Administrative Law Prof Blog

Declaratory judgment actions in administrative matters

Declaratory judgment actions in administrative matters pose interesting problems: When does the statute of limitations accrue? When does a plaintiff have standing to bring the action? Does the doctrine of exhaustion of administrative remedies apply? A recent Arizona Court of Appeals opinion discusses these issues (for a Rules jurisdiction) in straightforward language in Canyon del Rio Investors, LLC v. Flagstaff, CV 10-0013 (May 24, 2011) [citations omitted]:

¶1 Canyon del Rio Investors, L.L.C. (“CDR”), brought claims against the City of Flagstaff for declaratory judgment and damages in connection with a zoning dispute. The superior court ruled that the claims were barred by the statute of limitations. We hold: (1) damage claims arising out of municipal zoning decisions do not ripen -- and the statute of limitations does not begin to run -- until the plaintiff exhausts its administrative remedies; and (2) though declaratory judgment claims may be brought before related damage claims become ripe, no statute of limitations begins to run against such claims until administrative remedies have been exhausted.

The Court distinguishes between when a justiciable controversy arises for purposes of standing in declaratory judgment actions and when the statute of limitations begins to run for damages claims.

¶17 The City argued, and the trial court agreed, that CDR’s claims accrued more than one year before its lawsuitbecause it was fully aware of its injuries and discovered or should have discovered they were caused by the City’s actions no later than May 2004, when it first submitted a notice of claim to the City. CDR contends the statute of limitations for its declaratory judgment claims did not begin to run until an actual controversy arose between it and the City, which it asserts occurred when the City rejected its application for Parcel R in 2007. We reject both positions. ...

(Don't you love opinions where the court rejects both sides' arguments?)

¶20 The time when a breach or injury occurs is the earliest time that a coercive claim can accrue and a limitations period can begin to run. “Until a breach [has] actually occurred there [is] nothing upon which appellants could base a suit and necessarily the statute of limitations could not be set in motion prior to the accrual of a cause of action.” We have, therefore, recognized that a “distinction exists between the point in time when a justiciable controversy arises which permits the filing of a declaratory relief action, and when an action accrues for purposes of a period of limitations.”

The Court then looks at the doctrine of exhaustion of administrative remedies.

¶22 In general, plaintiffs who fail to exhaust administrative remedies are barred from seeking relief from the courts. Damage actions against municipalities arising out of administrative decisions are subject to the exhaustion requirement. But it has long been held that exhaustion is not a prerequisite to an action for declaratory relief from an allegedly invalid zoning ordinance. Taking considerations of justiciability, exhaustion, and limitations together, we hold that a claim for declaratory judgment concerning a zoning ordinance cannot be time-barred if it is brought before a related damage action accrues or within the applicable statutory period after it does.

¶23 A contrary holding -- that the statute of limitations begins to run against declaratory judgment claims as soon as the plaintiff becomes aware of a justiciable controversy -- would serve only to encourage unnecessary litigation. Under such a rule, a prudent developer faced with discouraging comments from municipal staff would be compelled to bring a swift action for declaratory judgment or face a limitations bar. By permitting such actions to be brought at any time before the expiration of the limitations period for a damage action, putative litigants are free to attempt to resolve issues through the administrative process without placing their legal rights at risk. We conclude that this approach is consistent with the goal of the doctrine of administrative remedies.

Depending on your jurisdiction, YMMV. EMM

 

 

Out of the loop

Sorry I've not been posting for a few days - illness in my family. I'll try to catch up. EMM

Standards of judicial review

The standard used by a court to review an administrative act may determine the outcome. Review standards range from rubber stamps to Constitutional scrutiny, depending on the jurisdiction and the kind of administrative act being reviewed. Many jurisdictions apply different standards of review to "legislative" versus "quasi-judicial" acts. The distinction is artificial, but it is significant in many jurisdictions. Dean Patty Salkin (Albany) describes a recent case on her Law of the Land blog in "Arkansas Supreme Court Holds Consideration of Conditional Use Permit is a Quasi-Judicial Act":

The plaintiff, King’s Ranch of Jonesboro, appealed the decision of the lower circuit court, asserting that the court’s review of the denial of a conditional use permit should have been de novo review rather the rational basis standard that lower court employed.  The Supreme Court of Arkansas determined that the de novo standard of review should have been used by the lower court, reversing and remanding the case for further review.

The court’s determination rested on whether the decision to grant or deny the conditional use permit was a legislative or quasi-judicial act. If the decision was a legislative act, it was entitled to rational basis review, and if it was a quasi-judicial act, the decision would be given de novo review.

To determine this matter, the Supreme Court of Arkansas had to look to the facts of the decision making process and the result of the decision. The court focused on the fact that the decision was made by applying the facts to an existing standard and that no new law was created, making the act quasi-judicial.  The City officials, when determining whether to grant a conditional use permit, took the facts on the application and the community’s sentiment, and applied them to the existing zoning ordinance that provided the process for the granting or denying of conditional use permits. As such, it was a fact intensive, quasi-judicial act subject to de novo review.

The court stressed that had an amendment been made to the zoning ordinance to facilitate the plaintiff’s requests, then it would have been a legislative act, subject to rational basis review.  This is because voting on an amendment results in the ratification or defeat of a law. However, that was not the case here. The City only applied the facts to the existing law that allowed for conditional use permits–and no more.

EMM

Call for papers: Procedural Reform: Rulemaking v. Legislation

From the Legal Scholarship Blog: "Procedural Reform: Rulemaking v. Legislation - AALS mtg - Washington, DC".

The Executive Committee of the AALS Section on Civil Procedure invites the submission of papers for presentation at the Annual Meeting of the AALS January 4-8, 2012, in Washington, D.C.

The topic of our panel will be “Procedural Reform: Rulemaking v. Legislation.” Procedural reform has enjoyed (or suffered from, depending on one’s point of view) considerable attention in recent years. Procedural topics are in the mainstream media. Supreme Court cases have reformed bedrock principles. Rulemakers regularly debate amendments to an ever-expanding corpus of rules. And the legislative branch seeks to undo some reforms while initiating still others.

Papers presented by the panel will put this constellation of procedural reforms into a broader perspective. The debate about whether procedural reform is more properly the province of rulemakers or lawmakers is neither new nor, perhaps, even resolvable. Yet it remains relevant-urgent, even, given the stakes. We invite the submission of papers that address this topic in whole or in part. Papers that address the topic in whole might, for example, consider the use of empirical evidence as an engine for procedural reform. Or institutional choice theory might be applied to the procedural landscape. Even if your work addresses the topic only in part, we encourage you to submit it; we will be selecting papers so that the panel, considered as a whole, will generate a dialogue to explore the broader issues.

Drafts of the papers submitted for consideration must be received by September 1, 2011. Submissions should be sent to tmain[at]pacific.edu. Papers already accepted for publication will be considered.

EMM

New admin law articles

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

• Dutta, Nikhil K. Accountability in the generation of governance indicators. 22 Fla. J. Int'l L. 401-465 (2010). [H]|[L]|[W]
• Hemel, Daniel. Note. Regulatory consolidation and cross-border coordination: challenging the conventional wisdom. 28 Yale J. on Reg. 213-251 (2011). [H]|[L]|[W]
• Ruhl, J.B. and James Salzman. Gaming the past: the theory and practice of historic baselines in the administrative state. 64 Vand. L. Rev. 1-57 (2011). [H]|[L]|[W]

EMM

Sources: New website on federal advisory committees

Today RegBlog reviews a new source of regulatory information in "GSA Launches Website on Federal Advisory Committees".

As part of President Obama’s Open Government Initiative, the General Services Administration (GSA) has created a new website that makes information about government advisory committees easier for the public to obtain and understand. ... The new eFACA website allows users to view a list of all current and terminated committees within each federal agency, providing links to committee websites where available.

The article includes a short explanation of the Federal Advisory Committee Act. EMM

 

Limits on judicial authority in administrative law

Yesterday I received a nice note by email from James Ridgway, Administrator of Veterans Law Library:

Veterans law is often overlooked as a branch of Administrative law because it is so young.  However, this doesn't mean that big administrative law rulings do not occur in veterans law.  This week, in a 140-page divided opinion, the 9th Cir. declared that large portions of the VA health and benefits system violate due process and indicated a Special Master may need to be appointed to assist the district court in changing the way VA operates its mental health services and its handling of administrative appeals.  In addition to the due process sections, the opinion has large discussions of federal courts' jurisdiction under the APA and whether Congress precluded jurisdiction by enacting the VJRA. Unsurprisingly, the dissent has a very different view of the ability of the federal courts to dictate how a federal agency must manage limited resources in handling the benefits of millions of claimants.  In any event, a lot of fodder for those interested in the relationship between courts and major agency operations. I thought you might be interested.

The case is Veterans for Common Sense v. Shinseki, No. 08-16728 (9th Cir., May 10, 2011). As a disabled veteran myself, I've been watching this with interest. Actually, veterans law has been around for a long time, first as cases seeking old common law writs to effect promised benefits. It disappeared from view for 150 years because the Civil War veterans laws effectively eliminated the right to be represented by a private attorney. (When I fought my benefits battle, I got help by becoming a member of the Disabled American Veterans.)

There are underlying problems in arguing that the government's failures to take care of veterans is a due process violation. They involve the fundamental weakness of the judiciary in trying to impose remedies on the elected branches of government. Mandamus is for bureaucratic chickens**t, like refusing to deliver a signed and sealed commission. Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803). Rarely will you see a mandamus action that costs the government much money. You have the problem of enforcement generally. President Andrew Jackson supposed said in response to the Supreme Court's decision in Worcester v. Georgia, 31 U.S. (6 Pet.) 515 (1832), "[Chief Justice] John Marshall has made his decision, now let him enforce it!" The President with the support of Congress can tell the courts, "you and what army?" Federal courts are able to impose expensive solutions on states. See, e.g., Swann v. Charlotte-Mecklenburg Board of Education, 402 U.S. 1 (1971), but see Milliken v. Bradley, 418 U.S. 717 (1974).  But forcing the federal government to spend money is hard.

Read both the majority opinion and Chief Judge Kozinski's dissent to get a better idea of the issues involved. EMM

 

The doctrine of primary jurisdiction

The New York Public Personnel Law blog reviews a useful teaching case in "The doctrine of primary jurisdiction and the doctrine of the exhaustion of administrative remedies considered in determining the jurisdiction of the court". The plaintiff had been employed by the defendant School District, first as its "Director of Technology", than as its "Assistant Superintendent for Curriculum and Technology", then for a short time as "Assistant Director for Curriculum and Technology" before her position was eliminated. She sued the School District for breach of her employment contract and claimed that she had tenure by estoppel. The tricky part is that the two "Director" positions were covered by the collective bargaining agreement and under that agreement were eligible for tenure, but the "Assistant Superintendent" position was not. Now mix this up with her employment contract for the "Assistant Superintendent" position, which

provided that the "terms and conditions of employment" not otherwise addressed in the contract were incorporated from the collective bargaining agreement. Under the collective bargaining agreement, claims relating to its terms were subject to a mandatory grievance process.

The trial court dismissed both her claims and handed her off to the state Commissioner of Education for resolution of her tenure claim, citing the doctrine of primary jurisdiction.

Addressing "The doctrine of primary jurisdiction", the court explained that the doctrine provides that "where the courts and an administrative agency have concurrent jurisdiction over a dispute involving issues beyond the conventional experience of judges . . . the court will stay its hand until the agency has applied its expertise to the salient questions," citing Flacke v Onondaga Landfill Sys., 69 NY2d 355. Further, said the court, "The doctrine . . . applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body. In such situations the judicial process is suspended pending referral of such issues to the administrative body for its views."

The appellate court reversed as to the breach of contract claim because "In contrast, where the determination does not require the special competence of an administrative agency, the doctrine does not apply."

In this instance the Appellate Division ruled that the interpretation and enforcement of Neumann's employment agreement was not within the Commissioner of Education's specialized knowledge and experience. Rather its interpretation and enforcement depends on common-law contract rules that lie within the purview of the judiciary. Accordingly ... [the trial court's] dismissal of Neumann’s cause of action alleging breach of contract under color of the doctrine of primary jurisdiction was improper and the Supreme Court should have retained jurisdiction to decide that cause of action.

EMM

Theory: Agency independence

Gillian Metzger (Columbia) introduces two new articles in "Designing Agency Independence" on JOTWELL. She opens with:

How do we structure an agency to be independent?  Not surprisingly, the answer to that question depends on what we want the agency to be independent from.  The traditional legal view, exemplified most recently by the Supreme Court’s decision in Free Enterprise Fund v. PCAOB, is that Congress intends independent agencies to be independent of the President and it achieves this goal primarily by imposing limiting the President’s power of removal.  Not so fast, say Rachel Barkow, Lisa Bressman, and Robert Thompson.  In two separate recent articles—one written before the Court handed down its decision and one after—these scholars argue that agency independence means both more and less than independence from the President.

"Insulating Agencies: Avoiding Capture Through Institutional Design" by Rachel E. Barkow (NYU). Abstract:

So-called independent agencies are created for a reason, and often that reason is a concern with agency capture. Agency designers hope that a more insulated agency will better protect the general public interest against interest group pressure. But the conventional approach to independent agencies in administrative law largely ignores why agencies are insulated. Instead, discussions about independent agencies in administrative law have focused on three features that have defined independent agencies: heads who are removable for cause by the President, an exemption from having to submit regulations to the President’s Office of Information and Regulatory Affairs for cost–benefit analysis, and a multimember structure.

But these traditional characteristics of an independent agency are not the only, or necessarily even the most effective, ways in which insulation from interest groups and partisan pressure can be achieved. In fact, under modern conditions of political oversight, other design elements and mechanisms are often just as important if the goal is to create an agency that is best suited to achieve a long-term public-interest mission free from capture. This is particularly true of agencies tasked with protecting the general public in the face of one-sided and intense political pressure. This kind of lopsided pressure can be seen in a range of areas, from criminal justice to consumer protection.

The goal of this Article is to move the conversation about insulation beyond the traditional hallmarks of independence and identify overlooked elements of agency design, deemed “equalizing factors,” that are particularly well-suited to addressing the problem of capture in the context of asymmetrical political pressure. The Article identifies five such equalizing factors that have received little or no attention in the legal literature on independent agencies but that are critically important for insulation against one-sided interest group dominance. The Article then compares the effectiveness of traditional and equalizing factors in the context of consumer protection, an area with the kind of one-sided interest group pressure that is a breeding ground for capture. The Article explores the relationship between the institutional design of the Consumer Product Safety Commission and its effectiveness and uses those lessons to analyze the Bureau of Consumer Financial Protection, the most significant new federal agency created in decades. This analysis of consumer protection regulatory agencies showcases both the continuing danger of capture and the critical importance of institutional design in policing it.

"The Future of Agency Independence" by Lisa Schultz Bressman & Robert B. Thompson (both Vanderbilt), 63 Vand. L. Rev. 599 (2010). Abstract:

Independent agencies have long been viewed as different from executive-branch agencies because the President lacks authority to fire their leaders for political reasons, such as failure to follow administration policy. In this Article, we identify mechanisms that make independent agencies increasingly responsive to presidential preferences. We find these mechanisms in a context where independent agencies traditionally have dominated: financial policy. In legislative proposals for securing market stability, we point to statutorily mandated collaboration on policy between the Federal Reserve Board and the Secretary of the Treasury. In administration practices for improving securities regulation, we focus on White House coordination of, and Treasury Department involvement in, the policy of the Securities and Exchange Commission. We argue that these mechanisms undermine the conventional distinction between independent agencies and executive-branch agencies. Additionally, we argue that these mechanisms, though producing presidential involvement short of plenary control, are consistent with the strategic political interests of the President. We further contend that they promote political accountability, particularly because greater presidential control is unnecessary to align agency preferences with presidential preferences; indeed, such control might be counterproductive. In making this argument, we present a nuanced vision of accountability and update the standard justifications for independence. We also consider the constitutional implications of the new independence-accountability hybrids that we see, as well as possible applications in areas where executive-branch agencies traditionally have dominated. Our claim is not that these hybrids are part of law in any of these contexts; rather, we seek to highlight institutional relationships that outstrip conventional categories but fit with the development of the administrative state. In the future, agency independence will occur not at odds with political accountability but engaged with it along a spectrum of institutional structures.

EMM

Conflicts of interest

Conflicts of interest, real or preceived, are a productive source of administrative disputes. Dean Patty Salkin (Albany) reviews a recent Oregon decision on her Law of the Land blog in "OR Appeals Court Finds Public Works Director Took Appropriate Steps to Mitigate Conflict".

Petitioner sought to have a decision annulled where the public works director who took part in the formation of a local improvement district (LID) owned property within said district. The Court stated that the interested official may have had a statutory obligation to notify the official who appointed her as to the nature of the conflict, who could then dispose of the matter giving rise to the conflict.  It was not clear whether the interested official had an actual or potential conflict, triggering her duty, but she did [orally] disclose the conflict to the city council.  However, that was beside the point, as that duty applied to the official and not the city council; what was important in this case was whether the council fulfilled their procedural duty to require disclosure and recusal.  Fulfilling their duty, the city council determined that the interested official had taken steps to mitigate the conflict because she disclosed the conflict orally at a council meeting and delegated her decision making authority to a project manager.  Also, the interested official did not receive any financial benefit from the location of the LID.  Given these facts, and that the petitioner could not point to any procedural violations concerning the LID hearing and the conflict, the court ultimately affirmed the municipality’s determination.

Sometimes there are other standards established by statute, such as the attorney's "appearance of impropriety" standards, but generally the rule for conflicts of interest is procedural — are there procedures in place that neutralize the harmful effects of a conflict. In the example above, the official disclosed her potential conflict to the city council and then mitigated any impact by delegating the decision to a subordinate. Two aspects of reality here that sometimes seem counterintuitive to clients.

First, it is next to impossible to preclude all potential conflicts of interest in government decision making. You can try to reduce potential conflicts in the hiring process, but the real world is messy and the probability that somebody in your organization will at some point have a conflict of interest approaches 100%. You will never eliminate all conflicts, so you have to live with some.

Second, when a conflict of interest exists it is impossible to eliminate all influence. Assuming everyone means well, conflicting interests may well affect decisions at a less than conscious level. In the case discussed above, the project manager to whom decision making authority was delegated probably works for the  public works director, probably knows that the public works director owns land in the proposed district, and probably want to make her boss happy. Just as we can't eliminate all conflicts, we can't eliminate all of the influence of conflicts on decisions. These are human beings, not computers.

We put procedures in place to minimize the conflicts and minimize their influence, trust that we have hired honest administrators, supervise, and hope for the best. Beyond examining compliance with procedures, the other factors arise from leadership, management skills, and attention, and are left to the political processes. EMM

Why winning on the facts is important

From the New York Public Personnel Law, a basic and general rule on judicial review of administrative decisions in "The court’s fact-review power of an administrative agency's determination is limited to whether substantial evidence supports the determination" - the title says it.

The Westchester Medical Center filed disciplinary charges against Lisa Jenkins alleging insubordination and misconduct pursuant to §75 of the Civil Service Law. The disciplinary hearing officer found Jenkins guilty of the charges and Westchester adopted the hearing officer’s findings. It then imposed the penalty of dismissal and terminated her employment as a nursing aide.

In response to Jenkin’s appeal challenging her termination, the Appellate Division said that its fact-review powers of an administrative agency determination “are limited to whether substantial evidence supports the determination" In this instance the court found that there was substantial evidence in the record to support a finding that Jenkins committed insubordination and misconduct. ...

This is the general rule, although there are some statutory exceptions in some jurisdictions. This means that an attorney cannot slack off at the agency level thinking that it can be straightened out in court. The facts are going to be as the agency finds them, so this is where the evidence battle must be fought. Nothing else appearing, relative weight of evidence for and against doesn't matter either. Is there evidence in the record that supports the agency's decision? If so, then contrary evidence doesn't help. At the agency level, you need to make sure that the evidence for your client's position is "substantial" and the evidence for other positions is not. If you are not going to be able to rely on law, then you must discredit opposing evidence as well as making your own more credible. Unless the law is in play, you need to win on the facts at the agency level. EMM

New admin law articles

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

• Coursey, Michael J. Developments during 2009 concerning the U.S. Court of International Trade's "residual" jurisdiction under 28 U.S.C. Section 1581(i). 42 Geo. J. Int'l L. 169-209 (2010). [H]|[L]|[W]
• Harker, Michael, Sebastian Peyer and Kathryn Wright. Judicial scrutiny of merger decisions in the EU, UK and Germany. 60 Int'l & Comp. L.Q. 93-124 (2011). [H]|[L]|[W]
• Klaper, Sarah. The sun peeking around the corner: Illinois' new Freedom of Information Act as a national model. 10 Conn. Pub. Int. L.J. 63-100 (2010). [H]|[L]|[W]
• Phillips, Brandon L. Note. Questioning the supremacy of the Supreme Court: Hernandez- Carrera v. Carlson and the Tenth Circuit's justification for indefinite detention under the Brand X framework. (Hernandez-Carrera v. Carlson, 547 F.3d 1237, 2008.) 96 Iowa L. Rev. 1099-1123 (2011). [H]|[L]|[W]
• Yoakum, Alexander J. Comment. Technical problem: how City of Dallas v. Dallas Morning News, LP exposed a major loophole in the Texas Public Information Act. (City of Dallas v. Dallas Morning News, LP, 281 S.W.3d 708, 2009.) 42 St. Mary's L.J. 297-336 (2010). [H]|[L]|[W]

EMM

Your editor disagrees with somebody

On the Environmental Law Prof Blog, Lincoln Davies (Utah) has posted "Yucca in the Crosshairs". He begins:

When I teach administrative law, we often start the semester with one of the primary lessons of the course:  "Everything in administrative law is political."  The same, often, can be said about energy law.  Our policy, our decisions, the directions we head on the nation's energy landscape often are driven as much by politics -- interest groups, ideology, inertia -- as they are by reason, calculus, and a careful assessment of costs.

I suggest that Prof. Davies is talking about political science rather than law. Had he said "Everything in administrative law can be political." I would have agreed. When any government in the real world, from a homeowners' association to the United Nations, makes a decision however large or small, politics can intrude.

But it often doesn't, especially at the level of involvement at which most of our alumni will be engaged. I submit that what our students need to know to practice administrative law is not policy or politics, but rather procedures, rights and responsibilities, and the impact of human behavior. Most of our alumni are not going to be involved in administrative policy. Most lawyers in the practice of administrative law, whether for or against a government, are helping their clients deal with the process and details of government decisions (rulemaking, compliance, adjudication). They aren't necessarily lobbyists.

It is certainly a career choice for lawyers in the practice of administrative law to get involved in policymaking and politics. Sometimes such involvement is thrust upon them. Then they will need to learn about "interest groups, ideology, inertia", and "reason, calculus, and a careful assessment of costs". They will probably pick it up by osmosis.

At one time in my practice years I worked for an attorney involved in changing policy in the U.S. Department of Transportation. He even organized an industry lobbying and litigation organization. But he had been General Counsel of the Federal Highway Administration, so he knew how to deal with the politics. He delegated to me the normal functions of an administrative lawyer - defending clients in enforcement actions, advising clients on compliance to preclude enforcement actions, trying to stop DoT from doing things that would hurt our clients. Did I have to learn some policies and politics? Sure. But that wasn't what I needed from law school. Before I met my first client, I needed to understand the APA, to know how to navigate the CFR, and to be able to spot when the government or my client had screwed up.

It is good for people, especially lawyers, to understand the politics and policies of government. But that's not what we have to teach in law school, because that's not what the clients of our alumni are going to need. EMM

Another reason to learn administrative law

From SCOTUSblog's "Academic round-up", May 5, 2011, by Amanda Frost:

In a forthcoming article in the University of Pennsylvania Law Review, Professor Kathryn Watts argues in favor of incorporating principles of administrative law into the Court’s case selection process.  She notes that congressional delegations of power to agencies are constrained by public participation, reason-giving, transparency, and the agency’s political accountability, but that none of these factors limit the Supreme Court when selecting cases. 

Will the Supreme Court give itself Chevron deference? EMM

New admin law articles

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

• Bell, Mark M. A pragmatic approach to judicial review of informal guidance documents. 2 Faulkner L. Rev. 77-110 (2010). [H]|[L]|[W]
• Blanchard, Kevin M. Comment. From sunshine to moonshine: how the Louisiana legislature hid the governor's records in the name of transparency. 71 La. L. Rev. 703-747 (2011). [H]|[L]|[W]
• Bollman, Ryan and Mark Andreu. Note. Jones v. Harris Associates L.P.: the search for investor protection continues.... (Jones v. Harris Assocs. L.P., 527 F.3d 627, 2008.) 65 U. Miami L. Rev. 717-749 (2011). [H]|[L]|[W]
• Spahn, Eva Merian. Note. Keep away from mouth: how the American system of food regulation is killing us. 65 U. Miami L. Rev. 669-715 (2011). [H]|[L]|[W]
• Vandenbergh, Michael P., Amanda R. Carrico and Lisa Schultz Bressman. Regulation in the behavioral era. 95 Minn. L. Rev. 715-781 (2011). [H]|[L]|[W]
• Symposium: What Change Will Come: The Obama Administration and the Future of the Administrative State. 65 U. Miami L. Rev. 321-620 (2011). [H]|[L]|[W]
  • Phillips, Carter. Keynote address. 65 U. Miami L. Rev. 321-333 (2011). [H]|[L]|[W]
  • Rose-Ackerman, Susan. Putting cost-benefit analysis in its place: rethinking regulatory review. 65 U. Miami L. Rev. 335-355 (2011). [H]|[L]|[W]
  • Rubin, Edward. Can the Obama Administration renew American regulatory policy? 65 U. Miami L. Rev. 357-393 (2011). [H]|[L]|[W]
  • Farina, Cynthia R., Mary J. Newhart, Claire Cardie, Dan Cosley and Cornell eRulemaking Initiative (CeRI). Rulemaking 2.0. 65 U. Miami L. Rev. 395-447 (2011). [H]|[L]|[W]
  • Krotoszynski, Ronald J., Jr. Transparency, accountability, and competency: an essay on the Obama administration, Google government, and the difficulties of securing effective governance. 65 U. Miami L. Rev. 449-481 (2011). [H]|[L]|[W]
  • Shane, Peter M. Empowering the collaborative citizen in the administrative state: a case study of the Federal Communications Commission. 65 U. Miami L. Rev. 483-505 (2011). [H]|[L]|[W]
  • Krent, Harold J. The private performing the public: delimiting delegations to private parties. 65 U. Miami L. Rev. 507-554 (2011). [H]|[L]|[W]
  • Levin, Ronald M. Hard look review, policy change, and Fox Television. 65 U. Miami L. Rev. 555-575 (2011). [H]|[L]|[W]
  • Shapiro, Sidney A. and Ronald F. Wright. The future of the administrative presidency: turning administrative law inside-out. 65 U. Miami L. Rev. 577-620 (2011). [H]|[L]|[W]

EMM

Rule interpretation and nondelegation

Being the faculty services librarian at an Arizona law school, I review all Arizona appellate cases for our faculty. I recently ran across an Arizona Supreme Court opinion that readers of this blog may find interesting, Gutierrez v. Industrial Commission, No. CV-10-0285-PR (April 21, 2011)(en banc). This unanimous decision opens with:

¶1 An Arizona administrative rule provides that a physician should rate an injured worker’s impairment using standards set forth in the “most recent edition” of the American Medical Association Guides to the Evaluation of Permanent Impairment (AMA Guides). Ariz. Admin. Code (A.A.C.) R20-5-113(B). We must determine whether “most recent edition” refers to the edition that was most recent when the Rule was promulgated (the Fifth Edition) or the latest edition existing when the claimant’s impairment was rated (in this case, the Sixth Edition). For the reasons set forth below, we hold that A.A.C. R20-5-113(B) refers to the edition most recently published before the claimant’s impairment is rated and that this reference does not constitute an improper delegation of legislative authority.

(Links added by the editor.) On the interpretation issue, the Court starts with straightforward reasoning.

¶6 The question presented is which edition of the AMA Guides the Rule means by its reference to the “most recent edition.” The term “most recent” is commonly understood as giving perpetual duration to a statute or rule that relies on changing facts and new developments or would otherwise require frequent updating. [Citation omitted.] This suggests that an evolving standard was intended. Indeed, if the [Industrial Commission of Arizona] had meant “most recent edition” to apply only to the Fifth Edition, it likely would simply have identified that edition by number. We therefore read A.A.C. R20-5-113(B) as referring to standards in the edition of the AMA Guides most recently published before the claimant’s impairment is rated.

The Court then adds three more long paragraphs of support. On the issue of improper delegation of legislative authority, the Court describes the Appellant's argument:

¶10 Gutierrez argues that if A.A.C. R20-5-113(B) refers to the version of the AMA Guides “most recent” when the claimant’s impairment is rated, the Rule unconstitutionally delegates authority to the AMA to set the standards physicians must use to rate impairment. He contends that although the Arizona Legislature delegated to the ICA the power to adopt rules regarding the presentation of compensation claims, see A.R.S. § 23-921(B) (1995), it could not delegate rulemaking authority to the AMA or empower the ICA to do so.

(Link added by the editor.) This argument is referring to the Article III of the Arizona Constitution, not the U.S. Constitution.

¶11 An improper delegation of legislative authority may occur when a statute (and, by implication, a rule) incorporates later-developed standards not promulgated by the Legislature or an Arizona agency. If, however, a rule does not make later-developed standards mandatory, but merely recommends their use, then such “permissive” incorporation is not improper.

(Citations omitted.) Applying this to the rule in question,

¶12 The text of A.A.C. R20-5-113(B) indicates that the use of the AMA Guides in rating impairment is discretionary. The Rule provides that, in determining a claimant’s impairment, the physician “should” use the AMA Guides “if applicable.” Use of these permissive qualifiers, particularly following use of the mandatory term “shall” in the preceding sentence, reveals that the physician is not required to apply the AMA Guides.

And so the rule is not an unconstitutional delegation of authority.

Regulation by non-governmental organizations is a hobby of mine. It seems to me to be a growth industry. The federal government no longer seems to distinguish between mandatory vice permissive use of NGO standards subject to change over time. So why is Arizona concerned with it?

The citations for ¶11 omitted above include cases from Maryland, Kentucky, and the Arizona Court of Appeals. Indus. Comm’n v. C & D Pipeline, Inc., 125 Ariz. 64, 607 P.2d 383 (App. 1979) cites to Carter Coal:

It is a well established theory that a legislature may not delegate its authority to private persons over whom the legislature has no supervision or control. In Carter v. Carter Coal Co., 298 U.S. 238, 56 S.Ct. 855, 80 L.Ed. 1160 (1935), a delegation of power to producers and miners to fix maximum hours of labor and minimum wages was struck down with the court stating:

The delegation is so clearly arbitrary and so clearly a denial of rights safeguarded by the due process clause of the Fifth Amendment, it is unnecessary more than to refer to decisions of this court which foreclose the question.

The Carter Coal quote is from 298 U.S. at 311. But let's look at the context in which that quotation occurs:

The power conferred upon the majority is, in effect, the power to regulate the affairs of an unwilling minority. This is legislative delegation in its most obnoxious form; for it is not even delegation to an official or an official body, presumptively disinterested, but to private persons whose interests may be and often are adverse to the interests of others in the same business. The record shows that the conditions of competition differ among the various localities. In some, coal dealers compete among themselves. In other localities, they also compete with the mechanical production of electrical energy and of natural gas. Some coal producers favor the code; others oppose it; and the record clearly indicates that this diversity of view arises from their conflicting and even antagonistic interests. The difference between producing coal and regulating its production is, of course, fundamental. The former is a private activity; the latter is necessarily a governmental function, since, in the very nature of things, one person may not be intrusted with the power to regulate the business of another, and especially of a competitor. And a statute which attempts to confer such power undertakes an intolerable and unconstitutional interference with personal liberty and private property. The delegation is so clearly arbitrary, and so clearly a denial of rights safeguarded by the due process clause of the Fifth Amendment, that it is unnecessary to do more than refer to decisions of this court which foreclose the question. Schechter Poultry Corp. v. United States, 295 U.S. 495, at page 537, 55 S.Ct. 837, 79 L.Ed. 1570, 97 A.L.R. 947; Eubank v. Richmond, 226 U.S. 137, 143, 33 S.Ct. 76, 57 L.Ed. 156, 42 L.R.A.(N.S.) 1123; Washington ex rel. Seattle Trust Co. v. Roberge, 278 U.S. 116, 121, 122, 49 S.Ct. 50, 73 L.Ed. 210, 86 A.L.R. 654.

This is a Lochner-era case citing other Lochner-era cases. Carter Coal was limited to its facts only three years later in Currin v. Wallace, 306 U.S. 1, 59 S.Ct. 379, 83 L.Ed. 441 (1939). The Arizona Court of Appeals was flatly wrong in C & D Pipeline, and the Supreme Court should not have used it as authority. What Carter Coal found unconstitutional was the delegation to a specific electorate of the power to make its own regulatory decisions and impose them on the regulated entities (unions and employers) that comprised that electorate. This is quite a bit different from an agency adopting a privately produced standard that it could un-adopt at any time by changing its regulations. While there are interesting arguments about the wisdom of delegation to NGOs, "mandatory or permissive" is not one of them. EMM

Why you need to go beyond statutes and regulations

U.S. LAW WEEK summarizes the Eighth Circuit's decision in Fast v. Applebee's Int'l Inc., No. 10-1725, 4/21/11, 79 U.S.L.W. 2453, in "Labor—Fair Labor Standards Act: DOL Reading of Tipped Employee Rule Upheld":

... The district court deferred to a 1988 DOL Wage and Hour Division Field Operations Handbook that interprets a department regulation, 29 C.F.R. § 531.56(e), regarding employees subject to the FLSA tip credit who sometimes perform nontipped work as part of their jobs. Section 531.56(e) ... uses the terms “part of the time” and “occasionally,” and “clearly places a temporal limit on the amount of related duties an employee can perform and still be considered to be engaged in the tip-producing operation,” the court said. The handbook states that if a tipped employee spends a “substantial amount” of time, which it defines as more than 20 percent of working hours, performing related but nontipped work, then the employer may not take the tip credit for the time the employee spends performing the nontipped duties. The department's reading of an “ambiguous” regulation is reasonable and entitled to judicial respect, the appellate court said.

You can see why it is important to know that these kinds of documents exist. When I represented truckers against the U.S. Department of Transportation, a repeated question was how they were selected for inspection. We found the algorithm described in an internal guidance document developed by one of the DoT's laboratories. I was able to decode it, with some help from the authors. Being able to explain this process, I was able to make our clients less unhappy. A third important use for such documents: They identify the agency's position on the interpretation of statutes and regulations, which is useful even when the agency is wrong. EMM

Katzen on the proposed REINS Act

On RegBlog, "Why the REINS Act is Unwise If Not Also Unconstitutional" by Sally Katzen. It opens with:

Republicans in both the House and Senate have introduced legislation that would dramatically change the way our laws are implemented. Their proposed REINS Act – an acronym for “Regulations from the Executive in Need of Scrutiny” – would require both Houses of Congress and the President to approve virtually all new major regulations, the same basic process needed to enact ordinary legislation.

Supporters view the REINS Act as a response to what they see as an out-of­-control regulatory process at federal agencies. By making agencies obtain congressional approval for rules likely to have an annual impact on the economy of more than $100 million, the bill’s sponsors claim they will improve regulatory policymaking – but in fact their bill is subject to some of the same criticisms that they make of agency regulations. That is, the REINS Act is not well considered, it is not tailored to the problem it is attempting to solve, and it will inevitably have unintended but nonetheless significant adverse effects on the economy and society at large, including fundamentally changing the constitutional structure of our government.

...

Sally Katzen ... served for eight years in the Clinton Administration, including five years as the Administrator of the Office of Information and Regulatory Affairs within the Office of Management and Budget. ... This RegBlog opinion post has been adapted with permission from testimony Ms. Katzen delivered earlier this year to the House Judiciary Committee’s Subcommittee on Courts, Commercial and Administrative Law.

EMM

 

Deference for an Era of Private Governance

New on SSRN, "Sidestepping Chevron: Reframing Agency Deference for an Era of Private Governance" by Aaron Cooper (Georgetown). Abstract:

Judicial interpretation of regulatory standards generally relies on the presumption that agencies are politically accountable and democratically “appointed” actors. As a result, courts defer to reasonable agency interpretations of ambiguous statutory language. This presumption, however, is severely outdated. The regulatory arena is replete with the privatization of regulatory decision making, which puts the current approach to agency deference in question. This Note seeks to address the changing nature of the regulatory framework by suggesting a modification of agency deference doctrine that accounts for the increasingly active role played by private parties in public governance. In proposing a new framework for agency deference in cases of private delegation, the Note explores parallels between agency deference and the non-delegation doctrine, addresses the relationship of agency deference to the separation of powers and the fragmentation of the political branches, and seeks to reinstate the judiciary as a primary expositor of statutory meaning in the private delegation context.

NOTE: the paper has been updated to reflect some revisions.

"An interesting student note." Larry Solum, Legal Theory Blog. EMM