2 Ways Agencies Are Created

1) Congressional Enabling Statute 

2) Presidential Executive Order (very rare, often backed by statute later)

Extra-constitutional; meaning that while the subject of regulatory agencies is not explicit in the Constitution, SCOTUS has long held that Congress has authority to create agencies, subject to fairly minimal constraints.

Agencies must comport with general constitutional principles anyways.

Agencies are often seen as possessing institutional competence - or expertise - for solving the complex problems that confront modern society.

Agencies have the time, specific knowledge, and systems and procedures required to effectively regulate.

In addition to certain constraints imposed by the Due Process Clause, agencies are subject to procedural requirements imposed by statute.

Most significantly, the Administrative Procedure Act provides default procedures for agencies to use for making law and policy, as well as the standards that courts apply when reviewing such action. At a general level, teh APA helps to ensure that agency decisions comport with the rule of law - that they are fair and deliberative.

1) FORMAL

2) INFORMAL

Formal action requires an agency to conduct a trial-type hearing and it can result in an order resolving a dispute between two parties, which is called formal adjudication, or a rule with future effect and general application, called formal rulemaking.

Agencies rarely engage in formal rulemaking, but often engage in formal adjudication.

Informal action does not require agencies to hold trial-type hearings. For so-called notice-and-comment rulemaking, agencies rely on written submissions from interested parties.

The APA prescribes virtually no procedures for informal adjudication.

Agencies are accountable indirectly to the people through the President, who supervises their activity.

The President can be held responsible at the polls for unpopular agency decisions, affording electoral accountability. In addition, the President can engraft his preferences on agency decisions, affording a form of democratic accountability that some say is superiour even to Congress's. The President is the one official elected by and therefore representative of a national constituency.

Total Presidential Control (serve at President's pleasure)

Executive-branch agencies appear under the President in the government organizational chart and are run by officials who can be fired at will by the President.

Each "Department" headed by a "Secretary"; Subdivisions of Departments, such as the FDA within the Department of Health and Human Services; Environmental Protection Agency.

Some Presidential control (removable only for good cause)

Their heads serve fixed terms that expire in staggered years and are removable by the President only "for cause" or "good cause." Thus, these agencies are independent in teh sense that their heads are not subject to plenary presidential removal.

Independent agencies are generally run by multi-member commissions or boards rather than a single administrator.

FCC, SEC, Federal Reserve Board

5members of FTC serve 7 year terms and are removable by the President for "inefficiency, neglect of duty, or malfeasance in office." In addition, not more than three of the Commissioners can "be members of the same political party." This is known as a bipartisan requirement. The President selects the Chairperson, who customarily steps down to allow a new President to select his or her own chairperson.

7 members of the Federal Reserve Board serve 14-year terms and are removable by the President only "for cause." Not more than one Board member "may be selected from any one Federal Reserve district." The President in selecting members "shall have due regard to a fair representation of the financial, agricultural, industrial, and commercial interests, and geographical divisions of the country." The Chair is selected by the President and serves for a four-year term, but does not step down upon the election of a new President, making the Federal Reserve Board more insulated from this sort of presidential control than other agencies.

Myers v. United States: NO. (written by former President and then Chief Justice Taft)

Humphrey's Executor: YES. (New Deal court focused on quasi-legislative and quasi-judicial functions of agencies rather than executive ones)

Morrison v. Olson: YES. (As long as the restriciton does not unduly "interfere with the President's exercise of the 'executive power' and his constitutionally appointed duty to 'take care that the laws be faithfully executed' under Article II)

Enabling statute designates the scope of authority.

1)May be coextensive with Congress's or Judiciaries'

2)Exercise authority through regulations and adjudications (orders)

3)Also conduct research and issue authoritative literature

4)Congress and Judiciary exercise broad oversight, but day-to-day operations are controlled by the agency.

5)Agency regulation and activity constitute approximately 1/10 of the GDP

Limitation: Non-Delegation Doctrine

Pre-dates agency regulation

1)Manufacturers' discretion regarding safety

2)"Make whole" relief uncertain

3)"Make whole" relief injuries adequate

4)Reactionary nature of tort law, not proactive

5)Unfair to First defendant, who is penalized for conducting business as usual and who has no notice

6)No legal certainty or uniformity with separate jurisdictions

7)Ambiguity in judicial holdings

8)Latent injuries, minor injuries, and injuries to nontraditional plaintiffs go unaddressed.

Winterbottom stands for the proposition that manufacturers cannot be held liable to consumers or other users of their products if those consumbers or users are not in contractual "privity" with the manufacturer.

When customers stopped buying chairs directly from the carpenter and the modern era developed commercial and retail activity, "privity" lost ground and is no longer ruling the day. Thank MacPherson and Judge Cardozo for that.

Customer sued manufacturer for negligence after suffering injuries caused by a defective wheel on vehicle. The issue is whether privity (limiting manufacturer's duty to immediate purchase only) bars recovery. Privity gave manufacturers no incentive to produce safer cars. MacPherson extended manufacturer liability to foreseeable uses.

But does MacPherson ensure vehicle safety? Only if cost of tort damages exceed cost of safety inspections, thereby discouraging manufacturers discretion to ignore safety.

Judgement against Buick. Auto manufacturers will respond in the marketplace by modifying behaviour. By changing inspection practices, Buick was able to avoid liability.

Buick could have done nothing at all. There is nothing to say that Buick has to change, just that it will have to pay. Tort law does not guarantee a change in auto safety; it is at the manufacturers discretion depending on how the manufacturer weighs the costs of increasing inspection costs and future liability costs.

Cost-Benefit analysis: If risk of liability is worth running, society does not get safer cars apart from checks provided by the market's supply and demand.

Courts do not forthrightly acknowledge that they are changing the law by overruling past decisions. Rather, courts recase those decisions in terms consistent with the present one. This practice leaves future parties and courts without a clear sense whether or to what extent the law has changed.

Also, courts resolve questions based on the facts of the case and only as necessary to decide the case.

1) Economic: Market failures; sometimes the market, reinforced by the common law, will not supply consumers with their preferred option.

2) Democratic: social justice and welfare; sometimes people will demand more of society than any individual will seek for himself as consumer.

Much government regulation stems from the recognition that, as a society, we may aspire to certain norms of conduct for their own sake. Some statutes should be understood as an embodiment not of privately held preferences, but of what might be described as collective desires, including aspirations, "preferences about preferences," or considered judgments on the part of significant segments of society.