1. Copyright © 2004 by Prentice-Hall. All rights reserved. PowerPoint Slides to Accompany BUSINESS LAW E-Commerce and Digital Law International Law and Ethics 5 th Edition by Henry R. Cheeseman Slides developed by Les Wiletzky Wiletzky and Associates, Puyallup, WA Chapter 44 Administrative Law and Government Regulation Chapter 44 Administrative Law and Government Regulation

2. 44 - 2Copyright © 2004 by Prentice-Hall. All rights reserved. Businesses spend billions of dollars each year complying with government regulation.

3. 44 - 3Copyright © 2004 by Prentice-Hall. All rights reserved. General Government Regulation  Businesses are subject to general government regulation that applies to many businesses and industries collectively. e.g., anti-discrimination laws e.g., anti-discrimination laws

4. 44 - 4Copyright © 2004 by Prentice-Hall. All rights reserved. Specific Government Regulation  Many industries are subject to specific regulation that regulates companies in that industry. e.g., banking e.g., banking e.g., television e.g., television e.g., railroads e.g., railroads e.g., commercial airlines e.g., commercial airlines

5. 44 - 5Copyright © 2004 by Prentice-Hall. All rights reserved. Administrative Agencies  Agencies that the legislative and executive branches of federal and state governments establish.  Rules and Regulations – adopted by administrative agencies to interpret the statutes that they are authorized to enforce.

6. 44 - 6Copyright © 2004 by Prentice-Hall. All rights reserved. Federal Administrative Agencies  Administrative agencies that are part of the executive or legislative branch of government.  The majority of federal administrative agencies are part of the executive branch of government.  Administrative agencies created by Congress are independent of the executive branch. They have broad regulatory powers over key areas of the national economy. They have broad regulatory powers over key areas of the national economy.

7. 44 - 7Copyright © 2004 by Prentice-Hall. All rights reserved. State Administrative Agencies  Administrative agencies that states create to enforce and interpret state law. Also have a significant effect on business. Also have a significant effect on business.  Local governments and municipalities create administrative agencies to administer local law. e.g., zoning commissions e.g., zoning commissions

8. 44 - 8Copyright © 2004 by Prentice-Hall. All rights reserved. Landmark Law: Administrative Procedure Act (APA) of 1946  Establishes certain administrative procedures that federal administrative agencies must follow in conducting their affairs. e.g., notice and hearing requirements e.g., notice and hearing requirements e.g., rules for conducting agency adjudicative actions e.g., rules for conducting agency adjudicative actions e.g., procedures for rule making e.g., procedures for rule making

9. 44 - 9Copyright © 2004 by Prentice-Hall. All rights reserved. Administrative Procedure Act (continued)  Most states have enacted administrative procedural acts that govern state administrative agencies.  Administrative Law Judges (ALJs) – preside over administrative proceedings. Decide questions of law and fact concerning the case. Decide questions of law and fact concerning the case. No jury No jury The ALJ is an employee of the administrative agency The ALJ is an employee of the administrative agency

10. 44 - 10Copyright © 2004 by Prentice-Hall. All rights reserved. Administrative Law  Administrative Law is a combination of substantive and procedural law.  Each federal administrative agency is empowered to administer a particular statute or statutes. These statutes are the substantive law that is enforced by the agency. These statutes are the substantive law that is enforced by the agency.

11. 44 - 11Copyright © 2004 by Prentice-Hall. All rights reserved. Delegation Doctrine  When an administrative agency is created, it is delegated certain powers. Legislative powers Legislative powers Executive powers Executive powers Judicial powers Judicial powers  If an administrative agency acts outside the scope of its delegated powers, it is an unconstitutional act.

12. 44 - 12Copyright © 2004 by Prentice-Hall. All rights reserved. Legislative Powers of Administrative Agencies Substantive Rule Making Interpretive Rule Making Statement of Policy Licensing

13. 44 - 13Copyright © 2004 by Prentice-Hall. All rights reserved. Substantive Rules  Government regulation that has the force of law.  Must be adhered to by covered persons and businesses.  Violators may be held civilly or criminally liable.  All substantive rules are subject to judicial review.

14. 44 - 14Copyright © 2004 by Prentice-Hall. All rights reserved. Interpretive Rules  Rules issued by administrative agencies that interpret existing statutory language.  Such rules do not establish new laws.  Neither public notice nor public participation is required.

15. 44 - 15Copyright © 2004 by Prentice-Hall. All rights reserved. Statement of Policy  A statement issued by administrative agencies.  It announces a proposed course of action that an agency intends to follow in the future.  Such statements do not have the force of law.  Public notice and participation are not required.

16. 44 - 16Copyright © 2004 by Prentice-Hall. All rights reserved. Licensing Powers of Administrative Agencies  Statutes often require the issuance of a government license before a person can enter certain types of industries or professions.  Most administrative agencies have the power to determine whether to grant licenses to applicants. Power to suspend or revoke licenses. Power to suspend or revoke licenses.  The administrative agency’s decision is subject to judicial review.

17. 44 - 17Copyright © 2004 by Prentice-Hall. All rights reserved. Executive Powers of Administrative Agencies  Powers that administrative agencies are granted. i.e., such as the investigation and prosecution of possible violations of statutes, administrative rules, and administrative orders. i.e., such as the investigation and prosecution of possible violations of statutes, administrative rules, and administrative orders.  Administrative subpoena  Administrative searches

18. 44 - 18Copyright © 2004 by Prentice-Hall. All rights reserved. Judicial Powers of Administrative Agencies  Many administrative agencies have the judicial authority to adjudicate cases through an administrative proceeding.  Initiated when an agency serves a complaint on a party the agency believes has violated a statute or administrative rule or order.  In adjudicating cases, an administrative agency must comply with the Due Process Clause of the U.S. Constitution.

19. 44 - 19Copyright © 2004 by Prentice-Hall. All rights reserved. Procedural Due Process Due process that requires the respondent to be given: 1.Proper and timely notice of the allegations or charges against him or her, and 2.An opportunity to present evidence on the matter.

20. 44 - 20Copyright © 2004 by Prentice-Hall. All rights reserved. Substantive Due Process  Due process that requires that the statute or rule that the respondent is charged with violating be clearly stated.

21. 44 - 21Copyright © 2004 by Prentice-Hall. All rights reserved. Procedures for Administrative Adjudication  Administrative Law Judges (ALJs) – preside over administrative proceedings. Decide questions of law and fact concerning the case. Decide questions of law and fact concerning the case. No jury No jury The ALJ is an employee of the administrative agency The ALJ is an employee of the administrative agency  The administrative agency and the respondent may be represented by counsel.

22. 44 - 22Copyright © 2004 by Prentice-Hall. All rights reserved. Procedures for Administrative Adjudication (continued)  The ALJ's decision is issued in the form of an order. Must state the reasons for the ALJ’s decision. Must state the reasons for the ALJ’s decision.  The order becomes final if it is not appealed.  An appeal consists of a review by the agency.  The agency review can result in new findings of fact and law.  Further appeal can be made to the appropriate federal or state court.

23. 44 - 23Copyright © 2004 by Prentice-Hall. All rights reserved. Judicial Review of Administrative Agency Actions  Many federal statutes expressly provide for judicial review of administrative agency actions.  The Administrative Procedure Act (APA) authorizes judicial review of federal agency actions. Where an enabling statute does not provide for review. Where an enabling statute does not provide for review.

24. 44 - 24Copyright © 2004 by Prentice-Hall. All rights reserved. Judicial Review of Administrative Agency Actions (continued)  Petitioner – the party appealing the decision of an administrative agency.  Decisions of federal administrative agencies are appealed to the appropriate federal court.  Decisions of state administrative agencies may be appealed to the proper state court.

25. 44 - 25Copyright © 2004 by Prentice-Hall. All rights reserved. Appeal of a Federal Administrative Agency Rule, Order, or Decision Administrative Law Judge (ALJ) Federal Administrative Agency U.S. District Court U.S. Court of Appeals U.S. Supreme Court Whether the appeal from the Federal Administrative Agency is to the U.S. District Court or the U.S. Court of Appeals is determined by the federal law in question.

26. 44 - 26Copyright © 2004 by Prentice-Hall. All rights reserved. Conditions for Judicial Review 1.The case must be ripe for review. 2.The petitioner must have exhausted all administrative remedies. 3.The decision of the administrative agency must be final before judicial review can be sought.  Final Order Rule

27. 44 - 27Copyright © 2004 by Prentice-Hall. All rights reserved. Standards of Judicial Review of Administrative Agency Decisions Questions of Law Questions of Fact

28. 44 - 28Copyright © 2004 by Prentice-Hall. All rights reserved. Questions of Law  If the administrative agency has decided a question of law the reviewing court is free to substitute its own judgment for that of the administrative agency. e.g., interpretation of statutory language e.g., interpretation of statutory language

29. 44 - 29Copyright © 2004 by Prentice-Hall. All rights reserved. Questions of Fact  Questions of fact are not easily overturned.  Reviewing court usually defers to the agency’s fact-finding.  APA specified standards for review of fact- finding: The arbitrary, capricious abuse of process test. The arbitrary, capricious abuse of process test. The substantial evidence test. The substantial evidence test. The unwarranted by the facts test. The unwarranted by the facts test.

30. 44 - 30Copyright © 2004 by Prentice-Hall. All rights reserved. Immunity of Agency Employees  Federal administrative agency employees are immune from lawsuits for personal liability regarding the actions and decisions they make while performing their agency duties. Similar to immunity of judges and legislators. Similar to immunity of judges and legislators.

31. 44 - 31Copyright © 2004 by Prentice-Hall. All rights reserved. Public Disclosure of Agency Actions Freedom of Information Act Government in the Sunshine Act Equal Access to Justice Act Privacy Act

32. 44 - 32Copyright © 2004 by Prentice-Hall. All rights reserved. Public Disclosure of Agency Actions (continued) Freedom of Information Act  Requires that documents of federal administrative agencies be open to the public.  There are certain exemptions from this requirement.  Requires agencies to publish their proceedings, rules, regulations, and other informa- tion in the Federal Register. Government in the Sunshine Act  Requires that meetings of federal administrative agencies be open to the public.  There are certain exemptions from this requirement.

33. 44 - 33Copyright © 2004 by Prentice-Hall. All rights reserved. Public Disclosure of Agency Actions (continued) Equal Access to Justice Act  Gives a private party who was subject to an unjustified federal administrative agency action the right to sue and recover attorneys’ fees and costs. Privacy Act  Requires that federal adminis- trative agencies maintain only information about an individual that is relevant and necessary to accomplish a legitimate agency purpose.  Gives individuals access to these records and a right to correct the records.

34. 44 - 34Copyright © 2004 by Prentice-Hall. All rights reserved. Government Regulation Versus Compensable “Taking” of Property  The government may use its powers of eminent domain to acquire private property for public purposes.  The Due Process Clause of the U.S. Constitution requires the government to allow the owner to make a case for keeping the property. State constitutions where applicable. State constitutions where applicable.

35. 44 - 35Copyright © 2004 by Prentice-Hall. All rights reserved. Government Regulation Versus Compensable “Taking” of Property (continued)  Just Compensation Clause of the U.S. Constitution – mandates that the government must compensate the property owner when it exercises the power of eminent domain.  Anyone who is not satisfied with the compensation offered by the government can bring an action to have the court determine the compensation to be paid.