Adjudication (Pt 2)

Question 1

Chenrey II, NLRB v. Bell Aerospace

Answer 1

• Agency can use either rulemaking vs. adjudication to make policy

Question 1

Benefits of Adjudication

Answer 1

• Grounded in real world facts: Applies to facts immediately and you can see how the policy affects regulated community
• Dealing with particular facts step by step and not issue policies with uncertain impacts
• Factual vehicle: present policy in best possible light for litigation purposes
• Adjudication maybe is faster than rulemaking? But sometimes it takes a while to find right facts for the policy: mismatch
• Adjudication can only be challenged by those subject to the adjudication
• More control over forum of the litigation
• Are adjudications subject to Congressional Review Act?

Question 2

NLRB v. Epilepsy Foundation

Answer 2

• NO retrospective application of a new rule
• Cannot apply rule emerging from adjudication retrospectively to party at issue; the party at subject to the adjudication will not be liable for violations of a new rule, but will be subject to the rule going forward

Question 3

Qualms of Epilepsy Foundation

Answer 3

• Unfair to employer to hold it liable for behavior that was lawful at the time the behavior happened; but what if the employer had no idea on what the law was (employer was negligent/ignorant of the law?)
• employee was fired for insisting on having a representative at a disciplinary hearing and employer fired him (a right that employee has); but because agency cannot apply rule retroactively, the employee cannot get back pay because employer’s conduct was not illegal at time of conduct

Question 4

Benefits of Rulemaking

Answer 4

• Rule is less beholden to specific facts ; agency can be clearer about who the regulation applies to in rulemaking
• Enhanced Public participation: The whole world can give you input on rule; Access to Stakeholder input and contributions
• Applies prospectively

Question 5

Citizens Awareness Network Inc v US - Facts

Answer 5

• 1st Cir 2004
• rule made by Nuclear Regulatory Commission -> reduced the formality of its reactor licensing proceedings, eliminated discovery in favor of certain mandatory discoveries, and limited cross-examination
  -> NRC did this through notice and comment (though technically just changing agency procedure, so didn’t need to)

Question 6

Citizens Awareness Network - Discussion of APA Adjudication Reqs

Answer 6

• essentially, arguing that APA doesn’t require much (agency has lots of leeway to define its adjudicatory procedures)
• lack of discovery okay (despite info asymmetry)
• lack of cross-examinatin okay in most cases, though must be allowed to extent necessary for full and fair hearing
• “The APA lays out only the most skeletal framework for conducting agency adjudications, leaving broad discretion to the affected agencies in formulating detailed procedural rules. In specific terms, the APA requires only that the agency provide a hearing before a neutral decisionmaker and allow each party an opportunity “to present his case or defense by oral or documentary evidence, to submit rebuttal evidence, and to conduct such cross-examination as may be required for a full and true disclosure of the facts.” 5 U.S.C. § 556(d).”
• “APA does not provide an absolute right of cross-examination in on-the-record hearings. The APA affords a right only to such cross-examination as may be necessary for a full and fair adjudication of the facts….We do, however, add a caveat. The APA does require that crossexamination be available when “required for a full and true disclosure of the facts.” If the new procedures are to comply in practice with the APA, cross-examination must be allowed in appropriate instances.”

Question 7

Citizens Awareness Network - Holding

Answer 7

• “Procedural flexibility is one of the great hallmarks of the administrative process—and it is a feature that courts must be reluctant to curtail. Though the Commission’s new rules may approach the outer bounds of what is permissible under the APA, we find the statute sufficiently broad to accommodate them”
• Agency rationale for streamlining licensing is compelling: “[Old] hearings proved to be very lengthy; some lasted as long as seven years. . . . [F]aced with the prospect of hearings on many license renewal applications in the near future—a large number of reactors were initially licensed in the decade from 1960 to 1970 and the standard term for such licenses was forty years—the Commission began to reassess its adjudicatory processes, focusing particularly on the procedures used in reactor licensing cases”

Question 8

Citizens Awareness Network - Concurrence

Answer 8

• outlines 10 different requirements of APA in adjudications

Question 9

SEC v. Jarkesy

Answer 9

• pending SCOTUS case

3 constitutional challenges to SEC process:

1. First, violates 7th Amendment right to jury for agency to impose civil penalty without a jury (if agency has option to choose to litigate in administrative forum-> administrative tribunal does not have jury trial)
2. SEC process violates nondelegation doctrine because Congress gave agencies discretion to choose between administrative forum or in a court to bring case
   - Gov’t argues that precedent says Congress can set range of enforcement options for Executive and allow agency to decide how to enforce (in which court)
3. SEC ALJ double layer protection violates separation of powers: imposes multiple levels of tenure protection for ALJ (executive officers): Double protection comes from 1) ALJ can only be removed for cause AND 2) cause is determined by an independent agency whose heads can only be removed for cause-> Prevents President from fulfilling constitutional duty to “Take care” laws are followed
   - Gov’t argued that insulation ALJ from political influence is important
   - Double protection for adjudicators is more ok than double protection for enforcement officials

Court is likely to invalidate SEC adjudicatory process on 7th Amendment grounds-> will have far reaching effects

Meta has adopted Jarkesy’s arguments to FTC’s adjudicatory authority

Question 10

Axon Enterprise v FTC

Answer 10

• 2023 SCOTUS
• held that the Federal Trade Commission Act (in 21-86) and the Securities Exchange Act (in 21-1239) did not preclude district courts’ ordinary subject-matter jurisdiction to hear challenges to those agencies’ structure, procedure, or existence.
• in other words, pls can bring existential challenges to agencies in fed district ct

Significance
1) opened the door to these challenges in district court + 2) enabled litigants can choose a particular judge and do forum shopping creatively

Question 11

Space X v NLRB

Answer 11

• compliant filed SD TX Jan 2024
• essentially analogous to Jarkesy
• constitutional challenge to agency adjudicatory process
• declaratory and injunctive relief: If granted, it would bring NLRB to a halt (shut down agency): Very serious consequences