Chapter 23: "Administrative Agencies"

Question 1

Federal administrative agencies are created by:

Answer 1

enabling legislation passed by Congress.

Question 2

When regulated groups oppose a rule adopted by an agency, they can bring a lawsuit arguing that the rule was not authorized by the enabling statute.

True
False

Answer 2

True

Question 3

Types of Agencies

There are two basic types of administrative agencies:

Answer 3

executive agencies and independent regulatory agencies.

Examples of independent agencies include the Federal Trade Commission and the Securities and Exchange Commission (SEC).

Question 4

All cabinet departments of the executive branch are included in independent regulatory agencies.

a. True
b. False

Answer 4

b. False

Question 5

An independent regulatory agency is usually run by:

Answer 5

a commission or board made up of several members, one of whom serves as the agency’s chair.

Question 6

legislative rules

Answer 6

An administrative agency rule that affects substantive legal rights and carries the same weight as a congressionally enacted statute.

Question 7

interpretive rules

Answer 7

An administrative agency rule that simply declares a policy or explains the agency’s position and does not establish any legal rights or obligations.

Question 8

delegation doctrine

Answer 8

A doctrine based on Article I, Section 8, of the U.S. Constitution, which has been construed to allow Congress to delegate some of its power to make and implement laws to administrative agencies. The delegation is considered to be proper as long as Congress sets standards outlining the scope of the agency’s authority.

Question 9

bureaucracy

Answer 9

A large organization that is structured hierarchically to carry out specific functions.

Question 10

The main difference between independent regulatory agencies and executive agencies is that:

a. executive agencies report only to Congress.	
b. independent regulatory agencies are subject only to the authority of Congress.	
c. executive agencies are subject to the authority of the president to a greater degree than are independent regulatory agencies.

Answer 10

c. executive agencies are subject to the authority of the president to a greater degree than are independent regulatory agencies.

Question 11

Agency Powers and the Constitution

Executive Controls

Answer 11

The executive branch of government exercises control over agencies both through the president’s power to appoint federal officers and through the president’s veto power. The president may veto enabling legislation passed by Congress or congressional attempts to modify an existing agency’s authority.

Question 12

Agency Powers and the Constitution

Legislative Controls

Answer 12

Congress exercises authority over agency powers through legislation. Congress gives power to an agency through enabling legislation and can take power away—or even abolish an agency altogether—through subsequent legislation. Legislative authority is required to fund an agency, and enabling legislation usually sets certain time and monetary limits on the funding of particular programs. Congress can always revise these limits.

In addition to its power to create and fund agencies, Congress has the authority to investigate the implementation of its laws and the agencies that it has created. Congress also has the power to “freeze” the enforcement of most federal regulations before the regulations take effect. (Another legislative check on agency actions is the Administrative Procedure Act, discussed shortly.)

Question 13

Agency Powers and the Constitution

Judicial Controls

Answer 13

The judicial branch exercises control over agency powers through the courts’ review of agency actions. As you will read in the next section, the Administrative Procedure Act provides for judicial review of most agency decisions. Agency actions are not automatically subject to judicial review, however. The party seeking court review must first exhaust all administrative remedies under what is called the exhaustion doctrine.

In other words, the complaining party normally must have gone through the administrative process—which occurs from a complaint to a hearing to a final agency order—before seeking court review.

Question 14

The law that specifies the procedural requirements that all federal agencies must follow in their rulemaking, adjudication, and other functions is the:

a. Administrative Procedure Act.	
b. Administrative Open Government Act.	
c. Occupational Safety and Health Act.

Answer 14

a. Administrative Procedure Act.

Question 15

rulemaking

Answer 15

The process undertaken by an administrative agency when formally adopting a new regulation or amending an old one. Rulemaking involves notifying the public of a proposed rule or change and receiving and considering the public’s comments.

Question 16

Notice-and-comment rulemaking

three basic steps

Answer 16

An administrative rulemaking procedure that involves the publication of a NOTICE OF A PROPOSED RULEMAKING in the Federal Register, a COMMENT PERIOD for interested parties to express their views on the proposed rule, and the publication of the agency’s FINAL RULE in the Federal Register.

Question 17

The Arbitrary and Capricious Test

One of Congress’s goals in enacting the APA(Administrative Procedure Act) was to provide for more judicial control over administrative agencies. To that end, the APA provides that courts should “hold unlawful and set aside” agency actions found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Under this standard, parties can challenge regulations as contrary to law or as so irrational that they are arbitrary and capricious.

There is no precise definition of what makes a rule arbitrary and capricious, but the standard includes factors such as whether the agency has done any of the following:

Answer 17

1. Failed to provide a rational explanation for its decision.
2. Changed its prior policy without justification.
3. Considered legally inappropriate factors.
4. Entirely failed to consider a relevant factor.
5. Rendered a decision plainly contrary to the evidence.

Question 18

When an agency formally creates a new rule, its first step is to:

a. solicit public comment.	
b. publish a notice of the proposed rulemaking proceeding in the Federal Register.	
c. issue a subpoena.

Answer 18

b. publish a notice of the proposed rulemaking proceeding in the Federal Register.

The creation of a new rule is most commonly accomplished by the notice-and-comment process. That procedure requires that the administrative agency first publish a notice of the proposed rulemaking proceeding in the Federal Register. After the notice is given, the agency must allow time for interested parties to comment. See The Administrative Procedure Act.

Question 19

Federal Register

Answer 19

a daily publication of the executive branch that prints (and offers online) government orders, rules, comments, and regulations.

Question 20

Does an agency involved in rulemaking need to respond to all comments during the comment period?

Answer 20

The agency need not respond to all comments, but it must respond to any significant comments that bear directly on the proposed rule.

Question 21

What happens when substantial changes occur to a proposed rule because of public comments?

Answer 21

The final rule may modify the terms of the proposed rule in light of the public comments, but if substantial changes are made, a new proposal and a new opportunity for comment are required. The final rule is later compiled along with the rules and regulations of other federal administrative agencies in the Code of Federal Regulations. Final rules have binding legal effect unless the courts later overturn them and for this reason are considered legislative rules.

Question 22

If an agency failed to follow proper rulemaking procedures when it issued the final rule, the rule may not be binding.

a. True
b. False

Answer 22

a. True

Question 23

initial order

Answer 23

In the context of administrative law, an agency’s disposition in a matter other than a rulemaking. An administrative law judge’s initial order becomes final unless it is appealed.

Question 24

final order

Answer 24

The final decision of an administrative agency on an issue. If no appeal is taken, or if the case is not reviewed or considered anew by the agency commission, the administrative law judge’s initial order becomes the final order of the agency.

Question 25

adjudication

Answer 25

The process of resolving a dispute by presenting evidence and arguments before a neutral third party decision maker in a court or an administrative law proceeding.

Question 26

administrative law judge (ALJ)

Answer 26

One who presides over an administrative agency hearing and who has the power to administer oaths, take testimony, rule on questions of evidence, and make determinations of fact.

Question 27

Charges that an individual or a firm has violated an administrative rule are first brought before:

Answer 27

an administrative law judge (ALJ)

Question 28

The EPA wants to ensure that Delmar Oil Company is in compliance with federal environmental rules regarding cleanup of oil and gasoline spills. In order to do so, it:

a. can conduct an on-site inspection.

b. must issue a subpoena.	
c. must rely on Shay's documentation of compliance.	
d. must obtain a search warrant.

Answer 28

a. can conduct an on-site inspection.

Question 29

Before any on-site investigation by a federal administrative agency, most businesses resist those inspections by going to an appeals court.

a. True
b. False

Answer 29

b. False

Question 30

Agencies Can Conduct Warrantless Searches in the Following Situations:

Answer 30

Agencies can conduct warrantless searches in several situations. Warrants are not required to conduct searches in certain highly regulated industries. Firms that sell firearms or liquor, for instance, are automatically subject to inspections without warrants. Sometimes, a statute permits warrantless searches of certain types of hazardous operations, such as coal mines or liquid propane retailers. Also, a warrantless inspection in an emergency situation is normally considered reasonable.

Question 31

The EPA and Zenith Dry Cleaners are negotiating a settlement for alleged violations of federal emissions standards. The EPA issues subpoenas duces tecum for all of Zenith’s financial records for the past two years and orders Zenith to pay the costs. Zenith challenges the subpoena on the basis that:

a) an alleged violator does not have to bear the costs of complying with the subpoena.
b) the subpoena was not sufficiently specific.
c) the agency’s request is unrelated to the emission violation and instead is aimed at pressuring Zenith into a settlement.

Answer 31

c) the agency’s request is unrelated to the emission violation and instead is aimed at pressuring Zenith into a settlement.

there are limits on what an administrative agency can subpoena. The request must be relevant to the charge being made, and must not be intended to harass or compel a settlement in an unrelated matter. Zenith’s financial records are unrelated to the emissions violation and are unlikely to be the subject of a valid subpoena.

Question 32

One important difference between formal litigation in a court and an administrative hearing before an administrative law judge (ALJ) is that:

a) the ALJ is typically not an agency employee.
an administrative agency proceeding is typically far more formal.

b) an administrative hearing can admit hearsay as evidence.
c) less information is admitted during an administrative hearing.

Answer 32

b) an administrative hearing can admit hearsay as evidence.

the main difference between an administrative hearing and a court trial is that much more information, including hearsay(secondhand information), can be admitted as evidence in an administrative hearing than in formal trial procedures. Typically such hearsay evidence would not be admitted in regular court proceedings.

Question 33

When a negotiated settlement cannot be reached, the agency may issue a formal complaint against the suspected violator.
a. True

b. False

Answer 33

a. True

Question 34

Every administrative hearing procedure must be exactly the same as legislated by Congress.

a. True
b. False

Answer 34

b. False

Question 35

What happens when no party appeals an adjudication?

a. A federal district court reviews the initial order.	
b. An initial order is given.	
c. The ALJ dismisses the complaint.	
d. The ALJ's decision becomes the final order of the agency.

Answer 35

d. The ALJ’s decision becomes the final order of the agency.

Question 36

Private communications between the ALJ and any party to the agency proceedings are known as _____ communications.

Answer 36

ex parte

Question 37

The administrative law judge and the agency’s investigative and prosecutorial staff are basically one integrated unit.

a. True
b. False

Answer 37

b. False
- hint
Could the ALJ remain fair if he or she worked closely with investigators and prosecutors in the same office?

Question 38

Who are the members of juries in administrative hearings?

a. No one, because there are no juries.	
b. Other members of the agency.	
c. The secretaries in the agency.

Answer 38

a. No one, because there are no juries.

Question 39

Freedom of Information Act

Answer 39

Enacted in 1966, the Freedom of Information Act (FOIA)Footnote requires the federal government to disclose certain records to any person or entity on written request, even if no reason is given for the request. All federal government agencies must make their records available electronically on the Internet and in other electronic formats.

The FOIA exempts certain types of records, such as those pertaining to national security, and those containing information that is confidential or personal. For other records, though, a request that complies with the FOIA procedures need only contain a reasonable description of the information sought. An agency’s failure to comply with an FOIA request can be challenged in a federal district court. The media, industry trade associations, public-interest groups, and even companies seeking information about competitors rely on these FOIA provisions to obtain information from government agencies.

Question 40

Government in the Sunshine Act

Answer 40

Congress passed the Government in the Sunshine Act, or open meeting law, in 1976. It requires that “every portion of every meeting of an agency” be open to “public observation.” The act also requires the establishment of procedures to ensure that the public is provided with adequate advance notice of scheduled meetings and agendas.

Question 41

Like the FOIA, the Sunshine Act contains certain exceptions. Closed meetings are permitted when:

Answer 41

1. the subject of the meeting concerns accusing any person of a crime,
2. an open meeting would frustrate the implementation of agency actions, or
3. the subject of the meeting involves matters relating to future litigation or rulemaking.

Courts interpret these exceptions to allow open access whenever possible.