Administrative Law Prof Blog

Judicial Review in the Bailout Bill

From David Zaring (Wharton) at The Conglomerate:

As we've told you, currently the bailout bill, now passed by the Senate, and looking better in the House, provides:

• "Actions by the Secretary pursuant to the authority of this Act shall be subject to chapter 7 of title 5, United States Code [that's the Administrative Procedure Act], including that such actions shall be held unlawful and set aside if found to be arbitrary, capricious, an abuse of discretion, or not in accordance with law."
• But "No injunction or other form of equitable relief shall be issued against the Secretary for actions pursuant to section 101 [that's the power granting section] ... other than to remedy a violation of the Constitution."
• The section by section notes prepared by the drafters for the House say only that the section "[p]rovides standards for judicial review, including injunctive and other relief, to ensure that the actions of the Secretary are not arbitrary, capricious, or not in accordance with law."

The problem here is that arbitrary and capricious review is equitable relief.  Indeed, the Supreme Court said this in Doe v. Chao, 540 U.S. 614, 619 n.1 (2004) (referring to the "the general provisions for equitable relief within the Administrative Procedure Act" and citing a section of the same Title 5, Chapter 7 referenced in the bailout bill's judicial review provisions).  And so it looks a bit like the bill provides for A&C in one section, and then takes it away, by taking away equitable relief, in the other section.

It's worth puzzling through this because judicial review could be the most substantial limitation of the Secretary's authority to administer the bailout, which is not subject to a great deal of constraint elsewhere in the bill.  Can someone who thought that that Paulson underpaid for a particular mortgage backed security sue?  Remember, Treasury may make literally millions of these purchases.

I tentatively posit that the bill does appear to give plaintiffs that right, though probably the only remedy available would be a declaratory judgment (saying that a particular purchase was inconsistent with the bailout law), rather than an injunction stopping the sale.  Sometimes courts distinguish between declaratory relief and other equitable remedies.  And APA relief is usually described as declaratory, in that you get a declaration that what the Secretary did was illegal, with an implicit direction that the Secretary should go do it again in a legal way.  If the Secretary's actions under section 101 aren't subject to A&C review, then the first section of judicial review would be largely superfluous.   

But I don't think the case is closed.  I suspect the government could argue that A&C review isn't permitted for every purchase decision, based on the statute and on the unmanageability of that project.  It'd have to come up with a good account of what judicial review would do, though. 

At any rate, Treasury might want to use its broad powers to set up a mandatory administrative appeals process, which, under Darby v. Cisneros, would keep plaintiffs out of the courts until they had exhausted their administrative remedies, and which would give the courts an adjudicated process to look at (and, hopefully for Treasury, rubber stamp).

Thanks to Prof. Zaring for the pointer and commentary. EMM

Whose rules?

Preemption - the question of who has the authority to promulgate and enforce rules - is often decisive in administrative law matters.  The U.S. Supreme Court has already granted cert in several preemption cases for the October 2008 Term.  See "Pre-emption Looms Large in Supreme Court's Upcoming Business Cases".

EMM

Interpreting initiatives

One interesting source of local administrative law issues is disputes over the interpretation of regulatory statutes.  In those states with popular initiatives, interpretation of initiatives can be tricky, as they are not always well drafted.  Of course, that's true of many statutes from our legislatures, but understanding what the voters intended is different from understanding what the legislature intended.

What seems to be a straightforward case is Prince & Princess Enterprises, LLC, v. State of Arizona ex rel. Arizona Department of Health Services, 1 CA-CV 08-0151 A, filed Sept. 30, 2008 (Ariz. App.).  It can't be that straightforward or the Attorney General wouldn't have appealed it and Court of Appeals wouldn't have reversed the trial court.  The controversy arose from the Smoke-Free Arizona Act, an initiative passed by the voters in 2006.  The statute bans smoking in public places and places of employment, with several exceptions including retail tobacco stores.  The plaintiff meets the requirements of being a retail tobacco store but also sells alcohol and food.  The plaintiff asked for a declaratory judgment that it could permit smoking on its premises.  The State countered that as the plaintiff was both a tobacco store and a bar, that the bar restriction (no exception so no smoking) applied.  The State won in Superior Court, but the Court of Appeals reversed based on a plain meaning argument.  (I worry a bit about plain meaning arguments when very intelligent lawyers find different meanings in the same words.)

There are some questions as to what facts need to be found for the declaratory judgment on remand, but this opinion is an easy read.  It demonstrates one of the sorts of administrative law issues an attorney in a general or business practice may face.

EMM

When is a committee not a committee

- for the purpose of open meeting laws.  Open meeting laws are an entertaining part of local administrative law, as officials wary of embarrassment and individuals wanting privacy seek ways around them, and interested people and media representatives try to open things up.  Robert Ambrogi, in his Media Law blog, reports on an interesting opinion by a local Massachusetts district attorney, "Police Board Not Bound by Meeting Law".  The opinion, citing a 1991 opinion from the Supreme Judicial Court of Massachusetts, distinguishes between a board of a municipality (must be open) and a board selected to advise an official (need not be open).  I would enjoy our readers' thoughts as to whether this is a distinction without a difference.

EMM

Administrator has no constitutional duty to keep interested parties personally informed

In her Law of the Land blog, Patty Salkin (Albany) has posted a review of an interesting state court opinion on the duty of public officials to keep people informed.  This case is in the context of the appeal of the grant of a building permit by adjacent property owners, but easily applies more generally.  The last paragraph of her review:

Turning to the argument that the State constitution imposed a duty upon the zoning administrator, in response to a direct inquiry, to properly inform the petitioners about the status of zoning approvals with respect to the subject property, the Court said that the constitutional duty to provide assistance to citizens is measured with a benchmark of reasonableness.  The Court explained that the constitutional duty, while relevant when an abutter or interested resident inquires about a project, is the same as the scope of the duty the petitioners seek to impose in this case. At most, the Court found that the record supports a conclusion that the petitioners inquired and expressed concern about the project and the placement of the house. Therefore, the Court concluded, that on the record, they “cannot endorse imposing upon the zoning administrator a constitutional duty to have taken some initiative to educate…[the petitioners] about the pendency of the project and about the appeal process.”

In my practice experience, I observed many more issues like this than issues arising from the Federal Constitution.  These issues rarely make it to the appellate level, which makes this an important opinion. EMM

OIG Report: Violations Found at 94% of Nursing Homes

The Office of Inspector General of the U.S. Department of Health and Human Services has just released a disturbing report about the status of American nursing homes.  In 2007, violations were found at 94% of the nation's 15,000 nursing homes.  Most deficiencies did not cause actual harm or expose the residents to immediate jeopardy, but the shear volume and pervasiveness of deficiencies is alarming.  For-profit nursing homes were the most often cited facilities.  Ninety-six percent of for-profit homes were cited for violations, compared to 88% of not-for-profit homes and 91% of government run facilities.  For-profit homes also had more deficiencies than than the other homes.  Inspectors cited an average of 7.6 deficiencies per for-profit home, 5.7 deficiencies per nonprofit home and 6.3 deficiencies per government run home.  More information is available here. 

FTC Proposes New Rules to Improve Enforcement Actions Before Administrative Law Judges

From the National Law Journal:  "FTC Proposes New Rules to Improve Enforcement Actions Before Administrative Law Judges".  The article begins:

The Federal Trade Commission has proposed new rules to improve and streamline enforcement actions tried before administrative law judges.

The agency is seeking public comments on the revisions to what are known as Part 3 and sections of Part 4 of the commission's rules of practice.

While some FTC enforcement actions are brought in federal district courts, others are brought through the administrative process. In the latter cases, an ALJ issues an initial decision and that decision can be appealed to the full commission.

How does this compare with other agencies?  Will the FDA changes be adopted by other agencies?  EMM

New Administrative Law articles

From the Current Index to Legal Periodicals:

• Ahn, Joyce S.  Uncapping the bottle:  a look inside the history, industry, and regulation of bottled water in the United States.  3 J. Food L. & Pol'y 173-207 (2007). [L]|[W]
• Heskamp, Brian D.  Note.  The prisoner's ombudsman:  protecting constitutional rights and fostering justice in American corrections.  6 Ave Maria L. Rev. 527-557 (2008). [L]|[W]
• McCabe, Margaret Sova.  The battle of the bulge:  evaluating law as a weapon against obesity.  3 J. Food L. & Pol'y 135-172 (2007). [L]|[W]
• Prado, Mariana Mota.  The challenges and risks of creating independent regulatory agencies:  a cautionary tale from Brazil.  41 Vand. J. Transnat'l L. 435-503 (2008). [L]|[W]
• Vale, Judy.  Note.  Expanding expanded access:  how the Food and Drug Administration can achieve better access to experimental drugs for seriously ill patients.  96 Geo. L.J. 2143-2175 (2008). [L]|[W]
• Wolf, Kaycee L.  Comment.  Beetles for breakfast:  what the FDA should be telling you.  3 J. Food L. & Pol'y 229-251 (2007). [L]|[W]

EMM

Defense Contract Audit Agency rescinds nondisclosure memorandum against whistleblower

The Defense Contract Audit Agency (DCAA) issued a 2007 nondisclosure memorandum that threatened a veteran auditor with "disciplinary action" if she possessed or shared any DCAA document used to file a complaint against the agency.  On September 12th the DCAA director reinforced the agency's official policy supporting the agency employees ability to speak freely with investigators.

Governmentexecutive.com reports here.

KP

11th Report to Congress on the Costs and Benefits of Federal Regulations

[A bit off-topic, but of interest to those who follow the regulatory process:]

FOR IMMEDIATE RELEASE
September 24, 2008
Contact: OMB Communications, 202-395-7254

NEW REPORT SHOWS BOOST IN BENEFITS AND LOWER REGULATORY
COSTS FOR CONSUMERS

Washington, DC — Today, the Office of Management and Budget (OMB) issued its draft of the eleventh annual “Report to Congress on the Costs and Benefits of Federal Regulations”.  The report is now available for public comment on www.regulations.gov.

The Report features a look back at the last ten years of major Federal regulations reviewed by OMB to examine their quantified and monetized benefits and costs.  The Report shows that the estimated annual benefits of major Federal regulations reviewed by OMB from October 1, 1997 to September 30, 2007 range from $122 billion to $656 billion, while the estimated annual costs range from $46 billion to $54 billion.

Specific findings of the draft report include:

• The average annual benefits of the regulations issued over the last seven years is 138% greater than the average annual benefits over the previous eight years.
• The estimated benefits of major regulations issued from 1992 (the first year for which we have benefit estimates) to 2007 exceed the estimated costs by more than four fold.
• The average annual costs of the regulations issued over the last seven years is about 24% less than the average annual costs over the previous 20 years.
• Over the last 27 years for which we have cost data, the major regulations reviewed by OMB have added at least $139 billion to the overall yearly costs of regulations to the public.

In addition to the OMB review of major regulations, the Report also includes:

• A brief summary of the analysis of major regulatory activity of independent agencies over ten years.
• An update on agency implementation of the Information Quality Act, including a summary of the correction requests that were received by agencies in FY 2007 as well as updates on earlier requests and status reports for the Information Quality Bulletin for Peer Review, the Good Guidance Practices Bulletin, and the 2007 Memorandum on the Principles of Risk Analysis.
• An update of the status of the 2004 Regulatory Reform nominations.
• The thirteenth annual Report to Congress on Agency Compliance with the Unfunded Mandates Reform Act.

[Thanks to the pointer from beSpacific.  EMM]

Delegation without standards

In "VT Supreme Court Invalidates Ordinance and Plan For Lack of Standards To Guide Development", Patty Salkin (Albany) describes overturning denial of a building permit due to the absence of standards in the regulating ordinance.

From a regulatory standpoint, the ordinance provides no guidance as to what may be fairly expected from landowners who own a parcel containing wildlife habitat or scenic views and wish to develop their property ... Such standardless discretion violates landowners’ due process rights, the court declared.

Possible discussion scenario or exam question on the issue of standardless delegation of authority.

EMM

Article on The Bailout

David Zaring in the Conglomerate blog has an excellent discussion-opener about The Bailout, "The Agreement on Principles: Not Without Problems".  While much of this is beyond the scope of this blog, there are a variety of administrative law teaching points covered, including the scope of authority delegated to the Secretary of the Treasury and standards of judicial review.

EMM

Lauded Agency Head Leaves NIH

I have been very critical of Bush appointees who have muzzled their scientists and disregarded scientific data when it did not suit their political purposes, so it seems only fair to highlight one of the better public servants to have served in the Bush administration.  Dr. Elias A. Zerhouni has announced that he is leaving his post as the director of the National Institutes of Health (NIH) in October.  Dr. Zerhouni, who is most famous far barring NIH scientists from consulting for pharmaceutical companies, also changed the agency's focus from primarily basic research to patient care and he reorganized the agency to make it more effective in turning scientific discoveries into treatments for patients.  His tenure is not without controversy as there are still investigations about NIH officials having possible conflicts of interest pending.  Despite these investigations, Dr. Zerhouni is widely regarded as an effective leader of the agency who served with integrity.

LT

Express and implied preemption

Federal preemption of state regulation (and sometimes state preemption of local regulation) is perhaps more important for the application of administrative law than for its practice.  It is, however, important in the administrative law context so our future alumni don't go charging into the wrong forum.  On the Drug and Device Law blog, Jim Beck and Mark Herrmann present a great description of express and implied preemption - and the difference between the two - in "Living On The Point Of The Spear".  The authors have a strong and acknowledged bias in favor of the defense in pharmaceutical and medical device cases, but their exposition of the questions surrounding preemption is clear and objective.  FYI, Herrmann is the author of, among other things, The Curmudgeon's Guide to Practicing Law (2006).

EMM

Roscoe Pound and the Administrative State

On the Legal History Blog, Dan Ernst has published an extensive (now up to five parts) essay "Roscoe Pound and the Administrative State".  From the opening paragraph:

For twenty years as dean of the Harvard Law School Pound interpret the applause that greeted his addresses as the bar's affirmation of his exalted vision of the lawyer in the American polity. Apparently he assumed the legal academe would follow his lead, but it set out on its own, taking his "sociological jurisprudence" in unexpected directions. By the time he stepped down from the deanship in 1936, Pound felt that not just his scholarly standing but the ideas he championed were in jeopardy. His writings during his long emeritus career--he died in 1964--were brittle, shrill, repetitive, and often otherworldly. G. Edward White said it well in the Dictionary of American Biography: in Pound one "confronts the paradox of a scholar who for a time can be said to have bestridden his profession like a colossus but who was so disinclined to probe beyond a certain point that one cannot find much of enduring value in his work. . . . His life is as much a tale of opportunities lost and reflections prematurely cut off as one of staggering achievements."

If you are interested in understanding why administrative law in the United States became what it has become, this essay is a wonderful map of the ideas that and personalities who shaped it in its gestation and infancy.

EMM