriately. The board overturned the decision of the adjudicator and found that there was a preponderance of evidence finding that the person had engaged in misconduct. So what we have going on here now is the court is reviewing both the initial findings by the person presiding over the initial adjudication and then the subsequent decisions by the board on appeal that are then overturning decisions of the original person who presided over the adjudication. So you basically have, within the agency, an appeals process that allows the original decision itself to be rejected by the agency, and that's exactly what happened. So we have three levels of review here and we're really opinion of the third level review which is the court and this federal Circuit Court is now deciding whether or not they're going to go along with what they felt the board decided in overturning initial conclusions of the overseeing or presiding officer, or the judge overseeing the initial administrative hearing, or they're going to go with the board's decision. So the court looks at both incidents to determine whether or not there could be substantial evidence in the record to support them and in both cases, these are formal proceedings that are going forward, so they are being held under substantial evidence test. And in doing so the court looks at them separately. The first instance where the person allegedly was involved in physically assaulting or being unburdened, kissing the person on the cheek. There were two persons who testified and said this event had occurred. The person who alleged she had been kissed on the cheek and I should be clear, I’m not sure it was the cheek and the person she was talking to on the phone who said she told me that she been kissed and then the person who denied that this event had happened. And so in that instance what occurred was we had three persons to testify, the original officer who was overseeing the adjudication decided that he felt that the person who was testifying and denied that this event occurred, was credible and the person who was testifying was not viewed as being credible, the one was making the allegation, because there was some inconsistency in her testimony as to when the event occurred between her and the person she was on the phone with. So the person who was overseeing adjudication made a determination that there's a lack of credibility because of the inconsistency in the testimony that's provided. And they found that the person who denied the event had occurred, in observing his demeanor found him to be credible. The court looks at this instance and this is an important matter for administrative law purposes, as obscure as it may seem, what it stands for in principle is the fact that when a person is an adjudicator in the first instance of fact finding they actually have the ability to make findings with regards to the demeanor of witnesses. They give them a basis to find the witness either is, or is not credible. There isn't anyone who has the ability, more or less, to second-guess their demeanor findings with regards to witnesses. So credibility that is based on an observation of the demeanor is something that is normally not going to be overturned. However, what we do find is credibility findings that are based on testimony that is provided, and that is recorded, and is part of the transcript, that actually can be overturned, because a reviewing agency, as occurring in this case with the Veterans Administration, or a reviewing court, has ability to look at the same testimony and decide that that is not an inconsistency that should lead to finding that someone is not credible. So in this case, what we learned is about the fact that when there is an adjudication that’s taking place in an agency level, when a person is making a finding with regard to demeanor, testimony that is normally something that there's a deference to that adjudicator. However when they're making findings with regards to testimonial evidence and finding inconsistency in the statements, there is no deference that they receive. So ultimately, the court found that with regards to the first instance, the board overturned the decision of the original adjudicator and found that there was misconduct in this case. The court in this case overturns the board saying there really isn't substantial evidence to support a finding of misconduct. The reason being is that there were only two people who were present the person who allegedly made the kiss and the person who alleged that is made was on the phone. The third person who testified who the person making the allegations of the kiss had occurred that they were talking to on the phone, was not present so they could actually not say whether or not a kiss had happened. They could only say that they were told the kiss had happened and so the court found that there wasn't any substantial evidence to support the board’s finding that that incident had occurred. With the next incidents however where the person who made the allegations of being kissed made further allegations that whenever she wanted to go out or leave early, the supervisor would say yes you can leave but you have to give me a kiss first. And she had a friend who came to pick her up one day, and that friend also testified that when she asked to leave early or her friend asked if the worker could leave early, she was told by the supervisor, only if you give me a kiss first and so because the court said there was corroborating testimony of two persons saying that this event had occurred, and it was a third person the one who the judge felt his demeanor suggested that he was credible, there was still a preponderance of the evidence because there were two people testified that it occurred and only one who denied it, defined that there was in fact, misconduct in that incidence by making those statements. So what we see here then is two things, one we see substantial evidence is being located and found by the reviewing court, because the substantial evidence test is a preponderance of the evidence test, the court says, and that there is a preponderance of the evidence to support a finding that this is that this is incident occurred about the supervisor asking for a kiss before the worker was able to leave. So we see that lesson about substantial evidence corresponding with the preponderance of the evidence. More importantly, we see the idea that there has to be a reasonable relationship between the evidence in the record and the finding. And in this instance there was a reasonable relationship for the board to overturn the original adjudicator. The original adjudicator said that he believed the demeanor evidence of the person who was alleged to have acted improperly and that person had claimed that this event had not occurred. But that original adjudicator had disregarded the testimony of the friend/witness who said she was told the same thing that the worker had. Therefore there were two witnesses who testified that this event had occurred, one who had not. That provided substantial evidence for an adjudicator to make a finding that in fact the event had occurred since there was evidence in the record to support it. So we see here how substantial evidence actually works in practice. So the next case is the Citizens to Preserve Overton Park versus Vole case. We talked about the case previously on the slide in a prior module, so the only thing I will say about that case, is it that case is important because it established how the arbitration and capricious standard today is being reviewed. And that basically means that whenever there is a case there has to be an adequate record that's developed and that adequate record has to be enough provide a rational basis to explain why the agency came to the conclusion it did, with regards to its decision. So the context of an adjudication, there has to be found that there was an adequate record to support the decision that the agency did in fact act properly making its ruling and in the Citizens to Preserve Overton Park ,what occurred was the agency didn't have a developed record and the court said we're going to have to call in the administrator of the agency now, to come and testify unless you give us a record to explain what administrator made there,

what was the basis of administrative decision. And that led to the idea that a decision has to be rationally related to the evidence in the record, to satisfy the arbitrary and capricious standard. And that's what we should really get out of the Citizens to Preserve Overton Park v. Volpe. Okay, that ends our discussion of the scope of review with regards to adjudications and judicial review. We will talk to you when we move into the next module.

Script_M10_Judicial Review=Deference Revisited Video JD Law Administrative Law

Good afternoon, good morning, good evening, I'm exactly not sure what time of the day it is that you all are watching this But welcome to our next lecture in administrative law. Now in our last class we were examining the judicial review of adjudication and now we come to judicial review but now it's not necessarily exclusively considering judicial review of adjudication, it’s looking at judicial review more broadly, and so we reconsidering the question of deference that we discussed in our last class, and as we reconsider deference, not in our last class, but a little while ago, and as we reconsider deference, we are examining now how does deference work when it's either adjudication or rulemaking, it's not clear what kind of agency action has to been undertaken. We’re going to learn what kind of agency actions do qualify for deference.

So in doing so, we begin with considering how administrative implementation of statutes get deference, so you'll recall Chevron deference is what's applied by the court, when an agency is interpreting what is otherwise an ambiguous legislative directive and its agencies have been given certain level of authority to make that kind of determination. And so, the court looks at the agency, looks at the level of authority that it has, and then decides whether or not deference is appropriate. So when you look at the slide, you’ll see, one of the things that's part of this process is the court does make a determination then discriminates between agencies that have not been granted the authority to create regulations or to hold formal adjudications in their enabling legislation from those that do. Agencies that have been given more authority in the legislation are much more likely to be found worthy of deference by the court. An agency that lacks the authority to promulgate regulations or to hold formal adjudications or formal rulemaking is an agency that normally is not going to be likely to get deference from the court. The reason being is that those agencies have not been implicitly empowered by Congress or delegated authority by Congress to create law and because they haven't been implicitly delegated that authority by Congress to create the law, the courts does not provide them deference when they act in a way that is lawmaking. So to determine whether or not an agency has that kind of delegation from the Congress, we go back to what I just mentioned a second ago, in this slide. And that is that looking at what kind of power Congress has given them in the enabling legislation, so they look to see do they have the power to engage in adjudications, do they have the power to conduct notice and comment rulemaking, is there any other language given in the enabling legislation that reflects a congressional intent to allow this agency to make laws. When it's not found that kind of authority has been given to the agency then as we’ve said the court does not look to provide deference.

So what happens then when the agency is not engaged necessarily in a formal rulemaking or a formal adjudication and it wants to interpret its own regulations? So that means the agency has gone through a rulemaking process and it is now going to interpret its own rule, so when an agency promulgates a rule, that one becomes a regulation, and that means if it's a rule that guides other parties who are nongovernmental actors in the way they conduct themselves, that rule is a regulation. So when an agency is interpreting its own regulation, there is a level of deference that the court will give that agency and that level of deference is one that establishes that the court will normally uphold the agency's decision unless it finds that the agency's decision is plainly erroneous or otherwise consistent with the

regulations that the agency had passed previously. So one level of deference we are now encountering, beyond what we learned about with Chevron, is that agencies have not only deference when they interpret the statute, or statute that is ambiguous, agencies also have some deference when they are interpreting a regulation that they have themselves promulgated, that is itself ambiguous in some ways. Note, even though the slide doesn't reflect that, the courts have found that if it is no ambiguity in the regulation, the court is not going to deferred to the agency's interpretation of its regulation, it only does so as it does with the idea of Chevron deference to agencies interpretations of statutes, it only provides deference when there is an ambiguity.

So we can see two cases that kind of point out how this deference works when an agency is interpreting its own regulations that is the Bowles versus Seminole Rock and Sand case and the Auer versus Robbins case, and in both of those cases, the court held that when an agency is going through a process of interpreting its own regulation, it is going to find that agency's interpretation should have a weight that controls the day, and normally the court will then defer to that agencies interpretation, unless they find it is inconsistent with the regulations or is plainly erroneous. As we said previously, however, that agency regulation itself has to be ambiguous or the court will not refer to an agency's interpretation if they feel the regulation itself is clear and lacks ambiguity.

The kind of deference this is, is what we call Seminole Rock or Auer deference. Today, Seminole Rock being the older case, Auer is the most frequent title that's used to describe this kind of deference. And you can find this kind of deference in a wide range of agency publications or pronouncements. So an agency can adopt an interpretation of its regulations in memos, can adopt them in briefs, they can adopt them in letters, that means that the court will defer to an agency position in a memo, or in a brief, or even a letter, when that interpretation is an interpretation of the agency's own regulations that it itself ambiguous.

So in thinking about deference, there is one note that is worth paying attention to, in a case a little over a decade ago, and that is in the Gonzales versus Oregon case, the court said that when an agency's regulation doesn't actually do anything to interpret the statute but instead merely reflects the statutory language. So the agency has the authority to promulgate a regulation, to implement the rules about automotive emissions, and when the statute defines the type of vehicles, it provides a list that is not exhausted. So the agency can go in and identify other kinds of vehicles beyond those that have been provided in the statute by the Congress and the agency rather than doing that, merely takes the exact same definition used in the congressional legislation and puts that into its regulation. When that happens, an agency's interpretation of that regulation will not receive the Auer or Seminole Rock deference. That's because it’s seen as parroting the statute and therefore the agency doesn't have or has not acted in a way to use the ambiguity in the statute to develop a certain level of expertise and experience using its expertise and experience to further define the meaning of certain terms or further define the approach to deal with things that are otherwise are not made clear in the legislation. So when that happens Supreme Court says there's no deference that the agency is entitled to because the agency hasn't done the work, so to speak, to apply expertise and experience to interpret the statute, the agency is merely parroted the statute, so therefore when an agency comes up with a more informal interpretation of the meaning of the statute by just interpreting the regulations that parrot the statute, the court will not give them deference. A quick note I just want to highlight before we move on, and that is that we think about the agencies

deference that they receive in particular administrative actions, like when they're issuing rules or when they are issuing orders, it's not mutually exclusive that the court will say oh this rule or this order that the agency's issued is entitled to Chevron deference or is entitled to Aeur deference, is entitled to Skidmore deference as mentioned in your reading. It could be that in one case, the court will apply multiple types of deference, they can apply Chevron and Skidmore, they can apply Chevron and Auer or they can apply Auer and Skidmore, they could even apply all three different types of the deference depending on the specific details of the agency's actions and activity. So you just want to note, you shouldn’t look at cases and say oh either this thing that the agency done is going to get one kind of deference or another, it depends on the agency's activities whether or not there might be multiple forms of deference. It could be one part of a rule that an agency promulgates or an order that the agency promulgates, is entitled to Chevron deference and another section of the same rule or the same order, may be entitled to a lesser level of deference because of the way it was promulgated, because of the language that it uses, because of the experience that the agency has working with it, because of the expertise that the agency applied in developing it. Those things can vary with in a particular rule or order and therefore, the level of deference also vary.

The second note I want to draw your attention to is that agencies have the authority to take a turn. So they can change course so to speak from previous interpretations that they've had of statutes or regulations, and when that happens, the agency can still get deference either Chevron or Aeur deference, when an agency’s interpretation, is a new interpretation over old approaches, they can still get deference in those cases because the court may feel that even though there's been a change, the change reflects agency experience and/or expertise.

So what are the things it's worth remembering the Chevron case was that the court basically said that when the agency promulgates or develops its interpretation of the statute, it needs merely to be reasonable, and if the interpretation of an ambiguous part of the statute is reasonable, then the court will differ. In some cases however if an agency is making a switch from a former interpretation of the statute, and it decides to use a new interpretation, the court may require the agency to explain why they're rejecting the former interpretation, in order to meet the reasonableness standard. So sometimes it's just a matter of political changes that happen in an administration, so one president interprets, directs the agency to interpret the statue one way, another president comes in and directs the agency or appoints a new director who interprets the statute in another way, it's not always enough just to recognize it's been a change of administration, the court will actually look for the agency to explain why a new interpretation of the statute is appropriate, before it decides that the agency's new interpretation is reasonable and that it is worthy of deference.

Alright so before we wrap up, we come to now the cases that are in the reading for this week, there are three cases for this particular section on a judicial review and judicial deference revisited. And also for those of you who have already read these cases and feel comfortable with their meaning, feel free to go ahead and wrap up the lecture here and then pick up in the next module. We will talk to you all then. And for those of you who are interested in hearing a few words from me on these three cases and just a quick and brief summary of what they stand for, just hang on and we'll go directly to our first case. In our first

case Christiansen versus Harris County, we are dealing with the same issue we are in the subsequent two cases, the United States versus Mead Corporation and Barnhart versus Walton and that is what level of deference should be given to the agencies determination? Looking at this from an administrative law standpoint, the basic question in each of these cases is what deference should the court give the agency’s determination. In the first case, the Department of Labor had offered an opinion letter about what compensation rules were required for people who had what's called comp time, comp time is time when people work and you're supposed to get time off for the additional time they work, rather than getting overtime, and so the question that came up was about whether or not an employer could force or require someone to use their comp time, and so the department of labor issued an opinion letter saying, yes they can require someone to use the comp time. The court however looked at the agency’s regulations and felt that the agency’s regulations were ambiguous. It wasn't clear on the face of the regulations that someone had to use comp time, it was clear that someone could be compelled to use comp time, the regulations were ambiguous, the court felt and it felt that under the terms this matter was really open based on those terms, a person could either use comp time or not use comp time, but it wasn't clear that the agency had prohibited an employer from requiring someone to use comp time. So the court held that there was no deference required to this agency's opinion letter interpreting its own regulations. The countervailing argument was that this should've at least been an Auer deference because as we saw per earlier in this lecture, the agency was interpreting its own regulations and when agencies interpret their own regulations, they're supposed to receive Aeur deference. The court said, yes, agencies do get Aeur deference for interpreting their regulations, when the regulations are ambiguous on a question. The court said here the regulation was not ambiguous it did not prohibit employers from requiring that their employees use their comp time. They felt that employers had leeway under the clean plain meaning of the regulation and therefore the agency's interpretation that employers were prohibited, they felt, was contrary to what the express meeting of the regulation was. Therefore they denied them the Auer/Seminole Rock deference. They did however say that the opinion letter from the Department of Labor on the question was entitled to Skidmore v. Swift deference and Skidmore v. Swift deference as you're reading indicates, is merely a different standard that says we will defer, if you are able to persuade us. So the court basically says that the agency has the power of persuasion, if their argument is persuasive to the court and the court will differ. In this case the court did not find the Department of Labor’s argument persuasive, it did not differ and it ruled against the agency, saying that this employer, this local county, did have the authority to demand that their employees use their comp time. The next case in United States v. Mead, we were dealing with a question about customs. United States customs service and the classification of different kinds of materials that were in the import/export market, in this case there was a question about whether these Mead Corporation products were diaries or notebooks and those kinds of classifications were of the sort the court felt, that the customer service should have the regular ability to make determinations about. However if they had some problem giving them Chevron deference which was what the customs service was asking for and they felt it was inappropriate to give them Chevron deference because they issued literally of over 10,000 of these kind of classification rulings in a year and it felt no agency that's issuing that many classifications could be engaged in lawmaking in every case, particularly in light of the fact that they were coming from 46 different kinds of offices around the country. In this case, this ruling came from the headquarters office but that they said did not change the fact that they were issuing so many classifications to give them the force of law was itself troubling to the court, and they did not feel that this reflected an intention by Congress to make this lawmaking.

Nonetheless they did feel that these were in fact a reflection of the agency engaging in an interpretation in a policy statement and they highlighted how agencies interpretations that are reflected in policy statements or other very informal kind of engagements, were in fact entitled to again, Skidmore deference, and so the tariff classification ruling, they said was, entitled to Skidmore deference and in fact that deference should have been afforded to the custom service by the lower court. So the court remanded it to the lower court for them to make a determination based on Skidmore deference whether

or not the court should defer to custom services decision about exactly what these products should be classified as, and so in that case, we can see that the custom service had a directive from the Congress to make these kinds of classifications but the court felt that these were less than lawmaking because of the large number of them that were done and the fact that the custom service has ability to modify or revoke them without any prior notice. So that certainly sounded a lot less like lawmaking which is what happens when an agency goes through a formal rulemaking or informal rulemaking process, goes to notice and comment, promulgates a rule, or goes to a formal adjudication and it has to follow quite a few rules to do so. They thought it was a lot less like lawmaking and it was a lot more like an agency interpretation through a policy statement that was entitled to Skidmore differences. The third case is the Barnhart v. Walton case which is a very interesting case because in that case the agency was in fact engaged in the process of making an interpretation of a regulation that it had just in fact issued and arguably that it had in fact issued because of the litigation itself. The court said that didn't matter, what happened was there was an argument about what constituted a disability under the Social Security administration and the administration had a long-standing interpretation that said that the statute should be interpreted in a way that allows for a person to be excluded from disability, if they don't show that they have had both a disability that has lasted for 12 months or more and that impairment resulting from that disability that lasted 12 months or more as well. Because the agency had had a long-standing interpretation of the statute to say that both the impairment and the disability had the last 12 months or more, their application of this interpretation to this individual had one to last for 11 months and the other went to last for more than 12 months was being a challenged. The court felt that long-standing interpretation entitled them to Chevron deference because they were interpreting the statute. As we said the agency had recently promulgated a regulation and that regulation had reflected the long standing interpretation that the impairment and the disability both had the last 12 months or more. So the court in that case, told or made the decision that Social Security Administration was entitled to Chevron deference and they provided some very important language that's kind of worth thinking about at the end of the case. They noted that the interstitial nature of the questions, the related expertise of the agency, the importance of the question to the administration the statute, the complexity of administration, and a careful consideration the agency is given the question for a long period of time, all indicates that Chevron provides the appropriate legal limbs through which to view the legality of the agency interpretation. And so they found interpretation lawful, giving the agency the benefit of Chevron deference, in the way they interpreted the statute, and that was very important because they demonstrated that in some cases an agency can get Chevron deference even when it hasn't gone through a formalize rulemaking process and when I say formalized I don't mean a formal rulemaking process but I mean a notice and comment rulemaking process even when a comment and notice rulemaking process has not been followed and no formal adjudication has taken place, in those cases, the court can still find that deference is appropriate. Now note the distinction here it's not that the agency lacked the ability to promulgate regulations, it’s that the agency had not used his authority to promulgate regulations. That's different than what we said at the beginning of the lecture when I noted that agencies are not likely to get deference when they've not been given the authority to promulgate regulations or rules through notice and comment processes. So in this case you had an agency that didn't have the authority to promulgate those rules and even to hold adjudications, but it just hadn't used that authority to promulgate the rules. In that case the court felt that their long-standing interpretation dealing with a complex issue was itself worthy of Chevron deference.

Alright that covers these three cases and hopefully helps you get a better sense of the different levels of deference that a court may provide and under what circumstances you'll find those levels of deference are provided. We’ll talk to you soon.

Script_M11_ Standing Video JD Law Administrative Law

Hello class, we continue our exploration of judicial review and now we've moved out of our former examination of judicial review within the context of adjudication, or within the context of rulemaking, and we talk more broadly about judicial review. That means what has to happen before a person is able to challenge the decision of an agency in a Federal District Court. We talked about it before we talked about what is the APA require to challenge an agency undergoing a rulemaking. We talked about what does the APA require to challenge an agency undergoing adjudication. Then we talked a little bit about what is the approach that the court uses when is reviewing agencies adjudication decision. Then we talked about what is the courts approach when it is reviewing and agency’s interpretation of its regulations, or interpretations of policy statement, or interpretation of its regulations, and it interprets its regulations in different kinds of ways, it can interpret its regulations through adjudication, it can interpret its regulations through policy statements, it can interpret its regulations through other kinds of decision-making. And so we consider that, what is the level of deference that the court will provide an agency as it goes through that process. Today begins the question of what does it take to get the court to review an agency’s action. Period, end of story, it doesn't matter whether it was adjudication, it doesn't matter whether it was rulemaking, this is outside now the boundaries of the APA. We are now flying freely in the realm of the federal courts and as we are flying freely in the realm of the federal courts, the Constitution is going to dictate, in fact, how courts are going to receive persons who bring challenges. Now because the challenge is to administrative agency, we are going to find that the APA is going to sneak back in to create one additional requirement above what the Constitution does, in terms, of challenges to agency action. So we look at that probably in our next class and just introduce it in this lecture. So let's begin with standing.

So what's necessary, and many of you have already been exposed to standing, I expect in your common law class, so this should be a review. So if you're going to get standing, you’re going to have to show some basic things at the stage of pleading, that means that allegations that are filed when a person files at the trial court level, have to include, certain kinds of terms. And so one of the terms that have to be included in the allegation, is that a party has been injured in fact, that means that there will be an injury or there is a threatened injury at the time the case is filed. Now courts have shown that these injuries can be an esthetic, or they could be environmental, but they have they have to be experienced by the plaintiff themselves. And as long as they're experienced by the plaintiff, they can relate to the plaintiff’s esthetic view of nature or esthetic enjoyment of a river, or they can relate to harm to a forest, or harm to an animal species, as long as the person who is the plaintiff makes clear in her allegation, of how the heart of the forest, or how the harm to the species, is also going to be a harm to them.

Secondly, you have to say not only that the injury is an injury, in fact, but it also has to be an injury that is redressable by judicial action. That means you have to show that the harm that is caused, can be redressed by the courts. It doesn't it have to be completely fixed but it means the courts have the ability to provide some benefit to persons who were injured by the harm that is going to help to alleviate some of the consequences of the harm.

Thirdly, it has to be shown that the injury that was suffered can be traced to the action that the person is complaining about. So from an administrative law standpoint, you're claiming that the agency an agency is promulgated, or the agency has failed to act in a certain way, and that failure to act in a certain way, is traceable to harm that you personally may have experienced in your life. If you can show that the injury or harm that you suffer can be traced back to an agency's action, or failure to act, then that is considered an action that is fairly traceable or an injury that is fairly traceable to a contested action.

Alright, the fourth aspect of standing that is particular to administrative law that I told you would sneak in there, is this whole idea of the zone of interest test. So any injury that is resulting from a governmental action has to show that it actually occurred within the zone of interest protected by the statute. That means that courts are going to examine the statutory language, that’s going to again be what kind of act, it’s going to come out of the enabling act, normally that is used to give an agency the authority to address a particular issue. Courts are going to examine that enabling legislation to look and see if the alleged injury was of a type of interest that is indicated in the statute and was intended to be protected by the statute, overall, or with any particular provision or section of the statute. And again, we are going to go more in-depth with examples of kinds of elements of standing include the zone of interest test when we talk about o9ur cases. But the important thing for you to pick up is that there are these requirements that there's an injury in fact, that it be an injury that is redressable by the courts action, that the injury be fairly traceable to the challenged action, and that the injury that occurred is within the zone of interest, and again the zone of interest goes not to the APA it's required by, but goes to the enabling legislation a person is complaining about. So if you're complaining that the Environmental Protection Agency has failed to promulgate regulations that they were required to promulgate and you want standing to sue the agency for failing to promulgate the regulations, which they were required to under the statute, you are going to have to show that you are within the zone of interest of the persons that Congress intended to protect when in the statute, they required that the agency promulgate those regulations. That’s what the zone of interest test is all about.

Now after the zone of interest test, the last thing that we need to look at to get a broad overview of standing, is the idea of associational standing. And associational standing is basically the concept that allows organizations to bring lawsuits. When you think about it, we know all the time, organizations are involved in bringing lawsuits. To use the environmental context, you can think of some of these big green organizations like Green Peace, or Earth Justice, or Natural Resources Defense Council, we’ve see some cases brought by them, and so these organizations have the ability to bring cases and get standing, because the court has a set of laws that allows organizations to base their standing challenge, on the actions and interests of their members. So the organization is able to show that if it's individual members would have standing and the interest that the organizations trying to protect, is germane to the organizations purpose then the organization is allowed to have standing as well. So that basically means if we would go with the Natural Resources Defense Council, we can say that the Natural Resources Defense Council is bringing a suit in order to challenge a determination by, let's see, the Forest Service, that a certain area that is going to be a clear-cut, should be clear-cut, then Natural Resources Defense Council, to get standing, not to win the case or to prove the merits but just to be able to represent their concern before the federal courts, just to be able to be a player, just to sit down at the table, just to get in the game, they have to show they have members who would have standing. So they have to show that they have members, for example, visit the area or the forest that is going to be clear-cut or members who are in the region of the area of the forest that is going to be clear-cut, and that that forest provides benefits that those members are going to lose if the clearcutting occurs. So they would bring literally,

affidavits from those individual members making those claims and those will be provided at the point of pleading. Next the association, the Natural Resources Defense Council, in my hypothetical, would also have to show that the complaint that they are raising is consistent with their purpose. So they are an environmental protection based nonprofit organization and they try to preserve natural resources, so they would show that their purpose is to preserve natural resources, which includes but is not limited to, forests, parks, lakes, rivers, streams, mountains, mountain ranges, valleys, so they will be able to show that protecting this forest from being clear-cut would be germane to the organization's normal purposes. So associational standing is accessible to organizations because they show both their members would have standing and that the purpose that they're trying to accomplish through the litigation and interest

they’re trying to protect is germane to their purpose as an organization. Alright, that covers our overview of standing. Now there's another video talking about standing where we're going to dive in more deeply into this question of standing, we are going to look at some particular cases, we are going to flesh out more depth, each of these elements we've already exposed you to. I will talk to you in that lecture.

Script_M12_ Standing Part 2 Video JD Law Administrative Law

Welcome to Standing, Part 2, now we are examining judicial review and we're exploring, as the third aspect of administrative law, how judicial review functions, what is the set of activities that parties have to take in order to challenge administrative law actions in the United States federal courts. And one that we've established in our last session together was the fact that you have to obtain standing in order to get the court to allow you to represent your concern before them. And the standing requirement is a basic requirement of which the court is saying, hey, should you be the person or party or parties or organization who argues this case to us, standing says that only people who have a part in cases and controversies, should actually be able to appear before the court, standing fleshes that question out.

We see this in a set of elements that the court has established that are necessary to show standing and what that goes to is allegations, right, that means that at the time of the complaint the parties have to allege that certain things have occurred, and the first allegation as we established in our prior lecture, is that the party must allege that they have been injured in fact. If there is no injury, in fact, there is no basis to obtain standing. Now what does it mean to allege an injury in fact, alleging an injury in fact, means that you have to allege that there is either a threatened injury or an actual injury that has already occurred.

More specifically the court requires that the allegations establish that the challenged action will result in injury or has resulted in an injury that is concrete and particularized and actual or imminent. Now in establishing those requirements the court is saying they want injuries, or threats of injuries, that are concrete not abstract, and they have to be particularized to the persons who are requesting standing. Further they have to show that they are actually injuries that have taken place already, or that will imminently take place. The court rejects allegations that it views as being conjectural or hypothetical, that means that when you provide affidavits to the court to support the allegations in the complaint, those affidavits need to establish that there is an actual or threatened injury that is that has already occurred or will imminently occur and that that injury is one they can be specified as to the person who is filling out the affidavit, so that it is concrete and that it is particularized to the party who was making the challenge. So the allegations have to lay out these kinds of claims in order to establish an injury in fact. In the Lujan case, Lujan v. Defenders of Wildlife case that we'll talk about later, we'll see that this note applies because the allegation is being made is that there's a harm that you could argue is either environmental or aesthetic but the allegations have to go to how that harm relates to the plaintiff who is arguing that they have been injured in fact and so we will talk about that for those of you listen to discussion on Lujan.

The next requirement in standing and these aren’t in a set order by the court, but these are the three obligations, is that the injury is fairly traceable to the contested action, and what does that mean that the injury is fairly traceable, it basically means that you can show that the allegations that are made, establish that there is a causal connection between the injury and the conduct complained of. So this is administrative law standing, so we're talking about making an argument that there's a connection between the government agency action, which is being complained about and the injury which is being alleged.

So, you have to show that there is a causality or causation between the government action and the injury and that's what the fairly traceable element of standing is all about.

The third element is the element of redressability, and that means that parties have to allege, again, that the injury can be fixed or lease helped in some way by the court. So the allegation has to establish that it is likely, as opposed to speculative, that the injury will be helped by a favorable decision. Doesn't mean it has to be a complete cure, doesn't mean it has to be has to take away or make the injury as if it never happened, it just has to show or at least allege, that the court is likely to be able to provide redress if a favorable decision is issued.

The fourth thing goes to the zone of interest and we talked about zone of interest previously, and will have an entire lecture just on zone of interest, so I just mention it here passing again, it is the fourth element of standing, when the standing is based on a claim that there is a statutory based harm that persons are suffering. So if there's a statutory based harm, you have to show that you are in the zone of interest. That means if you are bringing a claim as it does in Lujan under the Endangered Species Act, or you’re bringing a claim under Internal Revenue Code, or you’re bringing a claim under the fair labor standards act, anytime you're bringing a claim under any of these pieces of legislation that enable and establish administrative agencies to act under their authority, then the person who is bringing the claim as a plaintiff or challenger to the governmental action, has to also allege that the harm they suffered is within the zone of interest that the statute intended to protect. So they have to show that they are the kind of person that Congress was looking at protecting, and they need to point to particular provisions within the statute when they make the claim that they should have standing that demonstrate that persons in similar situated to themselves, were intended to be protected by the Congress. So how do you think about making this kind of showing? You should think about it sort of like torts, making an argument that they are a foreseeable person in light of the language that Congress used in the statute. So you don't they don't have to show to legislative history that Congress directly at them in mind, they merely need to establish that based on the language of the statue it was foreseeable that they would be a party that would be affected by the law and that was intended therefore to be protected by the law. You sort of think about this like the Palzgraf case, there's a hypo that I'll share with you that's rooted in the idea that there was during the 1970s, a gas energy crisis and it really had to do with the fuel being scarce, so for example, in California, there was rationing that took place and in the rationing legislation, it established that people could only get fuel on certain days of the week and only certain providers can provide fuel if they had followed certain kinds of procedures. And so there was a person who lived in a neighborhood near a gas station, that had fuel on a much more frequent basis and in light of that gas station’s popularity, lines would pile up of people waiting in line at the gas station to get gas. The lines became so long that they snaked into the nearby neighborhood and people would be in line at such levels that they would block the driveways of homes in the neighborhood near the gas station. So the party who brings this case argues that they are within the zone of interest that is protected by the statute that relates to the rationing of gasoline because it was foreseeable the gas rationing would lead to long lines and long lines near gas stations would ultimately affect people in their homes. And so the argument is made that the homeowner who can't get out of their driveway to get to work in the morning because of the long lines of cars waiting to get gasoline, was foreseeable and therefore was within the zone of interest protected by the statute. As I said we’ll say more about the zone of interest in an entirely separate lecture, but for now just use that as a way of getting thought through about what the allegations have to include when you're making a claim for standing.

Lastly, we go back to the point of associational standing, we’ve already mentioned that in a prior slide, but I continued here just to emphasize in all the things we just mentioned in the prior slides, in this lecture, in terms of the injury in fact having to be concrete and particularized, and actual or imminent, not conjectural

or speculative, and that it has to be fairly traceable to the challenged conduct and it has to be likely redressed by the courts behavior. The members of an organization that wants to get standing, have to all, or have to independently and individually, meet each of those elements that we just talked about. So for each of the members the allegations need to be made that they were injured in fact, that their injuries are fairly traceable to the challenged action and that their injury can be redressed by the court. An associational standing claim is the claim is based on an organization that is in fact, working on a case, or a party to a case, or seeking to be a party to the case, that their challenge to administrative action relates to the organization's purpose otherwise. So in the Lujan case, you had an organization that was defenders of wildlife, a wildlife protection organization or an environment organization, and they were in fact complaining about a change under the Endangered Species Act interpretation by administrative agency. And so because of that, they were alleging that their individual members met all of the elements of standing that we've just gone through, and for associational representational standing the only thing that's necessary's organization is to show the individual members, through allegations, meet these prior elements of standing that we talked about. That means that the members have to file affidavits at the time that the charges brought in order to show that they're standing. And those affidavits have to allege the things that we just discussed in terms of injury in fact, causation and redressability. And so ultimately that goes through the kinds of allegations that are necessary for persons who want to establish standing in the context of an administrative agency based case.

Lastly that brings us to our case discussion, we have two cases, the Lujan versus the Defenders of Wildlife case, and then we have this interesting relatively new case that is on Monsanto and Alfalfa Seed Growers and I will talk about both of those cases. But as I do each time we come to case discussions, and particularly in this class because many of you all have had standing in constitutional law, you may have developed a clear expertise on it, and you don't really need a refresher, in light of that you could stop the lecture here on part 2 standing, but for those of you who are interested in continuing to listen on and hear my take, or at least my Reader's Digest version, or just a brief synopsis of what's happening in these cases, continue to listen on and I will just give a little bit of the cases and how they relate to standing and then we’ll be done. So for those of you are continuing to listen, let's take a moment minute and talk about the Lujan v. Defenders of Wildlife case. That's a big case in standing law and what that was going on in this case was, as I said earlier, one of the administrative agencies that has responsibility for interpreting and dealing with the Endangered Species Act is the Fish and Wildlife Service, and so those organizations along with the National Marine Fisheries Service, on behalf of the Secretary of Interior and Secretary of Commerce, promulgated joint regulations stating that the obligations that were in fact associated with the Endangered Species Act did not relate to activities that were taking place outside of the United States, or at least on the high seas. That was a change to the former policy that had been established back in the late 70s and so when that change occurred there was a challenge that was brought to that effort to withdraw from looking at how the Endangered Species Act related to species that are in other countries. And so that change, which removed arguably from the federal government’s purview concerns about endangered species protection among countries that we interact with, maybe give grant money to, etc. was challenged by the defenders of wildlife. This nonprofit organization based on members, alleged that their members in fact, had were going to be harmed as result of the change in this policy. And so the court considered whether or not their members really established an injury in fact. To do that affidavits were provided by the members stating that they had attended or reviewed, I should say, some of these endangered species in other countries like Egypt, and that they hoped to go back and view the species again and that if this rule was going forward that would prevent the United States from expecting that other countries were also address this endangered species act issue, particularly those countries that the country was providing grant money to, working with, then in fact, they would be harmed

because they would not be able to enjoy the aesthetic value, and the recreational value, of watching the species. And this gets to the note that says that an injury can be environmental or aesthetic, it has to be based on a human being though, who is alleging that they're going to be deprived of the benefit of certain aesthetic values or certain environmental attributes. So this is a claim that's made, the court was really, really not satisfied with the affidavits, and the court found that in fact, those affidavits failed to establish that these were actual or imminent injuries. The court argued that the affidavit did not show anything other than a speculative or a conjectural injury, and that the person said that they had visited these places in the past and watch the species, and they hoped to return in the future, and they didn't show that had had any plane tickets, any travel reservations that were made, or anything it indicated that they had anything beyond a hope or a speculation that they might return and watch the species. As a result of that, the court found that this was not in fact a sufficient allegation to establish that there was an injury in fact. That was the key discussion in the case, however, the court also considered the question of redressability and they argued that there was no clear redressability in this case, the Secretary of the Interior was the agency actor here that they wanted to revoke the regulations that had been put in place or proposed. And the court argued that it was not clear that a change those regulations would actually result in a change to the practices in the foreign countries. Even though federal grant money was being used for the projects that were threatening the endangered species, the court said it wasn't clear that a removal of the kind of funding and they argued that in some cases, for example, the American agency was giving less than 10% for the funding of the project that was being brought up as the threat to the endangered species. It's not clear that removing that 10% funding would mean that the project would not go forward and have 10% of the funding was removed because the agency was required to change their proposed regulation then it is not clear that the species would still not be harmed by the project, the project would still go forward, presumably with the 10% coming from somewhere else. So the court said, in light of the fact, that we have not only a failure to establish something beyond speculative injury, the court says there is no clear redressability, because even if we ruled that the regulations need to remain in place as they were, that doesn't mean that the funding will be withdrawn, and even if it is withdrawn that doesn't mean that the project won't go forward. So the court argues that there is really a failure of standing here, based on the fact that there is no plaintiff whose made allegations showing that they been injured in fact, or facing imminent injury, and that there's no redressability.

The next case is the Monsanto Company versus the Geertson Seed Farm case which is a really interesting case because it's a new case, and it deals with genetically modified organisms, and the argument made by the Geertson Seed Farm that the decision by the Animal and Plant Health Inspection Service to take a variety of genetically engineered alfalfa and deregulate them, and just allow them to go forward and be used commonly in the environment, was going to bring it harm to them as organic alfalfa growers. Their claim is that once the deregulation of the genetically modified alfalfa seeds goes into effect, then they will have financial difficulty continuing to sell their organic seeds, because the seeds have a way of being spread and they're not under control, and it's not clear that once those seed spread, the organic seed company will be able to continue its operation. Because if there is any genetically modified seed that shows up on the organic seed corporation’s fields, they potentially will lose their organic designation. And they have very stringent rules to have that organic designation, and so once it's off that would create a great harm to the company. The company also showed how they've already spent money trying to protect their crops in the event that there is this deregulation which is proposed. And so they had to hire consultants, they had to have people do investigative work, etc. and all of these relate to damages to their business because their company will be harmed as result of this. So, the court has to determine whether or not this is too speculative a harm for them to be able to establish that they should have Article 3 standing and they claim that they have an imminent injury which will occur to them and that further they already have an actual injury and that they already are in fact spending money which is harmful, it's money that's taking away from their business and therefore the deregulation is leading to an injury in fact, that correct that doesn't mean they’re going to win the case but it means they should at least be able to come and talk about how they are being harmed as a result of this deregulation. So the court considers the argument and the court basically says that these allegations that they have made, demonstrate that they have increased costs and that those increase costs and the other costs that they're going to occur and the adverse impact of their business, even if their crops aren’t actually infected by the genetically modified organism, was sufficiently concrete to satisfy the injury in fact prong of the standing analysis. They showed that those farms were attributable to the deregulation decision and the District Court already found that there was a significant risk of the genetically modified version of the alfalfa to actually get into the atmosphere and impact of other alfalfa that already was being grown. And then lastly they argued that a court found that a judicial order which prohibited the selling and growing of the genetically modified alfalfa which was proposed to be deregulated would remedy their injuries, it would eliminate or minimize the risk of any of those genetically modified organisms, or seeds, or alfalfa plants getting into the organic alfalfa crops. So therefore they concluded that there was constitutional standing to give them adjunctive relief, to stop the deregulation order from going forward. So here we see two cases where the standing requirements are kids of parceled out and they're applied and we see how the court addresses these different elements. With that, that resolves them in our discussion of Standing Part 2, I will talk to you in the next module.