Administrative agencies resulted from the inability of governments, federal, state and local, to effectively regulate many aspects of business as well as other aspects of laws affecting citizens. As life and business became more and more complicated, the administrative agency came into being. Law governing administrative agencies is known as administrative law.
Administrative agencies affect each of us every day in hundreds of ways. They have become the fourth branch of government. Supporters believe that they provide unique expertise in complex areas. Detractors regard them as unelected government run amok.
Many administrative agencies are familiar. The Federal Aviation Administration, which requires all airlines to ensure that your seats are upright before takeoff and landing, is an administrative agency. The Internal Revenue Service haunts us every April 15. The Environmental Protection Agency regulates the water quality of the river in your town. The Federal Trade Commission oversees the commercials from your television set.
Other agencies are less familiar. You may never have heard of the Bureau of Land Management, but if you go into the oil and gas industry, you will learn that this powerful agency has more control over your land than you do. If your software corporation wants to hire an Argentine expert on databases, you will get to know the complex workings of the Immigration and Naturalization Service: No one lawfully enters this country without its approval.
Administrative agencies use three kinds of power to do the work assigned to them: they make rules, investigate, and adjudicate.
One of the most important functions of an administrative agency is to make rules. In doing this, the agency attempts to establish fair and uniform behavior for all businesses in the affected area. To create a new rule is to promulgate it. Agencies promulgate two types of rules: legislative and interpretive.
These agency rules are much like statutes. For example, the Federal Communications Commission (FCC) promulgated a rule requiring all cable television systems with more than 3,500 subscribers to develop the capacity to carry at least 20 channels and to make some of those channels available to local community stations. This legislative rule has a heavy financial impact on many cable systems. As far as a cable company was concerned, it was more important than most statutes passed by Congress. Legislative rules can have the full effect of a statute.
These rules do not change the law. They are the agency’s interpretation of what the law already requires. But they can still affect all of us.
In 1977, Congress passed the Clean Air Act in an attempt to reduce pollution from factories. The act required the Environmental Protection Agency (EPA) to impose emission standards on “stationary sources” of pollution. But what did “stationary source” mean? It was the EPA’s job to define that term. Environmentalists wanted the term defined to include every smokestack in a factory so that the EPA could regulate each one. The EPA, however, developed the “bubble concept,” ruling that “stationary source” meant an entire factory, but not the individual smokestacks. As a result, polluters could shift emission among smokestacks in a single factory to avoid EPA regulation. Environmentalists howled that this gutted the purpose of the statute, but to no avail. The agency had spoken, merely by interpreting a statute.
Agencies do an infinite variety of work and they need broad factual knowledge of the field they govern. Some companies cooperate with an agency, furnishing information and even voluntarily accepting agency recommendations. For example the United States Product Safety Commission investigates hundreds of consumer products every year and frequently urges companies to recall goods that the agency considers defective.
In addition to legislative authority, administrative agencies generally have the power to execute the regulations and bring proceedings against violators. Of course, this power is limited to matters within an agency’s jurisdiction. The agency typically has the power to investigate possible violations, require people to appear as witnesses, and require witnesses to produce relevant papers and records. As previously mentioned, the agency has the authority to bring action against violators of the law and the regulations of the agency. Some companies refuse to turn over needed information. To force disclosure, agencies use subpoenas and searches. A subpoena is an order to appear at a particular time and place to provide evidence. A subpoena duces tecum requires the person to appear and bring specified documents. Many businesses and other organizations intensely dislike subpoenas and resent government agents plowing through records and questioning employees.
Facts: Under the Occupational Safety and Health Act of 1970, an employer may be ordered to eliminate or abate an unsafe working condition. If the employer fails to comply, a civil penalty may be assessed against it. Atlas Roofing was ordered to abate a specific working condition, and a penalty was assessed against it for failure
to do so. It claimed that the procedure that had been followed violated the right to a jury trial declared by the Seventh Amendment of the federal Constitution: “In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved . . . “
Decision: Judgment against Atlas Roofing. The constitutional provision means only that where a jury was required at common law, it must now be provided. The Constitutional provision has no application to new duties and liabilities created by statute that were unknown to the common law. Such new duties and liabilities may therefore be determined without a jury.[1]
An administrative agency has only such powers as have been granted to the governmental agency that by law creating the agency. A contract must abide by a law declared by Congress as construed by the Courts, and also with the regulations and decisions of a governing administrative agency.
Because of the legislative, executive, and judicial powers of administrative agencies, there have been objections that the agencies do not act in an impartial manner. To counteract this, some agencies have separated their various functions. For example, the judicial function of the FTC is now performed by administrative law judges.
To provide a check on possible abuse, there are provisions in the law for public knowledge of the activities of administrative agencies. The Freedom of Information Act provides that information contained in the records of federal administrative agencies shall be made available upon proper request. Most of the meetings of the major administrative agencies are open to the public.
The Administrative Procedure Act, with certain exceptions, requires that every federal agency publish in the Federal Register a statement of the rules, principles, and procedures followed by the agency.
Typically, federal administrative agencies, prior to adopting regulations, invite public comment of both individuals and businesses which would be affected by the regulations. The opinions of individuals and such businesses are not binding on the administrative agency, but are taken into consideration. In fact, the APA, with certain exceptions, requires that a federal agency planning to adopt a new regulation must give public notice of this intent. The agency then must hold a hearing in which members of the public may be present to express their views and make suggestions.
As previously stated in order to inform the public of federal regulations, the Federal Register Act provides that an administrative regulation is not binding until it is printed in the Federal Register. This is a governmental publication that lists all administrative regulations.
The Occupational and Health Act of 1970 authorizes the secretary of labor to adopt job standards to protect workers from harmful substances. The secretary is directed by the statute to adopt that standard which most adequately assures, to the extent feasible, on the basis of the best available evidence that no employee will suffer material impairment of health. Acting under this authorization, the secretary adopted a Cotton Dust Standard to protect workers exposed to cotton dust. This dust causes serious lung disease that disables about one out of twelve cotton factory workers. The cotton industry attacked the validity of the Cotton Dust Standard on the ground that the secretary, in adopting the standard, had not considered the cost to the cotton industry of complying with the standard (a cost of $656.5 million). Was the Cotton Dust Standard valid? Yes. The statute directed the Secretary of Labor to adopt a standard that was feasible, meaning “capable of being done.” Congress did not direct the secretary to weigh the costs of the standard against its benefits. The act directed the secretary to attain the benefits without directing that any consideration be given to the costs. Congress thus closed the door on consideration by the secretary of the costs of protecting the workers. Because Congress decided that as a matter of public policy, the workers were to be protected, the secretary could not be required by the court to change this policy determination. The Cotton Dust Standard adopted by the secretary without evaluation of the cost of compliance was therefore valid.
With regard to the investigative authority of an agency, a person has basically the same protection against unreasonable search and seizure by an administrative officer as that person would have against unreasonable search and seizure by a police officer. However, this general rule is subject to exceptions such as when the danger of concealment is great. In such a situation, the agency may make a warrantless inspection or search without advance notice. Donovan v. Dewey (U.S. 1981) was a case involving the inspection of mines and quarries pursuant to the Federal Mine Safety and Health Act. This Act allows government inspectors to make inspections of mines and quarries a specified number of times each year to see if the safety laws are being observed. Also, inspectors can make inspections, without a search warrant, to see if the safety laws are being observed. Also, inspectors can make inspections, without a search warrant, to see if prior violations have been corrected. When this power was challenged, the Supreme Court stated that the Federal Constitution does not prohibit all searches of property, but only unreasonable searches. In the case of business property, greater freedom to search may be allowed than in the case of a private home. To require advance notice of a particular inspection might defeat the purpose of the inspection which would be to find violations. The Court in this case pointed out that the purpose of the inspection was closely related to national health and safety.
The Fifth Amendment provides in part that a person shall not be compelled to be a witness against himself in any criminal case. However, this protection may not apply in a situation where the records being subpoenaed by the agency are required to be kept by the person or business subject to the administrative investigation.
An agency may be given the power to sit as a Court to determine whether or not there have been any violations of the law or of the agency’s regulations. For example, the NLRB determines whether an unfair labor practice has occurred. The FTC acts as a Court to determine whether unfair competition has occurred.
Generally, either a private individual or the agency itself may file a complaint regarding violations of regulations. It is also generally necessary for an agency to give notice and hold a hearing at which all persons affected by the complaint may be present. There is no right of trial by jury. Also, some administrative agencies have the right to make an initial determination without holding a hearing. If the agency’s conclusion is challenged, the agency will then hold a hearing.
Often, administrative agencies will inform a business of a violation (for example an OSHA violation) and give the business a chance to correct the violation before a formal complaint is made. Also, settlements may be made after the complaint and even during the formal hearing. Also, even after the hearing, and a decision has been made, a settlement still can be made if the agency believes that there is a chance that the decision may be overturned on appeal to a Court.
Some agencies have the power to impose a penalty and to issue orders that are binding on the person or business being regulated without an administrative proceeding. The only recourse for the penalized person or business is to appeal to a Court. For example, OSHA has the power to assess civil penalties against employers for failing to put an end to a dangerous working condition. Certain environmental protection statutes adopted by states give a state agency the power to fine violators of environmental protection regulations. The FTC can issue a cease and desist order to stop a business practice that it deems to be improper. This order to stop is binding unless it is reversed on an appeal to a Court.
An administrative agency may have the authority to require proof of compliance of companies, even though they are not being investigated or even though there is no complaint pending. For example, employers employing 100 people or more are required by law to file an EEO-1 Report which can be examined by the Equal Employment Opportunity Commission (EEOC) to determine the racial, sexual, and national origin makeup of the work force. The Wage and Hour Department may audit a particular business even if there has been no complaint against that business. This audit would be similar to an IRS audit in that the records of the company would be examined.
As previously stated, a law creating an administrative agency typically provides that an appeal can be taken from a decision of the agency to a particular Court. Of course, a person must have standing to appeal. In other words, the person appealing must have been the subject of the administrative action. For example, ABC Corporation could not appeal a decision of OSHA which was against XYZ Corporation.
It is generally very difficult to override a decision of a federal administrative agency on appeal. Basically, to override such a decision, you would have to show that the agency’s decision was an incorrect application of the law or that the evidence was such that the agency should have made a different decision. Where a question of fact is involved, for example, who is telling the truth and who is not, the Court will normally accept the agency’s determination.
Bell was employed by the Sinclair Radio Corporation. She was fired from her job and made a complaint to the National Labor Relations Board that she was fired because she belonged to a union. The examiner of the board held a hearing, at which Bell produced evidence of an antiunion attitude of the employer. The employer produced evidenced that Bell had been fired because she was chronically late and did poor work. The examiner and the Labor Relations Board concluded that Bell was fired because of her union membership. Sinclair appealed. The court reached the conclusion that, if the court had been the board, it would have held that the discharge of Bell was justified because it would not have believed the testimony of Bell’s witnesses. Will the court reverse the decision of the National Labor Relations Board? No. When the question is who should have been believed, the court will not substitute its personal opinion for that of the agency and therefore will not reverse the decision of the agency merely because the agency believed one witness or group of witnesses and the court would have believed other witnesses. The decision of the agency as to the credibility of the witnesses is final and cannot be reversed on appeal. Therefore, the court will affirm the decision of the NLRB even though it actually disagrees with that decision.[2]
[1] Atlas Roofing Company, Inc. v Occupational Safety and Health Review Commission, 430 US 442 (1977)
[2] 306 F.2d 569 (5th Cir. 1962)
