Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning Chapter 6 Administrative Law Its Legal, Ethical, and Global Environment MARIANNE M. JENNINGS 7 th Ed.

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 2 Non-legislative/Non-judicial Body. –Exist at every level of government. –They make, interpret, and enforce regulations. –Legislatures pass enabling acts. Sets up basic law, purpose, penalties. Sets up administrative agencies to handle the enforcement. What are Administrative Agencies?

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 3 Examples of federal administrative agencies. –Department of Agriculture. –Department of the Interior. –Federal Maritime Commission. –Veterans Administration. What are Administrative Agencies?

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 4 Role of Administrative Agencies Protect Small Interests and Small Business –Examples: Corrective advertising, consumer complaints. Provide for More Rapid Enforcement and Relief. –Do not have to use court system for enforcement. –Licensing and permits can be done quickly. Achieve Social Goals. –Examples: Environmental Protection Agency; Federal Home Loan Bank Board; Resolution Trust Corporation

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 5 Specialization. –Needed to deal with complexities of legislation. –Agencies can hire the necessary expertise. Examples: Environmental, occupational safety, nuclear, securities—regulation in these areas requires special expertise. Role of Administrative Agencies

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 6 Laws Governing Administrative Agencies Administrative Procedures Act (APA). –Established uniform procedures for agencies to follow in promulgating rules. –Other acts have separate names but are amendments to the APA.

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 7 Freedom of Information Act (FOIA). –APA amendment passed in –Purpose was to allow public access to agency records. –Types of information required to be published. Location of offices. Names of responsible individuals. Rules and regulations. Reports. Policy statements. Laws Governing Administrative Agencies

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 8 Freedom of Information Act (FOIA). –Types of information not published. Hearing orders. Non-published interpretations. Personnel policies and procedures. Laws Governing Administrative Agencies

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 9 Freedom of Information Act (FOIA). –Unpublished information can be obtained through an FOIA request. Must be written. Must describe the information and/or documents sought. Agency can charge for time and copy costs. Laws Governing Administrative Agencies

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 10 Freedom of Information Act (FOIA). –Wrongful refusal to supply information allows requester to bring suit and obtain court order for release as well as recovering cost. Laws Governing Administrative Agencies

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 11 Laws Governing Administrative Agencies Freedom of Information Act (FOIA). –Exemptions from disclosure:

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 12 Laws Governing Administrative Agencies Federal Privacy Act. –Passed in 1974 as an APA amendment. –Intended to cut down on the pervasive and casual exchange of information about individuals between and among agencies. –Agencies cannot obtain individuals’ records from other agencies without the consent of that person.

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 13 Government in Sunshine Act. –Open meeting law passed in Federal Register Act. –Authorizes a formal record of agency actions called the Federal Register. Regulatory Flexibility Act. –Requires publication of proposed rulemaking in trade publications. Laws Governing Administrative Agencies

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 14 Functions of Administrative Agencies Promulgating Regulations— Business Input: –Formal rulemaking. Congress passes Enabling Act. Agency researches a problem. Proposed regulations. Public comment period. Action on rules is taken. Challenges to adopted agency rules.

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 15 Case 6.1 U.S. v. Sun Diamond Growers of California (1999). –Defendant charged with making illegal gifts to then Secretary of Agriculture Mike Espy. –Defendant was convicted and appealed. –Held: Reversed. There must be a link between the gift and some official act. Functions of Administrative Agencies

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 16 Proactive Business Strategies in Regulation: –Sunset laws. Agency created for a limited time. Must justify its existence within that time. –Zero-base budgeting. Ongoing budget for agency is not assumed. Must justify its budget each year. Functions of Administrative Agencies

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 17 Functions of Administrative Agencies Case 6.2 Motor Vehicles Manufacturers Association v. State Farm Mutual Insurance Co. (1983). –What was done with the regulation to result in this Judicial decision? Case 6.3 Corn Products v. Dept. of H.E.W. and F.D.A. (1970) –What are federal standards for peanut butter?

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 18 Functions of Administrative Agencies Case 6.4 San Diego Air Sports Center, Inc. v. Federal Aviation Administration (1989). Was the letter an attempt to promulgate regulation? Case 6.5 Rubin v. Coors Brewing Company (1995). To survive a First Amendment challenge, what must a regulation of commercial speech accomplish?

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 19 Enforcement Actions

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 20 Enforcement Actions Licensing and Inspection. –Enforcement and Inspection. Up-front approval. Some checks imposed. –Enforcement by inspection. Health Code violation, Occupational Safety and Health Administration (OSHA) safety inspections.

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 21 Prosecution of Business. –Enforcement by prosecution. Complaint is filed. Injunction can be obtained for this period. –Consent decree. Like a plea bargain in a criminal case. Like a nolo contendere plea in a criminal case. Enforcement Actions

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 22 Enforcement Actions Prosecution of Business. –Penalties: Fines. Injunctions. Repayment to buyers. Corrective advertising.

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 23 Enforcement Actions Prosecution of Business. –Can go to hearing without an agreements. Administrative law judge (ALJ) hears the case. ALJ is like a judge at trial. Intervenors can appear in the case. Rules of evidence are relaxed. Must allow for due process. Exhaust administrative authority before appeal.

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 24 Enforcement Actions Prosecution and Business. –Go to court of appeals. Appeals of decisions go to agency heads exhausting administrative authority (unless it would be futile) before court or appeals will consider. State court appeals also go to court of appeals; however, some states require new trail in state trial court.

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning 25 Administrative Agencies in the International Market The United States is Heavily Regulated. –Some businesses have argued that regulations hinders them in the international marketplace.