THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch The Legal Environment of Business A Critical Thinking Approach 5 th Edition Nancy K. Kubasek Bartley A. Brennan M. Neil Browne

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch THE LEGAL ENVIRONMENT OF BUSINESS CHAPTER 17 The Law of Administrative Agencies

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch Administrative Agencies Administrative agencies were created by Congress in response to economic problems of monopoly and the stock market crash of Examples:  FTC, SEC NLRB, FCC, CPSC, NHSTB, EPA

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch Introduction to Administrative Law Definition:  Rule, regulation, or statute  Procedural or substantive  Originates in any branch of government  Affects an administrative agency  Federal, state or local level.

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch Administrative Agencies  Created by legislation  Given specific duties  May have power to  Make rules  Adjudicate  Investigate and enforce misconduct

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch Types of Administrative Agencies Types of Administrative AgenciesIndependent  Run by appointed board  FTC, SEC EPA, FCC, EEOC, NLRB Executive  Attached to executive branch  FDIC, NASA, OSHA, NTSB

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch Growth of Administrative Law  Need for more flexible enforcement proceedings  Need for subject matter expertise  Relieve court backlog  Need to solve national issues quickly NOTE: Some advocate for deregulation. Others are advocating re-regulation in certain areas, such as the power sector.

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch Creation of Administrative Agencies  Created by Congress or state legislature  Enabling legislation  Delegation of legislative, executive and/or judicial power Criticism: Such delegation is unconstitutional

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch Functions of Administrative Agencies  Rule making  Adjudication  Administrative activities  Advising  Reporting  Issuing guidelines

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch Rule Making Formal Rule Making :  Under APA  Notice via Federal Register  Public hearing and live testimony  Publication of findings

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch Rule Making Informal Rule Making:  Agency drafts rules  Notice via Federal Register  Public comment period 30 days  Publication of final draft  Agency considers comments… decides to modify or not

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch Rule-making  Give notice of proposed regulation  Period for public comments  Hold a public hearing  Cost benefit analysis  Exempt rule-making: highly sensitive areas such as military, foreign affairs and public property; therefore, agencies decide whether there will be public participation.  Hybrid rule-making combines formal and informal rule-making.

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch Judicial Review of Rule-making  Generally, courts accept administrative rules as law  Subject to constitutional challenges:  Vagueness  Violation of minimum constitutional standard  Beyond scope of authority

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch Adjudication 1. Investigate complaint 2. Negotiation with alleged violator 3. File with ALJ 4. Hearing and decision by ALJ 5. Appeals taken to full commission or court. 6. Judicial review of adjudicative proceeding

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch Limitations on Administrative Agencies Statutory  APA, FOIA, FPA Institutional  Executive  Appointment power, budget control, executive orders  Legislative  Oversight, investigation, termination, advise and consent  Judicial  Court review of agency decisions

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch State and Local Administrative Agencies State: utility commissions, universities, tax collection Local: land planning boards, zoning commissions, school boards Each state and territory has analogous local agencies.

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch Global Dimensions of Administrative Agencies Some other countries have more powerful agencies, with broader scope and purpose There is general cooperation at the ministerial level among agencies of different countries having similar duties. Example: Japan’s MITI

THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall