Presentation on theme: "History and Evolution of Administrative Agencies"— Presentation transcript:
1 History and Evolution of Administrative Agencies NAHO 2013 ConferenceSt. Paul, Minnesota
2 What are Administrative Agencies1 Constitutional structureSeparation of powers; Checks and BalancesBoth federal and state constitutions divide governmental power into three branches of government: Executive, legislative, and Judicial.Both federal and state governments in the US have the same type of structure.Each branch has a core function and also has powers to check the other branches of government.Tyranny and abuse of power was feared more then inefficiency.
3 Case Law: Case Law: Enacts (1) Legislative(2) Executive(3) JudicialAt the Federal Level, United States Constitution establishes and defines the powers of the 3 branches of government.We have a unique system of government in our country (largely modeled by the 50 states), which vests power in three separate branches of government-- prevents any one branch or group from holding too much power and possibly abusing that power-- each branch has certain checks and balances (oversight privileges) over the other branches-- this keeps one branch from being supreme over the other.Article 1 of the U.S. Constitution established the legislative branch of our government.-- legis branch = Congress-- enacts our federal statutory lawArticle 2 created the executive branch-- the President, his cabinet, heads of various administrative agencies (SEC, DOJ, EPA, IRS, etc.)-- charged with enforcing the federal lawArticle 3 created the judicial branch-- these are the federal courts that interpret federal statutory law-- ex: trademark infringement statute prohibits using or substantially copying someone else’s trademark to the extent your mark is “likely to confuse” consumers with the mark of the trademark holder-- statute does not define “likelihood of confusion”-- series of federal court cases steps in to define what types of marks are likely to confuse consumers-- factors include same type of goods, similar packaging, evidence of consumer confusion, etc.There is very little federal common law –-- most federal law is statutory in nature (or from the Constitution)-- common law is really a creature of state law, created by state courts to fill in the gaps where the legislature has not enacted statutes that address particular factual and legal situations.Case Law:InterpretsStatutory LawCase Law:CreatesCommon Law(state)EnactsStatutoryLawEnforcesthe LawRemedies –usually $Equity –fairness
4 What are Administrative Agencies2 Administrative agencies are located in the executive branch [Article II of the U.S. constitution] (enforces the laws).The legislative branch consists of the two houses of Congress [Article I of the U.S. constitution] (enacts statutory law).The judicial branch of the U.S. Government consists of the Supreme court and lower federal courts [Article III of the U.S. Constitution] (decides cases or controversies and interprets the law)
5 What are Administrative Agencies3 1. Most agencies carry out law enforcement functions (speaking broadly of civil and administrative law enforcement, such as inspections, subpoenas, and record keeping requirements).2. Most agencies are subject to judicial review in the federal (or a state) court system (checks and balances)3. Virtually all agencies are creatures of statutes, and their agency enabling acts (organic statutes) are enactments of congress (or a state legislature) that create the agencies and give them powers and responsibilities (delegation of powers).
6 What are Administrative Agencies4 FAPA Section 551(1) definitionAdministrative Agencies are in the Executive Branch(1) “agency” means each authority of the Government of the United States, whether or not it is within or subject to review by another agency, but does not include–(A) the Congress;(B) the courts of the United States;(C) the governments of the territories or possessions of the United States;(D) the government of the District of Columbia;
7 What are Administrative Agencies5 2010 Revised Model State APA Section 102(3)(3) “Agency” means a state board, authority, commission, institution, department, division, office, officer, or other state entity that is authorized by law of this state to make rules or to adjudicate. The term does not include the Governor, the [Legislature], or the Judiciary.Professor Ogden was the reporter for the Revised MSAPA from
8 Appointment of Officers 1 1. Presidents and governors exercise control over executive branch agencies through the power to appoint and remove the top officials of the agency. In most agency settings, there will be some political appointees, including the agency head, but most of the employees of the agency will be selected through civil service systems set up in that jurisdiction. Civil service systems were established as a merit selection reform to eliminate patronage appointments of individuals who were beholden to the appointing authority but who were also often not qualified for the job they were asked to do.
9 Buckley v. Valeo 1Facts: The Federal Election Commission has eight members, six of whom are voting members. Of the six, two are appointed by the President pro tem of the senate, two by the speaker of the house, and two by the President. This lawsuit was brought to challenge the appointment structure on separation of powers grounds, that the appointment clause for officers of the US provided the exclusive method for appointing Officers of the US and inferior officers, and that Congress did not have appointment powers under either category. The commission members exercise significant authority related to enforcement of the laws of the US. [Buckley v. Valeo 424 U.S. 1 (1976)
10 Buckley v. Valeo 22.The US Supreme court held that the appointment structure violated Art. II, S 2, cl. 2 because the commission exercises law enforcement (executive) power, operates like an independent regulatory agency, and those powers can only be exercised by Officers of the US who are appointed following the constitutionally prescribed method.3. The US constitution was very specific about the requirements for appointments. The supreme court upheld a formalist or textualist approach to this issue.
11 Appointing officers in the states 1 1. Marine Forests Society v. California Coastal Commission: In this case, the California Supreme court upheld an appointment structure that violated the principles of Buckley v. Valeo. Buckley was not a controlling precedent because the challenge was based upon the California Constitution not the US constitution. There were 12 appointees on the commission 4 appointed by the governor, 4 by the senate rules committee, and 4 by the speaker of the assembly. The court upheld this structure based upon the California constitution, which did not have anything like the officers of the US language in the US constitution. There are limits to legislative appointment of executive branch agency officials, and legislators could not retain the power to remove their appointees
12 Appointing officers in the states 2 Selection of agency officials in the states is more complex. Most agency employees are hired under civil service system rules. The top agency officials may be elected (California Attorney General), or they may be selected by the state governor with or without legislative confirmation. States have a mixture of executive branch and independent regulatory agencies. Most state public utility commissions are independent regulatory agencies for both historic and structural reasons.
13 Removal of Officers 11. The Myers v. US decision invalidated a statute that had required the consent of the senate before a President could remove a presidential appointee. The court held that this unduly interfered with the President’s executive powers. In the later Humphrey’s Executor case, the court upheld limits on the presidential removal power for FTC Commissioners. That structure is still used today. Most cabinet officials serve at the pleasure of the president, and most independent regulatory agency commissioners serve fixed terms and can be removed only for good cause. [Myers v. US, 272 U.S. 52 (1926)]
14 Removal of Officers 2Facts: In this case, President Roosevelt wanted to remove the FTC chair, William Humphrey, who had been appointed by President Hoover. Roosevelt fired Humphrey after he refused to resign, but Roosevelt did not rely on good cause, but rather on political considerations. After his death, the estate sued for recovery of Humphrey’s salary. The Supreme court upheld Humphrey’s claim and concluded that the good cause removal standard did not violate separation of powers. This fueled the rise of the modern independent regulatory agency. IRA’s are structured to have greater independence from the president, unlike executive branch agencies. They are meant to be nonpartisan, impartial, and to regulate in the public interest. [Humphrey’s Executor v. U.S. (1935) 295 U.S. 602]
15 Agency Characteristics 1 I. What are administrative agenciesA. Executive branch: Administrative agencies are located in the executive branch of federal and state government. Agency characteristics include:1 Law enforcement responsibilities including inspections, searches, audit powers, subpoena power, benefit granting powers, regulatory powers(Example: Safety inspectors for OSHA or Mine Safety Agency inspect work places, and cite employers for violations of workplace safety standards)2 Appointment of agency heads by the President (federal) or Governor (state) with advice and consent of the Senate or state legislature(Example: Attorney General or EPA administrator)
16 Agency Characteristics 2 3 Cabinet agencies: policy preferences consistent with the President or Governor currently in office (single head cabinet agencies); serve at the pleasure of the President or Governor(Example: State Department or Environmental Protection Agency4 Independent agencies: Policy independence for independent regulatory agencies that have multi member boards (5 to 7 appointees) serving fixed terms in office with good cause removal standards and political balance in membership.(Example: Federal Communications Commission or state public utilities commissions)
17 Agency Characteristics 3 • Expertise in subject area of regulation: Agencies are created to address specific public policy problems by devoting full time attention to those problems as structured by Congress or a state legislature in an agency enabling act (organic statute). Agencies have a permanent staff and budget which allows the development of expertise in addressing the problems that they are charged with regulating.(Example: The Environmental Protection Agency (EPA) or the California Air Resources Board).
18 Agency Types 1B. Types of Agencies: agencies have a variety of missions to carry out depending upon the enabling act that creates the agency and gives the agency powers.• Industry specific regulationExamples: public utilities (state public utilities commissions); aviation (federal aviation administration) telecommunications (federal communication commission) securities industry (securities exchange commission)
19 Agency Types 2• Subject specific regulation (cutting across all industries)Examples: federal trade commission (antitrust law and unfair trade practices); environmental protection agency (environmental law); national labor relations board (labor relations law)• Benefit granting agencies Examples: social security administration (disability benefits, and Medicare benefits); worker’s compensation agencies (worker’s compensation benefits); unemployment benefits (state employment agencies); welfare benefits (TANF state and local agencies)
20 Agency Types 3 • Licensing agencies Examples: nuclear regulatory commission (licensing of nuclear power plants); professional and business licensing agencies (e.g. State Bar of California licenses attorneys) • Labor relations agencies Examples: national labor relations board (private sector labor law); public employees relations board (public sector labor relations)
21 Agency Powers 1 C. Agency Powers • Enforcement Powers: powers typically granted by agency enabling act including inspections, searches, audit powers, subpoena power; [Executive Powers]• Rulemaking Powers: authority to adopt rules granted by enabling act, but required procedures for rulemaking governed by administrative procedure act applicable to the agency [Legislative powers]
22 Agency Powers 2• Adjudicative powers: authority to provide adjudicative hearings to resolve disputes granted by enabling act but procedures used for adjudication governed by administrative procedure act applicable to the agency. [Judicial Powers]
23 Executive Power 1 Agencies conduct investigations 1. Most administrative agencies have regulatory and law enforcement powers. The agency mission is to enforce the provisions of the enabling act that creates and empowers the agency. This is why agencies fit into the executive branch structure to carry out law enforcement functions.2. the term “law enforcement” in administrative law is much broader than criminal law (though some administrative law violations are punished criminally through the regular criminal court systems) because it includes civil and administrative enforcement systems
24 Executive Power 23. To carry out the law enforcement responsibilities, agencies need information from regulated parties. Four methods are used to obtain relevant information.A. Record Keeping required by law (e.g., employers have to keep records of wage payments to employees; people subject to income tax liability have to keep records of income and expenses).B. Report writing (and filing) (e.g., employers have to prepare and file with the IRS employee income information ( W-2 reports) or independent contractor income (IRS 1099 form); Taxpayers have to file annual IRS 1040 forms.)
25 Executive Power 3C. Investigative subpoenas to compel testimony and production of records ( e.g., employer in Craib v. Bulmash case had to produce wage records for caregivers for his sister to determine compliance with state wage and hour laws).D. Administrative Searches for inspection of the non public parts of homes and businesses to determine compliance with health and safety standards (e.g., OSHA safety standards compliance in Marshall v. Barlow’s note case),
26 Executive Power 44. Another technique is compliance audits ( e.g., audit of client trust accounts held by lawyers.). Some of the investigative techniques are used to determine whether or not possible violations of the law have occurred. These techniques would precede any adjudicatory enforcement action brought by the agency.5. the first two methods (record keeping and report writing)rely primarily on voluntary compliance by the regulated parties, but lots of time and money can be spent to comply with these methods.
27 Executive Power 56. The 3rd and 4th techniques ( subpoenas and administrative inspections) are not voluntary. Disclosure of information is compelled, sometimes to determine if the law has been violated, and sometimes to gather evidence for an enforcement proceeding.7. Compelled disclosure of information raises questions under the Fourth and Fifth Amendments to the U. S. Constitution
28 Legislative Power 1Federal APA Rulemaking procedures: 5. U.S.C. Section 553 governs rulemaking procedures:A. Notice [Section 553(b)provides: “General notice of proposed rule making shall be published in the Federal Register, unless persons subject thereto are named and either personally served or otherwise have actual notice thereof in accordance with law…..”B. Comment [Section 553(c) provides “After notice required by this section, the agency shall give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation
29 Legislative Power 2Federal APA Rulemaking procedures: 5. U.S.C. Section 553 governs rulemaking procedures:C. Statement [Section 553(c) provides: “After consideration of the relevant matter presented, the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose.”D. Publication [Section 553(d) provides: “(d) The required publication or service of a substantive rule shall be made not less than 30 days before its effective date……
30 Legislative Power 3 2010 Revised MSAPA rulemaking procedures: A. Notice [Section 304];B. Regulatory Analysis [Section 305];C. Comment [Section 306];D. Adoption and Publication [Section 307]E. Concise Explanatory Statement [Section 313]
31 Judicial Power 1The federal APA uses the external hearing rights approach. 5 U.S.C. Section 554(a) provides: “(a) This section applies, according to the provisions thereof, in every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing…”.To enforce this provision courts look for and seek to find in statutes(other than the APA) language that uses the underlined terms or their equivalent. We will see how this issue is resolved in the Dominion case.
32 Judicial Power 2The 2010 Revised Model State APA (MSAPA) uses the external hearing rights approach as well. Section 102(7) provides: “(7) “Contested case” means an adjudication in which an opportunity for an evidentiary hearing is required by the federal constitution, a federal statute, or the constitution or a statute of this state.”Section 102 (11) provides: “Evidentiary hearing” means a hearing for the receipt of evidence on issues on which a decision of the presiding officer may be made in a contested case.With this approach, hearing rights are governed by law other than the APA, but hearing procedures are governed by the APA. This is the same as the Federal APA, except for the constitutional language in Section 102(7).
33 Judicial Power 3Right to a trial type APA adjudicative hearing in state administrative law:1. External Hearing rights: California [Ca. Gov. Code Section This statute provides: “this chapter applies to a decision by an agency if, under the federal or state Constitution or a federal or state statute, an evidentiary hearing for determination of facts is required for formulation and issuance of the decision.”2. APA Hearing rights approach: This is a minority approach under which the APA provides for an all inclusive definition of adjudication and requires APA hearings for all adjudications whether or not an external source of law requires hearing rights
34 What is Administrative Law 1 D. Administrative LawAdministrative law is the law governing executive branch agencies like the environmental protection agency as well as independent regulatory agencies like the Securities Exchange commission. Administrative law provides the legal principles and rules that those agencies have to follow when they enforce their substantive governing law. Administrative law is a good course for lawyers who want to practice in public law or regulatory law fields like environmental law, securities law, labor law, antitrust law, and others.
35 What is Administrative Law 2 Administrative law principles are applicable to both federal and state administrative agencies. Administrative law principles govern the procedures used by agencies when they engage in rulemaking (adopting administrative regulations) adjudication (deciding administrative cases), and enforcing the law (inspections, subpoenas). Administrative law is a procedure course, but it has lots of constitutional concepts like separation of powers.
36 What is Administrative Law 3 Sources of law for administrative law:1. Federal and state constitutions (e.g., Due Process of law)2. Statutes (federal and state administrative procedures act; agency enabling acts)3. Common Law (federal and state appellate decisions)4. Regulations (agencies that have rulemaking authority sometimes adopt procedural rules that govern proceedings before the agency)
37 Administrative Procedures Acts 1 E. Administrative Procedures Acts 1945 California (state agencies in California) Revised and amended 1979 ( rulemaking chapters) and 1995 (new adjudication chapters)1946 Federal APA (federal agencies)1946 MSAPA (state agencies in adopting states)1961 MSAPA (state agencies in adopting states)1981 MSAPA (state agencies in adopting states)2010 Final Revised MSAPA (same)
38 Administrative Procedures Acts 2 1. Federal APA: 5 U.S.C. Sections 551 to 706Revised Model state APA ( adopted, July 2010, Uniform Law Commission3. State APA’s (e.g., California APA; California Government Code Sections )Administrative Procedures Acts provides the required procedures for agencies to follow when enforcing the substantive law the agency is responsible for (agency enabling act)
40 APA Topics (evolution of subjects) Definitions of key terms ( )Public access to agency law and policy (internet era, 2000’s)Freedom of Information Act (public records acts) (1970’s)Government in the sunshine act (open meetings laws) (1970’s)Rulemaking procedures ( )Adjudication procedures ( )Judicial Review procedures ( )Legislative review procedures (1980’s)Central panel hearing procedures (1980’s to date; 25 states)
41 Brief History of Admin. Law 1 III. History of American Administrative Agencies(post civil war and post industrial revolution)– Controlling Monopolies and RatesInterstate Commerce Commission (ICC)– 1915 Regulating Product QualityFederal Trade CommissionPredecessor to FDA (USDA)
42 Brief History of Admin. Law 2 – Extending Regulation for Socioeconomic Purposes and Technology Advancements Food and Drug AdministrationSocial Security AdministrationFederal Communications CommissionFederal Power CommissionNational Labor Relations BoardSecurities Exchange CommissionCivil Aeronautics BoardFederal Aviation Administration
43 Brief History of Admin. Law 3 – 1979 Extending Regulation to Enhance Public Health and Safety and to Promote Fairness in the Workplace and Community Equal Employment Opportunity CommissionEnvironmental Protection AgencyOccupational Safety and Health AdministrationConsumer Product Safety CommissionCivil Rights division of Justice DepartmentOccupational Safety and Health Commission
44 Brief History of Admin. Law 4 to 2000 Deregulation Movement to Reduce Bureaucratic overexpansion Office of Management and Budget (OMB)Office of Information and regulatory affairs (OIRA)Abolition of CAB (airline rates)Deregulation of banking and savings and loan industryTelecommunications partial deregulation (FCC)Welfare Reform (TANF)
45 Brief History of Admin. Law 5 to War on Terror, Globalization, and Economic Stability Patriot ActDepartment of Homeland SecurityWorld Trade OrganizationHealth care legislation (HHS)Dodd Frank legislation (new consumer finance agency)Sarbanes Oxley (new powers for SEC) corporate regulation
46 The futureWhat pressing issues do we face today as a notion and how can administrative agencies respond to those issues?1. Global economic issues.2. Global environmental issues.3. aging populations in many advanced economies.4. entitlements and debt.