Administrative Law and Procedure
| Author | Jeffrey Lehman, Shirelle Phelps |
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Administrative law is the body of law that allows for the creation of public regulatory agencies and contains all of the statutes, judicial decisions, and regulations that govern them. It is created by administrative agencies to implement their powers and duties in the form of rules, regulations, orders, and decisions. Administrative procedure constitutes the methods and processes before administrative agencies, as distinguished from judicial procedure, which applies to courts.
The Administrative Procedure Act (5U.S.C.A. §§ 551?706 [Supp. 1993]) governs the practice and proceedings before federal administrative agencies. The procedural rules and regulations of most federal agencies are set forth in the CODE OF FEDERAL REGULATIONS (CFR).
The fundamental challenge of administrative law is in designing a system of checks that will minimize the risks of bureaucratic arbitrariness and overreaching, while preserving for the agencies the flexibility that they need in order to act effectively. Administrative law thus seeks to limit the powers and actions of agencies and to fix their place in our scheme of government and law. It contrasts with traditional notions that the three branches of the U.S. government must be kept separate, that they must not delegate their responsibilities to bureaucrats, and that the formalities of due process must be observed.
The U.S. Constitution establishes a three-part system of government consisting of the Legislative Branch, which makes the laws, the EXECUTIVE BRANCH, which carries out or enforces the laws, and the Judicial Branch, which interprets the laws. This system of checks and balances is designed to keep any one branch from exercising too much power. Administrative agencies do not fit neatly into any of the three branches. They are frequently created by the legislature and are sometimes placed in the Executive Branch, but their functions reach into all three areas of government.
For example, the SECURITIES AND EXCHANGE COMMISSION (SEC) administers laws governing the registration, offering, and sale of SECURITIES, like stocks and bonds. The SEC formulates laws like a legislature by writing rules that spell out what disclosures must be made in a prospectus that describes shares of stock that will be offered for sale. The SEC enforces its rules in the way that the Executive Branch of government does, by prosecuting violators.
The Securities and Exchange Commission administers laws governing the actions of these traders on the floor of the New York Stock Exchange. The SEC is an independent agency that enforces its rules without need for approval from Congress or the executive branch of the government.
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It can bring disciplinary actions against broker-dealers, or it can issue stop orders against corporate issuers of securities. The SEC acts as judge and jury when it conducts adjudicatory hearings to determine violations or to prescribe punishment. Although SEC commissioners are appointed by the president subject to the approval of the Senate, the SEC is an independent agency. It is not part of Congress, nor is it part of any executive department.
Combining the three functions of government allows an agency to tackle a problem and to get the job done most efficiently, but this combination has not been accepted without a struggle. Some observers have taken the position that the basic structure of the administrative law system is an unconstitutional violation of the principle of the SEPARATION OF POWERS.
The first issue that is encountered in the study of administrative law concerns the way in which Congress can effectively delegate its legislative power to an ADMINISTRATIVE AGENCY. Article I, Section I, of the U.S. Constitution provides that all legislative power is vested in Congress. Despite early resistance, the U.S. Supreme Court gradually accepted the delegation of legislative authority so long as Congress sets clear standards for the administration of the duties in order to limit the scope of agency discretion. With this basic principle as their guide, courts have invalidated laws that grant too much legislative power to an administrative agency. President FRANKLIN D. ROOSEVELT learned just how far the Court would go in allowing the delegation of authority, in two cases that stemmed from his administrative-agency actions to support his NEW DEAL program.
The NATIONAL INDUSTRIAL RECOVERY ACT (15 U.S.C.A. § 701 et seq., 40 U.S.C.A. § 401 et seq. [1933]) authorized the president to prohibit interstate shipments of oil that had been produced in violation of state board rules that attempted to regulate crude-oil production to match consumer demand. The Panama Refining Company sued to prevent federal officials from enforcing the prohibition, known as the "hot oil" law (Panama Refining Co. v. Ryan, 293 U.S. 388, 55 S. Ct. 241, 79 L. Ed. 446 [1935]). The U.S. Supreme Court found the law to be unconstitutional. Congress could have passed a law prohibiting interstate shipments of hot oil, but it did not do so; instead, it gave that power to the president. This has been called a case of delegation run amok because the law had no clear standards defining when and how the president should use the authority that the statute delegated to him.
Four months later, the Court invalidated a criminal prosecution for violation of the Live Poultry Code, an unfair-competition law that President Franklin D. Roosevelt had signed in 1934 pursuant to another section of the National Industrial Recovery Act. This was the case of SCHECHTER POULTRY CORP. V. UNITED STATES, 295 U.S. 495, 55 S. Ct. 837, 79 L. Ed. 1570 (1935). The problem in this case was not that the delegation of authority was ill-defined, but that it seemed limitless. The president was given the authority to "formulate codes of fair competition" for any industry if these codes would "tend to effectuate the policy" of the law. Comprehensive codes were created, establishing an elaborate regulation of prices, minimum wages, and maximum hours for different kinds of businesses. But there were no procedural safeguards from arbitrariness or abuses by enforcement agencies. Someone who was charged with a violation was not given the right to notice of the charges, the right to be heard at an agency hearing, or the right to challenge the agency's determination in a lawsuit. The Court struck this law down, stating that the unfair procedures helped strong industrial groups to use these codes to improve their commercial advantage over small producers.
As a result of Panama Refining and Schechter Poultry, when Congress delegates authority to agencies, it also sets out important provisions detailing procedures that protect against ARBITRARY administrative actions.
The Fifth and Fourteenth Amendments guarantee that the federal government and the state governments, respectively, will not deprive a person of his or her life, liberty, or property without DUE PROCESS OF LAW. An administrative agency thus may not deprive anyone of life, liberty, or property without a reasonable opportunity, appropriate under the circumstances, to...
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