Chapter 6 Administrative Law

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning

Chapter 6 Administrative Law

Its Legal, Ethical, and Global Environment

MARIANNE M. JENNINGS

7th Ed.

2 Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning

• Non-legislative/Non-judicial Body.– Exist at every level of government.– They make, interpret, and enforce

regulations.– Legislatures pass enabling acts.

• Sets up basic law, purpose, penalties.

• Sets up administrative agencies to handle the enforcement.

What are Administrative What are Administrative Agencies?Agencies?


• Examples of federal administrative agencies.– Department of Agriculture.– Department of the Interior.– Federal Maritime Commission.– Veterans Administration.

What are Administrative What are Administrative Agencies?Agencies?


Role of Administrative Role of Administrative AgenciesAgencies

• Protect Small Interests and Small Business– Examples: Corrective advertising, consumer

complaints.• Provide for More Rapid Enforcement and Relief.

– Do not have to use court system for enforcement.– Licensing and permits can be done quickly.

• Achieve Social Goals.– Examples: Environmental Protection Agency;

Federal Home Loan Bank Board; Resolution Trust Corporation


• Specialization. – Needed to deal with complexities of

legislation.– Agencies can hire the necessary

expertise.• Examples: Environmental, occupational

safety, nuclear, securities—regulation in these areas requires special expertise.

Role of Administrative Role of Administrative AgenciesAgencies


Laws Governing Laws Governing Administrative AgenciesAdministrative Agencies

• Administrative Procedures Act (APA).– Established uniform procedures for

agencies to follow in promulgating rules.

– Other acts have separate names but are amendments to the APA.


• Freedom of Information Act (FOIA).– APA amendment passed in 1966.– Purpose was to allow public access to agency

records.– Types of information required to be published.

• Location of offices.• Names of responsible individuals.• Rules and regulations.• Reports.• Policy statements.



• Freedom of Information Act (FOIA).– Types of information not published.

• Hearing orders.• Non-published interpretations.• Personnel policies and procedures.



• Freedom of Information Act (FOIA).– Unpublished information can be

obtained through an FOIA request. • Must be written.• Must describe the information and/or

documents sought.• Agency can charge for time and copy costs.



• Freedom of Information Act (FOIA).– Wrongful refusal to supply information

allows requester to bring suit and obtain court order for release as well as recovering cost.

Laws Governing Laws Governing AdministrativeAdministrative Agencies Agencies



• Freedom of Information Act (FOIA).– Exemptions from disclosure:

National defense or foreign policy matter

Internal personnel rules of the agency

Statutorily protected information

Trade secrets Inter- and intra-agency

memos

Personnel and medical files

Records of investigations

Banking audits Geological

information on well sites



• Federal Privacy Act.– Passed in 1974 as an APA amendment .

– Intended to cut down on the pervasive and

casual exchange of information about individuals between and among agencies.

– Agencies cannot obtain individuals’ records from other agencies without the consent of that person.


• Government in Sunshine Act.– Open meeting law passed in 1976.

• Federal Register Act.– Authorizes a formal record of agency actions

called the Federal Register.• Regulatory Flexibility Act.

– Requires publication of proposed rulemaking in trade publications.



Functions of Administrative Functions of Administrative AgenciesAgencies

• Promulgating Regulations—Business Input:– Formal rulemaking.

• Congress passes Enabling Act.• Agency researches a problem. • Proposed regulations. • Public comment period. • Action on rules is taken. • Challenges to adopted agency rules.


• Case 6.1 U.S. v. Sun Diamond Growers of California (1999). – Defendant charged with making illegal

gifts to then Secretary of Agriculture Mike Espy.

– Defendant was convicted and appealed.– Held: Reversed. There must be a link

between the gift and some official act.



• Proactive Business Strategies in Regulation:– Sunset laws.

• Agency created for a limited time.• Must justify its existence within that time.

– Zero-base budgeting.• Ongoing budget for agency is not assumed.• Must justify its budget each year.




• Case 6.2 Motor Vehicles Manufacturers Association v. State Farm Mutual Insurance Co. (1983).– What was done with the regulation to result in

this Judicial decision?• Case 6.3 Corn Products v. Dept. of

H.E.W. and F.D.A. (1970)– What are federal standards for peanut butter?



• Case 6.4 San Diego Air Sports Center, Inc. v. Federal Aviation Administration (1989).

• Was the letter an attempt to promulgate regulation?

• Case 6.5 Rubin v. Coors Brewing Company (1995).

• To survive a First Amendment challenge, what must a regulation of commercial speech accomplish?


Enforcement ActionsEnforcement Actions


Enforcement ActionsEnforcement Actions• Licensing and Inspection.

– Enforcement and Inspection.• Up-front approval.• Some checks imposed.

– Enforcement by inspection.• Health Code violation, Occupational Safety

and Health Administration (OSHA) safety inspections.


• Prosecution of Business.– Enforcement by prosecution.

• Complaint is filed.• Injunction can be obtained for this period.

– Consent decree.• Like a plea bargain in a criminal case.• Like a nolo contendere plea in a criminal

case.

Enforcement ActionsEnforcement Actions


Enforcement ActionsEnforcement Actions• Prosecution of Business.

– Penalties:• Fines.• Injunctions.• Repayment to buyers.• Corrective advertising.


Enforcement ActionsEnforcement Actions• Prosecution of Business.

– Can go to hearing without an agreements.• Administrative law judge (ALJ) hears the case.• ALJ is like a judge at trial.• Intervenors can appear in the case.• Rules of evidence are relaxed.• Must allow for due process . • Exhaust administrative authority before appeal.


Enforcement ActionsEnforcement Actions• Prosecution and Business.

– Go to court of appeals.• Appeals of decisions go to agency heads

exhausting administrative authority (unless it would be futile) before court or appeals will consider.

• State court appeals also go to court of appeals; however, some states require new trail in state trial court.


Administrative Agencies in Administrative Agencies in the International Marketthe International Market

• The United States is Heavily Regulated.– Some businesses have argued that

regulations hinders them in the international marketplace.

Documents

Chapter 6 Administrative Law