CHAPTER 1
Major Themes
The goal of Chapter One is to introduce you to administrative law (procedure) in two ways. First, you should gain an overview of the Administrative Procedure Act (APA) and multiple types of administrative actions it authorizes an agency to take. Second, you are asked to consider the role of government lawyers and how that role might different from private lawyers in terms of a lawyer’s professional responsibilities.
Executive Summary
Adjudication or Rulemaking. Students should be able to identify from a set of facts whether an agency is engaged in adjudication or rulemaking. Rulemaking corresponds to legislative action. When an agency engages in rulemaking, it promulgates a regulation that has the same force and effect of law as if it had been passed by Congress or a state legislature. Adjudication corresponds to the judicial function of the courts. When an agency engages in adjudication, it applies an existing rule or statute to a set of facts to determine what outcome is required by the rule or statute.
APA Procedural Requirements. Students should be able to identify the sections of the APA that apply to adjudication (formal and informal) and to rulemaking (formal and informal). 5 U.S.C.A. § 551(5)–(7) defines rulemaking and adjudication. Section 553 establishes a three-step process for informal rulemaking. In formal rulemaking, an agency follows the procedures specified in sections 556–57. Section 554(a) controls whether an agency must use formal adjudication. If so, the agency must then use the procedures required in sections 554, 556 and 557. If an agency is not required to use formal adjudication, the APA does not prescribe any procedures for adjudication.
ABA Model Rules of Professional Conduct. Students should know what is their obligation under Rule 1.6 to keep confidential information relating to the professional representation of a client including who is your client for purposes of this rule. As well, students should know the scope of their obligation to give independent advice to a client under Rule 2.1. Finally, students should be able to analyze their duty under Rule 1.13, if any, to refer illegal action to a higher authority in the government in different factual situations.
CHAPTER 2
Major Themes
The goal of Chapter Two is for you to learn what procedures are required when an agency promulgates legislative (legally binding) rules. The chapter proceeds in chronological fashion, looking at each step of the rulemaking process in the order in which it occurs. As with other sections of the APA, the courts have taken the language of the APA and interpreted it in ways that have expanded on an agency’s procedural requirements. Thus, the law of administrative law is found both in the APA and in the case law. This makes for some frustration among students because, unlike civil procedure, the law of administrative procedure is not entirely codified, which means that you must learn it from the case law as well as the APA. Chapter Two also introduces you to how judicial review of agency decisions relating to the promulgation of legislative rules takes place.
Executive Summary
Rulemaking Petitions. The APA provides that “[e]ach agency shall give an interested person the right to petition for issuance, amendment, or repeal of a rule.” 5 U.S.C.A. § 553(e). The APA does not require any further procedures concerning a rulemaking petition, but an agency’s own mandate might do so.
If any agency does not respond to a petition, the APA provides that “[t]he reviewing court shall compel agency action unlawfully withheld or unreasonably delayed.” 5 U.S.C.A. § 706(1). Since section 551(13) of the APA defines “agency action” to include “failure to act,” a court can review an agency’s failure to respond to a petition to determine if it has been “unreasonably delayed.” A court will determine this issue using the criteria identified in TRAC v. FCC.
When an agency rejects a petition, the scope of review is limited to ensuring that the agency has adequately explained the facts and policy concerns it relied on, and that the facts have some basis in the record. In Massachusetts v. EPA, however, the Court held that the reasons that an agency gives for rejecting a petition must conform to the authorizing statute.
Exceptions to Rulemaking Procedures. Section 553 of the APA contains the “notice and comment” procedures applicable to “informal rulemaking,” and it directs persons to sections 556 and 557 if “formal rulemaking” is triggered, but 553 does not apply to certain kinds of rules. There are categorical exceptions (rules that concern military or foreign affairs functions, agency management or personnel, or public property, loans, grants, benefits, or contracts) and specific exceptions (rules of agency organization, procedure, or practice; interpretive rules, general statements of policy; and other rules for which notice and public procedure are impracticable, unnecessary, or contrary to the public interest).
Rules of Agency Procedure. According to JEM Broadcasting, a rule of procedure does not “alter the rights or interests of parties, although it may alter the manner in which the parties present themselves or their viewpoints to the agency.” Since, however, procedural rules can have a substantive impact, the court also asked whether a procedural rules substantive impact is “sufficiently grave so that notice and comment are needed to safeguard the policies underlying the APA.”
Informal Rulemaking. The APA itself only recognizes informal and formal rulemaking; hybrid rulemaking is when Congress has imposed additional procedures, or substituted different procedures, beyond those required by the APA. In informal rulemaking, an agency is only subject to the notice-and-comment procedures required by section 553 and must be accompanied by a statement of basis and purpose when they are promulgated.
Formal Rulemaking. In formal rulemaking, agencies must follow the procedures specified in sections 556–57, which essentially require a trial-type proceeding, to promulgate a rule. Students should be aware of what language is necessary in an agency’s statutory mandate to trigger formal rulemaking according to US v. Allegany-Ludlum and Florida East Coast Ry.
Hybrid Rulemaking. In hybrid rulemaking, the additional or substitute procedures differ from statute to statute, but they are more burdensome to the agency than those required for informal rulemaking, while less burdensome than the procedures required in formal rulemaking. Students should be aware of what language is necessary to trigger other types of procedures according to Vermont Yankee.
The National Environmental Policy Act (NEPA), Regulatory Flexibility Act (Reg-Flex), Paperwork Act, and the Unfunded Mandates Act are all examples of hybrid rulemaking. Students should be aware of when these requirements are triggered and what procedures an agency must undertake if the statute applies. The Clean Air Act, discussed in the Sierra Club case, is an example of a statutory mandate that requires hybrid rulemaking. Students should review the rulemaking procedures required by CAA as part of your review of that case.
Executive orders are another source of hybrid rulemaking requirements. Presidents have imposed a number of analytical requirements that agencies must undertake in certain circumstances, and students should review these requirements. Executive Order 12866, the most important of these requirements, requires agencies to study and report on the190likely costs and benefits of proposed and final “significant” rules. Students should be aware of the definition of a “significant” rule since this is the trigger for agencies to undertake these cost-benefit studies.
Notice of Proposed Rulemaking. The APA requires that a “general notice of proposed rulemaking shall be published in the Federal Register.” 5 U.S.C.A. § 553(b). A group of older cases require notice to include the data and methodology of any scientific evidence on which they relied. Beyond this requirement, the courts require an agency to “fairly apprise interested persons” of the issues in the rulemaking. If an agency changes a proposed rule in response to comments or for some other reason, there may be an issue of whether parties received adequate notice of the new and changed final rule. The original notice is adequate if the final rule is a “logical outgrowth” of the rulemaking proceeding.
Opportunity for Comment. Section 553(c) requires agencies to provide interested persons an opportunity to comment “through submission of written data, views, or arguments.” There is no requirement for an oral presentation or hearing or any time period specified as the length of the comment period, although most agencies will provide for 60 or more days for complex or controversial rules, and they will often extend the time for comments if requested to do so.
Ex Parte Contacts. In formal rulemaking the APA places specific prohibition on ex parte communications; i.e., communications made to decision-makers in the agency outside of the prescribed (and public) procedures. See 5 U.S.C.A. § 557(d). Section 553, by comparison, does not prohibit such contacts in informal rulemaking. Congress can, and sometime does, prohibit or limit such contacts in an agency’s mandate, and an agency can adopt prohibitions or limitations on its own. Sierra Club ruled the APA did not generally ban ex parte contact in informal rulemaking, but there is an older case, Sangamon Valley Television Corporation v. FCC, that established that the due process clause prohibits ex parte contacts when rulemaking involves “conflicting claims to a valuable privilege.”
Statement of Basis and Purpose. After receiving comments from interested persons, Section 553(c) requires agencies “after consideration of the relevant matter presented, . . . [to] incorporate in the rules adopted a concise general statement of their basis and purpose.” Despite the reference to “concise” statement of basis and purpose, this is not the practice today as the preamble to a complicated or controversial rule can easily exceed 100 pages of the double-columned, small type Federal Register. The more detailed and expansive statements of basis and purpose are primarily the result of court decisions that either set aside or remanded to the agency rules that the courts found inadequately justified. This issue is discussed below under the topic of “Adequate Reasons.”
Judicial Review. Section 706(2) of the APA establishes six grounds for a court to hold that a rule is unlawful. The last provision, referring to a trial de novo, is a historical anachronism, but the courts regularly use the other sections. Students should be familiar with section 706(2).
Statutory Interpretation. Agencies frequently must interpret statutes in determining what type of rule to adopt, and these interpretations are subject to judicial review under section 706 of the APA, which directs a court to hold unlawful agency action “not in accordance with law,” 5 U.S.C.A. § 706(2)(A), and “in excess of statutory jurisdiction, authority, limitations, or short of statutory right,” id. § 706(2)(C). Although since Marbury v. Madison, it is the responsibility of the courts to “to say what the law is,” the Court in Chevron v. NRDC required courts to show deference to an agency’s statutory interpretation in certain circumstances.
Chevron established a now famous two-step test for the judicial review of a rule that contains a statutory interpretation. In step one, the courts ask whether Congress “has directly spoken to the precise question at issue.” If so, the court must apply Congress’ statutory language, but if a statutory word or words are ambiguous, or if the intent of Congress is unclear, a court will move to step two of its analysis. At step two, a court will ask whether an agency’s interpretation constitutes a “permissible construction of the statute.”
Step One. In some cases, the Court determines whether statutory language is ambiguous by using a “plain meaning” test. This approach asks how an objective observer would understand the text of the statute. For this purpose, a court commonly will consider the dictionary definition of the word or words in question. A court might consider other statutory provisions if they shed light on the “objective” meaning of the word or words being considered.
In other cases, a court will start with the language of the statute, but the judges will also consider the entire statute and its object and policy. This can include the legislative history of the statute and the canons of construction, which are a set of tools that judges have developed over the years to aid them in determining the meaning of statutory terms. One such tool, for example, is the “avoidance canon,” which asks courts to construe ambiguous language to avoid raising serious constitutional problems. When a court moves on to these other sources of evidence of Congress’ intent regarding a word or words, a judge is asking how a “reasonable person” would interpret a word or words after considering the full context of the legislation and the rules of construction that judges have developed.
Avoidance of Step Two. At Step two, a court defers to an agency’s construction of a statutory term or terms unless it can conclude the interpretation is unreasonable. On occasion, however, the Supreme Court has avoided the entire Chevron two-step framework and, thus, has avoided the possibility of deferring to an agency’s interpretation at step two. In King v. Burwell, the Court explained the deference at step two of Chevron “is premised on the theory that a statute’s ambiguity constitutes an implicit delegation from Congress to the agency to fill in the statutory gaps,” but in an “extraordinary case,” there may be reasons to conclude that Congress has not intended such an implicit delegation. The reasons to avoid Chevron may exist if an issue of statutory interpretation presents “a question of deep ‘economic and political significance’ that is central to this statutory scheme.” In resolving that issue, the Court may also consider whether an agency has expertise in the underlying192policy issue that is related to the meaning of a statutory term or terms. It is unclear whether an agency’s lack of expertise is a separate ground for avoiding Chevron.
Substantive Decisions. When an agency promulgates a rule, it determines on the basis of the evidence available to it, what are the relevant facts, and then it decides what type of rule, if any, is appropriate in light of those facts, choosing the regulatory option that will best further its statutory mandate. Section 706 authorizes courts to review both types of conclusions when it mandates that the “reviewing court shall . . . hold unlawful and set aside agency action, findings, and conclusions found to be—(A) arbitrary, capricious, an abuse of discretion or not otherwise in accordance with law; . . . [and] (E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title. . . .” 5 U.S.C.A. § 706.
Scope of Review. As section 706 states, the “substantial evidence” standard applies when an agency must comply with sections 556–557, which involves “formal” rulemaking. Thus, in informal rulemaking, the “arbitrary and capricious” scope of review will normally apply. In an agency’s statutory mandate, however, Congress sometimes requires the use of a “substantial evidence” standard for judicial review of informal or hybrid rulemaking. However, as the Court did in State Farm, courts do not view the two standards to differ in application in informal or hybrid rulemaking.
Using an “arbitrary and capricious” standard of review, a court will ask whether “the decision was based on a consideration of relevant factors and whether there has been a clear error of judgment. . . .” Citizens to Preserve Overton Park, Inc. v. Volpe.
Adequate Reasons. The Supreme Court has added another consideration concerning whether or not an agency’s rule is arbitrary and capricious. If an agency has not adequately explained its reasons for promulgating a rule, the court will remand the rule back to the agency for a more adequate explanation. The court will not furnish the missing reasons and uphold the rule. According to the State Farm case, an “agency must examine the relevant data and articulate a satisfactory explanation for its action including a “rational connection between the facts found and the choice made.” The Court in State Farm further explained: “Normally, an agency rule would be arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.”
Hard Look Review. The courts insist that their review of the agency’s decisions is a narrow one, intended to give deference to the agency’s fact-finding and conclusions, but the State Farm requirement that an agency must establish a “rational connection between the facts found and the choice made” has become known as “hard look” review. Judges and justices appear to vary concerning how demanding they will be concerning the adequacy of an agency’s explanation. In some instance, a minor discrepancy or discrepancies might193be enough for a judge to decide that the agency’s explanation was not adequate, while in other cases a judge will be looking for significant or major problems in the explanation.
CHAPTER 3
Major Themes
This chapter focuses on agency adjudications, both formal and informal, including the procedures required for each type of adjudication, and the nature and extent of judicial review.
Formal adjudications are generally governed by the Administrative Procedure Act, and typically provide/require that an individual be given a full evidentiary hearing.
Informal adjudications can be governed by statutory or regulatory requirements, but frequently are governed by the due process clauses of the U.S. Constitution. The standards for informal adjudication can vary depending on circumstances.
Executive Summary
Orders and Adjudications. Under the APA, an “order” is a “final disposition . . . of an agency in a matter other than rule making but including licensing.” 5 U.S.C.A. § 551(6). In other words, the APA’s definition seems to say that, except for rulemaking, an agency’s final disposition is necessarily an order. Because the APA defines “adjudication” as the process for formulating an “order,” any agency process that results in a final disposition, which is not rulemaking, is necessarily adjudication. The one major caveat on this statement is that investigations and information gathering are not adjudications.
Scope of the Term “Adjudication.” Adjudication necessarily covers a wide range of activities. On the one hand, adjudication includes administrative proceedings that are hardly distinguishable from judicial proceedings, including an agency attorney who prosecutes a person for violating the law and who seeks an administrative order that is the equivalent of an injunction and penalties. On the other hand, an adjudication can include a less formal process (e.g., that a law student qualifies for a federal student loan) that may be made without any hearing, attorneys, or other trappings of the judicial process. Between these two extremes are an infinite variety of other types of agency actions that qualify as adjudications.
Formal Versus Informal Adjudication. Although there are many different types of adjudication, the APA recognizes only two categories: formal and informal adjudication. These terms, however, can be misleading, because informal adjudication can be very formal (that is, highly proceduralized). It would be more accurate to distinguish adjudications by referring to them as APA adjudications and non-APA adjudications, meaning that the former is governed by the procedures specified in the APA and the latter are not. The APA procedures for formal adjudication are found at 5 U.S.C.A. §§ 554, 556, and 557, and generally reproduce the procedures applicable to a trial without a jury, but with an Administrative Law Judge (ALJ) presiding. By comparison, the APA specifically imposes no requirements on informal adjudication.
Requirements for Formal Adjudications. When formal adjudications are involved, Section 554 of the APA imposes various requirements, including a requirement that the proceeding begin with notice (that includes the time, place and manner of the hearing; the legal authority for the hearing, and the matters of fact and law asserted by whoever is bringing the proceeding); “rules” regulating intervention by interested persons; an opportunity to settle or adjust the dispute; the hearing must be overseen by the agency, one or more members of the body that comprises the agency, or one or more Administrative Law Judges (ALJs) (with variances for agencies with split enforcement models); a requirement that the proponent of the order must bear the burden of proof; a requirement that an agency’s decision “be supported by and in accordance with reliable, probative, and substantial evidence”; that parties be allowed to present their case by oral or documentary evidence, to submit rebuttal evidence, and to conduct cross examination; and a variety of other requirements.
Due Process Hearings. When the APA’s formal procedures do not apply, the governing standards often come from the Due Process Clause, unless an agency has adopted procedural regulations governing the procedure that exceed the requirements of due process. Because the Due Process Clause appears both in the Fifth Amendment (with respect to the federal government), and in the Fourteenth Amendment (with respect to state and local governments), the adequacy of administrative procedure under the Due Process Clause can arise in both federal or state agency actions.
Application of the Due Process Clause. In applying the Due Process Clause, the first issue is whether the clause applies at all. If it does apply, the second issue is what procedures are required. The Due Process Clause requires the government to hold some type of hearing before it deprives an individual of “life, liberty, or property” based on the resolution of disputed factual issues pertaining to that person. However, generally, the Due Process Clause only applies to individualized decision-making, involving individualized deprivations of property or liberty, and generally does not apply to policy-based deprivations affecting a class of individuals.
Definition of Property for Due Process Purposes. Historically, “life, liberty, and property” included the common law or fundamental rights that persons held by reason of membership in the body politic. They did not include the “privileges” that government might grant to persons, such as government employment and welfare payments. Thus, the law distinguished between “rights” and “privileges,” with the former protected from deprivation without due process and the latter not. During the early 1970s, the Supreme Court expanded the reach of the Due Process Clause by expanding the definitions of “property” and “liberty.” For example, the Court held that a recipient was entitled to a pre-termination hearing before welfare benefits could be terminated. The Court referred to welfare benefits as an “entitlement” because welfare benefits were a matter of “statutory entitlement for persons qualified to receive them.” By contrast, term contract professors had no right to a hearing regarding renewal of their contracts unless the decision not to rehire “imposed on him a stigma or other disability that foreclosed his freedom to take advantage of other employment opportunities.”
Definition of “Liberty” for Due Process Purposes. Historically, liberty meant freedom from bodily restraint or injury. Ordinarily, the government cannot restrain someone except as incident to the criminal process, which ensures due process of law. The right to engage in a common calling or profession is regarded as a liberty interest that triggers due process protections if there is a denial of an individual’s license to engage in a profession.
The Requirements of Due Process. In Mathews v. Eldridge, 424 U.S. 319 (1976), the Court suggested that “flexible due process” would be applied in informal adjudications, and the process due would be determined by considering three distinct factors: First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.
Neutral Decisionmaker Requirement. Many formulations of the basic requirements of due process include the need for a neutral decisionmaker.
Judicial Review. After an agency has rendered a decision in an adjudication, a disappointed party ordinarily may sue for judicial review of that decision. Section 706(2) (E) provides that agency action is to be held unlawful if it is “unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute.” While this provision applies equally to rulemaking and adjudication, it only applies to formal agency action. Section 706(2)(A) governs judicial review of informal agency action and requires courts to determine whether the agency action is arbitrary, capricious, or an abuse of discretion.
CHAPTER 4
Major Themes
The goal of Chapter Four is to acquaint students with the different ways in which agencies can establish new policies, some of which are legally binding and some of which are not. Agencies can announce policies using adjudication, rulemaking, or non-legislative rules. After discussing the advantages and disadvantages of each approach, the chapter looks at what are the legal limitations on the use of legislative (legally binding) and non-legislative (not legally binding) rules. Most of the chapter addresses the legal situation of non-binding rules (policy statements and interpretive rules) because they are widely utilized by administrative agencies. As with the prior chapters, this one ends with judicial review, this time judicial review of non-legislative rules.
Executive Summary
Restrictions on the Use of Adjudication. NLRB v. Bell Aerospace holds that an agency can announce a new policy in adjudication unless to do so would amount of an abuse of discretion or violate the agency’s statutory mandate. In RWDSU v. NLRB, the court determined whether an abuse of discretion had occurred by comparing the statutory interests advanced by using adjudication and the inequity of doing so in terms of the impact of the adjudication on the regulated entity. The court identified five factors that it considered in making this judgment, and you should be aware of those factors.
Restrictions on the Use of Rulemaking. Bowen v. George University Hospital held that agencies do not have the power to give rules retroactive effect without an express grant of such authority by Congress. General Electric Company v. EPA reminds us that the due process clause may limit an agency’s enforcement of a policy adopted in rulemaking. Students should be aware of what test the court uses to determine if a due process violation occurred because of a lack of notice. Students should also be aware why the due process clause applied to the case.
Non-Legislative Rules Are “Rules”. An agency’s choice of a non-legislative rule to adopt a new policy is different than if it uses adjudication or rulemaking because, by itself, a non-legislative rule does not have binding legal effect on third parties. Nevertheless, such statements are “rules” because they fit the APA’s definition of rule, which you studied in Chapter 1. Recall that a rule “means the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy. . . .” 5 U.S.C.A. § 551(4).
Litigation Against Non-Legislative Rules. Parties who oppose a non-legislative rule may attack it as not really being a non-legislative rule, but rather a legislative rule. If this attack is successful, a court will hold that the “rule” is invalid because the agency failed to promulgate it using notice and comment rulemaking. Students should therefore be aware of the tests that a court uses to distinguish legislative and non-legislative rules.
Policy Statements. Policy statements are issued by an agency to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power in subsequent adjudication or a rulemaking. Courts therefore use a “binding effect” test to distinguish policy statements from legislative rules. A court will ask whether the statement of the agency imposes a new duty or merely announces the intention to impose a new duty at some future time.
Interpretive Rules. An “interpretive rule” interprets or clarifies the nature of the duties previously established by an agency’s statutory mandate or by a regulation promulgated by the agency. In an interpretive rule, an agency announces how it believes an existing law or statute is binding on those who are subject to it. The interpretive rule, however, is not itself binding. Persons are free to ignore the interpretation until it is adopted using rulemaking or in an adjudication. To determine whether a “rule” is a legislative or non-legislative rule the courts will consider the agency’s characterization of the rule, and more importantly, the source of the duty that a party is obligated to obey. If an agency is describing with greater clarity or precision a duty that a statute or regulation has already established, a court will conclude that the agency has issued a “non-legislative rule.” If a court determines that the agency is creating an entirely new duty, it will hold that the agency has violated section 553 by its failure to use rulemaking procedures.
Reliance on Non-Legislative Rules. When an agency offers its view as to what the law provides and a person relies on it, if later the agency changes its mind or discovers it made an error, the person may attempt to stop the government from abandoning its earlier position by claiming that the government is estopped from doing so or that the change denies the person of due process. The Supreme Court has never found a case of estoppel against the government, but it has resisted making a hard fast rule that it cannot lie against the government. Rather the Court has found a Due Process violation in extreme cases, such as where the government has prosecuted someone for doing something the government told the person was lawful. In Appeal of Eno, a state case, the court held that the due process clause may apply in a case of reasonable reliance if a state misleads a citizen in a manner that is fundamentally unfair.
Judicial Review of Non-legislative Rules. In an older case, Skidmore v. Swift & Co., the Supreme Court held that a court engaged in interpreting a statutory provision should take into account an agency interpretation of that provision, but the agency’s interpretation was not controlling upon the courts. Instead, the weight that the court gives to the agency’s interpretation depended on “the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.”
This lesser level of deference is commonly described as “Skidmore” deference to distinguish it from the stronger deference mandated by Chevron. The Supreme Court has decided a trio of cases that relate to when agencies will receive Chevron deference and when they will receive Skidmore deference.
Christensen. According to Christensen, “interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law—do not warrant Chevron-style deference. Instead, interpretations contained in formats such as opinion letters are ‘entitled to respect’ under our decision in Skidmore v. Swift & Co., but only to the extent that those interpretations have the ‘power to persuade.’ ”
Mead. In Mead, the Court seemed to continue to rely on the “force of law” test, stating that Chevron applies “when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law and that the agency interpretation claiming deference was promulgated in the exercise of that authority.” However, it then went on to warn that an interpretation or application of a statute might qualify for Chevron deference even if it was not adopted using formal adjudication or notice-and-comment rulemaking.
Barnhart. Barnhart elaborated on when Chevron deference might be appropriate even if an agency did not issue an interpretation that had the “force of law.” To determine whether Chevron deference is appropriate, the courts should consider the interpretive method used and the nature of the question at issue. The Court then held that “the interstitial nature of the legal question, the related expertise of the Agency, the importance of the question to administration of the statute, the complexity of that administration, and the careful consideration the Agency has given the question over a long period of time all indicate that” Chevron deference was appropriate in Barnhart.
CHAPTER 5
Major Themes
a. Requirements to File Suit. In order to challenge agency action, the reviewing court must have jurisdiction, and the plaintiff must establish a cause of action.
b. Exclusions from Review. Section 701(a) of the APA provides that the judicial review chapter applies “except to the extent that—(1) statutes preclude judicial review; or (2) agency action is committed to agency discretion by law.”
c. Statutory Requirements for Bringing APA Suits. The subject of the suit must be final agency action, the plaintiff’ must either suffer legal wrong or be adversely affected and within the zone of interests of an applicable statute, and the plaintiff must have exhausted any administrative remedies as required by Section 704.
d. Ripeness Requirement. The Court has created a prudential requirement that the suit must be ripe for review.
Executive Summary
Subject Matter Jurisdiction. In order to challenge agency action, a litigant must first establish that the reviewing court has subject matter jurisdiction to hear the case. Many statutory regimes contain specific jurisdictional provisions. If the statutory regime does not provide a jurisdictional basis, 28 U.S.C.A. § 1331 provides that: “The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” The Administrative Procedure Act (APA) itself does not grant jurisdiction, but it is, of course, a law of the United States, so a case brought under the APA would qualify for jurisdiction under Section 1331.
Standing Requirements. The basic constitutional test for standing focuses on whether the plaintiff has suffered an injury (or is about to suffer an injury) caused (or about to be caused) by the alleged illegal action, and that a favorable court decision would remedy (or avoid) that injury.
Cause of Action. Even if subject matter jurisdiction exists, the plaintiff must still establish a cause of action. Some administrative statutes specifically grant aggrieved individuals judicially enforceable rights. For matters not covered by a specific review provision, APA section 702 is the fallback provision. It establishes a “cause of action” for “[a] person suffering legal wrong because of agency action, or adversely affected by agency action within the meaning of a relevant statute.”
Legal Wrong and Zone of Interest Requirements. Section 702’s cause of action is limited to persons suffering “legal wrong” or those “adversely affected or aggrieved . . . within the meaning of a relevant statute.” A “legal wrong” in the context of the APA means an action by the government that interferes with a person’s constitutional, statutory, or common law rights. The “adversely affected or aggrieved” language authorizes lawsuits by persons who assert “interests” that are “arguably within the zone of interests to be protected or regulated by the statute . . . in question.”
Exclusions from Judicial Review Under the APA. Section 701(a) states that the APA’s judicial review provisions do not apply “to the extent that (1) statutes preclude judicial review; or (2) agency action is committed to agency discretion by law.”
Agency Action. Section 702’s right of review is limited to persons suffering legal wrong because of “agency action” or adversely affected or aggrieved by “agency action.” “Agency action,” as defined by 5 U.S.C. § 551(13), means “the whole or a part of an agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act,”
Finality Requirement. Under APA Section 704, “agency action made reviewable by statute and final agency action for which there is no adequate remedy in a court” are judicially reviewable. When a particular statute specifically provides for judicial review of agency action, then the review proceeds pursuant to that statute, not the APA. For agency action to be final it must be the completion of the agency process and it must have legal consequences or perhaps practical consequences.
Exhaustion Requirement. Under APA Section 704 a plaintiff must have exhausted his available administrative remedies—that is, an ability to obtain agency review of the action—if a statute or an agency rule provides for such a remedy and the agency stays the effect of its action pending its decision on review.
Ripeness Doctrine. Much administrative litigation involves attempts to obtain to “pre-enforcement review”—for example, review of a regulation or interpretation before the agency tries to enforce that regulation or interpretation. If review is not “ripe,” persons subject to the regulation would have to wait until the agency attempts to enforce the regulation against them, and would then seek judicial review of the regulation as a defense to the enforcement action. Some regulatory statutes require persons to bring pre-enforcement challenges to rules within a set period of time or forever lose their ability to challenge the rule. In these circumstances, because of the statutory requirement, ripeness is not an issue. Such statutes are, however, relatively unusual.
CHAPTER 6
Major Themes
a. Separation of Powers/Checks and Balances. The U.S. Constitution envisions a federal government with three separate and distinct branches of government (legislative, executive and judicial), assigns distinct tasks to each branch, and is based on the assumption that each of the branches will “check” and “balance” the powers of the other branches. Administrative agencies fit awkwardly into the U.S. constitutional system. Although almost all agencies are housed in the executive branch of government, many agencies exercise what look like legislative, executive, and judicial powers. The Supreme Court has gone through three phases in evaluating the validity of delegations of power.
b. Administrative Adjudications. Agencies routinely adjudicate cases, albeit subject to review by Article III courts, but under the substantial evidence standard that review is deferential as to the agencies’ factual determinations and under the Chevron and Auer doctrines that review may be deferential as to the agencies’ interpretations of law. The constitutionality of ordinary agency adjudication seems well established under the “public rights” rubric, and the Court has long sanctioned administrative adjudication of “public rights” without a right to jury trial because such adjudication does “not constitute a suit at common law or in the nature of such a suit.”
c. The Legislative Veto. At one point, Congress reserved to itself the right to veto rules or orders in almost 200 statutes before the legislative veto was struck down as a violation of the Constitution’s requirement of bicameralism (a law must be passed by both houses of Congress) and presentment to the President. Although Chadha involved an adjudicatory decision, the Court later held that rulemaking vetoes were likewise unconstitutional.
d. Congressional Efforts to Assert Control over Administrative Agencies. After Chadha, Congress has taken steps to reassert its authority over agency decision-making through “Corrections Day” (a fast track procedure for expediting review of both perceived mistakes made by Congress and perceived errors made by agencies) and the Congressional Review Act (which required agencies to submit all rules to Congress for its review and stays the effective date of major rules to permit legislative review). The House of Representatives has repeatedly passed a bill—the REINS Act—that would require Congress to approve by law all major rules before they can take effect.
e. Appointments and Removal. Under Article II of the Constitution principal officers must be appointed by the President with the advice and consent of the Senate. While inferior officers may also be appointed in this fashion, Article II further states that Congress may provide for the appointment of inferior officers, as it thinks proper, by the President alone, by the heads of departments, or by the courts of law. While the Constitution is silent as to how officers may be removed, short of impeachment, the Supreme Court has established limits on the ability of Congress to restrict the presumed power of the President to remove officers at will.
f. Presidential Supervisory Authority. Art. II, § 3 of the Constitution requires the President to “take Care that the Laws be faithfully executed. . . .” As a result, the President has the constitutional authority to require administrative officials to do a number of things: prepare cost-benefit analyses, develop regulatory agendas, file environmental reports, and explain the reasons behind their proposed actions. What other powers the Take Care Clause effectively provides to the President is unclear.
Executive Summary
Separation of Powers/Checks and Balances. The U.S. Constitution envisions a federal government with three separate and distinct branches of government (legislative, executive and judicial), assigns distinct tasks to each branch, and is based on the assumption that each of the branches will “check” and “balance” the powers of the other branches. Administrative agencies fit awkwardly into the U.S. constitutional system. Although almost all agencies are housed in the executive branch of government, many agencies exercise legislative, executive and judicial powers.
Nondelegation Doctrine. The Supreme Court has gone through three phases in evaluating delegations of power. The Court rejected all nondelegation challenges until the 1930s, when it struck down two statutes on this ground. The Court has rejected all additional nondelegation challenges since that time, but it has occasionally used the nondelegation clause to justify narrowly interpreting an agency’s statutory authority.
Administrative Adjudications. Congress routinely assigns the power to adjudicate to persons other than Article III judges. Administrative adjudication is a common example of such adjudication, but agencies are not the only non-Article III adjudicators. Agencies routinely adjudicate cases, albeit subject to review by Article III courts, but under the substantial evidence standard that review is deferential as to the agencies’ factual determinations and under the Chevron and Auer doctrines that review may be deferential as to the agencies’ interpretations of law. As confusing as the case law is, the constitutionality of ordinary agency adjudication seems well established under the “public rights” rubric.
Administrative Adjudication and the Right to Jury Trial. The Court has long sanctioned administrative adjudication of “public rights” without a right to jury trial because such adjudication does “not constitute a suit at common law or in the nature of such a suit.” A jury trial would only be required if the plaintiff’s cause of action is one that was a “legal” claim at common law, or if the cause of action was unknown at common law but is analogous to a “legal” action at common law. When administrative agencies adjudicate disputes between private parties, if the Court regards such statutory rights as “closely intertwined with a federal regulatory program that Congress had the power to enact,” the rights are “public rights” and the Seventh Amendment does not apply. Congress, however, cannot simply reclassify a preexisting common law cause of action in order to eliminate a party’s Seventh Amendment right to a jury trial. However, in Crowell v. Benson, the Court approved agency adjudication of a federal worker’s compensation claim as consistent with Article III despite the fact that the dispute involved a private right.
The Legislative Veto. Until the legislative veto was declared unconstitutional, Congress reserved for itself the right to veto rules or orders in almost 200 statutes. The veto was popular because Congress could delegate substantial discretion to an agency and still retain the authority to disapprove of specific agency decisions. The legislative veto was struck down as a violation of the Constitution’s requirement of bicameralism (a law must be passed by both houses of Congress) and presentment to the President. Although the case in which the veto was struck down (Chadha) involved an adjudicatory decision, the Court also held that rulemaking vetoes were likewise unconstitutional.
Post-Legislative Veto Developments. Following Chadha, Congress took two steps to reassert its authority over agency decision-making. In 1995, the House of Representatives established “Corrections Day” as a fast track procedure for expediting review of both perceived mistakes made by Congress and perceived errors made by agencies. Further, a 1996 law, the Congressional Review Act, required agencies to submit all rules to Congress for its review and stays the effective date of major rules to permit legislative review. The REINS Act would amend the Congressional Review Act to require Congress to approve by law all major rules before they can take effect.
Appointments. Article II of the Constitution requires that the President “shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the Supreme Court, and all other Officers of the United States, whose appointments are not herein otherwise provided for, and which shall be established by law.” U.S. Const. art. II, § 2. However, it also provides that “Congress may by Law vest the appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.” Id. Members of the Federal Election Commission are regarded as “officers” of the United States, and therefore Congress may not vest the power to appoint those commissioners in itself. Likewise, Congress cannot assign executive functions under the Balanced Budget and Emergency Deficit Control Act of 1985 to the Comptroller General of the United States who is regarded as a legislative branch official and can only be removed by Congress. The631Supreme Court has established tests for determining who is a principal officer, an inferior officer, and an employee, but the outcome from application of those tests is uncertain.
Removal Power. In general, the President has the power to remove executive branch officials. However, the Supreme Court upheld a limitation on the President’s authority to remove at will members of the Federal Trade Commission except for cause. The Court said the FTC could not “be characterized as an arm or an eye of the executive. Its duties are performed without executive leave and, in the contemplation of the statute, must be free from executive control.” Almost all the principal officers whose removal can only be for cause are members of independent boards or commissions. Only four agencies are headed by a single officer protected from removal at will: the Consumer Finance Protection Bureau, the Social Security Administration, the Office of Special Counsel, and the Federal Housing Finance Agency. Congress can also restrict the President’s removal power over inferior officers if the restriction does not interfere with the President’s core functions. However, if the principal officer who supervises the inferior officer can only be removed for cause, then the inferior officer cannot also be so protected, at least if it has policy making and enforcement functions.
Presidential Supervisory Authority. Art. II, § 3 of the Constitution requires the President to “take Care that the Laws be faithfully executed. . . .” As a result, the President has the constitutional authority to require administrative officials to do a number of things: prepare cost-benefit analyses, develop regulatory agendas, file environmental reports, and explain the reasons behind their proposed actions. What else the President can do under the Take Care Clause is uncertain.
CHAPTER 7
Major Themes
a. Agencies seek information for a variety of reasons, and for a variety of purposes.
b. One way that agencies obtain information is through inspections of businesses and regulated entities. Inspections are subject to the warrant requirement of the Fourth Amendment, but that requirement is applied in a unique way in this context.
c. Other ways that agencies obtain information is through requiring regulated entities to keep records and through the issuance of subpoenas.
d. In general, agencies must have authority to issue subpoenas, and their attempts to obtain information are subject to constitutional requirements.
Executive Summary
Administrative agencies need information to perform their many functions. They use this information to set policy through the promulgation of rules and regulations, to keep Congress advised regarding various matters, and to enforce regulatory requirements and prosecute companies for civil and criminal violations. Agencies obtain information in different ways: they conduct inspections or searches of areas; they require persons to submit information or produce documents to the agency; and they require persons to keep records, which the government may then wish to inspect or have delivered to it.
Administrative Inspections. A number of agencies regularly inspect buildings and work sites. Health inspectors enter restaurants to determine whether food preparation and service areas are clean, as well as to see whether food is being kept under healthy conditions. Inspectors from the Occupational Safety and Health Administration (OSHA) examine construction and factory sites to make sure that workers are employed in safe and healthy conditions. In some instances, administrative officials even seek to enter people’s homes or yards. Child welfare officials, for example, will enter a house looking for abused or neglected children.
Agency Authority to Inspect. An agency’s authority to inspect is defined in its enabling act. If Congress (or a state legislature) has not authorized an agency to conduct administrative inspections, it has no legal authority to do so. Moreover, an agency’s authority to inspect is only as great as its statutory authorization.
Fourth Amendment Requirements. In the Court’s landmark decision in Camara v. Municipal Court, 387 U.S. 523 (1967), the U.S. Supreme Court held that administrative inspections are subject to the requirements of the Fourth Amendment. In particular, absent consent (or a Fourth Amendment exception), such inspections require a search warrant that is based on probable cause and otherwise complies with the requirements of the Fourth Amendment. However, the Court redefined the concept of probable cause. In the administrative context, probable cause does not require proof regarding specific violations or misconduct at a particular place, but can instead be based on such things as proof that there was a reasonable inspection plan, and that it was time to search under that plan
Pervasively Regulated Industries. An exception to the warrant requirement exists for certain “pervasively regulated” industries. See Colonnade Catering Corp. v. United States, 397 U.S. 72 (1970) (liquor dealers); United States v. Biswell, 406 U.S. 311 (1972) (firearms dealers); Donovan v. Dewey, 452 U.S. 594 (1981) (underground mines); New York v. Burger, 482 U.S. 691 (1987) (auto junkyard). In such cases, courts ask only whether the searches serve an important government purpose, whether warrantless searches are necessary to achieve that purpose, and whether the statute authorizing the searches provides protections that substitute for a warrant (providing notice of searches to the owner, limiting the scope of the search, and limiting the discretion of the inspecting officer). The mere fact that businesses are subject to the Occupational Safety and Health Act does not mean that they should be treated as highly regulated industries. In addition, hotels and motels will not necessarily be treated as “highly regulated industries.” Perhaps the limit of this exception was reached in New York v. Burger, 482 U.S. 691 (1987), in which the Court held that automobile junkyards could be treated as pervasively regulated industries, and therefore could be subjected to warrantless police searches of their records and their premises.
Remedies for Illegal Inspections. To the extent that officials enter a home or business without authority, they may be liable in tort under state law (e.g., trespass). They might also be liable under federal law. When federal, state, or local officials violate a citizen’s Fourth Amendment right to be free from unreasonable searches and seizures, they can be sued under the Constitution itself, Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388 (1971) (petitioner entitled to sue federal officials for violating his Fourth Amendment rights), or under 42 U.S.C.A. § 1983 (authorizing suits against state officials who infringe citizens’ “rights, privileges, or immunities secured by the Constitution and laws” of the United States). Another potential remedy is the exclusionary rule which precludes the use of evidence seized in violation of a defendant’s constitutional rights. However, in general, the Court has held that the exclusionary rule is not applicable in civil proceedings. It is possible that the exclusionary rule could be applied in administrative proceedings when the administrative conduct is particularly egregious, and application of the exclusionary rule might help to deter future violations.
Special Needs Searches. Courts have also upheld so-called “special needs” searches. For example, the Court upheld Federal Railroad Administration (FRA) regulations mandating blood and urine tests of railroad employees involved in “major” train accidents, and
authorizing railroads to administer breath and urine tests to employees who violate certain safety rules. Similarly, the Court upheld a school program authorizing drug testing of students involved in extracurricular activities. See Board of Education v. Earls, 536 U.S. 822 (2002). In a couple of cases, the Court has limited the authority of administrative officials to conduct searches. In Ferguson v. City of Charleston, 532 U.S. 67 (2001), a city instituted a program whereby the local hospital, without the knowledge or consent of the patients, would perform drug screens on the urine samples provided by pregnant patients and, if the drug test was positive, the hospital would provide the results to local law enforcement. Then, depending upon the stage of their pregnancy, the patients were either arrested for child abuse or given the opportunity to avoid criminal prosecution by successfully completing a drug counseling program. The Court found that the program violated the Fourth Amendment. In addition, the Court emphasized that none of the other cases involved use of the results for law enforcement purposes. In Safford United School District # 1 v. Redding, 557 U.S. 364 (2009), the Court held that school officials could not subject a student to a strip search.
Border Searches. At the nation’s borders, customs officials have always exercised the right to stop would-be entrants to the United States to demand proof of their right to entry, and sometimes to search their persons, luggage and effects. See United States v. Flores-Montano, 541 U.S. 149, 152 (2004); United States v. Ramsey, 431 U.S. 606 (1977). Indeed, the United States Supreme Court has generally regarded border searches as “routine,” and allowed customs officials to exercise broad powers without showing probable cause or even a “reasonable suspicion” of criminal activity. For example, customs inspectors have exercised routine authority to search all of an entrant’s papers, suitcases and effects. However, the Court has suggested that it might impose more rigorous requirements on strip, body-cavity, or involuntary x-ray searches.” Questions have arisen regarding whether this plenary authority to search extends to smart phone, laptops and other electronic devices.
Recordkeeping Requirements. Recordkeeping requirements are used by agencies to generate information, and are usually imposed by regulation. Some of these involve government required forms. Income tax returns filed by individuals, for instance, are prescribed by IRS regulations. Some reporting requirements, however, are not imposed by regulation but merely by letter or other communication from the agency. When a reporting or recordkeeping requirement is imposed by regulation, the agency need not show express authority for that requirement. Rather, the authority may be implied from the statute creating the regulatory program. If, however, the agency wishes to issue a subpoena or report order, or simply to impose a reporting requirement by letter, the authority must be explicit. There is no implied authority to issue a subpoena. Moreover, statutes granting subpoena power contain their own limitations regarding the scope of the subpoena. When an agency imposes a reporting or recordkeeping requirement by regulation, the rulemaking requirements of the APA obviously apply.
The Paperwork Reduction Act. When an agency wishes to impose a reporting or recordkeeping requirement on 10 or more persons, the Paperwork Reduction Act. 44 U.S.C.A. § 3501 et seq., imposes substantive and procedural requirements on the agency.
Agency Subpoenas. If expressly provided by statute, agencies can issue subpoenas. Subpoenas are of two types: subpoenas ad testificandum and subpoenas duces tecum. The first requires a person to come and testify; the second requires a person to come and bring something with him, usually documents. Usually, but not always, subpoenas are used when an agency is investigating possible violations of its regulations or its governing statute. A person receiving a subpoena has three options: comply; go to court and move to quash the subpoena; or ignore it. Historically, there was no penalty for ignoring an administrative subpoena. Some modern statutes have begun to streamline the process by providing for a penalty for failure to comply with the original subpoena whether or not judicial enforcement has been sought.
The Fourth Amendment and Subpoenas. In its early decisions, the United States Supreme Court interpreted the Fourth Amendment broadly to limit the power of administrative agencies to subpoena information. In Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186 (1946), however, the Court held that probable cause was not necessary to the validity of an administrative subpoena, and held that the disclosure shall not be unreasonable. It is not necessary, as in the case of a warrant, that a specific charge or complaint of violation of law be pending or that the order be made pursuant to one. In United States v. Morton Salt Co., 338 U.S. 632 (1950), the Court extended Oklahoma Press to the compelled disclosure of information through required reports.
Fifth Amendment Privilege Against Self-Incrimination. The Supreme Court determined years ago that “a corporation cannot resist the production of records upon the ground of self-incrimination.” Wilson v. United States, 221 U.S. 361 (1911). In Hale v. Henkel, 201 U.S. 43 (1906), the Court explained that whereas an “individual may stand upon his constitutional rights as a citizen,” the “corporation is a creature of the state.” In United States v. White, 322 U.S. 694 (1944), the Court held that an unincorporated labor union did not have a privilege against self-incrimination. In White, it held that the framers intended the privilege to extend only to individuals and not to organizations and other entities. When the government seeks documents from a non-natural person, the natural person who must respond for the organization cannot claim a personal privilege for the organization’s documents, even though those documents might incriminate the person. In Shapiro v. United States, 335 U.S. 1 (1948), the Court held that the privilege does not apply to so-called “required records.” Even when records are not required to be kept by the government, the Court has indicated that requiring the production of already created documents is not self-incrimination within the meaning of the Fifth Amendment, because that amendment goes to compelled testimony, and compelling the production of already existing documents is not equivalent to compelling testimony. See United States v. Doe, 465 U.S. 605 (1984).
Fifth Amendment Exceptions. Nonetheless, there are situations when persons are, or may be, protected. In Marchetti v. United States, 390 U.S. 39 (1968), for example, Marchetti had been convicted of failing to register with the government as a person engaged in the business of accepting wagers (i.e., being a bookie). He claimed that the requirement to so register compelled him to incriminate himself. The Court agreed. Another way the Self-Incrimination Clause can protect a person from a demand for documents is when the mere act of producing the documents, as opposed to the contents of the documents, may incriminate the person producing the documents.
Parallel Proceedings. In some instances, when the government seeks information from companies or private individuals, it is pursuing both civil and criminal objectives. If the government is contemplating criminal charges, is it appropriate for it to use its civil powers to compel the disclosure of information? The Constitution does not ordinarily require a stay of civil proceedings pending the outcome of criminal proceedings. Nevertheless, a court may decide in its discretion to stay civil proceedings, postpone civil discovery, or impose protective orders and conditions “when the interests of justice seem to require such action, sometimes at the request of the prosecution, sometimes at the request of the defense.” The court must make such determinations in the light of the particular circumstances of the case.
CHAPTER 8
Major Themes
a. FOIA. The Freedom of Information Act (FOIA) provides individuals with the ability to access governmental information and documents. However, FOIA is subject to various exemptions. Sometimes, when agencies hold information about private individuals or corporations, and a FOIA request is received for that information, the private individuals or corporations will bring a “reverse FOIA” suit to prevent the release of that information.
b. Federal Advisory Committee Act. The Federal Advisory Committee Act, 5 U.S.C.A. §§ 1–15, limits the ability of the executive branch to create or use advisory committees that include private persons, unless those committees comply with the Act.
c. Government in the Sunshine Act. The Government in the Sunshine Act, 5 U.S.C.A. § 552b, requires that “every portion of every meeting of an agency shall be open to public observation.” 5 U.S.C.A. § 552b(b). Unlike the FOIA, the Sunshine Act only applies to agencies headed by a collegial body, but the requirement to have open meetings is subject to the same exceptions as are found in FOIA, except for the (b) (5) exemption.
Executive Summary
FOIA Access. The Freedom of Information Act (FOIA) provides the public with the ability to access governmental materials and documents. FOIA is a disclosure statute so the assumption is that governmental agencies will turn over requested documents unless those documents fall within one of the FOIA exemptions.
FOIA Exemptions. FOIA exempts the following types of information from disclosure: classified information; internal agency personnel rules and practices; information specifically exempted from disclosure by statute; private commercial or trade secret information; inter-agency or intra-agency privileged communications; personnel, medical, or similar files the disclosure of which would constitute a clearly unwarranted invasion of privacy; information compiled for law enforcement purposes; information related to reports for or by an agency involved in regulating financial institutions; and geological information concerning wells.
Reverse FOIA Suits. Private persons or organizations about whom the government has information may have a very strong interest in whether the government releases information requested by someone. In some instances, these individuals will bring “reverse FOIA” suits to prevent the government from disclosing this information to others. Most reverse-FOIA litigation involves commercial information, but there is no particular reason why it cannot occur with respect to personal information as well.
Federal Advisory Committee Act. The Federal Advisory Committee Act, 5 U.S.C.A. §§ 1–15, limits the ability of the executive branch to create or use advisory committees that include private persons, unless the committees comply with FACA. FACA imposes a number of requirements that must be met in order to create an advisory committee, including a requirement that the membership of advisory committees be “fairly balanced in terms of the points of view represented and the functions to be performed by the advisory committee.” No longer would advisory committees be industry advisory committees. FACA also requires that any meetings of an advisory committee be noticed to and open to the public, subject to exceptions that mirror the exemptions of FOIA.
Government in the Sunshine Act. The Government in the Sunshine Act, 5 U.S.C.A. § 552b, requires that “every portion of every meeting of an agency shall be open to public observation.” 5 U.S.C.A. § 552b(b). Unlike the FOIA, the Sunshine Act only applies to agencies “headed by a collegial body composed of two or more individual members, a majority of whom are appointed to such position by the President with the advice and consent of the Senate, and any subdivision thereof authorized to act on behalf of the agency.” In other words, only multi-member independent regulatory agencies, such as the FCC, FTC, SEC, etc., are subject to the Sunshine Act. In order for the Sunshine Act to apply there must be a meeting of at least a quorum of the members of the agency required to take action. In addition, the meeting must involve “deliberations” that “determine or result in the joint conduct or disposition of official agency business.” The Act does contain exceptions.
CHAPTER 9
Major Themes
a. Recovery of Attorneys Fees. In general, in the U.S., each side to litigation must pay his/her own attorneys fees. In response to concerns regarding this approach, Congress has from time-to-time passed special fee shifting statutes, usually relating to a particular substantive area of law when Congress wanted to encourage, or at least not discourage, particular types of lawsuits.
b. Equal Access to Justice Act (EAJA). The EAJA, the most prominent fee shifting statute, permits the recovery of attorneys fees in litigation against the government, and applies broadly to any non-tort action against the United States, as well as to some agency adjudications. The Act imposes limitations on those who may recover these fees, the requirements for recovery, and the amount of the recovery.
Executive Summary
Fee Shifting Statutes. In general, in the U.S., each side to litigation must pay his/her own attorneys fees. In response to concerns regarding this approach, Congress has from time-to-time passed special fee shifting statutes, usually relating to a particular substantive area of law, in which Congress wanted to encourage, or at least not discourage, particular types of lawsuits.
Equal Access to Justice Act (EAJA). The EAJA permits the recovery of attorneys fees in litigation against the government, and applies broadly to any non-tort action against the United States, as well as to some agency adjudications. The Act limits awards to individual plaintiffs with a net worth of $2 million or less, businesses with fewer than 500 employees and a net worth of less than $7 million, tax-exempt charitable organizations, or any other organization that would qualify as a “small entity” under the Regulatory Flexibility Act (primarily this would extend the EAJA to small governments as well).
EAJA’s Application. The EAJA extends by its terms to formal adjudications under the APA at which the government is represented by counsel (but not ratemaking or the grant or renewal of a license), appeals of government contract disputes before one of several contract appeal boards, and administrative penalty proceedings under the Program Fraud Civil Remedies Act. In administrative proceedings, the adjudicative officer “shall” award attorneys fees to a prevailing party other than the United States “unless the adjudicative officer of the agency finds that the position of the agency was substantially justified or that special circumstances make the award unjust.”
Recovery Under the EAJA. The EAJA authorizes an award of costs (but not including attorneys fees) to any eligible prevailing party without a further showing. It also authorizes an award of attorneys fees to prevailing parties in suits with an agency on the same basis that awards of attorneys fees can be made under common law (i.e., where an exception to the American rule would apply). Finally, it authorizes an award of attorneys fees (even843when it would not be allowable under common law) to “a prevailing party other than the United States,” unless the court finds that “the position of the United States was substantially justified or that special circumstances make an award unjust.”
Definition of “Prevailing Party.” In order to be a “prevailing” party, a litigant must succeed on “any significant issue” in the litigation. However, a “technical victory may be so insignificant” as to not support prevailing party status. A plaintiff who recovers damages in any amount, whether compensatory or nominal, qualifies as a prevailing party. The extent of success on the merits or damages received, while not affecting prevailing party status, can affect the appropriate amount of attorneys fees to be awarded. The person’s success, however, must be reflected in a judicial decree. For example, a private settlement agreement, even legally enforceable as a contract, that acknowledges changed conduct that resulted from the lawsuit, would not be sufficient to make a plaintiff a prevailing party.
“Substantially Justified.” The EAJA’s presumption, that a prevailing party is entitled to a fee award unless the government’s position is “substantially justified,” is relatively unusual and subject to some interpretation. The burden is on the government to establish that its position was substantially justified. Moreover, a 1985 amendment clarified that the “position of the United States” includes both its position in the litigation and its position that made the litigation necessary (that is, the justification for the underlying government action).
Amount of Award. Under the EAJA, the agency or court is to base the fees on “prevailing market rates for the kind and quality of the services furnished, except that an attorney fee cannot exceed $125 per hour,” unless the court or agency by regulation determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee. Agency “bad faith” is grounds for an enhanced fee award.