© 2004 West Legal Studies in Business, a Division of Thomson Learning 7.1 Chapter 7 Government Regulation: Anatomy and Enforcement of a Regulation

7.2 Functions of Administrative Agencies Executive Law enforcement and administrative Adjudicative Hearings before administrative law judges Legislative Both informal and formal rule making Hybrid rule making

7.3 The Making of a Federal Regulation: Steps 1, 2, and 3 Step 1: Society perceives a problem Step 2: Congress passes an enabling act Step 3: An agency studies the problem

7.4 The Making of a Federal Regulation: Step 4 Step 4: The agency proposes a regulation The Administrative Procedure Act allows this Notice is given to the Federal Register Not all regulations must be published Notice is easier to find with the advent of the Internet

7.5 The Making of a Federal Regulation: Step 5 Step 5: Public comments Time to comment Form for comment What agencies must do with comments Why comment

7.6 The Making of a Federal Regulation: Step 6 Step 6: The agency promulgates, modifies, or withdraws the regulation Promulgation – when the topic is noncontroversial and has no problems Modification – when topic is controversial or agency does not fully understand problem Withdrawal – when regulation has overwhelming criticism

7.7 The Making of a Federal Regulation: Step 7 Step 7: Challenges in court to the promulgated regulation occur when the regulation Is in violation of the U.S. Constitution Is arbitrary, capricious, an abuse of discretion Is beyond the authority of the enabling act

7.8 The Making of a Federal Regulation: Step 7 An agency acts ultra vires when it Makes regulations beyond the authority of the enabling act grants Makes regulations where no enabling act exists at all

7.9 The Making of a Federal Regulation: Step 8 Step 8: An agency enforces valid regulation through investigation, prosecution, and administration by means of Permits and licenses Prosecuting

7.10 The Making of a Federal Regulation: Step 8 An agency enforces valid regulation by means of Searches and investigations by police and FBI officers The general rule Practical tip Administrative sanctions Civil penalties

7.11 The Making of a Federal Regulation: Step 9 Step 9: Agencies hold adjudicatory hearings The hearing (the agency is the prosecutor) An administrative law judge (one who presides over proceedings) The parties (introduce evidence, witnesses, and arguments to support their cases)

7.12 The Making of a Federal Regulation: Step 10 Step 10: Appeal of administrative law judge’s decision StandingExhaustion Exceptions to the exhaustion doctrine Appeals to the courts Appealable agency action Proper court Ripeness

7.13 The Making of a Federal Regulation: Remedies A reviewing court may declare agency action illegal if it has acted Arbitrary, capricious or abused its discretion Contrary to constitutional right, power, privilege, or immunity Beyond its statutory authority Without observing legal procedures Without substantial evidence

7.14 More Points About Rulemaking No evidentiary hearing is necessary Specific statutes may require a hearing for informal rule making Reg-neg (regulation that is negotiated) is possible for future federal rule making

7.15 Recap – Terms to Know Functions of agencies: executive, adjudicative, legislative Rule making: formal, informal, hybrid Enabling act Public comment Arbitrary and capricious ExhaustionReg-neg