Administrative law for public managers pdf

DAVID H. ROSENBLOOM

SECOND EDITION

Administrative Law for Public Managers

A Member of the Perseus Books Group www.westviewpress.com

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“Rosenbloom crafted a compelling narrative . . . Students like Administrative Law for Public Managers because it is

straightforward and easy to understand. I teach a wide range of students—mid-level managers to students with no work

experience—both are relieved that the content and examples are easily digestible. It’s an excellent book!” —Lorenda Ann Naylor, University of Baltimore

“This book presents a profound, as well as comprehensive, knowledge base of administrative law.”

—Public Administration Review

Administrative Law for Public Managers is an accessible and comprehensive guide to the fundamentals of administrative law—why we have administrative law, the constitutional constraints on public administration, and administrative law’s frameworks for rulemaking, adjudication, enforcement, transparency, and judicial and legislative review. Rosenbloom explains administrative law from the perspective of administrative practice, emphasizing how various administrative law provisions promote their underlying goal of improving the fit between public administration and US democratic-constitutionalism.

The second edition includes more coverage of state administrative law, as well as an expanded discussion of judicial review. It has also been updated to include the major statutes, court cases, executive orders, and other major executive initiatives since 2003. The addition of discussion questions makes this an even more valuable resource for public administration classrooms and students.

David H. Rosenbloom is Distinguished Professor of Public Administration at American University. A major contributor to the field and a Fellow in the National Academy of Public Administration, he has received numerous awards, including the Gaus Award for exemplary scholarship in political science and public administration, the Waldo Award for outstanding contributions to the literature and leadership of public administration, the Levine Award for excellence in public administration, and the Brownlow Award for his book, Building a Legislative-Centered Public Administration. He edited Public Administration Review, coedited the Policy Studies Journal, and is now on the editorial boards of about twenty academic journals.

Cover Image © Shutterstock Cover Design: Miguel Santana & Wendy Halitzer

Administrative Law for Public Managers

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Administrative Law for Public Managers

second edition

David H. Rosenbloom American University

A Member of the Perseus Books Group

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Westview Press was founded in 1975 in Boulder, Colorado, by notable publisher and intellectual Fred Praeger. Westview Press continues to publish scholarly titles and high-quality undergraduate- and graduate-level textbooks in core social science disciplines. With books developed, written, and edited with the needs of serious nonfiction readers, professors, and students in mind, Westview Press honors its long history of publishing books that matter.

Copyright © 2015 by Westview Press Published by Westview Press, A Member of the Perseus Books Group

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Library of Congress Cataloging-in-Publication Data

Rosenbloom, David H., author. Administrative law for public managers / David H Rosenbloom. -- Second edition. pages cm ISBN 978-0-8133-4881-0 (paperback) -- ISBN 978-0-8133-4882-7 (e-book) 1. Administrative law--United States. 2. Public administration--United States. I. Title.

KF5402.R669 2014 342.73'06--dc23 2014015458 10 9 8 7 6 5 4 3 2 1

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v

Contents

Preface to the Second Edition xiii

1 What Is Administrative Law? 1

2 The Constitutional Context of US Public Administration 19

3 Administrative Rulemaking 63

4 Evidentiary Adjudication and Enforcement 89

5 Transparency 123

6 Judicial and Legislative Review of Administrative Action 151

7 Staying Current 185

References 195 Index 209

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vii

Detailed Table of Contents

Preface to the Second Edition xiii

1 What Is Administrative Law? 1

Introduction: What Is Administrative Law? 1 Why We Have Administrative Law Statutes: Delegation and

Discretion, 4 Delegation, 4 Discretion, 7

Administrative Decisionmaking, 8 Procedural and Substantive Review of Administrative

Decisions, 10 The Development of US Administrative Law, 12 Conclusion, 16 Additional Reading, 16 Discussion Questions, 16

2 The Constitutional Context of US Public Administration 19

The Separation of Powers, 22 Congress, 22 The President, 23 The Judiciary, 32

Federalism, 35 The Commerce Clause, 36 The Tenth Amendment, 40 The Spending Clause, 41 The Eleventh Amendment, 41

Individuals’ Constitutional Rights in Administrative Encounters, 43

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viii Detailed Table of Contents

Relationships with Clients and Customers, 43 Equal Protection, 43 New Property and Procedural Due Process, 46 Unconstitutional Conditions, 47

Public Personnel Management, 48 First Amendment Rights, 49 Fourth Amendment Privacy, 51 Procedural Due Process, 51 Equal Protection, 52 Substantive Due Process Rights, 52

Relationships with Contractors, 53 Public Mental Health Patients, 54 Prisoners’ Constitutional Rights, 55 Street-Level Regulatory Encounters, 56

Fourth Amendment Constraints, 56 Equal Protection Constraints, 57

Public Administrators’ Liability for Constitutional Torts, 58 Conclusion, 60 Additional Reading, 60 Discussion Questions, 61

3 Administrative Rulemaking 63

Introduction: Smoking Whitefish, 63 Rulemaking: Definitions and General Concerns, 64 Rulemaking Processes, 71

Limited or No Procedural Requirements, 71 Informal Rulemaking, 72 Formal Rulemaking, 74

Hybrid and Negotiated Rulemaking Processes, 75 Hybrid Rulemaking, 75 Negotiated Rulemaking, 76

Additional Features of the Idealized Legislative Model for Rulemaking, 78 Representation: Advisory Committees, 78 Protecting Specific Interests and Values, 79

Executive Efforts to Influence Federal Agency Rulemaking, 82 Conclusion: The Philosopher’s Stone Versus the Bubble Effect,

85 Additional Reading, 86 Discussion Questions, 86

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ixDetailed Table of Contents

4 Evidentiary Adjudication and Enforcement 89

Adjudicating Cinderella: A Case of Deceit, Abuse, and Due Process, 89

What Is Evidentiary Administrative Adjudication? 91 Criticisms of Adjudication, 93

Legal Perspectives, 94 Administrative Perspectives, 95

Why Adjudicate? 99 Agency Convenience, 99 Advantages Presented by Incrementalism, 100 Conduct and Application Cases, 101 Equity and Compassion, 102 Procedural Due Process, 106 Caveat Estoppel, 107

Adjudicatory Hearings, 108 Presiding Officers, 110

Administrative Law Judges, 110 Other Presiding Officers, 113

Decisions and Appeals, 113 Alternative Dispute Resolution, 115 Enforcement, 117 Conclusion: Should Adjudication Be Reformed? 120 Additional Reading, 121 Discussion Questions, 121

5 Transparency 123

Introduction: The Central Intelligence Agency’s Budget? What Budget? 123

The Administrative Law Framework for Transparent Government, 125

Public Reporting, 126 Freedom of Information, 128

The Freedom of Information Act, 128 The Presidential Records Act, 138

Privacy, 139 Open Meetings, 142 Whistle-Blower Protection, 145

Qui Tam, 148 Conclusion: An Opaque Fishbowl? 148

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x Detailed Table of Contents

Additional Reading, 149 Discussion Questions, 150

6 Judicial and Legislative Review of Administrative Action 151

Introduction: The Drug Companies’ Acetaminophen, Salicylic Acid, and Caffeine Headache, 151

Judicial Review of Administrative Action, 153 The Court System, 154 Reviewability, 159

Standing to Sue, 160 Mootness, 162 Ripeness, 163 Political Questions, 165

Timing, 165 Primary Jurisdiction, 165 Exhaustion of Administrative Remedies, 166 Finality, 167 Deference to State Courts, 167

The Scope of Judicial Review, 168 Agency Rules, 169 FOIA Requests, 172 Rulemaking Procedures, 172 Agencies’ Statutory Interpretations, 173 Agency Nonenforcement, 175 Discretionary Actions, 177 Adjudication, 178

Legislative Review of Administration, 178 Oversight by Committees and Subcommittees, 179 Reporting Requirements, 179 Research, Evaluation, Audit, and Investigation, 180 Sunset Legislation, 181 Casework, 181 Strategic Planning and Performance Reports, 182 Congressional Review Act, 182

Conclusion: Checks, Balances, and Federal Administration, 183 Additional Reading, 184 Discussion Questions, 184

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7 Staying Current 185

The Primary Function of US Administrative Law, 186 Constitutional Contractarianism, 186 Public Administrative Instrumentalism, 187

Periodicals and Websites, 190 Talk Administrative Law Talk, 191 Administrative Law Audits, 192 The Next Level, 192 Discussion Questions, 193

References 195 Index 209

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xiii

Preface to the Second Edition

It may come as a surprise that the Encyclopedia of Life Support Systems, which is sponsored by United Nations Educational, Scientific, and Cul- tural Organization (UNESCO), contains an entry on administrative law. I was certainly surprised when asked to write it.1 I immediately had a sci- ence fiction inspired vision of earthlings boarding a spacecraft clutching the Encyclopedia in hand as they went to off to colonize a distant planet. Administrative law? Life support? At first, the connection seemed dubious at best. On reflection, however, I realized that the inclusion of administra- tive law is, in fact, necessary for life as we know it in modern, complex political systems. All governments in developed countries have mature administrative components. Public administration is the institutional means through which contemporary governments deliver public services and regulate aspects of economic, social, and political life. Administrative law is the regulatory law of public administration. It regulates public ad- ministrative activity. Without administrative law, public agencies could go about their business as they saw fit, perhaps routinely emphasizing ad- ministrative convenience and self-interest over other values and the public interest. In the United States, administrative law infuses public adminis- tration with democratic-constitutional values, including stakeholder repre- sentation, participation, transparency, fairness, accountability, and limited government intrusion on private activity. Life was once, and still could be, supported without it. However, other than perhaps some administrators themselves, few, if any, who know the history of US public administration would want to return to the days before the federal Administrative Proce- dure Act of 1946 went into effect.

1. See David H. Rosenbloom, “Administrative Law,” UNESCO-EOLSS, http://www.eolss .net/sample-chapters/c14/e1-34-05-07.pdf.

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xiv Preface to the Second Edition

To appreciate the importance of administrative law, one has to bear in mind that although students and scholars in the field of public administra- tion tend to view administration as providing valuable public services, the rest of the world doesn’t necessarily see it this way. Many in legislatures, small businesses, the health, medicine, industrial, and research sectors, and myriad other walks of life think of administration as bureaucracy impos- ing red tape and unwanted, often unnecessary, and even seemingly bizarre regulations. This is why administrative law books may contain chapters on “getting into court” and “staying in court” (W. Fox 2000). Looking from the outside in, administrative law constrains public administration, guards against abuses, and enables chief executives, legislatures, and courts to keep administrators in check. From the inside looking out, administrative law seeks to guide administrators and agencies in achieving their objec- tives within the framework of the nation’s democratic-constitutional val- ues and practices.

A solid grounding in administrative law is a prerequisite for under- standing a substantial amount about the internal administrative processes used on a daily basis by public agencies in the United States. As with other aspects of public administrative practice, it is better to learn administra- tive law in the classroom than to be bewildered by its pervasiveness upon entering a public-sector job. Students already working in the public sector will need no reminder of the importance of administrative law. Neverthe- less, they will benefit from gaining a systematic understanding of how and why it developed as it did.

Administrative law has such a major impact on what administrators and agencies do on a daily basis that it cannot be treated as tangential or as a specialization best left to lawyers. It needs to be integrated into day-to-day practice. For some administrators, such as those engaged in rulemaking, adjudication, and processing freedom-of-information requests, administra- tive law defines the fundamental structure and activity of their jobs.

This book aims to make administrative law accessible to public admin- istration students, both those new to the subject and those already in prac- tice. The book focuses on the essentials that public managers should know about administrative law—why we have administrative law; the broad constitutional constraints on public administration; administrative law’s frameworks for rulemaking, adjudication, enforcement, and transparency; and the parameters of internal executive and external judicial and legisla- tive review of administrative action. The book views public administration from the perspectives of managing, organizing, and doing administration rather than lawyering. It is far more concerned with staying out of court than getting into it.

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xvPreface to the Second Edition

The discussion is organized around federal administrative law. Where appropriate, state approaches are noted as alternatives or parallels to fed- eral designs and requirements. After reading this book and grappling with the discussion questions at the end of each chapter, readers should have a firm grasp of federal administrative law and no difficulty learning the administrative law of any state.

Unlike most administrative law texts, the book neither contains legal cases nor devotes much attention to the development of case law. Federal court decisions are readily available on the Internet, and instructors can se- lect them flexibly to augment the text. Books dealing comprehensively with case law tend toward dysfunctional excess in general public administrative education, sometimes exceeding 1,000 pages of material that is apt to go largely unused and soon be forgotten. This book also differs from others by including a chapter on the constitutional context of US public adminis- tration, which explains the constitutional constructs and doctrines within which today’s public administration and administrative law operate.

The book is intended for classroom use in three ways. First, as a supple- ment, it will efficiently cover the main dimensions of administrative law in introductory public administration classes and courses on bureaucratic politics or the political context of public management. Second, it can serve as a core text in public administration courses dealing with administrative law or the legal basis or environment of public administration. As a core text, it can be coupled with selected legal cases of the instructor’s choice. Third, in constitutional law courses, it can serve as a supplement to explain how abstract constitutional concerns such as delegations of legislative au- thority and procedural due process are transformed in concrete action by administrative agencies. It is unlikely that the book will be used in law school classes, though law students may find it refreshingly concise and helpful in explaining the political and administrative contexts in which ad- ministrative law is applied and the larger purposes it serves.

The challenge in writing the first edition was to explain the essentials of administrative law clearly and accurately, in nontechnical terms, with sufficient depth to provide readers with a sophisticated, lasting under- standing of the subject matter. That there is now a second edition is testa- ment to the success of that effort. The new edition thoroughly updates the previous one, adding discussion of new statutes and law cases, as well as developments during the first five years of Barack Obama’s presidency. It also fine-tunes the earlier discussion for clarity. I hope those familiar with the first edition will view this one as fresh and refreshing and those new to the text will find in it a welcome alternative to other treatments of administrative law.

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xvi Preface to the Second Edition

This edition continues to benefit from those acknowledged in the earlier one. I continue to extend my thanks to them. I would also like to thank the reviewers who gave such thoughtful feedback on the first edition for this revision, including Bradley Bjelke (California Lutheran University), Lo- renda Ann Naylor (University of Baltimore), Stephanie Newbold (Ameri- can University), Cindy Pressley (Stephen F. Austin State University), Susan E. Zinner (Indiana University Northwest), and others who wished to re- main anonymous. Special mention should go to my American University colleague Jeffrey Lubbers, who is always generous with his time and pa- tient in sharing his encyclopedic knowledge to explain the finer points of US federal administrative law to me.

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1 What Is Administrative Law?

Introduction: What Is Administrative Law?

Administrative law can be defined as the body of constitutional provisions, statutes, court decisions, executive orders, and other official directives that, first, (a) regulate the procedures agencies use in adjudicating, rulemaking, and adopting policies, (b) control the exercise of their authority to enforce laws and regulations, and (c) govern the extent to which administration is open to public scrutiny (i.e., transparent); and, second, provide for review of agency decisions, rules, orders, policies, actions, and other aspects of their operations. In short, administrative law is the regulatory law of pub- lic administration. It regulates how public administrative agencies do what they do and why, as well as their authority to do it. As such, it is among the most important aspects of modern government. We are all affected by administrative law in myriad ways in our daily lives.

Food may present the best example of why administrative law is so important. What did you eat today? Is that all? Well, probably not. The US Food and Drug Administration (FDA) regulates the “maximum lev- els of natural or unavoidable defects in food for human use that present no health hazard.” Known as the FDA “Rat Hair List,” these regulations specify the amount of rodent hair that can be in one hundred grams of var- ious foods such as apple butter, oregano, and peanut butter. The list also regulates the number of insect fragments and eggs, milligrams of mamma- lian excreta, maggots, and other unappetizing impurities in the foods that Americans consume every day (FDA, periodic). Chocolate can have up to

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2 1. What Is Administrative Law?

sixty insect fragments per hundred grams (about two bars) and one rodent hair. On average, Americans eat 1.2 pounds of spider eggs and 2.5 pounds of insect parts annually.1

The FDA is empowered to set such standards by law. It would have no power to do so without statutory authorization. However, it does have considerable discretion in deciding what levels are unavoidable and do not pose health hazards and what to do about products that exceed the speci- fied limits. An initial question is whether “unavoidable” should be deter- mined based on technology or economics. Although the agency maintains that some defects cannot be completely screened out, removing from pizza sauce more fly eggs and maggots than are allowed is probably technolog- ically feasible. Some producers may already do so. But is it economically feasible for the entire industry of large and small, relatively financially strong and weak firms to do so? Determining unavoidability also involves economic feasibility, which is related to the cost of producing products, their market price, and consumer demand for them. Some balance between purity and cost must be struck. The FDA seeks a desirable trade-off by testing products nationwide and determining the levels of defects present under the best production processes in use. This approach assumes that requiring investment to make the best practices even better is economically infeasible, or at least undesirable, and ultimately unnecessary because, while unappetizing, the acceptable levels are deemed safe to consume.

Safety is a second issue. Clearly, if people are not getting sick from the allowable defect levels in regulated foods, then these product levels are probably safe. Yet it is possible that the cumulative effect of the permit- ted impurities over one’s lifetime takes a toll on health, even though the harm may not be traceable to them. It is also possible that the defects af- fect people differently based on age, allergies, and other factors. No doubt, aside from looking at best production practices, the FDA takes the views of health experts and research into account in considering where to set and maintain defect levels.

A third issue is transparency. As a consumer you may wonder if the FDA’s regulations provide adequate information and protection. We are all familiar with the nutrition labels on food products sold in the United States. Peanut butter lists calories, fat calories, total fat, saturated fat, trans fat, polyunsaturated fat, monounsaturated fat, cholesterol, vitamins A and C, sodium, total carbohydrates, fiber, sugars, protein, calcium, and iron. The average number of insect fragments and rodent hairs is missing.

1. Data from http://www.spydersden.worldpress.com/2010/page/78; www.chacha.com/ question/does-the-average-american-really-consume-1.2-pounds-of-spider-eggs-a-year-and -eat-2.5-pounds-of-insect-parts-a-year.

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3Introduction: What Is Administrative Law?

Should this be identified? Who should decide—Congress, which is elected by “We the People”; an administrative agency like the FDA, which is not; or the food industry itself? If it were decided to require information about “unavoidable defects,” would it be sufficient to indicate compliance with FDA allowable levels? Should that level be specified on the product? Should the average number of various impurities be indicated? If Congress makes such decisions, it will hold hearings and receive testimony from representatives of the food industry such as the Snack Food Association, Pizza Industry Council, US Potato Board, National Confectioners’ Associ- ation, Whole Grains Council, and other groups. If an agency makes these decisions, how should its decisionmaking process be structured? Should it be open to input from the same kinds of stakeholders, and if so, how? Regardless of where the decision is made, what role, if any, should health experts, hospitals and other care providers, health insurance companies, and consumer advocates play?

Finally, how should the FDA’s defect levels be enforced? Should the FDA test products already in the marketplace, inspect production facilities, or both? If a firm’s product exceeds the allowable defect levels, what steps should be taken? What opportunities should the firm have to contest the FDA’s finding? Such questions are the stuff of administrative law. Although they focus largely on process, as they suggest, process can affect substance.

Administrative policymaking often involves a wide range of consider- ations and complex trade-offs like those involved in establishing the FDA’s Rat Hair List. Administrators make a great number of decisions that di- rectly affect the health, safety, and welfare of the population or sections of it. They have to address difficult issues regarding transportation, envi- ronmental protection, economic practices, labor relations, and much, much more. Their decisions are of fundamental consequence to the nation’s qual- ity of life and attract a great deal of political and media attention. Equally important to our constitutional democracy, though generally less visible and interesting to the public, is how administrators should make and en- force their decisions.

The how rather than the what is the essence of administrative law. What steps should an administrator and an agency take before regulating impuri- ties in food? What values should be weighed and how heavily? How much evidence should be adduced to support agencies’ conclusions? How open to public scrutiny and participation should decisionmaking be? How should the costs and benefits of agency action be weighed? How can an agency assess the impact of greater transparency on consumers’ behavior? Would including the FDA’s allowable defect levels on nutrition labels change Americans’ diets, and if so, how—toward more or less healthful diets?

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Additional administrative law questions focus on accountability and re- view of agency decisionmaking. How should the FDA be held accountable for whatever levels it sets? Should its standards be subject to review by Congress and/or a unit within the executive branch, such as the Office of Management and Budget (OMB)? Presuming that one or more of its standards is challenged in court, should the FDA have to show statistically that its maximum levels are safe, that lower levels would not be safer, or that the defects are unavoidable? Should the data relied on to reach its decisions be available to the public? Concerns like these are the crux of administrative law, and they are of recurring importance.

For the most part, administrative law is generic in the sense that one size fits all. Although there are apt to be exceptions, it more or less applies across the board to administrative agencies within a government, as op- posed to being tailored to match each agency’s mission individually. The phrase “administrative law,” as used in the United States, makes an im- perfect distinction between the procedures agencies use to make rules, set standards, and adjudicate and the substantive content produced by those actions. In other words, how the FDA sets maximum defect levels is a mat- ter of administrative law, whereas the levels themselves are not. Similarly, how the Environmental Protection Agency (EPA) makes rules for clean air and water is a matter of administrative law; the actual regulations, such as parts per billion of arsenic allowed in groundwater, are not. The distinc- tion is imperfect because administrative law provides for judicial review of agencies’ rules, standards, and adjudicatory decisions, which may be found unlawful if their content is irrational or their scope is beyond the law. Moreover, administrative law, with the exception of some forms of adjudication, is not concerned with agency decisions regarding internal personnel, organizational, budgetary, outsourcing, and similar administra- tive matters. All levels of government in the United States rely on some form of administrative law to regulate their administrative activities. In the absence of US Supreme Court constitutional law decisions applying to all jurisdictions, the requirements of federal, state, and local administrative law need not be uniform. In fact, there is substantial variation.

Why We Have Administrative Law Statutes: Delegation and Discretion

Delegation

Administrative law statutes regulate administrative procedures and the review of agency actions. In the United States such statutes were adopted

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5Why We Have Administrative Law Statutes: Delegation and Discretion

largely to control agencies’ use of delegated legislative authority and their exercise of discretion. Although administration is usually associated with the executive branch of government, administrative activities nowadays also involve legislative functions. Rulemaking is the preeminent example. Agencies’ legislative rules (also called “substantive” rules) are the equiv- alent of statutes and are essentially a substitute for them. Administrative rulemaking is sometimes called “supplementary lawmaking.” For instance, legal standards for clean air and water can be imposed by statute as well as by EPA rules. But at the federal level, where agencies have no indepen- dent constitutional authority, such rules can be issued only pursuant to a congressional delegation (i.e., grant) of legislative authority to an agency.

At first thought, it may seem odd that legislatures would relinquish their own lawmaking authority to public administrators. After all, bureaucrats are hardly popular among the American public. Legislators and the media often deride them for usurping power and issuing undesirable rules writ- ten in impenetrable gobbledygook. However, legislatures find it necessary or desirable to delegate legislative authority to administrative agencies for several reasons. First, as the scope and complexity of public policy increase, legislatures have difficulty keeping abreast of the need to adopt and amend legislation. Legislative processes are typically cumbersome, especially in bi- cameral legislatures such as the US Congress and those of forty-nine of the fifty states (Nebraska being the sole exception with a unicameral legislature). A bill typically has to work its way independently through each house. It has to win majority support in both before being submitted to the president or governor for approval or veto. Legislative procedure is intended to pro- vide ample checks and balances, but where the workload is heavy, it can overwhelm a legislature’s capacity to deal with all the demands it faces. By delegating legislative authority to administrative agencies, legislatures can shed some of the lawmaking burden onto administrators.

Second, legislatures cannot be expected to have the level of detailed technical expertise often required in contemporary public policymaking. Environmental, health, and safety regulation can involve setting standards based on elaborate scientific analysis. Trade-offs, such as balancing tech- nology, economics, and health concerns in setting the FDA’s maximum defect levels, are also complex. Available science and statistical evidence may be inconclusive. For example, it may take years of technical analysis to determine how many parts per million or billion of a substance can be considered safe in drinking water, in the ambient atmosphere at a factory, or in our bodies, for that matter. In time, new information may require re- evaluation of that determination. Expert administrators are in a better po- sition than legislators and their staffs to deal with such matters. Moreover,

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the range of regulatory standards and related policy concerns is too broad for legislatures to address. It takes the attention of numerous, specialized, and frequently large agencies.

Third, legislators may find it politically advantageous to delegate leg- islative authority to administrative agencies in order to avoid taking firm stands on controversial issues. It is easier to maintain constituents’ favor by supporting broad objectives that are widely shared, such as protecting the environment, than by setting regulatory standards that will raise prices or cause unemployment in one’s home district. Legislators may even score points with voters by denouncing decisions made by the very agencies and administrators that their legislation has empowered (Fiorina 1977, 48–49).

As necessary and convenient as delegations of legislative authority are, they raise a number of political questions. Constitutionality is one. The separation of powers at the federal level and in the states is intended to es- tablish checks and balances as a means of protecting the people against the aggregation of power in one branch of government. Parliamentary systems fuse legislative and executive powers, but the framers of the US Constitu- tion thought such a combination could produce tyranny. Following their lead, Americans have preferred to keep these powers separate, though less so at the local government level. Consequently, when legislative author- ity is delegated to administrative agencies, even though voluntarily on the part of legislatures, this can be seen as a threat to the constitutional order. As the US Supreme Court once summarized the problem, “The Congress is not permitted to abdicate or to transfer to others the essential legislative functions with which it is . . . vested,” and there must be “limitations of the authority to delegate, if our constitutional system is to be maintained” (Schechter Poultry Corp. v. United States 1935, 529–530). Yet modern govern- ment requires at least some delegation. Large-scale administration would be impossible without it.

At the federal level, the formal constitutional solution to the tension between the separation of powers and the vesting of legislative author- ity in administrative agencies requires delegations to be accompanied by “an intelligible principle to which [an agency] . . . is directed to conform” (J. W. Hampton, Jr. & Co. v. United States 1928, 409). In theory, this intelligible principle doctrine ensures that Congress will clearly establish the broad objectives of public policy, relying on the agencies, when necessary, only to fill in the details. In practice, however, finding an intelligible principle in some delegations may be impossible. For instance, the federal Occupa- tional Safety and Health Act of 1970 provides that the secretary of labor, “in promulgating standards dealing with toxic materials or harmful physical agents . . . shall set the standard which most adequately assures, to the

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7Why We Have Administrative Law Statutes: Delegation and Discretion

extent feasible, on the basis of the best available evidence, that no employee will suffer material impairment of health or functional capacity even if such employee has regular exposure to the hazard dealt with by such standard for the period of his working life” (Industrial Union Department, AFL-CIO v. American Petroleum Institute 1980, 612 [emphasis added]). With obvious frustration, Justice William Rehnquist parsed this language in an unsuccessful quest for an intelligible principle: “I believe that the legisla- tive history demonstrates that the feasibility requirement . . . is a legislative mirage, appearing to some Members [of Congress] but not to others, and assuming any form desired by the beholder” (Industrial Union Department, AFL-CIO v. American Petroleum Institute 1980, 681).

Rehnquist called the feasibility requirement “precatory,” meaning that it essentially entreated the secretary of labor to take a balanced approach (Industrial Union Department, AFL-CIO v. American Petroleum Institute 1980, 682). Such “legislative mirages” are not unusual. Statutes are loaded with key “standards,” such as “‘adequate,’ ‘advisable,’ ‘appropriate,’ ‘beneficial,’ ‘convenient,’ ‘detrimental,’ ‘expedient,’ ‘equitable,’ ‘fair,’ ‘fit,’ ‘necessary,’ ‘practicable,’ ‘proper,’ ‘reasonable,’ ‘reputable,’ ‘safe,’ ‘sufficient,’ ‘whole- some,’ or their opposites” (Warren 1996, 370). The Federal Communications Commission (FCC) is charged with regulating communications by wire and radio in the “public interest”—a term with no fixed meaning that can accommodate any reasonable action (Office of the Federal Register 1999, 524). The greatest certainty regarding the meaning of the phrase “stationary source” in the Clean Air Act Amendments of 1977 is that such a source of pollutants is not mobile. The EPA has interpreted these same words very differently in different programs and at different times (Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. 1984; see Chapter 6).

Discretion

Delegations of legislative authority call on administrators to use discretion in formulating standards and policies. The weaker the intelligible principle in the statutory delegation, the greater the potential range of administra- tive discretion. However, administrative discretion also goes well beyond the rulemaking function. Agencies may exercise a great deal of it in imple- menting or enforcing laws, rules, other regulations, and policies. They of- ten lack the resources to do everything legally required of them. Universal enforcement may be impossible or impracticable. It is an uncomfortable fact that selective application of the law is often inevitable. Equally import- ant, the legal acceptability of many matters is determined by the discretion of “street-level” administrators, such as safety and health inspectors, or

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8 1. What Is Administrative Law?

weighed on a case-by-case basis through adjudication within administra- tive agencies.

The use of discretion by thoroughly trained, professional, expert ad- ministrators can be highly beneficial—society has come to depend on it. We have master’s programs in public administration or policy to provide public managers and policy analysts with the tools and ethical and legal grounding to exercise discretion soundly. We rely on merit systems and career civil services to reduce the likelihood that discretion will be abused for political gain. From a public administrative perspective, discretion is essential to the implementation of laws and the successful achievement of a government’s policy objectives.

There is also another view. The motto “Where law ends tyranny begins” is prominently engraved on the US Department of Justice’s headquarters building in Washington, DC. From the vantage of US democratic constitu- tionalism, then, discretion is often at war with the bedrock principle of the rule of law (Warren 1996, 365). The Supreme Court has even called uncon- strained discretion in law enforcement an “evil” (Delaware v. Prouse 1979).

Administrative law is a major means of checking the exercise of admin- istrative discretion to ensure that its use is rational and fair. It does this primarily in two ways: by structuring administrative decisionmaking pro- cesses and by providing for procedural and substantive review of admin- istrators’ decisions.

Administrative Decisionmaking

The federal Administrative Procedure Act (APA) of 1946 is representative of US administrative law statutes in trying to promote rationality and law- fulness in agency decisionmaking without imposing overly encumbering procedural requirements. It specifically seeks to prevent decisions that are

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accor- dance with law; (B) contrary to constitutional right, power, privilege, or immunity; (C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; (D) without observance of procedure required by law; (E) unsupported by substantial evidence . . . ; (F) unwarranted by the facts. (sec. 706)2

2. Citations to codified statutes in the text are to their section number in the United States Code (U.S.C.). Rather than repeat the title number of the Code in which the statute is found in each citation, this information is provided in the References section at the end of the book. The full citation to this section of the APA is 5 U.S.C. 706.

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9Administrative Decisionmaking

These objectives are often augmented by other statutes and executive orders that require agencies to use the best science available, engage in cost-benefit analysis, prepare environmental and other impact statements, or promote substantive values such as vibrant federalism and environmen- tal justice. (These matters are addressed in Chapter 3 on rulemaking.)

In administrative law, agency decisions may be either “formal” or “in- formal.” Although the distinction is imperfect, decisions resulting from activities whose procedures are substantially regulated by administrative law, such as rulemaking and adjudication, are considered formal. Informal decisions are more likely to involve questions such as which firm to inves- tigate or inspect, how carefully, when, and what enforcement actions, if any, to take. Except where constitutional law is involved (e.g., the Fourth Amendment’s protection against unreasonable searches and seizures), in- formal decisions are overwhelmingly regulated by individual agency pro- tocol rather than administrative law.

Administrative decisions can also be categorized as retrospective, pro- spective, or present tense. Administrative law uses a variety of processes to structure formal decisions of each type and to constrain the administra- tors making them. Retrospective decisions require assessing the past behav- ior of an individual, firm, group, governmental unit, or other entity. They involve questions such as whether a corporation has engaged in illegal false advertising or an unfair labor practice. Retrospective decisions are often made in an adjudicatory framework. The agency and the regulated party make their cases before a hearing examiner, an administrative law judge, or a commission or board of some kind. The process can take place in writing or involve the presentation of oral statements. It can range from an almost cursory review of the facts and issues by the decisionmaker to a full-fledged hearing that resembles courtroom procedure. It may also in- clude a right to appeal adverse decisions to a higher unit within the agency. In all cases, however, the objective is to establish the facts, including mo- tives where relevant, and to apply the law to them in an unbiased fashion. Consequently, administrative law may specify a great deal about the pro- cedures required, the kind of information that can be considered, and the credentials and neutrality of the decisionmaker. (Adjudication is discussed in Chapter 4.)

Prospective decisions apply to events in the future. Rulemaking is the clear- est example. Administrative law requirements are generally based on the assumption that prospective decisionmaking on complex matters will be more rational when it is open to public scrutiny and participation. Ideally, open rulemaking and related decisionmaking will bring a greater range of

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10 1. What Is Administrative Law?

perspectives and information to the administrators’ attention. Administra- tive law can require that the decisionmakers respond to public input, which often comes from stakeholders, and explain their evaluation of it. Upon ju- dicial review, rules may also be subjected to a rationality standard, such as whether they are supported by substantial evidence (reasonableness).

Present tense decisions often involve questions of eligibility or immediate compliance with a regulatory requirement. Many licensing decisions are present tense and strongly regulated by administrative law statutes. How- ever, much present tense decisionmaking is informal, and some is largely regulated by constitutional law decisions as opposed to administrative procedure acts. For example, the denial or termination of a welfare or other benefit may raise equal protection, due process, or other constitutional con- cerns. Many law enforcement decisions by police and health, safety, and housing inspectors are also present tense. Their discretion as to whether to issue citations is generally not regulated by administrative law and is constrained by constitutional law only within broad parameters (Lipsky 1980; Bardach and Kagan 1982).

It is often difficult to establish or maintain the balance that adminis- trative law seeks to secure between constraining discretion and allowing administrators enough flexibility to carry out their legislative mandates cost-effectively. Administrators may complain that the procedural require- ments for rulemaking and adjudication are counterproductive and too complex, whereas regulated entities may want even more elaborate pro- cedures to protect their interests. The compromises reached in administra- tive law statutes upon their enactment can also become outdated or upset by future legislation. Finding and keeping a satisfactory balance between under- and overregulation of administrative decisionmaking is part of the challenge and vibrancy of administrative law.

Procedural and Substantive Review of Administrative Decisions

Administrative law provisions regarding the procedural and substantive review of agency decisions also seek a balance of competing concerns. On the one hand, the political system relies on administrators to bring a high level of specialized expertise to the formulation and implementation of public policies. Subjecting their decisions to review by generalists who know less about the specifics of these policy areas and enforcement can result in delay, expense, and poor decisions. On the other hand, admin- istrators’ judgments can be distorted by self-interest, untoward internal

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11Procedural and Substantive Review of Administrative Decisions

or external influences, a failure to recognize competing priorities, over- or underconfidence, and many other factors that negatively affect individual and group decisionmaking. It is easy to find excellent as well as shockingly bad examples of administrative decisionmaking. Administrators have sent astronauts to the moon and back; they have also allowed American chil- dren to play in highly toxic radioactive fallout (H. Ball 1986). The trick is to protect against the bad decisions while not upsetting the good ones or wasting time, effort, and money reviewing them.

Administrative law focuses on four venues for review of agency deci- sions. First, review may be available within the agency itself. For instance, decisions by administrative law judges (ALJs) in the federal government can be overturned by agency heads, boards, or commissions on procedural and substantive grounds. This allows political appointees, who are often generalists, to substitute their judgment for that of more specialized ALJs in the career civil service. They can correct decisions for failure to see pub- lic policies from a big picture perspective, as well as for simple errors of judgment. Of course, political appointees’ decisions themselves may be subject to review by the courts, and so, before making them, appointees normally consult with agency attorneys and experts.

Second, administrative law may provide for review by specific units within the executive branch. Currently, the OMB plays this role with re- gard to aspects of rulemaking and information gathering by many federal agencies. Its Office of Information and Regulatory Affairs (OIRA) reviews agency proposals to engage in major rulemaking—that is, the creation of rules that will have an annual economic impact of $100 million or more. Agencies are also required to obtain OIRA’s clearance to use forms and other instruments for collecting information from individuals and organi- zations outside the federal government (see Chapter 3). The primary pur- poses of executive review of this kind are to coordinate agency activity and to ensure that it is in keeping with the goals of a president, governor, or other elected executive.

Third, administrative law statutes can establish the scope of judicial re- view of agency decisions, though the courts retain independent authority under the federal and state constitutions to hear cases alleging violations of constitutional rights and powers. Judicial review has become so common at the federal level that for some agencies (e.g., the EPA), it can be con- sidered part of the administrative process (Coglianese 1997, 1296–1309). (Judicial review is discussed in Chapter 6.)

Finally, there are procedures in Congress and some state legislatures for reviewing agency rulemaking decisions. Their logic is clear enough. The

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12 1. What Is Administrative Law?

agencies’ use of delegated legislative power ought to be reviewed by the legislature, which empowered them, in order to ensure conformance with legislative intent. (Legislative review is further discussed in Chapter 6.)

The Development of US Administrative Law

The United States began to develop a substantial administrative compo- nent in the 1870s and 1880s. In time, administrative agencies engaged in so much policy formulation and implementation that the term “administra- tive state” was adopted to convey their centrality to modern government. Against the background of industrialization, urbanization, and population growth, governments became increasingly involved in the economy and society and came to rely more heavily on administrative agencies to do much of their work. As noted earlier, the Congress and state legislatures were unable to keep up with the continual need for new legislation, often involving complex health, scientific, or technological issues. The courts, which once engaged in a good deal of regulation of economic practices un- der common law doctrines, were overwhelmed by the changes industrial- ization caused in production, employment, transportation, and marketing. Vesting rulemaking and adjudicatory functions in administrative agencies was the nation’s response to the ever-expanding scope and complexity of governing. More government activity also meant more enforcement by the executive branch.

A key feature of the administrative state is that agencies perform legis- lative, judicial, and executive functions. In other words, the constitutional separation of powers, which largely places these functions in different branches, collapses in administrative agencies. Administrators make rules, adjudicate alleged violations of laws and rules, and execute and implement public policy. After the massive federal administrative growth during the New Deal (1933–1938) and US involvement in World War II (1941–1945), it was fair to say, along with Supreme Court Justice Robert Jackson, that the agencies “have become a veritable fourth branch of the Government, which has deranged our three-branch legal theories as much as the concept of a fourth dimension unsettles our three-dimensional thinking” (Federal Trade Commission v. Ruberoid 1952, 487). By 1946, Congress viewed the power and independence of administrative agencies as a threat to its own role in gov- ernment and to the overall constitutional scheme (Rosenbloom 2000). In response, it enacted the APA, which still frames federal administrative law.

Several basic premises underlie the APA and state administrative law. One is that when agencies engage in legislative functions, they should be

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13The Development of US Administrative Law

informed by legislative values; when they adjudicate, they should follow judicial procedure; and enforcement should be fair, relatively nonintrusive, and subject to review. Importantly, Congress was willing to sacrifice some administrative cost-effectiveness to promote these values. As the APA’s chief sponsor in the Senate approvingly noted, the Senate Judiciary Com- mittee had “taken the position that the bill must reasonably protect private parties even at the risk of some incidental or possible inconvenience to, or change in, present administrative operations” (US Congress 1946, 2150).

In terms of rulemaking, as another APA supporter explained, “day by day Congress takes account of the interests and desires of the people in framing legislation; and there is no reason why administrative agencies should not do so when they exercise legislative functions which the Congress has del- egated to them” (US Congress 1946, 5756). Prior to the APA, administrative rulings might be made “in the form of letters, and nothing in the way of even an informal hearing [was] required. If the citizen [had] a hearing it [was] at the grace of the administrator or bureau chief” (US Congress 1940, 13668). From this perspective, the act could be seen as “a bill of rights for the hun- dreds of thousands of Americans whose affairs are controlled or regulated in one way or another by agencies of the Federal Government” (US Congress 1946, 2190). Its provisions for administrative adjudication model judicial procedure and constitutional procedural due process.

The APA did not provide for legislative or executive review, but it ad- opted a strong presumption of judicial review of enforcement and other actions: “Any person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof” (sec. 702). The act also contained a number of transparency provisions, including the general expectation that agencies would publish information about their organi- zation, rules, adjudicatory decisions, and methods of operation, as well as make their public records available to “persons properly and directly con- cerned” (sec. 3). (Transparency is the subject of Chapter 5.)

The APA continues to serve as a platform for requiring federal admin- istrative processes to embrace the basic democratic-constitutional values of openness for accountability, representativeness and public participation in policy formulation, reviewability for adherence to the rule of law, pro- cedural due process for the fair treatment of individuals, and rationality and limited intrusiveness when regulating private parties and other enti- ties. Over the years the APA has been amended and augmented by several additional statutes. The following list provides a snapshot of the develop- ment and scope of federal administrative law:

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14 1. What Is Administrative Law?

1. The Freedom of Information Act (1966; significantly amended in 1974, 1986, 1996, and 2007) vastly expanded the provisions for trans- parency contained in the APA.

2. The Federal Advisory Committee Act (FACA; 1972) promotes repre- sentativeness and transparency in the agencies’ use of advisory com- mittees in policymaking.

3. The Privacy Act (1974) protects against unwarranted administrative invasions of personal privacy and the release of information on pri- vate individuals without their consent.

4. The Government in the Sunshine Act (1976) requires multiheaded federal boards and commissions to hold open meetings.

5. The Regulatory Flexibility Act (1980) requires agencies to consider the impact of potential rules on small businesses and entities.

6. The Paperwork Reduction Acts (1980, 1995) seek to reduce the in- trusiveness and burdensome quality of agency efforts to collect in- formation from individuals and organizations outside the federal government.

7. The Administrative Dispute Resolution Act (1990) provides for alter- native dispute resolution of matters that might otherwise be adjudi- cated within federal agencies.

8. The Negotiated Rulemaking Act (1990) outlines the general process through which agencies may attempt to negotiate rules with parties whose interests will be directly affected by them.

9. The Government Performance and Results Act (1993) requires agen- cies to engage in strategic planning and annual performance mea- surement and reporting.

10. The Small Business Regulatory Enforcement Fairness Act (1996) re- quires the Occupational Safety and Health Administration and the EPA to solicit information from small entities when writing rules. It contains a title, known as the Congressional Review Act, that pro- vides for congressional review of federal agency rules.

11. The Assessment of Federal Regulations and Policies on Families Act (1998) requires agencies to consider the impact of their policies and regulations on family stability, marital commitments, parental au- thority, autonomy, and economic well-being.

12. The Data Quality Act (2000), also known as the Information Quality Act, requires the OMB to issue guidelines to ensure and maximize the quality, objectivity, utility, and integrity of information released by federal agencies. To achieve this objective, OMB guidelines fa- vored ensuring quality by relying on information that has been

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15The Development of US Administrative Law

peer-reviewed and is reproducible. Although the act and guidelines could be construed as a basis for challenging the studies on which rulemaking is based, to date, the federal courts have rejected this po- sition (Salt Institute v. Leavitt 2006).

13. The Openness Promotes Effectiveness in Our National Government Act (OPEN Government Act; 2007) strengthens freedom of informa- tion by requiring agencies to designate chief information officers, establish public liaisons to resolve disputes between requestors and agencies, and promote timeliness in processing information requests.

14. The Government Performance and Results Act Modernization Act (2010; signed into law January 4, 2011) strengthens agency strate- gic planning and performance reporting, coordinates strategic plans with the presidential term of office, calls on the OMB to develop an overall federal government performance plan, and requires agencies to designate chief operating officers and performance-improvement officers.