Volume 49, Number 3
Summer 1997 - Abstracts

Administrative Law Cases During 1996
- Bernard Schwartz

As scripture might have said, let us now praise famous laws. For administrative lawyers, 1996 was the year of the APA - the fiftieth anniversary of the Administrative Procedure Act. This article provides an overview of developments in such areas as delegation of powers ("It is an administrative law cliche that the Supreme Court has not invalidated a federal delegation in over sixty years" notes Schwartz), procedure problems, rulemaking, timing of review, availability of review, and investigatory powers.  In 1996, the Supreme Court affirmed several trends.

For example, the Court carried the second prong of the seminal 1994 case Chevron U.S.A., Inc. v. Natural Resources Defense Council, to the extreme, upholding as a "reasonable interpretation" a Comptroller of the Currency regulation that included under the definition of the term "interest" the flat late fees banks charge credit card holders. The Court also gave its blessing to administrative agency investigations conducted without probable cause to believe that any particular statute was being violated. And although the Congress removed the availability of judicial review for certain types of deportation orders, the Supreme Court preserved judicial review or presidential actions.

I. Delegation of Powers

The Supreme Court has consistently upheld federal delegations since 1935, and continues to do so; the delegations must meet only the standard of an "intelligible principle." Mistretta v. United States, 488 U.S. 361, 372 (1989). In Touby v. United States, it was argued that "something more" was required than the "intelligible principle" standard when Congress authorized regulations involving criminal punishments. 500 U.S. 160 (1991). The court rejected this argument in Loving v. United States, and upheld the validity of congress to delegate the power to define criminal punishments to the President. 116 S. Ct. 1737 (1996). The Touby argument was also rejected in Skinner v. Mid-America Pipeline Co., a case which involved the delegation of power to impose "user fees." 490 U.S. 212 (1996). Loving pushes the Court's abnegation policy on delegation issues to the brink, considering that Congress did not provide any principle, "intelligible," or otherwise in instructing the President how to choose "aggravating factors" in defining criminal punishments. However, these decisions do not mean there is "a carte blanche on delegation," and the trend in the lower courts may be shifting towards the delegation doctrine.

II. Procedure Problems

APA Section 554 Procedures: For an administrative hearing to be deemed ?quasi-judicial? and invoke the APA section 554 procedures, it must meet both: 1) the requirements of the test laid down by the Ninth Circuit in Duffy v. Riveland, and 2) the statute must specifically require an "on-the-record type of hearing contemplated by section 554." 88 F.3d 1525 (9th Cir. 1996) (advance sheets), available in 1996 WL 366442, at *10. However, the words "on-the-record" are not necessary in themselves, it is adequate that "Congress clearly indicate its intent to trigger formal on-the-record bearing provisions of the APA." Lane v. Department of Agric., 929 F. Supp. 1290 (D.N.D. 1996).

Bias in Administrative Decisionmaking: The Court in Pastrana v. Chater, found a Social Security Administrative Law Judge guilty of bias due to his comments at the hearing that expressed resentment towards a district court that had remanded the case, and derogatory comments he made about one of the witnesses in the case, and about Puerto Rican applicants for disability benefits in general. The court not only reversed and remanded the decision, but recommended disciplinary sanctions against the Judge. 917 F. Supp. 103 (D.P.R. 1996).

Hearsay: Federal and state cases both upheld the principle that the rule against hearsay is not applicable in administrative hearings, yet, most state courts "continue to follow the legal residuum rule."

Exclusionary Rule: In New York, in the case of In re Juan C., the court found that the exclusionary rule, even though it is not a due process requirement in an administrative hearing, does apply when the illegal evidence was obtained by the same agency that desires to use it as evidence in the hearing. 23 A.D.2d. 126 (N.Y. App. Div. 1996).  This decision, however, may be invalid, since the controlling precedent on this issue is INS v. Lopez-Mendoza, which allowed for evidence obtained by the INS to be used by it at a deportation hearing.  468 U.S. 1032 (1984).

Exclusiveness of the Record: The only recognized exception to the record is the doctrine of official notice. The Ninth and Seventh Circuits disagreed in cases involving "INS official notice of changed political conditions in Nicaragua," with the Seventh Circuit holding that due process does not require an opportunity for the applicant to rebut the "officially noticed facts," Gonzalez v. INS, 77 F.3d. 1015 (7th Cir. 1996), and the Ninth Circuit ruling to the contrary. Gonzalez v. INS, 82 F.3d. 903 (9th Cir. 1996).

III. Rulemaking

Rulemaking power requires a legislative delegation. Rich v. Delta Air Lines, Inc., 921 F. Supp. 767 (N.D.Ga. 1996). However, agencies can decide whether to exercise their rulemaking powers or to continue by adjudication. If an agency does not comport with its own regulations, its actions are invalid. Church v. Wing, 645 N.Y.S.2d. 356 (N.Y. App. Div. 1996).

No procedural requirements are imposed on rulemaking, unless a statute so requires: an agency may refuse to require sworn testimony in a rulemaking proceeding Public Serv. Co. v. State, 918 P.2d 733 (Okla. 1996), it is normally up to the agency when to issue rules. North Carolina Chiropractic Ass'n. v. N.C. State Bd. of Educ., 468 S.E.2d. 539 (N.C. Ct. App. 1996).

IV. Timing of Review

"The timing of judicial review is governed by the twin doctrines of primary jurisdiction and exhaustion of administrative remedies. Primary jurisdiction determines whether an agency or a court has original jurisdiction over a case or an issue." The central factor in primary jurisdiction doctrine is to effectuate "a desire for uniform outcomes." Total Telecomms. Serv. Inc., v. American Tel. & Tel. Co., 919 F. Supp. 472 (D.D.C. 1996). If primary jurisdiction is determined to lay with an agency, judicial proceedings are suspended and the issue is referred to agency review. See A.T.&T. Corp. v. PAB Inc., 935 F. Supp. 584 (E.D.Pa. 1996).

V. Availability of Review

The Antiterrorism and Effective Death Penalty Act of 1996 disallows judicial review in some deportation orders, and the federal courts have applied this provision as barring direct review in courts of appeals. However, federal habeas corpus jurisdiction is maintained. Felker v. Turpin, 116 S. Ct. 2333 (1996). Review can not be obtained if the plaintiff lacks standing, if the plaintiff asserts a violation of a procedural requirement, the standing issue is directed not only to whether the plaintiff has suffered a concrete and specific injury, but also whether the plaintiff has sued a defendant who caused the injury. Florida Audubon Soc'y v. Bentsen, 94 F.3d 658 (D.C. Cir. 1996).

VI. Chevron Ad Absurdam

The Chevron doctrine of deference applies not only to review of regulations, but to all statutory interpretation by agencies. Pfaff v. Department of Housing and Urban Dev., 88 F.3d 739 (9th Cir. 1996). The Chevron doctrine has been stretched to the extreme as exemplified by the decision in Smiley v. Citibank, where the Supreme Court held Chevron deference applies even when the meaning given to a statutory term is different from the definition found in any dictionary. 116 S. Ct. 1730 (1996).

VII. Investigatory Power

The Second Circuit rejected the First Circuit's holding in Parks v. FDIC, 65 F.3d 207 (1st Cir. 1995) (advance sheets) that a stricter standard is required than the one given in United States v. Morton Salt Co., 338 U.S. 632 (1950) when an agency is seeking to subpoena a private person's papers, as opposed to those of a corporation. In re Gimbel, 77 F.3d 593 (2d Cir. 1996). The second circuit upheld a "reasonable relevance standard" for enforcement of an agency's subpoenas against individuals.

Abstract by Dana Buchwald

For full copies of articles, please contact the subscriptions department of the American Bar Association. Articles are also available electronically on Lexis-Nexis and Westlaw.