Administrative Law Doctrines

Legal Directives: Adjudication Orders, Rulemaking Rules

- 555 applies to everything (adds prompt notice to interested
parties)
- 706 applies to all agency action (defined in 551(13))
Adjudication [Definition: agency process 551(7), resulting in an order
551(6)] generally addressed to a particular party
Formal - 554, 556, 557 Seacoast
- Some Circuits: hearing is sufficient (Seacoast)
- Some Circuits: hearing on the record is needed (following
FL East Coast)
Informal 555 Pension Benefit
Rulemaking [Definition: agency process 551(5), resulting in rule
551(4)] addressed to a class of people, or address to a particular person
but affecting many people)
Formal 553, 556, 557 FL East Coast
- hearing or public hearing not enough, hearing on the
record needed. Policy: rulemaking is slow and expensive. FL East
Coast.
Informal 553
Rulemaking
Rules change legal rights and duties for classes of individuals.
Formal rulemaking under APA 553c is triggered when a statute requires a
hearing on the record. (FL East Coast).
The term hearing alone does not mandate any formal procedure under
the APA. This is because rulemaking is often a slow process, requiring a
narrower interpretation of the APAs formal requirements than
adjudication (FL East Coast).
553
(c) triggers formal rulemaking if authorizing statute provides for
hearing on the record
No bar on ex-parte contacts since 554 does not apply.
PDP
Due process claims generally do not apply to rulemaking (BiMetallic).
When rules apply to more than a few people, it is impractical
and too costly that all affected persons should have a direct
voice in its adoption.
Agencies are functioning with either legislative or executive
authority, wherein parties would not have a PDP claim if
Congress or the President exercised the same authority.

But Congress enacts private leg and courts review class

actions where you have PDP rights, so not dispositive.
Court may really be doing Matthews balancing always cost
prohibitive except small class exception
Due process rights are considered protected by the legislative
process and leg/exec oversight.
Small Class Exception (Bi-Metallic; Londoner)
When a rule (1) applies to a small number of people and (2)
rests on specific facts about the particular parties, a rule will
be treated as an order for purposes of resolving a due process
claim.
Rationale: it is really an order, not a rule. (See Holmes in BiMetallic).
An order is a (1) specific directive or (2) a general directive
falling within the Bi-Metallic exception.
In Londoner, even though rule did not specify individuals by
name, it functionally applied to a small class of individuals like
an order.
Rules that function like orders may thus be treated like an
order for PDP purposes and are not immunized from judicial
review of due process.
See class notes p. 30 adjudicatory v legislative
decisions

Adjudication
Formal adjudication is triggered under 554(a) by the language of the
authorizing statute and governed under 554557 of the APA.
In some jurisdictions, public hearing is sufficient to trigger formal
adjudication because adjudicatory hearings subject to judicial review are
presumptively on the record (Seacoast).
Most courts require hearing on the record (FL East Coast).
The Supreme Court has not ruled on whether hearing on the record
is mandatory to trigger formal adjudication, but potentially would not
follow Seacoast given implications of Vermont Yankee, Pension Benefit,
and Chevron.
554
(a) formal adjudication is triggered by statute requiring hearing on
the record. In some circuits, public hearing is sufficient. Most
jurisdictions have not adopted this view (Seacoast).
(d)
(1) Presiding official at formal hearing cant consult person
or party on fact in issue, except with notice to all parties.
Seeking additional evidence not a violation if not presiding
officer (Seacoast).

 (2) Employee/agent engaged in investigation/prosecuting

function for agency may not in that case or factually related
case participate/advise in decision, recommend
decision/agency review pursuant to 557, except as witness or
counsel in public proceeding. This applies to ALJ (Seacoast).
(A) section does not apply to initial licenses (B) public
utilities, (C) to agency, and (D) agency may issue declaratory
order to terminate controversy or remove uncertainty.
Formal Proceedings
556
(c)

(2) employee may issue subpoenas authorized by law

subpoena power is triggered by authorizing statute. Ex. Perales.
(d)

Parties normally have an absolute right to present oral

or written evidence in a formal adjudication. An agency may,
however, adopt procedures for submission of all or part of
evidence in written form when a party will not be prejudiced.
These are known as last sentence cases.
There is also generally a presumptive right to crossexamination as required for full and true disclosure.

Thus, the right to cross examine implies that any

evidence that may not be cross-examined is inadmissible
must be disclosed (Wirtz).

An agency may limit cross-exam under APA if it is not

important for full and true disclosure OR if under Matthews
interest balancing it would not improve accuracy or
fairness. (NOTE no PDP claim for rulemaking BiMetallic). It
is not an absolute right.

Rights to cross-examination (and all APA rights) are

furthermore waivable (Perales) and cross-examination is
not necessary.

An implied subpoena right may exist if it is

required for full and true disclosure. The subpoena
evidence must improve accuracy and is thus conditional on
the evidence being cross-examined.

Hearsay is admissible if it is relevant and subject to crossexamination as required for full and true disclosure (Perales).
(e) No new evidence after proceeding. Transcript of testimony is
exclusive record. Sifting and analyzing is permissible, but inclusion of
new testimony or exhibits is not. May consult Administrator but may not
rely upon contact in decision (Seacoast).
557

(d) [Note: see 551(14) for def of ex parte communication]

(1) in formal proceeding, unless authorized by law

(a) interested person cannot make ex-parte contact

with agency, ALJ, or employee reasonably expected to be
involved in decision

(b) agency/ALJ/employee involved in decision cannot

make ex-parte communications to interested persons
outside the agency.

(c) If an impermissible contact does occur, it must,

once discovered, be made part of the public record, and

(d) the agency, ALJ, or other official presiding at a

hearing may impose sanctions including dismissal of a
claim

(2) agency may not withhold information from congress

(status reports excluded from definition of ex parte contacts in
551(14))

Informal Rulemaking
Informal Adjudication
Informal adjudication is triggered if in an adjudicatory process, an
authorizing statute does not require a hearing on the record (FL East
Coast rule) or in some jurisdictions, a public hearing (Seacoast).
Five potential challenges to agency adjudication (Pension
Benefit) work through all
Constraints on formal adjudication under 554, 556, 557.
FA not triggered unless authorizing statute requires it.
Constraints on informal adjudication under 555
Minimal requirements, no hearing rights.
555 of the APA acts as a floor for the procedure that an
agency must offer. It does not, however, offer any hearing
rights, such as a right to present oral or written evidence or
cross examine. Rather, it provides for minimal procedure,
including the right to be attended by counsel, the right to
subpoena under certain circumstances, and the right to a
brief statement for the agencys denial of a written petition.
Virtually none of Judge Friendlys list for a fair and unbiased
tribunal is included under 555.
PDP (see PDP section).
A claimant may challenge an agency action in informal
adjudication under due process if the authorizing statute
confers procedural rights (Pension Benefit did not, Califano

[not law] did interpret ambiguous statute as requiring pretermination oral hearing)
PB dealt with corporations. Califano dealt with
persons. Might explain difference.
Must be a sufficient liberty or property interest.
For liberty interest, must be grounded in
Constitution.
For property interest, must be sufficiently
determinate language to engender reasonable reliance.
Challenge under organic statute statute does not authorize
Language must be sufficiently determinate to show the
agency action was invalid.
Courts are to be very deferential to agencies in imposing
procedural requirements under the agencys organic statute.
In Pension Benefit, SCOTUS upheld an agencys procedure
since there was no clear violation of either its governing
statute or the APA.
Chevron deference applies if (1) statutory language is
ambiguous (2) agency interpretation is reasonable.
706(2)(a) arbitrary and capricious review
The Pension Benefit court stated that 706(2)(a) grants no
participatory procedures and thus an agencys action cannot
be invalidated as arbitrary and capricious for providing only
minimal procedure in informal adjudication.
Does imply agency must provide brief explanation so there
is some basis for judicial review (Pension Benefit; Overton
Park)

Arbitrary and Capricious Review

Two ways an agencys decision may be arbitrary and capricious if:
(1) there does not appear to be a sufficient reason as contemplated
within the authorizing statute
(2) if the evidence presented does not reasonably support the agencys
decision.
State Farm:
Important constraint on rulemaking.
The agencys actual, contemporaneous reasoning is captured in the
statement of purpose, and the court must rule that these reasons are
good enough.
The remedy is to vacate and remand so the agency can attempt to
justify the rule again.
This is more demanding than the minimum rationality a statute must
bear in order to withstand analysis under DP

 See footnote 9 in State Farm: We no not view as equivalent the

presumption of constitutionality afforded legislation drafted by
congress and the presumption of regularity afforded an agency in
fulfilling its statutory mandate. different standard of review
stricter standard
Legislative SDP is minimal rationality: as long as the court can
imagine some reason and some facts supporting governments
decisions it will be sustained
Post Lochner, SDP challenge to at least an economic agency
rule will fail
Maybe the point of the APA is filling in for the constitutional
constraints that have been gone since 1937

Overton Park requires the agency decision be based on

contemporaneous reasoning. Court will look to the record at the time of
decision making
In IA there is no formal record so it will look to the materials that were
in agencys file.
Can also look to depositions that were submitted.
Pension Benefit says where there is no record, the court may remand
for a statement by the agency.
Pension Benefit says 706(2)(a) does not generate any participatory rights
or any elements of Friendlys list.

706(2)(a) does mandate a sort of informal record though so that

there is something to review to determine if decision was arbitrary or
capricious. (Nova Scotia)
Procedural Due Process
Procedural due process is triggered by the deprivation of either life,
liberty or property.
Liberty interests are grounded in the constitution. For the deprivation
of a liberty, a person must claim deprivation of constitutional guarantee:
Roth court offered a list of liberty interests: bodily restraint; right to
contract; engage in any of the common occupations of life; to acquire
useful knowledge, to marry, establish a home and bring up children, to
worship god according to the dictates of his own conscience and
generally to enjoy those privileges long recognized.
If not on Roth list, courts reason by analogy to determine
whether a liberty interest is implicated.
Stigma alone isnt a deprivation of a liberty, but denying a tangible
benefit AND stigmatizing them (casting out their reputation) (stigma
plus) does count as a deprivation of liberty (Roth).
Property interests are not created by the Constitution but from
independent sources of law or practices (Roth; Loudermill). For the

deprivation of a property interest, a person needs a Legitimate Claim of

Entitlement There must be (1) some non-constitutional source of law
that limits the states decision and (2)(a) sufficiently determinate
language to engender (b) reasonable reliance.
Potential Sources: statutes language or intent, regulation, contract,
judicial precedent, historical practice, etc.
Informal practices and unwritten rules can be potential
sources of a LCE (Sindermann).
Courts determine if a non-constitutional source gives rise to a legitimate
claim of entitlement by looking to whether:
Sufficiently determinate: relatively high degree of
determinacy; language must clearly apply to the person
affected
Reasonable reliance: sufficiently clear and objective
standard to create expectation; courts will consider whether
language is mandatory rather than discretionary, i.e. shall v.
may.
New Property: A person may have a property interest in benefits and
privileges (ex. welfare, government jobs) resulting in constitutionally
mandated due process (Goldberg; Professor Reich).
But Roth says: person must have more than an abstract
need or desire. More than a unilateral expectation.
LCE cannot be too open ended that it is not sufficiently
determinate (Pension Benefit).
A mere showing of grievous loss is also insufficient, even
though the Court considered grievous loss in Goldberg,
because not all grievous losses implicate a property interest
(Roth).
Matthews balancing: courts generally determine what process is due
by balancing interests of parties as discussed in Matthews:
Three considerations:
Magnitude of private interest
Governmental interest in procedural efficiency
Likely contribution of procedure to greater accuracy &
elimination of error
Advantages: adaptability to any question of procedural adequacy;
recognition that procedure involves trade-offs between collective and
individual rights.
Disadvantages: suggests that given sufficiently compelling reason,
government can do anything; interest balancing seems to contradict
presuppositions of guaranteed liberties; true accuracy often requires
substantial procedure and therefore costs; courts, including SCOTUS,
have applied the test inconsistently.

Rule: if you are deprived of a protected interest, claimants will be entitled

to some type of hearing, whether written or oral or pre- or postdeprivation.
Matthews balancing is not straightforward cost-benefit analysis, in which
the primary concern is efficiency. It also balances moral considerations
such as fairness and distributive justice. Matthews suggests that the total
cost of a procedure is not a perfect measure for well-being but
nonetheless important.
Monetary benefit of procedure + moral benefit/process values > cost of
procedure + moral defects we should only pay for extra procedure up
to the amount of benefit being wrongly denied
States also cannot force recipients of procedural rights to take the
bitter with the sweet. Plurality in Arnett said this was permissible,
but the Court rejected this premise later in Loudermill. Since Arnett was a
plurality, it was not binding. Once a statute confers a legitimate claim of
entitlement/property interest ( for cause), it cannot deprive a person
of full due process. Courts determine what process is due
(Loudermill).
The amount of procedure due pre-agency action is dependent on the
promptness and fullness of any post-deprivation hearing available to a
claimant (Loudermill).
Need for pre-hearing procedure is greater where the private interest is
more substantial and there is a high risk of error (welfare in Goldberg >
disability benefit in Matthews).
This paradigm creates an incentive for states and agencies to make
statutes and rules indeterminate so there is not a sufficiently reasonable
expectation or reliance to create a Legitimate Claim of Entitlement. The
more indeterminate statutes and rules are, the weaker a PDP claim will
be.

Appointment and Removal

APPOINTMENT
Appointments clause (Art. II sec 2 ) says principal officers of the US must
be appointed by the President with senate confirmation, but allows
inferior officers to be appointed by the President alone, the courts, or
heads of departments.
Must decide if person is an officer of the US:
Under Buckley, officers that exercise rulemaking, adjudicative, or
enforcement authority are officers of the US.
If it is just information gathering, even with subpoena power, it is
probably not an officer of the US. Congressional committees have a
subpoena power that they can delegate without invoking the
appointments clause.
If officer, must determine if principal or inferior.

Morrison says principal officer is:

Subject to removal by the president
Principally responsible for enforcement/agency direction
Inferior officer is someone
Subject to removal by a higher executive branch official other than the
President.
Some degree of significant supervision.
Limited duties
Limitied jurisdiction
Limited tenure.

REMOVAL
Morrison test:
Open-Ended Test (for restrictions) - Morrison
o Do removal restrictions impede Presidents ability to fulfill his
constitutional duty? (Article 2, 3 Take Care Clause and Art II 1
vesting executive power in Pres)
Double insulation (double for cause removal) not okay under
Free Enterprise Fund virtually no situation when principal
officers refusal to remove inferior officer for cause is itself
reason for removal, so interferes.
o Engages Pros & Cons of Plenary Presidential Removal Authority
(applied deferentially to Agency) [Adler] Morrison
Would supervision enhance agency decision-making or
interfere with agency action?
Pros: accuracy/competency of agency decision-making,
democratic responsiveness (Pres elected), prevent conflict of
interest (self-policing)
Cons: accuracy/competency of agency decision-making,
fairness/impartiality (overzealous prosecution) in
adjudication, conflict of interests
Executive Orders
Where P has EO power, a duly issued EO overrides 706(2)(a). The agencys
decision to follow an EO is rational.
Nondelegation Doctrine
Impermissible delegation of legislative power in violation of Article I Sec I.
Mistretta says there is a violation when Congress does not establish an
intelligible principle for limiting the agencys legislative power thus there
is a violation when there is an unjustified degree of indeterminancy.
go through level of determinacy in statute
Court will probably not strike down statute under NDD since it has not done
so on NDD grounds since Schechter. Challenge will almost certainly fail.

Administrative Law Judges

Civil servants appointed by agency, removable for cause (APA 7521),
assigned to cases in rotation (APA 3105), Agency does not set ALJ salaries
(APA 5372), structurally separate from agency enforcement staff and cannot
be involved in prosecution (APA 554(d)(2)).
Federal Judges
Appointed by President w/advice + consent of Senate, life tenure
(impeachment only, removal for cause)
Impartiality
National Advertisers sets up high standard. Impartiality means prejudgment
of facts.
For an agency member to be disqualified for impartiality, there must
be clear and convincing evidence (i.e. compelling proof) that they have
an unalterably closed mind on matters critical to the disposition of the
proceeding
Clear this applies in formal rulemaking and adjudication under 556(b).
Essentially an impossible standard to meet.
Not clear it applies to interpretive rules. Would go against PB and VT because
agency gets deference.