Billman - Administrative and Regulatory State

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Administrative and Regulatory StateProfessor BillmanSpring 2005

1) INTRODUCTIONTOTHEREGULATORYADMINISTRATIVESTATE

a) Regulation: a set of rules that set up conduct by individual actors or a maret economy!

B) "#S$%R#&A'%(R(#*%+$"R#S%+R,-'A$#%.:i) $here /as regulation before the regulatory state&' is regulatory!

(1) 1odern administrative state begins in the late 3thcentury! Slo/ developmentuntil the 4epression! #nstitutionalied set of procedures 6APA) set out by the endof **##! 4eregulation during Reagan administration 6late 70s8early 30s)!

&) RAS%.S+%RR,-'A$#%.:i) #nformational ine9ualities! 6S&)!ii) Paternalism/e dont thin consumers can mae the right choices!iii) 4istribution of resources! 6$a;es< SSA)!iv) &lassic maret failure 6the 4epression)!

d) $%%'SR,-'A$%RS&A.-S:i) conomic incentives 6sometimes tradable)!

ii) &ost of service rate=maingiii) Allocation in accordance /ith a public interest standardiv) Standard=settingv) "istorically based price=setting or allocationvi) Screening or licensingvii) +ees or ta;esviii) Provision or informationix) Subsidiesx) .on=coercive efforts to produce cooperation thru moral suasion or political

incentives!

) A.#.$R%4-&$%R>?A1P'#.',#S'A$#(A.4A41#.#S$RA$#(R,-'A$#%.:%&&-PA$#%.SA+$>A.4"A'$"

i) Benzene@Industrial Union Department, AFL-CIO v. Amerian !etroleum Institute< $"R,-'A$%R>S$A$< A.4S$A$-$%R>#.$RPR$A$#%.

i) *hat is la/F(1) .atural la/: can be discovered thru natural in9uiryone divine< Platonic sort of

vie/! &': closed set of rules that the Gudge /ould thin he /ould be able todecide a ne/ case based upon reasoning from ne/ cases! Process of deductivereasoning! Kudge /ould be applying an already present la/! $his /as seen as amechanical process! Statutes seen as intrusive to this pure< &' theory!

(") 'egal realism: 9uestioned the concept of this logical deductive reasoning of thecommon la/! Kudges mae la/ all the timebe realistic about it!

(#) Purposive vie/ of la/: la/ has a purpose< instrument of e;ecution of social andeconomic policy! Statutes seen as having greater role! By the time of .e/ 4ealits clear that statute scheme /ill be center of policy enactment! Practical vie/:la/ this there to solve problems! Procedure is important: ho/ la/ is made is

almost as important as /hat la/ is made! $his establishes legitimacy of la/!ii) Speluncean ;plorers: straightfor/ard murder statute!

(1) Leen: loos at plain meaningformalist< positive la/! Kudge shouldnt bringo/n personal vie/s to the table! Rehn9uist plays this role in e*er! $ruepenny isalso about plain meaning< but he /ants the e;ecutive to grant clemency!

(") +oster: all la/s have a purpose! 'oos at legislative history! "e /ould say thatthe court must implement /hat the legislature intendedbranches need to /ortogether to mae the la/ /or! Brennan adopts this role in e*er! Problem: morethan one purpose to la/F

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(#) "andy: legal realism: loo at situation before you< loo to popular /ill!6a) 4ifference bet/een "andy and +oster: public opinion is unpredictable!

+oster thns about ho/ Gudges get legitimacy for their actions!(+) $atting: e;ecutive has po/er thru prosecutorial discretion! But this isnt ho/ to

deal /ith a tough statute!iii) &orane v. tate &arine Lines< #nc!< -SS&< 70 6BB): &' decision! ,ives history

of ho/ -SS& adopted British &'! $here /as la/ applying to the high seas and la/applying to territorial /aters! &%A P /anted to establish/rongful death! 2grounds: negligence and unsea/orthiness! 4eath on the "igh Seas Statuteenactedin 20! Allo/s /rongful death claims in non=territorial /aters! &ongress didntlegislate concerning territorial /aters! +acts: alleged inGuries occurred in +'territorial /aters! $here /as no federal claim for unsea/orthiness in territorial /aters&ongress didnt /ant to interfere /ith state statutes! +' la/: allo/ed /rongfuldeath< but not a claim based on unsea/orthiness! "arlan /ants to create uniformitycreates a remedy for unsea/orthiness under federal maritime la/ even in stateterritorial /aters! "ad sources from statutes< legislative history and arguablylegislative intentthis led him to conclude that policy of uniformity /as /orthimplementing!

(1) arris*urdecision: applied to all federal claims in territorial /aters and highseas! &ourt has to overrule! *hy change the state8federal dichotomyF Policy ofuniformity is important here! +ederal maritime policy adds a re9uirement that therules be uniform!

(") "arlan: believes in legal process theory! Arent /e changing the la/ retroactivelyagainst shipo/nersF #ts not an inGusticeoutside H mi limit he /ould have beenliable!

(#) *hat should Gudges be doing as a matter of &' and statutory interpretationF(+) ,oal uniformitysolve problems in terms of statutory interpretation! Sho/s ho/

far he goes!

B) $"',#S'A$#(PR%&SSi) ;amples of legislative history: official and unofficial statements!

(1) "o/ does the legislature /orF6a) &lassic< deliberative< republican vie/: legislators must come together and

decide /hat is good for the public! Put aside personal vie/s! $he bicameralnature and H branches are to prevent factions from ruling! $itle (## /as aproduct of factions bargaining! Scalia thins in/o0nsonthat Kohnson /asntpart of the bargaining process! #s it up to the Gudiciary to see that thedisenfranchised groups are represented by building safeguards to statutoryimplementation processF

6b) conomic< maretplace vie/: legislators are selling a productrationallyma;imiing their o/n utility in the legislative maretplace! Buyerscontribute money to reelection campaigns to buy the product from thelegislators!

6c) &an one approach to statutory interpretation 6a la Scalia) do it allFii) United teelor2ers o' Ameria v. e*er< -SS&< 7 6BB): affirmative action

agreement bet/een the union and the company! $he company agreed to reserve 50Mof positions in training program for blac employees until number is e9ual! Blacsadmitted has less seniority than /hites turned do/n! P: /hite /orer turned do/n fora spot! Brennan opinion: says theres nothing /rong /ith this! *hy isnt thisdiscrimination on basis of raceF Brennan says that one of the primary purposes of thestatute /as social concerns about lac of opportunity for blacs! 4oesnt try to hide/hats going on! $his is a retroactive leveling of the playing field! *ere /ords of the

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statute sufficiently unclear to Gustify Brennans readingF 1aybe notEeven though /emight lie the result! Rehn9uist 6dissent): this is a violation of the statuteitdiscriminates against *eber b8c he is /hite! Section 70H6G) specifically outla/s this!Brennan focuses on Dre9uire in 70H6G): could have said permit!

iii) /o0nson v. $ransportation Aen3< -SS&< 37 6BB): se; discrimination case! $hisis a different type of decision than e*er! *as gender discrimination the same type

of problem in &ongress Dmind as racial discriminationF Blacmun uses a legislativeinaction argument: invites the legislature to tell the court they /ere /rong< but theydont! Scalia dissents!

&) S$A$-$%R>#.$RPR$A$#%.:i) +actors in interpreting statutes:

(1) $e;t< 'egislative "istory< Purpose< volutionary +actors< &urrent Policiesii) out0 Corp. v. United tates< +ed &ir!< 32 6BB): early case in federal circuit! #f you

have your vessel repaired overseas you have to pay a ta; to the -S! $his maespeople have ships repaired in the -S! "o/ /ell did &ongress communicate intentFSection NCC6a): Dto engage in the foreign or coasting trade! Ps say they didnt havethe purpose to engage in foreign trade! $he ship /as documented to do so< but theydidnt intend to actually do it! Arguing about the Ior8and!J $herefore< not subGect to

tariff! Problem for Ps: there /ere e;ceptions built into the statute for /hich they didnot 9ualify! Plain meaning /as the dominant argument< but court obviously refers tolegislative history! &ant get rid of the IorJ distinction!(1) 4emonstrates plain meaning and te;tual integrity!

iii) &CI $eleommuniations Corp. v. Amerian $elep0one and $elerap0 Co.< -SS&es! 4ecree affirmed! &ongress may freely establish legislative courts toadGudicate a host of legislative functions< including ta;ation< immigration< andcommerce! $he instant case involves the adGudication of a private rightthe

liability of one individual to another! $his type of determination is usually madeby the courts established by the &onstitution! But there is a large history ofpractice and procedure< particularly in the fields of e9uity and admiraltyes! $he *agner Acts reference to evidence means Dsubstantial evidence!#ts more than a mere scintilla! #t means such relevant evidence as a reasonable mindmight accept as ade9uate to support a conclusion! #t must be sufficient to Gustifyrefusal of a directed verdict! &ongress as embraced the Iupon the record as a /holeJlanguage! $he lo/er courts must assume more responsibility for the reasonableness

and fairness of agency decision=maing than they have done! 1ust use Isubstantialevidence on the record as a /holeJ standard! "earing e;aminers findings are neitherconclusive nor should they be ignored! #t /as important to define /hat /as to beincluded in the record for revie/the hearing e;aminers findings or notF

ii) 8L7B v. Universal Camera Corp.< 2d &ir!< 5 62HO H7): Issue: &onsidering thee;aminers findings< /as this courts previous order that the employee be reinstated/rongF Holding: yes! $he .'RB should have dismissed the complaint! $he -SS&sdecision re9uires that the .'RB cannot overrule the hearing e;aminers findingsD/ithout a very substantial preponderance of the evidence as recorded!(1) But really< the -SS& doesnt say its an either=or proposition! #n concurrence! Spread burden for 1edicaidprogram! &ourt handles the case by saying that certain types of state la/s affectemployee benefit plans but must be allo/ed to operate! &ourt says that this regulationimplicates the state police po/er! .ot Gust looing at statutory languagepresumption infavor of non=preemption!

i) U8U& Li'e Insurane Co. v. ard< -SS&< : -.-1 provides plan insurancecoverage! mployer had info about disability before -.-1 did! #nsurance contract hadtime limit for notifying insurance of disability! $echnical notification is after! &A noticepreGudice rule says they have to provide benefits unless the delay caused preGudice toinsurance co 6case la/)! 4oes this fit in savings clauseF &ourt uses common sense and1c&arran=+erguson 6doesnt re9uire all H prongs to be satisfied)! &ourt allo/s state la/to operate! Also has agency claim< even if there /as preGudice!

G) 7us0 !rudential &O, In. v. &oran< -SS&< 2002: #' la/ /ith third party evaluation of"1%s decisions! 1oran hurt shoulder< "1% didnt /ant to provide treatment! Absentstate statute< standard of revie/ is arbitrary and capricious! $homas points out that .%$using the state la/ /ill get employees benefits that they need! &ourt introduces conceptthat state could have a la/ regulating insurance that /ould still be preempted due to thepervasive nature of the la/ and its conflicts /ith congressional intent! &ourt finds thatsavings applies< dissent thins that preemption applies!

) Aetna v. Davila< -SS&< 200N: P denied (io;; under plantoo other medication thatmade him sic! State &%A couched in tort language of fiduciary duty! &ourt uses

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traditional tools of statutory interpretation! #s this non=monetary remedies or does itinclude damages for hospital stayF State is /aling on 502 territory! State la/ relates toemployee benefit plansdoes not regulate insurance! &ourt holds that state la/ ispreempted!

l) Bla2 and De2er Disa*ilit3 !lan v. 8ord< 200H: not directly a preemption case! Raisesrelated R#SA regulatory state type of issues! P has bac problem< applies for disability

under R#SA! Battle of e;perts< company decides P can /or /8o medication! "o/should /e treat e;pertsF Person seeing to overturn treating presumption has to havesubstantial evidence on the record! &ourt of Appeals applies this presumption< sinceR#SA conte;t is similar! &ourt has problem: is this the same as Social SecurityF .opolicy to Gustify Social Security rule for R#SA! $hin about C0evrondeference in thiscase&ongress is silent! #s this reasonable as a policy decisionF &ourt is frustrated bylac of specificity in 502!

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Billman - Administrative and Regulatory State