Administrative Law Prof Blog

Respect mah authoritay!

In a new Arizona Court of Appeals opinion, New Sun Business Park, LLC, v. Yuma County, No. 1 CA-CV 08-0094 (May 5, 2009), the plaintiff real estate developments tried to stop the County from enforcing multiple zoning violations by challenging the appointments of the County Zoning Inspector and his Deputy.

First, the Plaintiffs maintained that the Inspector was not properly appointed because the County ordinance under which he had been appointed had been repealed (apparently by accident). The County had not transferred his duties to anyone else when the ordinance was repealed, nor had it repealed the zoning regulations themselves. The Court of Appeals disagreed with the Plaintiffs, drawing an analogy to an Arizona state statute:

¶9  This conclusion is supported by A.R.S. § 1-251 (2002): “A person who at the time an act takes effect holds office under a law repealed by such act continues to hold the office according to the tenure of the law repealed, unless the duties of the office are expressly transferred to some other office.”  Even though county ordinances are not the equivalent of state statutes, we believe § 1-251 provides a guiding principle here.

As the Zoning Inspector had been properly appointed 12 years before the ordinance was repealed, he continued to hold the office with its full authority.

Second, the plaintiffs challenged the validity of the appointment of the Deputy Zoning Inspector who actually wrote up the violations because the relevant state statute required that both the Zoning Inspector and any Deputy Zoning Inspectors be appointed by the County Board of Supervisors. Here, the Deputy Inspector had been hired by the Inspector, not by the Board. After a detailed analysis of the statute, the Court of Appeals agreed with the plaintiffs.  However, that was not the end of the Court's analysis.

... In accordance with our interpretation of A.R.S. § 11-808(A), the hiring of Van Why did not comply with the § 11-808(A).  Nevertheless, the complaints issued by Van Why against Appellants are valid because Van Why was acting as a de facto deputy zoning inspector.

¶20  Our territorial supreme court in Jeffords v. Hine, 2 Ariz. 162, 168-69, 11 P. 351, 355 (1886), explained the rationale behind the de facto doctrine, which has arisen to ensure that the process of government continues even when an official must be removed for failure to meet certain statutory eligibility requirements:

Whatever may be said of the acts of a mere intruder, without any claim or color of title, it is well settled that a person actually obtaining an office, with the legal indicia of title, is a legal officer, until ousted, so far as his official acts are concerned, they are as valid as if his title were not disputed.  The public have an interest in the continuous and unbroken discharge of official duty, and the necessities thereof, and cannot wait to try the title of conflicting claimants to an office.  For this reason it has come to be held, so often as to be now settled, that the official acts of the incumbent of an office, with whom alone the public can, under the circumstances, transact business, shall be regarded as legal.  The affairs of society could not be carried on in any other way than by treating as valid the official acts of [a] person de facto in office.

[¶22]... And there is no suggestion by Appellants that, at the time Stansbury appointed Van Why as deputy zoning inspector, any person was aware that the appointment did not comply with the requirements of A.R.S. § 11-808(A).

¶23  On this record, therefore, we hold that Van Why was acting as a  de facto deputy county zoning inspector for the County when he issued the complaints against Appellants and, thus, the complaints are not void for the failure of the Board to appoint Van Why under A.R.S. § 11-808(A) as a deputy inspector.

(I confess that I enjoy seeing old cases cited in modern opinion, and in Arizona anything from before statehood is old.) So, as Cartman says in South Park: "Respect mah authoritay!" EMM

Recommended reading

On his Within the Scope blog, "Looking for Law in All the Wrong Places", E.L. Lipman recommends that administrative lawyers read the opinions in Federal Communications Commission v. Fox Television Stations, Inc., No. 07–582 (argued November 4, 2008—decided April 28, 2009).

The Court's opinion is a worthwhile read for administrative lawyers of all stripes – and not merely for those attorneys who advise broadcasters (or use “fleeting expletives”) as part of their day jobs.

Judge Lipman describes the majority opinion, then says

For me, the far-more interesting set of readings were the opinions as to which no other Justice subscribed.

He then goes on to describe the key positions in Part III-E of Justice Scalia’s majority opinion and the lone concurrences of Justices Thomas and Kennedy.

So, if an opinion that explores both the fault lines at the High Court on separation of powers issues and some important contemporary debates in administrative law, is of interest to you, the opinion in Fox Television Stations is a very worthwhile read.

EMM

Why sometimes regulation just isn't enough

On ThePopTort blog: "New Twist on FDA’s Inept Approval Process Of Special Concern to Women". About a urinary incontinence device for women:

Yes, the Food and Drug Administration “approved” this dangerous device.  Nothing new there either.  The FDA apparently approves unsafe devices all the time with little testing.  As the [New York] Times describes it, “While it ‘approves’ drugs, it merely ‘clears’ medical devices with minimal testing if they are deemed ‘substantially equivalent’ to devices already in use.”

But it turns out, the FDA approved this device based on it being “substantially equivalent” to a sling that had already been recalled!  And it’s not like the FDA feels it made a mistake.  The agency told the Times in an email that, “Any legally marketed device can serve as a predicate for a premarket submission.”  Even if it’s been recalled!

One cannot repair a lack of intellectual acumen.  EMM

Sources

In addition to the University of Washington's Current Index to Legal Periodicals, where I pick up the information for the weekly new articles post, I commend to you SSRN's Administrative Law Abstracts, edited by Prof. William Funk (Lewis & Clark). This ejournal comes out about monthly, and has links to interesting articles recently posted. You can find it first under "LSN Subject Matter eJournals" on your subscription page. EMM

Theory: The impact of information flows on regulation

Recently posted on SSRN: An interesting article by Bradley C. Karkkainen (Minnesota), "Framing Rules: Breaking the Information Bottleneck". Abstract:

This article attempts to develop "framing rules" for environmental problem-identification and problem-solving by inducing the production and disclosure of information that otherwise would be unavailable or difficult to obtain, or by altering the parties' incentives to act cooperatively in environmental problem-solving, rather than strategically attempting to thwart it. It argues that environmental programs should be structured to create incentives, both positive and negative, for private parties to continuously produce and disclose data that is relevant to solving environmental problems. In addition, policies should promote decentralized experimentation that can lead to the development of environmentally better technologies and production processes. Governments should provide centralized collection and analysis of locally produced data and create mechanisms for its efficient dissemination. In addition to centralized data and information collection, governments should identify categories of information that are best produced centrally and assign responsibility to centralized agencies to conduct or oversee that research.

While Prof. Karkkainen writes about environmental regulation, much of what he says in this article applies to regulation generally. He opens with a great expression for direct regulation.

The first generation of environmental law in the United States largely reflected a model of direct regulatory proscription of unwanted individual and corporate behaviors through a series of regulatory commands of the “thou shalt not” variety, which this Article will call the “Ten Thousand Commandments.” So, for example:

“Thou shalt not discharge specified pollutants into the nation’s waterways beyond specific volumetric tolerances established for your industry and incorporated in your permit.”

(Footnotes omitted.) Further on he identifies what he sees as the key problem with the existing environmental regulatory system:

I call this problem the "information bottleneck" in environmental regulation.  In my judgment, it is pervasive and severe, but it is not intractable.  We may characterize the general problem through the following propositions:

1)   In our free market economy, the general presumption—the default rule—is that an activity is allowed unless it is specifically prohibited or restricted.

2)   Activities may be prohibited or restricted only for good cause.

3)   The burden generally falls on the proponent of a prohibition or restriction—generally, a regulatory agency—to justify it.

4)   In the context of environmental (and many other forms of) regulation, the regulatory agency must produce a reasoned explanation, backed by scientific and technical data and information, not only as to why a prohibition or restriction is necessary in general, but as to why the particular restriction chosen is better than the alternatives.

5)   Judicial review of agency action through the Administrative Procedure Act or comparable statutory judicial review provisions further compounds the difficulty for agencies. Because their justifications and the underlying data and information may be challenged in court, risk-averse agencies seeking to avoid reversal have an incentive to produce ever more detailed analyses incorporating or rebutting all the data and information provided by interested parties during the notice-and-comment period.

6)  Under this approach, potentially regulated entities have little or no positive incentive—and possibly a disincentive— to cooperate with regulators in identifying potentially harmful pollutants or other environmental risks, or to provide information that might advance the regulator’s analytical process and lead to regulation.  These parties often do have incentives later in the regulatory process to produce information that would tend to rebut or undermine the agency’s own information, data, or analyses, because this may force the agency to modify the proposed rule, to withdraw it, to delay its onset while further analysis is undertaken, or to risk judicial reversal of the regulation.

7) Thus, instead of promoting cooperation in information production and disclosure, the regulatory process devolves into an adversarial game in which strategic non-production, non-disclosure, or selective disclosure of asymmetrically held information can be used to thwart, retard, or complicate agency action.

Footnotes not omitted - there aren't any. I would like to see these "propositions" documented to the extent practical. I agree with them, and would like to see them used as a springboard for further research. I suspect they can be applied to many areas of regulation.

I suggest that our students might find this article a good, readable introduction to the secondary effects of different regulatory schemes, enhancing their abilities to explain such schemes to their clients.  EMM

Theory: Regulation and litigation may not be economic substitutes

Recently posted on SSRN:  "The Relation between Regulation and Class Actions: Evidence from the Insurance Industry", by Eric Helland (Claremont McKenna College - Robert Day School of Economics and Finance; RAND) and Jonathan Klick (Pennsylvania). Abstract:    

Standard law and economics models imply that regulation and litigation serve as substitutes. We test this by looking at the incidence of insurance class actions as a function of measures of regulatory enforcement. We also look specifically at whether states with clear regulatory standards regarding the use of OEM parts experience less litigation over this issue. We find no evidence of substitution between regulation and litigation. We also examine the possibility that litigation is more frequent in states where regulators are more likely to be captured by industry interests, finding no support for this hypothesis either. Instead, litigation is more likely in states where similar litigation has been successful in the past, calling into question standard law and economics models in this area.

The one major area of commerce not subject to intensive federal regulation gives the authors a broad sample size, which is nice. A personal comment: As I went to business school where Herbert Simon taught, I've always been skeptical of economics, and especially the application of economics principles to as individualistic an undertaking as law. Only in some circumstances are economic pressures most significant, with the significance generally declining with the level of analysis.  EMM

New administrative law articles

From the University of Washington's Current Index to Legal Periodicals:

• Casey, Thomas L., III. Towards function and fair notice: two models for effecting executive policy through changing agency interpretations of ambiguous statutes and rules. 2008 Mich. St. L. Rev. 725-767. [L]|[W]
• Crespi, Gregory Scott. Incorporating endogenous preferences in cost- benefit analysis. 17 Penn St. Envtl. L. Rev. 157-189 (2009). [L]|[W]
• Davison, Steven G. General permits under Section 404 of the Clean Water Act. 26 Pace Envtl. L. Rev. 35-117 (2009). [L]|[W]
• Hawkins, Christina. Comment. How states and municipalities can retain the power to regulate rail carrier-owned solid waste transfer facilities in the context of the Metro Enviro Transfer, LLC v. Village of Croton-on- Hudson and Buffalo Southern Railroad, Inc. v. Village of Croton-on-Hudson decisions. 26 Pace Envtl. L. Rev. 289-315 (2009). [L]|[W]
• Hazen, Thomas Lee. Filling a regulatory gap: it is time to regulate over- the-counter derivatives. 13 N.C. Bank. Inst. 123-135 (2009). [L]|[W]
• Huizinga, James, Michael McEneney, Jan Van De Weert, and Karl Kaufmann. UDAP regulations for credit card issuers. 64 Bus. Law. 639-652 (2009). [L]|[W]
• Leviner, Sagit. A new era of tax enforcement: from 'big stick' to responsive regulation, 42 U. Mich. J.L. Reform 381-429 (2009). [L]|[W]
• Liu, Chang Derek. Note. The blank page before you: should the preemption doctrine apply to unwritten practices? 109 Colum. L. Rev. 350- 395 (2009). [L]|[W]
• Porter, Thomas O., II. Comment. The Federal Reserve's Catch-22: a legal analysis of the Federal Reserve's emergency powers. 13 N.C. Bank. Inst. 483-513 (2009). [L]|[W]
• Silverman, Amanda. Note. Draconian or just? Adopting the Italian model of imposing administrative fines on purchasers of counterfeit goods. 17 Cardozo J. Int'l & Comp. L. 175-221 (2009). [L]|[W]
• Smith, George P., II. Re-shaping the common good in times of public health emergencies: validating medical triage. 18 Annals Health L. 1-34 (2009). [L]|[W]
• Spencer, Jill, Julia Brown and Reggie O'Shields. The cooperative structure of the Federal Home Loan Banks: a model for government sponsered enterprises? 13 N.C. Bank. Inst. 227-245 (2009). [L]|[W]
• Wood, Mary Christina. Advancing the sovereign trust of government to safeguard the environment for present and future generations (part I): ecological realism and the need for a paradigm shift. 39 Envtl. L. 43-89 (2009). [L]|[W]
• Wood, Mary Christina. Advancing the sovereign trust of government to safeguard the environment for present and future generations (part II): instilling a fiduciary obligation in governance. 39 Envtl. L. 91-139 (2009). [L]|[W]

EMM

Supported by substantial evidence - or not

Two recent cases to compare from the New York Public Personnel Law blog: "Administrative disciplinary decision finding employee guilty must be affirmed if supported by substantial evidence" and "Court annuls Commissioner of Human Rights determination because it lacked substantial evidence to support a finding of unlawful discrimination". In the former,

[T]he determination that DeNardo was guilty of the charges filed against her was supported by substantial evidence. ... The Appellate Division noted that "The review of administrative determinations in employee disciplinary cases made as a result of a hearing required by Civil Service Law §75 is limited to a consideration of whether the determination is supported by substantial evidence" ...

In the latter,

The Appellate Division found that the Commissioner's determination was not supported by substantial evidence and vacated the determination and the award.

The court noted that the charging party admitted that the majority of incidents of which he complained were related to the use of profanity and poor hygiene practices and not motivated by racial animus.

Further, said the court, the proof adduced at the hearing did not show that the worker had been subjected to a hostile work environment in which his workplace was so permeated with discriminatory intimidation, ridicule, and insult as to alter the condition of his employment and create an abusive work environment. ... The decision the reports that “neither the police department nor the outside investigating agency found any evidence of racially discriminatory practices at the College."

It might be interesting for students to compare these two cases from the same court on similar subjects to see what the court considers and does not consider to be substantial evidence. EMM

Basic notice

Here is a basic case on notice requirements at the local level: "Failure to Provide Proper Notice Requires Annulment of Use Variance" by Patty Salkin (Albany) on her Law of the Land blog.

...[T]he Zoning Board of Appeals granted the respondent a use variance to allow him to use property he inherited in an RA-40 zone ... [N]eighboring property owners challenged the variance on the grounds that they did not receive adequate notice under both state statute and under the applicable zoning ordinance.

The appellate court agreed, and annulled the variance. The Court explained that to satisfy notice requirements, the notice must not be misleading, and it must be clear and unambiguous. In this case, the published notice contained the tax parcel address of the subject property but not the property address. This, said the court, at the very least rendered the notice ambiguous. With respect to the issue of personal notice, the Town zoning ordinance provides that ... the applicant shall serve notice of the hearing and an explanation of the variance to all property owners within 200 feet of the subject property either by certified mail (return receipt) ... to the last known address as shown by the most recent tax records. In this case ... the Town sent it to the last address known to the code enforcement officer, but not to the current address ... in the municipal tax records. Therefore, the Court said, notice was not provided as required under the law. Further, the fact that the petitioner found out about the hearing two hours before it was scheduled and the petitioner did show up and voice objection and concerns, this did not cure the notice failure since the lack of adequate notice deprived the petitioner of the “opportunity to meaningfully participate in the hearing and frustrated the purpose and intent of the hearing requirement.”

EMM

Theory: Judicial review of rulemaking

New on SSRN: "Depoliticizing Judicial Review of Agency Rulemaking" by Scott A. Keller (presently a Bristow Fellow at the Office of the Solicitor General, USDoJ and future law clerk to Justice Anthony M. Kennedy). Abstract:    

Administrative law doctrines for reviewing agency rulemaking currently give judges a significant amount of discretion to invalidate agency rules. Many commentators have recognized that this has politicized judicial review of agency rulemaking, as judges appointed by a president of one political party are more likely to invalidate agency rules promulgated under the presidential administration of a different political party. Unelected judges, though, should not be able to use indeterminate administrative law doctrines to invalidate agency rules on the basis that they disagree with the policy decisions of a presidential administration.

This Article therefore argues for the elimination of the Supreme Court's dicta on the Administrative Procedure Act's (APA) arbitrary and capricious standard of review in Motor Vehicle Manufacturers Association v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29 (1983), and the D.C. Circuit's hard look doctrine. In their place, courts should establish a doctrine for reviewing agency rulemaking that examines only the agency's purpose in regulating and the means used by the agency to achieve that purpose - instead of giving courts leeway to impose additional procedures on agencies and to nitpick rulemaking records. Constitutional doctrines for reviewing legislation already focus on a government actor's purpose and means, so these doctrines should also be used for reviewing agency rules, which are legislative-like pronouncements that are binding with the force of law.

Ultimately, this Article proposes that courts should review agency rulemaking under the standard for reviewing legislation known as rational basis with bite. Rational basis with bite would require the agency, at the time it promulgates a rule, to articulate its actual statutory purpose in promulgating the rule and explain how the rule is rationally related to that purpose. Not only would rational basis with bite significantly limit the ability of judges to invalidate agency rules based on policy disagreements, but the Supreme Court's precedents on APA arbitrary and capricious review fit quite well with the rational basis with bite doctrine.

EMM

First 100 days --The Obama Administration and Rulemaking

The New York Times has an interesting article on what the Obama administration has and has not yet accomplished thus far with regard to regulation reform, including the recent appointment of Cass Sunstein as head of the Office of Information and Regulatory Affairs.

During Obama's first weeks in office, the administration ordered a halt to all of President George W. Bush's pending last-minute regulations and tossed out a Bush executive order that had strengthened the White House's role in federal rulemaking.

"In most instances, the administration has moved away from a presumption of government secrecy to one of government openness, and Obama has scrapped some of the most damaging revisions of the regulatory process that Bush and his team imposed on the nation," said Gary Bass, executive director of OMB Watch.

"Overall, President Obama has set a positive tone on key regulatory components, such as transparency, scientific integrity, rolling back harmful deregulatory practices and appointing well qualified people to top positions at major regulatory agencies," according to an OMB Watch report (pdf) released yesterday.

But Bass said some concerns remain about how the Obama administration plans to proceed with its overhaul of the regulatory reform process, especially given the recent controversial nomination of Cass Sunstein to lead the White House office that oversees agency regulation (E&ENews PM, April 20).

KP

When can rules be made without notice and comment?

On The Conglomerate blog, David Zaring (Wharton) has posted "The Fed Never Does Notice And Comment" - wondering why the Federal Reserve seems to always act on an emergency basis. Interesting discussion question? EMM

Advising clients on applying for stimulus grants

More practical goodness, this time on the California Public Law blog of the law firm of Meyers Nave:  "Navigating Stimulus Funding Red Tape". Opening paragraphs:

California may receive as much as $80 billion in federal stimulus money under the American Recovery and Reinvestment Act (ARRA). The act sets a goal of allocating 50 percent of funds to projects that can be initiated by approximately mid-June 2009.

Given the tight timeframe for allocating such a large portion of the ARRA funds, local governments are wise to act now. The red tape begins before you apply for funding, and doesn’t end until the project is complete. In our new series on Maximizing Your Stimulus, we’ll be walking you through the process of obtaining ARRA funding. In this alert, we cover the steps up to and including applying for funding.

This post covers pre-application requirements including obtaining a Data Universal Number System (DUNS) number and registering with the federal Central Contractor Registry (CCR). This is the sort of administrative law advice that business and government clients find really useful - good for our students to know. EMM

Advising clients on disclosure of convictions on license applications

Fredrick Ray, a California attorney, has an interesting and useful discussion on his California License Law Blog, "Disclosure of Convictions on Applications and Renewals". Opening paragraph:

By far the number one question we get in our law offices is about the disclosure of criminal convictions on license applications and license renewal forms. Some people see themselves facing the choice of whether to be honest and disclose, almost certainly triggering a license problem, as opposed to lying to possibly get away with it but risking an even more severe license penalty if they are caught lying. For other individuals, it is not whether to answer yes or no, but rather how they should explain what happened.

This is the sort of practical question I often faced in my practice. It might make a good class discussion. EMM

Chen on "creamskimming"

New on SSRN: "Creamskimming and Competition" by Jim Chen (Louisville).  Abstract:    

The concept of “creamskimming” arises with regularity in the law of regulated industries. As a rhetorical weapon, the term “creamskimming” readily conjures images of the sort of putatively destructive competition that regulatory commissions are charged with patrolling. As a result, allegations of creamskimming have become a standard weapon in the legal arsenal of incumbent firms seeking to resist competitive entry. At an extreme, incumbent firms will characterize all forms of competitive entry as creamskimming. Sound regulatory responses to these allegations therefore depend on a proper understanding of the creamskimming concept.

This article proposes a definition of creamskimming that will help state and federal regulatory agencies distinguish genuine objections to proposed competitive entry from reflexive (and often improper) efforts to shield incumbent firms from competition. “Creamskimming” should be defined as “the practice of targeting only the customers that are the least expensive and most profitable for the incumbent firm to serve, thereby undercutting the incumbent firm’s ability to provide service throughout its service area.” Moreover, regulatory approaches to this practice should make clear that creamskimming can take place only where a competitive firm proposes to serve only a portion of an incumbent firm’s service area. In other words, when a competitive entrant proposes to serve an incumbent’s entire service area, creamskimming by definition cannot occur.

EMM