An Introduction to American Administrative Law
American Administrative Law has been long developed from common law heritage of England. In broad sense, administrative law might be defined as legal control of government. More specifically, it consitsts of the legal principles that defines the authority and structure of administrative agencies, specifies the procedural formalities that agencies use, detemines the validity of administrative decisions and outlines the role of reviewing courts, and other organs of goverment in their relations to administrative agencies.
Those principles include three basic bodies of law: (1) constitutional law; (2) statutory law which includes the Administrative Procedure Act (APA); (3) a form of federal common law, embodied in judicial decisions.
In the democracy system, the citizens elect their representatives to protect their general will, so-called, public interest. They act as legislator who enact the law to govern the citizen's activities in the day-to-day life. However, bureaucracy is the principal mechanic to run the system, so-called administrative agencies. Legislative function will delegate their powers to administrative agencies to enact the regulation to control, support, or prevent some people's activities.
There are several arguments if the regulation should be set up. Most lawyers consider that the regulatory system is necessary in the democracy administration although the administrative agencies are not the direct representatives of the citizen. The economists consider the regulations are indispensable but only when the market has completely failed for the citizens to bargain one another. In short, when the market defects fall within one of following categories, the administrative agencies can justify the regulation formation:
(1) The need to control monopoly power. Under this situation, regulation is required to achieve the allocation of resource efficiently, that is, the regulation is indispensable to achieve the fairness of income distribution;
(2) The need to compensate for inadequate information. Basically, the people will be considered as the "risk optimists;"they tend to believe that they have below-average susceptibility to risks because they lack the complete information. The regulation will play the role to compensate for inadequate information, or to lower the costs ot consumers or workes of obtaining adequate information.
For this reason, the government action may be justified when (1) suppliers mislead consumers whose available legal remedies such as private litigation are expensive; (2) consumers cannot readily evaluate the information available such as the potential effectiveness of a drug; (3) the market on the supply side fails to furnish the information needed or demanded;
(3) Collective action problem. The clearest cases involve public or collective goods, which are characterized by two features: (1) nonrivalous consumption (consumption by one person does not create more scarcity for other consumptions); (2) nonexcludability (every can access public goods). The government can set the standard for the public goods.
(4) The need to correct for "externalities" or for the existence of "transactions costs" that make bargain difficulty and costly. If the transactions costs is not high, the government should not intervene in such activities.
Government regulaltion might be able to justify some other reasons. The government might need to control the windfall profit of some commodity which the price might increase suddenly.
Sometimes, the government might need to control the excessive competition that lead the small rivals of big companies defunct from the business, and finally the price will go up substantially. The regulation to control the "unfair competition" might be easily issued. Another reason, the government might need to alleviate scarcity especially an item in short supply. Finally, the regulation might need to be enacted to control the administrative agency problems because the agencies might distort the market mechanism by themselves.
However, those reasons are not based on the economic basis because those are justified as a means to enhance the efficiency and reduce the social cost. In stead, those are the method to redistribute the resources from one group to another. As a result, the regulation will cause some people better off while making other people worse off.
There still be numerous reasons to justify the administrative regulation. For example, the regulation can be used as the plan to develop the facility, industries, etc. Sometimes, some regulation might be issued to facilitate or assist the poor under the paternalism idea.
History of American Administrative Law
(1) English Antecedents.
The court had developed the writ of mandamus, writ of prohibition, or the writ to certioria as te mean to control the administraive agency decision after the court built up the doctrines of official privilege based on the exercise of discretionary authority. During the sixteenth and seventeenth centuries, in England, the Tudor and Stuart monarchs had developed powerful administrative tribunals that were used to control the subordinate officials in their relation to the citizenry, as the present French Conseil d'Etat. However, it was cut short by the Glorious Revolution of 1688.
(2) The American Experience to 1875.
The writ and the Chancellor's injunctive power were used as the mechanisms for the control of administrive officials around the first 100 years of the states. The main idea to administrate the country shifted from the state rule, which state had responsibility to allocate the resource, to the marketplace mechanism. The state had very limited power to intrude the private's activities.
(3) 1875-1930: The Rise of Administrative Regulation and the Traditional Model of Administrative Law.
The state attempted to set up the regulatory agency such as Interstate Commerce Commission (ICC) to champion the fairness of the small business. In this period, the regulated firms used the court to block the regulation. Then, the state enacted the statutory provision to supplant the court decision and provided for a trial-type hearing before the regulatory agency to develop a factual record that would serve as the besis for agency action. Thereafter, whenever the statury is not clear about the hearing process, court applied the same a trial-type hearing as the due process requirement. Under this traditional model of administrative law, there are four essential elements as following:
(3.1) The legislature must authorize administrative sactions on priviate persons through rules or standards that limit agency discretion;
(3.2) The procedures used by the agency must tend to ensure agency compliance with legislative directives;
(3.3) Judicial review must be available to ensure that agencies use accurate and impartial decisionmsking procedure and comply with legislative directives;
(3.4) Agency processes must facilitate the exercise of judicial review.
(4) The New Deal and Beyond: 1932-1945.
Franklin D. Roosevelt's New Deal was a watershed for the development of American administrative law. During the condition of the Great Depression, the common law was considered both too much and too little in different situations. It was too much because it protected the property and liberty from governmental revision; it is too little because it did not included basic rights to individual "security." The New Deal sought the broad range of social and economi gaurantees. During this period, two movement occured that is: (1) president posessed the broad power of lawmaking and adjudication; (2) the size and independent regulatory commissions had been founded substantially. However, most of New Deal Plans relating to the economic area were struck down as unconstitutional by the supreme court. Court-packing plan to expand the number of supreme court had been proposed by the president; this fact caused the swing vote and acept the deal as constitutional.
(5) 1945-1962: The Administrative Procedure Act (APA) and the Maturation of the Traditional Model of Administrative Law.
In 1940, the congress proposed the Walter-Logan bill, which would have imposed imposed standardized procedural requirements on federal agencies and mandated a broad availability and scope of judicial review of agency decisions. The president voted against this bill, but he actually in 1939 set up the Committed on Administrative Procedure, which finally in 1946 the Federal Administrative Procedure Act had been adopted in U.S.C. section 551 et seq. Some outlines about APA can be deliniated as following:
Section 551 definitions;
Section 552 requirements for publication of certain rules and regulations, and requires agencies to make other important decision and documents available to the public on request;
Section 553-558 the procedural formalities that agencies must observe in decisionmaking;
for example, section 553 will deal with the rule-making process which requires the involved interest persons can participate in the process and everything must be concluded in the record;
section 556-557 is the modifying of trial-type hearing procedures in rulemaking. In addition, the independent administrative judge and the procecutorial official must be separated under section 554, and 556-557.
Section 701-706 deal with the timing, form, and scope of judicial review.
(6) 1962-1980: The Rights Revolution, Critique of Administrative Process and Administrative Substance, and "Public Interest" Administrative Law.
Many scholars considered that the APA was too stiff or rigid. Under the civil right movent in 1960s, there were requirment of fairness for some group of American increased. Many independent regulatory commissions such as Equal Employment Opportunity Commission (EEOC), have been set up. Congress enacted the statutory deadline or hammer that required the administrative to do in timely limit. The court deal with "welfare" which basically was not the property rights as the new property right and required the trial-type hearing or other procedural formalitie and thorough judicial review.
(7) 1980 to now: Presidential Administration and the Cost-Benefit State?
Since the Reagan administration, the economic analysis about the unit cost for the regulatory formation was applied. Administrative agency must prove that the regulation was complete enought to pass the requirement of cost-benefit balancing test and the agency selected the least-cost solutions from several choices. Since 1980, three developments have been of special importance that is the government has shown an increasing interest in engaging in "Quantitative analysis;"in assessing "Tradeoffs;" and in "Smarter tools." Particularly, the government replaced the command and control regulation with the information disclosure and economic incentives or deregulations.
Another factor that facilitate the administrative law in the United Stated is the United States Supreme Court. The Court has played the significant role to develop not only the constitutional issue, but build up the administrative Law as well. First of all, the Court ruled that the agencies have the conderable freedom from judicial review when they decide not to take certain kinds of action. Secondly, the court limits the extent to which the courts can impose new procedural requirements on agencies.
Lastly, the Court requires the lower courts to pay particular attention to agency interpretations of statutes. For instance, if the statutory provisions are unclear, the court will look into the Congress' intention and other background, and reserve the right to interpret the magic words in the statute.
In contrast, if the terms in the statute are defined and clear, the court will not intervene an agency interpretation unless it is obviously unreasonable.
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