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PART
PART
Regulation of Business
Administrative AgenciesThe Federal Trade Commission
Actand Consumer Protection Laws
Antitrust: The Sherman Act
11
McGraw-Hill/Irwin Business Law, 13/e
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
PART
PART
Regulation of Business
The Clayton Act,The Robinson-Patman Act, and
Antitrust Exemptions and Immunities
Employment LawEnvironmental Regulation
11
McGraw-Hill/Irwin Business Law, 13/e
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Administrative Agencies
PA ET RHC 47
“The execution of the laws is more important than the making of them.”
Thomas Jefferson
Learning Objectives
Creation of administrative agencies Agency types and organization Agency powers and procedures Controlling administrative agencies Information controls Issues in regulation
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The administrative agency, created by enabling legislation, implements and enforces statutes enacted by Congress Has legislative, executive, judicial
functions Federal and state agencies must operate
within the constitutional guarantees of due process, equal protection, and freedom of speech See Pearson v. Shalala
Overview
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Two types of federal administrative agencies: Executive: within Office of President or
executive departments of president’s cabinet Administrative heads appointed and
removable at President’s will Independent: still executive in function, but
headed by board or commission whose members are appointed by President “with the advice and consent of the Senate”
Agency Types
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Basic discretionary powers: rulemaking power, investigative power, and adjudicatory power
Agency also has significant informal power through agency advice, suggestions, guidelines Lack legal force of formal agency
regulations or rulings, but very persuasive in shaping behavior of regulated industries
Agency Powers
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Agency rulemaking power derives from enabling legislation and must comply with Administrative Procedure Act (APA)
Informal rulemaking (notice and comment) is most common method and the process is: Publication of Notice of Proposed
Rulemaking in Federal Register, comment period, publication in Federal Register of regulation (after review of comments) in final form
Rulemaking Power
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Formal rulemaking also begins with a Notice of Proposed Rulemaking published in Federal Register, but unlike informal rulemaking, the formal notice must state time and place at which a public hearing will be held Hearings resemble trials: agency must
produce evidence and justify proposed regulation; interested parties may present evidence in opposition
Rulemaking Power
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Agencies need accurate information about business activities for rules and enforcement
Agency investigations must be authorized by law and conducted for a legitimate purpose
Two most important investigative tools are subpoenas and searches and seizures Subpoena duces tecum (compels documents) Subpoena ad testificandum (compels testimony)
Investigative Power
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Agency may seek information only available by entry upon private property
Fourth Amendment prohibits unreasonable search and seizure and requires a warrant based on probable cause Typically, no warrant required for
routine administrative inspections
Investigative Power: Search & Seizure
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Agencies conduct judicial hearings to decide whether a regulation has been violated
In a hearing before an administrative law judge (ALJ), testimony and evidence are allowed, but no jury is present
ALJ issues decision with findings of fact and conclusions of law and penalty if required
ALJ decision may be appealed
Adjudicatory Power
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Executive shapes agencies by President’s: (a) power to appoint/remove
administrators, (b) power to veto legislation about agencies, (c) influence over executive budget
Congress shapes agency action by its: (a) advice and consent role in agency
appointments, (b) power to amend enabling legislation , (c) power to pass laws changing agency procedures
Control of Agencies
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Courts arguably exercise greatest control over agency behavior since APA allows judicial review of most agency action
Individual or organization seeking judicial review must demonstrate that the: Agency action being challenged is
reviewable, challenging party has standing to sue, all required administrative remedies exhausted, and dispute ripe for judicial review
Judicial Review of Agencies
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Legal bases for challenging agency action:1. Ultra vires doctrine
2. Agency deviated from necessary procedures
3. Agency action was unconstitutional
4. Agency action unsubstantiated by facts Judicial deference: if question of fact or
policy is at issue in the case, courts generally defer to agency decision
Challenging Agency Action
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Three statutes regulate flow of information held or gathered by administrative agencies
Freedom of Information Act (FOIA): enables citizens to access government documents
Privacy Act of 1974: citizens may inspect files agencies have on them and request corrections
Government in the Sunshine Act of 1976: “every meeting of an agency shall be open to public observation”
Information Controls
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Test Your Knowledge
True=A, False = B Agencies are created by Congress
through enabling legislation. Federal Procedure Act constrains
agencies. An agency subpoena may request
information that is privileged as long as it is necessary to the investigation.
An Administrative Law Judge’s opinion may not be appealed.
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Test Your Knowledge
True=A, False = B Informal rulemaking is also known as
notice and comment rulemaking. Under the Freedom of Information Act,
the plaintiff/requester bears the burden of proving the denial was wrongful.
If an agency decision is challenged, courts generally defer to the agency decision.
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Test Your Knowledge
Multiple Choice The basic discretionary powers agencies
may possess are: (a) Rulemaking power (b) Investigative power (c) Adjudicatory power (d) All of the above (e) A and B only
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Test Your Knowledge
Multiple Choice Which of the following is not a legal
basis for challenging agency action? (a) Ultra vires doctrine (b) Agency failed to obtain advice and
consent (c) Agency action was unconstitutional (d) Agency failed to comply with the APA (e) None of the above
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Test Your Knowledge Multiple Choice
An individual or organization seeking review of an agency action must show: (a) The challenged agency action is
reviewable (b) Challenging party has standing to sue (c) All required administrative remedies
have been exhausted (d) The dispute is ripe for judicial review (e) All of the above
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