Administrative Law Case Analysis


Administrative Law Cases

SEC v. Chenery Corp

Bell Aerospace Co. v. NLRB

NLRB v. Bell Aerospace

Bowen v. Georgetown Hospital (1988)

Clark-Cowlitz v. FERC (1987)

Heckler v. Campbell (1983)

United Church of Christ v. FCC (1966)

Heckler v. Chaney (1985)

Farmworker Justice Fund v. Brock (1987)

Scope of Judicial Review of Administrative Action

Penasquitos Village v. NLRB (1977)

NLRB v. Curtin Matheson Scientific, Inc.

Judicial Review of Agency Determination of Facts

O'Leary v. Brown-Pacific Maxon (1951)

NLRB v. Hearst Publications (1944)

Read for the week of Oct 13

SEC v. Chenery Corp. (1947)

A major pre-APA case that deals with the issue of rule making prior to adjudication. The majority opinion in Chenery II overturned Frankfurter's opinion in Chenery I and showed extreme deference to the administrative process

Be sure to cover Chenery I and note the reasons for Frankfurter's overturn of the SEC decision. Why didn't the Court on the second goaround reject the SEC's new reasoning in support of its decision to apply an entirely new standard to the Chenery case?

What is the real issue here as Justice Jackson notes in his vehement dissent? He shows real passion. How do you feel about an administrative agency imposing a new standard without having held any rule making proceedings at all that takes your property, in this case the preferred stock of the directors?

Bell Aerospace Co. v. NLRB (1973)

Question: Are buyers managerial employees within the meaning of the National Labor Relaions Act and threfore outside of the required collective bargaining process?

The NLRB says no and therefore buyers are entitled to unionize.

But this decision reversed a long standing NLRB "policy." The court held that rule making is required here, ironically quoting Chenery II: "The function of filling in the interstices of the Act" should be performed, as much as possible, through this quasi-legislative promulgation of rules to be applied in the future." Of course Chenery did not require rule-making and unheld adjudication for setting policy in that case.

Note why the court found rulemaking to be essential to fairness in this case, and its distinctions between the rulemaking and adjudicative processes.

The case was appealed to the Supreme Court in:

National Labor Relations Board v. Bell Aerospace Co. (1974), p.427.

The Supreme Court reversed the appellate court's decision, holding that the agency determines the choice of procedure because of its expertise and experience, citing Chenery II correctly. Appellate courts must defer to the reasonable judgment of agencies in this area.

Particularly note the Court's conclusion that while rulemaking would "provide the Board with a forum for soliciting the informed views of those affected in industry and labor before embarking on a new course,...surely the Board has discretion to decide that the adjudicative procedures in this case may also produce the relevant information necessary to mature and fair consideration of the issues."

In conjunction with Chenery the Bell Aerospace opinion gives agencies complete discretion to choose between rulemaking and adjudication in carrying out regulatory policies.

Students should ask themselves when is rulemaking more approprite than adjudication, applying the Londoner v Denver and BiMetallic v Colorado analysis. Note clear congressional standards (rare) would make adjudication feasible where adjudicative facts and a small number of parties are involved. But adjudication may also be necessary to help the agencies define unclear policies provided adjudicative facts are involved.

Rule making on the other hand inquires into and accepts legislative facts to define policies. These facts are not derivative from specific named parties or limited to them. The record is "informal" and agencies must only take into account the comments received through sec. 553 notice and comment procedures.

Bowen v Georgetown Hospital(1988)

HHS cannot engage in retroactive rulemaking although Congress could alter the reimbursement formula and recoup past costs. Compare Chenery and Justice Jackson's vehement dissent which seems to agree with the court here in another context. Fairness requires that rules be announced before they are applied. Of course in Chenery the Court avoided this problem by viewing the administrative action as one applying congressional standards of fairness and equity.

Note Justice Scalia's formalistic concurrence here in Bowen where he points out that a retroactive "rule" is simply not a "rule" under the APA which defines rules as statements having future effect.

,Clark-Cowlitz v FERC (1987)

Judicial deference to administrative expertise similar to Chenery seems to characterise the court's opinion here. The court allows what amounts to a mid-stream policy change on the issue of whether or not challengers to incumbent licensees should be given preference all other things being equal. The statute requires only that preference be given to states and municipalities in applications for power licenses but does not textually mention licensing renewal proceedings.

What happened in this case? The ALJ had awarded the license to Clark-Cowlitz on the basis in part of the agency's City of Bountiful (Don't you like the name? Kind of like the "Our Fair City" appellation of the WBUR car talk hosted by the Magliozzi brothers decision treating renewal licensing proceedings on a par with original proceedings. Now along comes the "agency" and overturns the ALJ with the statement that it's prior Bountiful policy is no longer in effect because it is contrary to congressional intent.

The court held that the agency's revised interpretation of the municipal preference provision was reasonable in light of what became an ambigious statute after congress eliminated the municipal preference during the proceedings. This even though congress exempted the proceedings involving the Clark-Cowlitz challenge from the amended provision. Congress intended in its changed law to award licensees to the best qualified applicants and the agency in effect carried this out. Cf. Chevron.

Heckler v. Campbell ( 1983) p.453.

Previous cases involved challenges to agency failure to engage in rulemaking before taking action, or inadequate notice of proposed rulemaking.

Now we confront complaints about too much rulemaking that preempts the ability of individual parties to present their adjudicative facts. That is agency rulemaking defines what the parties believe to be facts that should more appropriately be left to an individual hearing process.

Agencies use rulemaking to define facts that per se constitute legal violations to increase their efficiency and prevent endless hearings in the regulatory process.This method stresses efficiency over fairness, the public over private interest. Agencies find these generalized facts through notice and comment rulemking or some variation of more formal hearings. FTC trade practice conference rules are a good example of this process in operation where the agency has defined per se restraints of trade in violation of the Federal Trade Commission Act.

The issue in the Heckler case is how best to define the statutory term "disability," thereby triggering government payments under the law. To increase efficiency HHS promulgated regulations under APA #553 notice and comment rulemaking the defined generic disabilities under the law, preempting individuals from introducing evidence in support of their particular circumstances to obtain payments. At the same time the rules did recognize severe impairments and defined them as per se disabilities under the law.

Can you apply the Londoner v Denver/Bi-metallic theoretical framework to work through this case? Can disabilities be defined as they were here, which took into account the availability of a range of jobs and claimants qualifications to do them? Can this be defined in advance without taking into account the particular circumstances of the claimants?

Physical ability, age, education, and work experience were the predefined facts relating to the individual. Data concerning the availability of different types of jobs in the national economy defined in conjunction with the definitions of disabilities whether or not an individual could work.

Characteristically the appellate court ruled in favor of the claimant, holding that "the claimant is deprived of any real chance to present evidence showing that she cannot in fact perform the types of jobs that are administratively noticed by the guidelines." The Secretary also must introduce evidence that specific alternative jobs actually existed for the claimant.

The Supreme Court deferred to the agency, finding that the agency did promulgate valid regulations. The Court "has recognized that even where an agency's enabling statute expressly requires it to hold a hearing, the agency may rely on its rulemaking authority to determine issues that do not require case-by-case consideration."

Office of Communication of United Church of Christ v. FCC (1966) p. 465.

A paradigmatic late 1960s case that reflects the times in several ways.

First, the civil rights movement was at its peak . The appellants listed themselves as members of the UCC and also as television viewers within the station's viewing area who were leaders in Mississippi civic and civil rights (NAACP) groups. They claimed intervenor status to participate in the station's license renewal proceedings. Intervenor status is not equivalent to standing in court but is similar to it being essentially a claim for standing before an administrative agency similar to an amicus curiae intervenor before a court.

Second, the case reflected not only the politicization of the civil rights movement but also the times' political emphasis on participation in government and a growing suspicion of bureaucracy. .

What's the big deal here? Why shouldn't those requesting intervenor status be allowed to participate in administrative proceedings? Refer yet again to the Londoner/BiMetallic distinction essentially between adjudicative and legislative facts and the need to determine them for fairness, accuracy, and the efficient formulation and implementation of the public interest. Administrative proceedings should be limited to those directly affected and able to contribute to the desired outcome.

Congress in the Federal Communications Act requires the FCC to carry out the public interest, convenience, and necessity in the allocation of broadcasting licenses. Congress establishes formal proceedings to award licenses. Generally licensing proceedings are conducted under ##554, 556, 557, and 558 of the APA.

The APA, and the Federal Communications ACT, do not define who may participate in licensing proceedings beyond those immediately and directly affected, i.e., parties seeking licenses and licensees and challengers in renewal proceedings.

The court overruled the FCC's denial of intervenor status, finding that "legitimate" listener representatives should be heard by the agency because of its evident failure to do so in this and prior license renewal proceedings for the Mississippi station. It appeared as if the agency had ignored repeated complaints about the racist slant of the station.

Heckler v Chaney (1985) p. 477.

This case is again another twist on the typical administrative law case that challenges agency action, not inaction . Here prisoners on death row challenge the failure of the FDA to act to prevent drugs used for lethal injections from being used on the ground that the drugs had not been approved for such a purpose by the agency.

The agency had denied the request because the case did not present a serious danger to the public health or "a blatant scheme to defraud." (p. 478)

After the district court granted summary judgment for the agency the circuit court overruled, holding that the agency's failure to accept jurisdiction was reviewable. It then found that prior agency actions required it to act in this case to fulfill it statutory responsibilities.

The Supreme Court unanimously reversed. A non-enforcement decision is committed to agency discretion and nonreviewable absent a clear statutory intent to the contrary. This reverses the presumption of reviewability in cases challenging agency actions ( as opposed to inactions).

Note Brennan's concurrence and the conditions under which he would review an agency's failure to act.

Judicial review of agency failure to enforce puts judges in the position of defining policy and the faithful execution of the laws, clearly not a judicial function. The courts cannot clarify vague statutes. Their job is to apply the law to adjudicative facts, not to make or enforce law. Brennan's conditions would give the courts an appropriate role because they would be acting in line with traditional judicial roles, i.e. reviewing: (l) agency failure to act solely on the belief that it had no jurisdiction; (2) failure to enforce clear statutory language or rules; (3) nonenforcement that violates constitutional rights; (4) nonenforcement due to bribery or other clearly illegal reasons.

Farmworker Justice Fund v Brock (1987 ) p.488.

Where Congress clearly mandates administrative action the issue of reviewability is far clearer than in cases of discretionary enforcement. But it is rare for Congress to require particular administrative actions.

Here the Framworker Justice Fund sought to use the appellate court to compel the Secretary of Labor to promulgate rules for field sanitation for agricultural workers. The migrant farmworkers had sought the rules for a period of 14+ years and failed.

The statute established general guidelines for occupational health and safety and delegated authority to the Secretary of Labor to carry them out after certain administrative procedures were completed. The clear intent of the law was to protect all workers including farmworkers from occupational health and safety hazards.

OSHA (within the Labor Department) had failed to act over a long period of time but finally gave notice of proposed rulemaking for fieldworkers in 1976 under the Ford Administration. This was in response to earlier court action ordering the Secretary to proceed to promulgating rules in accordance with the recommendation of the Standards Advisory Committee on Agriculture. The statute textually requires the Secretary to give notice of a proposed rule within 60 days of the advisory committee's recommentation.

Nothing happens and the footdragging goes on into the Reagan administration which has now shifted focus to the states by stressing that states should wherever possible be the principal instrumentalities of government. Too much federal government is the problem said Reagan not the cure.

Reagan's Secretary of Agriculture, Brock, refuses to initiate rulemaking proceedings on the ground that the states would be preferable to the federal government in regulating field sanitation.

The court holds that Brock's political and policy preferences contradict clear congressional intent that the federal government should take the lead in occupational health and safety policy and implementation. It orders the Secretary to promulgate rules within 30 days, relying on the APA #706 that directs reviewing courts to "compel agency action unlawfully withheld or unreasonably delayed." The Secretary's reasons for delaying cannot be sustained therefore ipso facto he has acted unreasonably.

Note the length of time it took for the Justice Fund to get justice, 12 years. OSHA's duty to act is acknowledged by the district court in 1975, by the appeals court in 1977. Ten years later after two more actions before the circuit court the standards appear.

state of Iowa ex rel Miller v Block (1985) State Of Iowa ex rel Miller v Block (1985) p.499

Congress provides that the Secretary may make disaster payments. A Senate report on the bill expressed legislative intent by providing conditions, not inclusive, that should trigger relief payments. The Secretary does nothing. The court finds for judicial review of agency inaction presumeably because of the Secretary's failure to follow clear statutory intent.

The Secretary "has deliberately taken no steps to implement proper procedures to protect applicants from potential abuses of discretion under the statute." The court cannot order the Secretary to make payments but "it is the clear duty of the Secretary to promulgate regulations which carry out the intent of Congress." What do you think those regulations should be?

Jean v Nelson (1985) p. 501

The Supreme Court requires notice and comment rulemaking before the INS can detain Haitian immigrants. De facto the INS had reversed a longstanding practice that in effect constituted a "policy" against mass detention which had occurred in this case without following the required APA #553 notice and comment rulemaking procedures.

Importantly the court found that the detention violated the equal protection requirements of the due process clause of the 5th Amendment. The agency had intentionally discriminated again the Haitians as a class.

For the week of Oct 27

1. Scope of Review of Administrative Action

First review #706 of the APA which directs reviewing courts to:

Compel agency action unlawfully withheld or unreasonably delayed.

Hold unlawful agency action found to be:

a. arbitrary, capricious, an abuse of discretion;

b. unconstitutional;

c. ultra vires the statute;

d. without observance of procedure required by law;

e. unsupported by substantial evidence in formal proceedings required by law ( statute and APA);

f. unwarranted by facts where the facts are subject to de novo court review.

Upcoming cases define what these statutory terms mean.

Universal Camera v NLRB (1951)

Courts must apply the substantial evidence rule in formal proceedings to the "whole record" which includes ALJ findings. Previously courts simply reviewed agency findings in isolation from those of the hearing officers to determine if substantial evidence supported the decision.

Why should courts take into account the ALJ's findings and opinion? Essentially because "the one who hears must decide," an old rule of thumb in law, is important where demeanor evidence is critical to the accuracy determination of the facts. For example in the case of Penasquitos Village, Inc. v. NLRB (1977). (p.529)

Under the National Labor Relations Act employers cannot dismiss employess for union activities such action being defined as an unfair labor practice. Note the apparent NLRB bias in this case favoring the employees who naturally claimed their dismissal was due to their activities as union organizers. But the facts appeared to support the conclusion that they were indeed "loafers."

The board "inferred" from the timing of the dismissal that antiunion animus was the culprit because the disciplinary action came shortly after the employees union organizing activites came to light. But the ALJ supported the credbility of the employer over the employees presumably based upon "demeanor evidence," and a past employee record of lying.

Now here is the important point for students to keep in mind with regard to this and later cases of judicial review after Universal Camera. Courts defer to administrative experience and expertise where case outcomes hinge on policy considerations; but where the case depends on witness credibility the burden of proof is on the agency when it overrules an ALJ.

NLRB v. Curtin Matheson Scientific, Inc.

Here is another unfair labor practice case. The Act requires employers to bargain in good faith with unions, provided they have the support of a majority of the employees. Under such circumstances the union is the exclusive bargaining agent for the employees.

Well in this case after the employer took a hard line with a striking union the union agreed to return to work, accepting the employer's last offer. Too late! The employer had already hired replacement workers in sufficient numbers to call into doubt whether upon return the the union would continue to have majority support. The outcome hinged on whether or not in fact the replacement workers supported or would support the union in the same ratio as the regular employees. This presumption would support the continuance of the union which previously had majority backing.

Is this a question of adjudicative or legislative facts? Clearly the fact of replacement worker support or otherwise for the union would have to be gotten if not by testimony at least by come sort of certifiable polling. One cannot simply presume such support or nonsupport.

Note in the text of the case at pp. 532-533 the NLRB went back and forth over the years on if and how the presumption should be made, at one point deciding to determine the issue on a case by case basis (p. 532).

Why would the board presume rather than make findings of fact in individual cases? Because the presumption saves time but more importantly supports a policy objective of labor-management peace. The Supreme Court helped the board out in the Fall River case (p. 536) by noting that the prounion presumption furthers the Act's purpose of achieving industrial peace.

Back to the present case where the NLRB refused to apply any presumption about these workers' attitudes by finding sufficient evidence to rebut the employer's presumption that the replacement workers opposed the union. The result was to continue the general presumption that the union retained majority status. In other words if the attitudes of replacement workers are in effect neutralized as a factor in determining union status the presumption will continue to be that the union retains majority support.

The fifth circuit court reversed and held that the Board should adopt the widely accepted presumption that replacement workers opposed the union.

The Supreme Court found for the agency on the basis of deference to the experience and expertise of the NLRB, and on the finding that the Board acted reasonably. (cf. Chevron v NRDC).

In steps Justice Scalia in dissent, joined by Justice Sandra Day O'Connor and Justice Kennedy. This is formal adjudication states Scalia,and therefore the substantial evidence rule applies under the terms of the APA. A presumption is not substantial evidence. What is in essence a legislative fact cannot be substituted for the accurate determination of an adjudicative fact, that is do these replacement workers support the union and if so in what proportion?

Judicial Review of Agency Determinations of the Facts, Just the Facts

O'Leary v Brown-Pacific Maxon (1951 (p.555)

A classic if sad case. No dispute over the facts here. A courageous employee of a government contractor on Guam drowned while trying along with others to rescue two men yelling help in dangerous and forbidden waters so marked by a sign.

The administrator under the Longshoremen's and Harbor Workers' Compensation Act of 1927 awarded the deceased's dependent mother $9.38 per week under the Act's stipulation authorizing payments for "accidential injury or death arising out of and in the course of employment."

On appeal the district court upheld the award but the Ninth Circuit reversed on the ground that the award failed to conform to common law rules. The incident clearly did not in common law terms arise out of or in the course of employment. No common law court would sustain the award because of the definition of what constitutes "employment."

Well should the administrator be bound by the common law? Of course not says Frankfurter, deference is due the administrator who finds as a fact or a matter of law (it's not clear which it is) that the drowning did occur in the course of employment.

Note at this point that workmen's compensation statutes were passed to circumvent the common law courts which were considered too strict in awarding compensation.

The opinions discuss Universal Camera. Frankfurter avoids the enlarged scope of review that Camera requires by essentially stating that the record is so slim in this case there isn't much to review, and since the Act doesn't preclude the Deputy Administrator from making the award let's end the litigation here and now.

The dissenters are correct though aren't they?

NLRB v. Hearst Publications (1944) (p.557)

LA dailies refused to bargain with a union representing newsboys and probably a few newsgirls. The publishers argued that the newsboys were not employees within the meaning of the Act.

Formal proceedings were initiated by the NLRB and the Board made findings of fact that the newsboys were employees within the meaning of the statute.

Enter again the common law question as the respondents argued that the newsboys were not common law employees.

What would you hold at this point! It's obvious isn't it? Statutory law replaces common law, it is not governed by it. Note however we are dealing here with definitions of statutory terms that Congress has not clarified.

How does the court deal with this issue? "Congress...sought to find a broad solution..." to the problem of achieving industrial peace, a peace it should be pointed out that the common law did not achieve.

Bottom line, once again the court defers to agency experience and expertise in defining statutory terms, of course allowing the agency to be flexible. The common law cannot cast a shadow over Congress and the agencies that binds them to the past.

What does this case say about the scope of judicial review? How is the court to review the "whole record" ? Note this case predates Universal Camera. Does review really have any meaning outside of the semantics? Where Congress is unclear isn't the agency virtually free to do as it chooses absent close judicial scrutiny of the law and facts? And what is there to be scrutinized if Congress is unclear? Here the court found that the board considered the right factors and properly construed the Act. The NLRB acted "reasonsbly."

Justice Roberts dissent upholds a more meaningful judicial review. Nothing in language, law, history and customs supports defining newsboys as employees. "Congress did not delegate to the NLRB the function of defining the relationship of employment so as to promote what the Board understood to be the underlying purpose of the statute."