Administrative Law Prof Blog

FDA Oversight of State Inspections Sub Par

The recent peanut salmonella scare in Georgia is in part attributed to decreasing rigor in the FDA inspection process.  The Atlanta Journal Constitution reports:

From 2003 to 2006, the FDA cut its inspection force by 12 percent, according to a report by Waxman, the California congressman. During the same period, Waxman found, the number of inspections dropped by 32 percent.

The FDA has increased its reliance on state inspections, according to the Health and Human Services inspector general. But states vary in how stringently they inspect food facilities, have differing levels of enforcement authority and set their own examination schedules, the inspector general said in a report. Still, the report said, the FDA doesn’t adequately monitor state inspections, raising concerns “about the quality and uniformity” of food inspections. Halloran, of the Consumers Union, said federal authorities should have retooled the inspection system after earlier breakdowns caused widespread illnesses.

“We obviously have a problem here with inspection and enforcement,” she said. “It isn’t that states can’t do it. But the FDA doesn’t seem to have been supervising the state of Georgia or to have been in much touch with what the state was doing.”

The entire article can be found here.

KP

Sometimes it's the simple things that confuse

In administrative law, sometimes it's the simple things that confuse us.  Patty Salkin (Albany) describes a recent decision by the Delaware Supreme Court explaining that when acting in a decision-making capacity an agency

does not act in a legislative capacity, but rather "partly in a ministerial and partly in a judicial capacity." In reviewing the applicable enabling statutes, the Court said that the "The statutes do not, either expressly or by implication, give the Commission unfettered discretion to deny an otherwise legally conforming subdivision application based on impact-related concerns expressed by commenting state agencies."

Or whining by neighbors who don't like it.  The time for legislation has passed.  Unless we are dealing with a function involving allocation of limited resources, where there is not enough pie for everyone to have a piece (e.g., grants or electromagnetic spectrum), if an applicant or respondent conforms then the decision is made.  "Commission Exceeded its Authority in Denying Subdivision Application".  EMM

Look for interpretive guidance

A recent New York Appellate Division opinion discussion on the New York Public Personnel Law blog is a reminder to check for applicable interpretive guidance in regulations themselves or in their enabling statutes.  "NYC's Administrative Code requires court to apply "more stringent requirements" in adjudicating civil rights law allegations".  In this case, the regulation itself provided that:

The provisions of this title shall be construed liberally for the accomplishment of the uniquely broad and remedial purposes thereof, regardless of whether federal or New York State civil and human rights laws, including those laws with provisions comparably-worded to provisions of this title, have been so construed.

Provisions like this can be sneaky.  EMM

Explaining a new law to clients

A good summary of a new state regulatory change is available on Reed Smith LLP's Environmental Law Resource blog:  "Pennsylvania's New Right to Know Law" by Jayme Butcher.  First and last paragraphs:

Substantive revisions to Pennsylvania's Right to Know Law took effect on Jan. 1, 2009. The thoroughly revised law establishes for the first time an Office of Open Records with the Department of Community and Economic Development to administer the new law and fundamentally changes how citizens access public records.
...
Conclusion
The new Right to Know Law encompasses both substantial and procedural departures from previous versions. Substantively, the new law establishes much clearer boundaries between what is presumed to be public and what Pennsylvania agencies are permitted to withhold. Procedurally, the new law represents an even more radical departure from its predecessors by streamlining the process to permit requesters to more rapidly appeal agency decisions and seek judicial review.

This Is interesting from two perspectives:  The article itself is a well-written, plain-English summary of a complicated and novel regulatory scheme, and the new Pennsylvania law is an example of the "laboratory of democracy" aspect of state law.  Thanks to Lexology for the pointer.  EMM

It's all about Chevron

As Larry Friedman (Barnes/Richardson, Chicago) points out on his Customs Law blog, referring to Monday's SCOTUS decision in U.S. v. Eurodif S.A., No. 07-1059.  He spotted a news article, "NTI: Global Security Newswire - U.S. Uranium Enrichment Firm Wins Supreme Court Ruling".  From the article:

The key question centered around whether nuclear utility contracts to buy low-enriched uranium constituted a purchase of "goods" or "services." U.S. law allows for placing tariffs on "foreign merchandise" sold in the United States for "less than fair value," but does not permit such sanctions on the sale of services, ...

Complicating the situation is the nature of many uranium enrichment contracts, which can call for the utilities to provide natural uranium, purchased from a third party, to the enricher for processing. Ownership of the natural uranium is not clearly defined, however, as the enricher is free to use supplies on hand to produce the contracted low-enriched uranium.

Souter's opinion sought to emphasize the uncertainty of the situation.

"A customer who comes to a laundry with cash and dirty shirts is clearly purchasing cleaning services, not clean shirts. And a customer who provides cash and sand to a manufacturer of generic silicon processors is clearly buying chips rather than sand enhancement services," he wrote. "But the line blurs when the facts get more complicated."

"This is the very situation in which we look to an authoritative agency for a decision about the statute's scope ... and once the choice is made we ask only whether the department's application was reasonable," he continued.

Furthermore, allowing uranium enrichment to be considered a service would create a loophole that manufacturers in many industries would exploit, Souter wrote.

"The restructuring would not stop with uranium," he stated. "Contracts for imported pasta would be replaced by separate contracts for wheat and wheat processing services, sweater imports would give way to separate contracts for wool and knitting services, and antidumping duties would primarily chastise the uncreative."

To me at first glance it appears to be a straightforward reinforcing of Chevron deference, but I will enjoy seeing Mr. Friedman's promised analysis.  EMM

Costs of compliance

Clients constantly complain about the expense of regulatory compliance - including, of course, legal fees.  An article recently posted on SSRN describes a survey of the actual compliance costs in one particular area:  "Costs of Complying with the Sarbanes-Oxley Act", by Michael W. Maher (Cal-Davis, Graduate School of Management) and Dan Weiss (Tel Aviv, Faculty of Management).  Abstract:    

Managers, investors, and regulators have expressed concerns about the high costs of complying with the Sarbanes-Oxley Act of 2002 (SOX). This paper introduces a new measure of actual compliance costs to facilitate an objective large-scale study of accelerated filers. We find that (i) the annual SOX compliance costs range, on average, from 0.289% to 0.618% of sales in each of the four years after SOX was enacted, (ii) compliance costs exhibit substantial variation across firms and industries, (iii) firms that reported deficiencies in internal controls had significantly higher compliance costs, and, (iv) smaller firms incurred greater SOX compliance costs relative to sales than larger firms. For the majority of accelerated filers, we document significant SOX compliance costs that exceed the SEC's expectations of compliance costs. Nevertheless, we also find that almost one out of every four accelerated filers had costs as low as the SEC expectations in each of the compliance years. This empirical evidence is useful in considering future amendments to SOX and in expanding our knowledge about the economic implications of securities' regulations.

More empirical studies like this will help practitioners advise their clients as to what their clients  realistically face in compliance expenses, and will help regulators factor more realistic costs of compliance into cost-benefit analysis.  EMM

Pay for Performance Proposal

Robbie Kunreuther, Director of Government Personnel Services, explores the possiblity of basing the salaries of federal agency employees on performance.

This is the last in a series of three articles. They concern the challenged faced by the new Democratic administration as they assess ongoing experiments with pay-for-performance (PFP) in the Federal sector.(See Sizing Up Pay-For-Performance In The Next Administration and The Future of Pay-For-Performance Under Pres. Obama.)

A decision needs to be made as to whether such models should be expanded throughout the Executive Branch or concluded with employees being rolled back into the General Schedule (GS) or some similar pay system. A continuing patchwork of pay systems within the Executive Branch (from DHS to FAA to DoD and so forth) is not a good long-term option, if flexibility and movement among agencies is considered a virtue.

The full article is on FedSmith.com.

KP

Retaliation Against FDA Whistleblowers?

According to the New York Times, the FDA may have opened a criminal investigation against 9 scientists who blew the whistle on the agency for failing to properly review highly important medical devices before they were approved for market.  These failures were documented in recent GAO report, discussed in this blog last Friday.  The scientists are seeking assistance from President Obama and have sent him a letter that says in part:

"It has been brought to our attention that F.D.A. management may have just recently ordered the F.D.A. Office of Criminal Investigations (O.C.I.) to investigate us rather than the managers who have engaged in wrongdoing!” . . . It is an outrage that our own agency would step up the retaliation to such a level because we have reported their wrongdoing to the United States Congress.”

LT

Cost-benefit analysis and the impact of Sunstein as regulatory "czar"

One of the tasks clients ask of administrative lawyers is preparing comments on proposed regulations.  To do this effectively, the lawyer needs to know how agencies come up with their proposals.  Eric Posner's defense of the nomination of Cass Sunstein as head of the Office of Information and Regulatory Affairs presents clearly the issues surrounding cost-benefit analysis as such a technique.  EMM

Jurisdiction for review of agency action

On his Customs Law blog, Larry Friedman (Barnes/Richardson, Chicago) discusses Schick v. U.S., a recent Federal Circuit decision.  Seems Mr. Schick failed to file his triennial customs broker report, and when Customs and Border Protection took away his license he appealed to the U.S. Court of International Trade.  However, the Court of Appeals for the Federal Circuit says that this is not within the jurisdiction of the CIT as specified in 28 U.S.C. sec. 1581.  Whoops.  EMM

New administrative law article

From the University of Washington's Current Index to Legal Periodicals:

Deutsch, Rachel.  Note.  The federal role in reducing hospital-acquired conditions:  are Medicare reimbursement incentives enough?  42 Colum. J.L. & Soc. Probs. 1-41 (2008). [L]|[W]

EMM

Theory: "New public management"

A bit off-topic, but of interest to those of us who enjoy crystal-ball-gazing:  John Bumgarner (GAO) and Chad B. Newswander (Virginia Tech - Public Admin/Public Affairs), "The Irony of NPM: The Inevitable Extension of the Role of the American State" in 39 (2) American Review of Public Administration 189 (2009).  Abstract:

Government delivery mechanisms and services are increasingly being shifted to the private sector where executive values of efficiency and effectiveness reign supreme whereas legislative and judicial institutional values are confined to traditional government agencies. New Public Management (NPM) has ironically initiated a process of diffusing legislative and judicial institutional values into the contract state through reactive legislative enactments and judicial opinions that attempt to reinforce the constitutional character of public action. An integration of NPM and legislative and judicial constitutional values is sought to reach a balancing point in the American state. Last, prescriptions are provided for Congress, the judiciary, and public administrators to reach a balancing point that will ensure the protection of constitutional values while valuing effectiveness and efficiency. Thus, NPM may create a potential paradox—rather than the state becoming minimalist in nature, NPM will increase the influence of the state through the diffusion of constitutional values.

This appears to support my view of administrative law as a growth industry.  This article suggests that Congress and the federal judiciary will force administrative law values (e.g., due process) on private sector organizations performing what were government functions.  EMM

Integrating legislation and regulation courses into the first-year curriculum

Ethan Leib (Hastings) has posted links and comments on a panel discussion on this subject at AALS - "PrawfsBlawg: Legislating the Curriculum: The Podcast".  EMM

State preemption of county ordinance

In her Law of the Land blog, Patty Salkin (Albany) points out a new state supreme court decision holding that the state mining law preempts a county ordinance limiting the use of chemicals used in processing ores.  "CO Supreme Court Holds County Land Use Regulation Banning Use of Chemicals in Mining Preempted by State Law".  Of general administrative law interest are the four reasons for preemption cited: 

• the ordinance impedes the [state statute]'s goal of encouraging mineral development while protecting human health and the environment;
• the ordinance is inconsistent with both the [state legislature]'s decision to authorize mining operations that use chemicals for extraction and the resulting [state agency]-regulated permitting regime for [mining]; and
• state statutes and cannons of statutory construction require that we resolve the conflict between the [state statute] and [county ordinance] in favor of the [state statute].  And further,
• Implied preemption occurred here because the [state legislature] expressed a sufficiently dominant interest by assigning to the [state agency] the field of the use of chemicals and other toxic and acidic reagents in mining operations for mineral processing.

EMM

Change in access to presidential documents

From beSpacific:

This final rule establishes a new official updated daily online-only publication entitled the "Daily Compilation of Presidential Documents." The paper edition of the Weekly Compilation of Presidential Documents will no longer be issued. The annual edition of the Public Papers of the President will be based on the text of the Daily Compilation of Presidential Documents. The price for subscription to the Weekly Compilation of Presidential Documents has also been removed from the regulations, as this publication will no longer exist and the online Daily Compilation is available free of charge on the Internet. This rule also revises the regulatory text to make it more readable and consistent with plain language principles.

The Office of the Federal Register (OFR), which is part of the National Archives, has created a new publication, to be called the Daily Compilation of Presidential Documents. The Daily Compilation will appear on the Government Printing Office's (GPO) new Federal Digital System (FDsys) January 20, 2009, to coincide with the incoming President's term of office. The web site will be accessible via www.presidentialdocuments.gov by January 20. The online Daily Compilation will replace the printed Weekly Compilation of Presidential Documents.

"Availability and Official Status of the Compilation of Presidential Documents". Thanks to Karl T. Gruben, Director of the St. Thomas U. (Florida) Law Library, who commented:

The Weekly Comp will be done away with in favor of a Daily Compilation of Presidential Documents.  It is difficult to tell, just yet, how any paging will work on that since the only document available (as of 9:45am EDT, Friday, January 23, 2009) is the inauguration speech.  If there is no continuous pagination for each day (that is, each document is paged individually) it will certainly make citation an interesting proposition.  I guess more will be revealed as more documents hit the system.

EMM

Call for proposed papers for fellowship

The National Administrative Law Judge Foundation is currently inviting applications for the 2009 Fellowship. The topic for the 2009 Fellowship is "Ethics and Integrity in Administrative Adjudication: Issues and Solutions."   The Fellowship will offer the successful candidate the opportunity to analyze a range of issues regarding ethics, ex parte communication, independence, impartiality, and integrity as it relates to administrative adjudication.

The Fellowship Committee will also consider applications for the 2009 Fellowship on topics of the applicant's choosing. To be considered, such a submission should propose, for approval by the Fellowship Committee, a scholarly review of the law on an issue relevant to executive-branch adjudication at any level of government. Applicants for the 2009 Fellowship should submit two copies of a detailed outline for the proposed article, an abstract or an introduction to the paper, with a writing sample, curriculum vitae, and a list of publications, by April 30, 2009. The Fellowship Committee will review the submissions and select a Fellow by May 30, 2009. The final draft of the paper will be due January 1, 2010.

The Fellow will prepare an original article for publication in the Journal of the National Association of Administrative Law Judiciary, and will deliver a fifty-minute oral presentation at the annual meeting in Florida. Besides a $1000 cash stipend, the Fellow will receive transportation and accommodations at the annual meeting and educational program in Florida.

Applications and inquiries should be submitted to the Fellowship Committee, NAALJ, P.O. Box 71, Glenmont, NY 12077, or by email to naalj@naalj.org.

Christopher B. McNeil, J.D., Ph.D.
Professor of Legal Writing and
Adjunct Instructor of Administrative Law
Capital University Law School
PO Box 595
Worthington, Ohio 43085
614.571.6031
cmcneil@law.capital.edu

EMM

The timing of agency action

Jacob E. Gersen (Chicago) and Anne Joseph O'Connell (Berkeley) have posted a draft paper titled "Hiding in Plain Sight?  Timing and Transparency in the Administrative State".  From its introduction:

Burying bad news is one of the oldest tricks in politics. ...

At first glance, these political anecdotes seem to mimic stories from the corporate world, where companies sometimes report unexpected poor earnings results on Fridays or after market trading has closed for the weekend. ...

... Despite constant attention to the structures and procedures that regulate agency decisions, be they statutory, common law, or constitutional; the questionable status of administrative agencies in the constitutional order, and recurrent cries of agency malfeasance and nonfeasance, few scholars have sought a theoretical account of when agencies act, as opposed to how agencies act (what procedures are used) or what agencies say (what substance is promulgated). This Article seeks to remedy this oversight by constructing a theoretical and empirical analysis of the timing of agency action.

Our thesis is straightforward. We suggest that the conventional anecdotal wisdom about the bureaucracy burying bad news is simply wrong or incomplete, at least in its most typical and general form. ...

...[S]ome decisions are immediate one-off events, with no opportunity to plan for the performance or to provide feedback afterward. For the subset of once-in-time decisions, timing could play a much greater role. This subset is small but important: mainly, the withdrawal of previously proposed rules or the abandonment of existing agency process. For reasons we discuss below, it is more difficult to challenge withdrawals in court.  Immediate scrutiny and a non-judicial political reaction will be more important. To foreshadow a bit, the manipulation of timing is rare for the issuance of final rules or the commencement of a rulemaking process, but appears to be common for the withdrawal of proposed rules.

As indicated above, this is a draft paper.  However, if the published version bears out these conclusions this paper will guide practitioners on what to watch for on Friday afternoons.  EMM

Planning for the new Administration's administration

Baker Hostetler has put together an interesting projection of the wide variety of administrative law changes we can expect under the new administration.  "Planning for Obama Administration Legislative and Enforcement Initiatives".  Introduction and contents:

Taking the new legislative, regulatory and enforcement outlook into account in decision-making ranges in difficulty from merely routine to nearly impossible.

With a new President supported by a Democratic House and a 58-42 margin in the Senate (59-41 if Mr. Franken is seated), "Change we can believe in" has already begun -- and at a break-neck pace. This Alert highlights fundamental changes expected from Congress and from new regulatory and enforcement officials that should be considered when making business decisions.  Topics covered here include:

    * The American Recovery and Investment Tax Act of 2009
    * Higher Individual Tax Rates
    * Higher Tax Rates on Capital Gains and Dividends
    * Blowing the Cap Off Social Security Earnings
    * Lower Corporate Tax Rates, At a Cost
    * Revenue Raisers, Including Executive Compensation Tax Changes and So-Called “Loophole Closures”
    * Estate Tax Permanence and Co-ordination with the Gift Tax
    * Charitable Gifts from IRAs
    * Conservation Easements
    * Energy Incentives
    * Free Trade Issues
    * Leaders of Key Committees
    * Financial System Regulatory Reform and TARP Implementation
    * Labor
    * Environmental
    * Healthcare Reform
    * Subprime Lending Litigation
    * White Collar Defense and Corporate Investigations

Thanks to Lexology for the pointer.  EMM

GAO list of high-risk government programs

Usually I don't blog about agency-specific issues, but the GAO's January 2009 High-risk series: An update cuts across many federal departments.  It identifies 30 areas, of which three are new and six have been on the list since it was first prepared in 1990.  Nine directly involve regulation of business, four are individual benefit programs, and seven directly involve government contracting processes.

What's a "high-risk" area to the GAO?

it involves national significance or a management function that is key to performance and accountability.

[it is] an inherent problem, such as may arise when the nature of a program creates susceptibility to fraud, waste, and abuse, or

[it is] a systemic problem, such as may arise when the programmatic; management support; or financial systems, policies, and procedures established by an agency to carry out a program are ineffective, creating a material weakness.

[it] involves public health or safety, service delivery, national security, national defense, economic growth, or privacy or citizens’ rights, or

[it] could result in significantly impaired service; program failure; injury or loss of life; or significantly reduced economy, efficiency, or effectiveness.

In addition, we also consider the exposure to loss in monetary or other quantitative terms. At a minimum, $1 billion must be at risk ...

Before making a high-risk designation, we also consider corrective measures planned or under way to resolve a material control weakness and the status and effectiveness of these actions.

For 19 of these areas, "Legislation is likely to be necessary, as a supplement to actions by the executive branch, in order to effectively address this high-risk area."  Watch your firing lane.  EMM

FDA asleep at the wheel

The Government Accountability Office (GAO) recently issued a report indicating that the Food and Drug Administration (FDA) is sending Class III medical devices to market with minimal review.  Class III medical devices, which include replacement heart valves and other devices implanted in the body, are the most sophisticated medical devices and are often necessary to sustain human life.  This failure is particularly disturbing in light of last year's Supreme Court decision in Riegel v. Medtronic, Inc.  In Medtronic, the Court approved preemption of state tort claims for defective medical devices relying in part on the FDA's alleged "rigorous regime of premarket approval for new Class III devices."  LT