Chapter 38
Administrative Law
N.B.: TYPE indicates that a question is new, modified, or unchanged, as
follows.
N A question new to this edition of the Test Bank.
+ A question modified from the previous edition of the Test Bank.
= A question included in the previous edition of the Test Bank.
TRUE/FALSE QUESTIONS
1. Like statutory law, administrative law is created by legislatures.
2. Federal executive agencies are outside the federal executive departments.
3. Independent regulatory agencies include the cabinet departments of the
executive branch.
4. State regulation, when not preempted, may cover many of the same activities
as federal regulation.
5. By delegating some of its authority to make and implement laws, Congress
violates the U.S. Constitution.
6. Federal administrative agencies can regulate beyond the powers granted by
enabling legislation.
7. Administrative agencies cannot make legislative rules, or substantive rules, that
are as legally binding as laws that the Congress passes.
8. Interpretive rules simply declare policy and do not affect legal rights or
obligations.
9. A party seeking court review of an administrative action must first exhaust all of
his or her administrative remedies before seeking court review.
10. Under the exhaustion doctrine, a party must feel “exhausted” about an
administrative action or regulation to challenge it in court.
11. An administrative agency can issue an interpretive rule to indicate how the
agency plans to interpret its statutory authority.
12. There is a precise definition of what makes an administrative rule arbitrary and
capricious.
13. A party can challenge an administrative regulation as so irrational as to be
arbitrary and capricious.
14. The Administrative Procedure Act does not apply to a particular agency
procedure.
15. Rulemaking—the formulation of new administrative regulations—is a major
function of Congress, not administrative agencies.
16. Unlike those who violate statutes, violators of agency rules are not punished.
17. The period for persons to comment on a proposed administrative rule must be
at least thirty days.
18. Only experts can submit comments on a proposed administrative rule.
4 UNIT SIX: GOVERNMENT REGULATION
19. Final administrative rules do not have binding legal effect unless the courts
later declare them to be binding.
20. Final administrative rules have binding legal effect unless the courts later
overturn them.
21. Often, an administrative agency itself enforces its rules.
22. If a business firm refuses to comply with an agency’s request to inspect
facilities or business records, the agency must defer to the refusal.
23. Administrative agencies can conduct warrantless searches in some situations.
24. In most instances, an agency is not required to obtain a search warrant before
a physical search for evidence is conducted.
25. Frequently, disputes over violations of administrative rules are resolved through
informal adjudication proceedings.
26. Administrative agencies generally exercise substantial discretion over the type
of hearing procedures that they use.
27. An administrative adjudicatory hearing does not have to meet the constitutional
standards of due process.
28. If the meaning of a statute’s language is unclear and an agency interprets it, a
court must overturn the interpretation.
29. If the meaning of a statute’s language is unclear and an agency interprets it, a
court must follow the interpretation as long as it is reasonable.
30. All federal government agencies must make their records available
electronically on the Internet.
31. The federal government must disclose certain records to any person or entity
on written request only if there is a rational reason for the request.
32. Every portion of every meeting of a federal administrative agency does not
have to be open to public observation.
33. The public must be provided with adequate advance notice of scheduled
federal administrative agency meetings and agendas.
34. Federal agencies must consider ways to reduce the economic impact of new
regulations on small businesses.
35. An agency must conduct a regulatory flexibility analysis whenever a new
regulation will have an impact on a “small number of substantial entities.”
MULTIPLE CHOICE QUESTIONS
1. Independent regulatory agencies such as the Federal Trade Commission are
a. not part of the government’s executive branch.
b. outside the major departments of the government’s executive branch.
c. subagencies of executive agencies.
d. subject to more executive authority than executive agencies.
2. The U.S. Social Security Administration is a federal agency. The Iowa
Department of Social Services is a parallel state agency. If these agencies’
regulations conflict
a. the federal agency’s regulations take precedence.
b. the state agency’s regulations take precedence.
c. the two agencies’ regulations take equal precedence.
d. the two agencies’ regulations cancel each other.
3. Congress leaves it to the Bureau of Prisons to oversee the promulgation of
detailed regulations in areas under the agency’s jurisdiction. This is
a. divine right.
b. the delegation of legislative powers.
c. gap-filling power.
d. unconstitutional conduct.
4. Playground Equipment, Inc., is subject to regulations issued by the
Occupational Safety and Health Administration (OSHA). Like other federal
administrative agencies, the OSHA was created by
a. Congress, through enabling legislation.
b. the Federal Trade Commission, through the rulemaking process.
c. the president, through an executive order.
d. the U.S. Department of Labor, through a final order.
5. Nemo’s Seafood Restaurant Company pays income and other taxes collected
by the Internal Revenue Service (IRS). Like other federal administrative
agencies, the IRS was created by
a. Congress, through enabling legislation.
b. the courts, through the adjudicatory process.
c. the U.S. Constitution, through the tax and spend clause.
d. the U.S. Department of the Treasury, through a legislative rule.
6. Persons who favor the creation of a National Biotech Agency to regulate the
production of genetically altered agricultural products should concentrate their
lobbying efforts on
a. Congress.
b. federal administrative agencies that oversee agricultural products.
c. the United States Supreme Court.
d. the president of the United States.
7. Plastix Produx Company is subject to a decision by the Consumer Product
Safety Commission. Opposed to the decision, Plastix Produx wants a court to
review it. First, however, the firm must use all of the potential administrative
remedies. This is
a. an actual controversy at issue.
b. standing to sue.
c. the exhaustion doctrine.
d. the ripeness doctrine.
8. The Federal Aviation Administration uses notice-and-comment rulemaking. The
final rule in such a proceeding is sometimes referred to as
a. a legislative rule.
b. an interpretive rule.
c. an adjudicatory order.
d. an executive edict.
9. The Merit Systems Protection Board issues a rule. Like other administrative
agencies’ “legislative rules,” this rule is as
a. binding as a law passed by Congress.
b. persuasive as an expert’s opinion.
c. suggestive as a newspaper’s editorial.
d. unenforceable as a salesperson’s puffery.
10. Executive control over the Federal Communications Commission, and other
agencies, may be exercised through a presidential veto of
a. Congress’s modifications of the agency’s authority.
b. the agency’s final rules.
c. the agency’s final orders.
d. none of the choices.
11. Pure Water Company is subject to a decision by the Environmental Protection
Agency. Pure Water appeals the decision, arguing that it is arbitrary and
capricious. This could mean that the decision
a. changed the agency’s prior policy without justification.
b. followed a consideration of all relevant factors.
c. was accompanied by a rational explanation.
d. was plainly warranted by the evidence.
12. Freight Transport Company is subject to a decision by the National Labor
Relations Board. Freight Transport appeals the decision, arguing that it is
arbitrary and capricious. This could mean that the decision
a. followed a consideration of legally appropriate factors.
b. justifiably changed the agency’s prior policy.
c. was accompanied by a rational explanation.
d. was plainly contrary to the evidence.
13. Before adopting new regulations to govern Internet-based phone services, the
Federal Communications Commission may not
a. hold hearings to acquire facts pertinent to the proposed rules.
b. ignore the Administrative Procedure Act to streamline proceedings.
c. order manufacturers to provide certain documents.
d. solicit testimony from interest groups and consumers.
14. To notify the public of a proposed rule, the Food Safety and Inspection Service,
like other federal agencies, publishes the proposal in
a. the news media.
b. a trade journal available to members of the industry.
c. the Federal Register.
d. an office memo that employees are free to take home.
15. The Securities and Exchange Commission decides to create a new rule
relating to the dissemination of material nonpublic information through
corporate Web sites. The first step is
a. compile the rule with others in the Code of Federal Regulations.
b. conduct an on-site inspection.
c. publish a notice of the proposed rulemaking.
d. solicit public comment.
16. The U.S. Fish and Wildlife Service utilizes notice-and-comment rulemaking.
This involves a period during which
a. judges, legislators, and the president are asked about a proposed rule.
b. potential violators of a proposed rule are notified and publicized.
c. the administrators “notice” a problem and “comment” on it.
d. the public is asked to comment on a proposed rule.
17. The U.S. Citizenship and Immigration Service issues a rule. Like the rules of
other federal administrative agencies, this rule is compiled in
a. the Administrative Register of the Federal Government.
b. the Code of Federal Regulations.
c. the Federal Rules of Civil Procedure.
d. the United States Code.
18. The Consumer Product Safety Commission (CPSC) wants Monster Toy
Company to produce certain records for review. To obtain the records, the
CPSC will issue
a. an order for specific performance.
b. a rule for parol evidence.
c. a formal complaint.
d. a subpoena.
19. The Food and Drug Administration (FDA) is investigating reports that Caplets
Pharmaceutical Corporation is putting potentially harmful additives in Doze, a
new pain-relief medication. The FDA’s demands for particular documents from
Caplets
a. must be specific and adequately describe the material being sought.
b. must be non-specific so an incriminating item is not overlooked.
c. must be general so as to force an uncooperative party’s compliance.
d. may, but need not, be specific because the FDA is a federal agency.
20. The U.S. Patent and Trademark Office (USPTO) wants to review certain
records of Verity Corporation. The USPTO can legitimately gain access to the
records through
a. agency coercion.
b. infiltrating Verity’s computers without the firm’s knowledge.
c. public comment.
d. Verity’s consent.
21. The Internal Revenue Service (IRS) wants to seize certain documents of
Monetary Propriety, Inc. Whether it is permissible for the IRS to request or
seize the documents depends on whether the documents are
a. incriminating.
b. relevant.
c. technical.
d. valuable.
22. Caleb is a witness in a controversy involving the U.S. Drug Enforcement
Administration. Caleb can be compelled to appear before an administrative law
judge if he is served with
a. an order for specific performance.
b. a rule for parol evidence.
c. a subpoena.
d. a politely worded request.
23. The Nuclear Regulatory Commission (NRC) files a complaint against General
Construction Corporation (GCC). GCC may want to settle the dispute, before
formal adjudicatory proceedings begin, to avoid
a. appearing uncooperative.
b. eliminating the need for additional proceedings.
c. rectifying the problem to the NRC’s satisfaction.
d. saving the expense of formal proceedings and later appeals.
24. The functions of the Social Security Administration, like those of other adminis–
trative agencies, include
a. adjudication.
b. declaration.
c. enunciation.
d. pronunciation.
25. The U.S. Mine Safety Administration conducts searches of certain businesses.
This agency and other administrative agencies can conduct warrantless
searches in
a. all industries.
b. highly regulated industries.
c. no industries.
d. newly regulated industries only.
26. The Federal Emergency Management Agency (FEMA) discovers that Goodnuff
Trailers, Inc., is violating a FEMA regulation. If this situation is resolved like
most such disputes, the outcome will be
a. a negotiated settlement.
b. a trial and a fine.
c. a trial and an appeal to a higher authority.
d. a trial and the dissolution of the business.
27. Nursing Home Care Company is charged with violating a rule of the Social
Security Administration. Most likely, Nursing Home Care will be required to
appear at a hearing presided over by
a. a federal appellate court judge.
b. a federal district court judge.
c. an administrative law judge.
d. a U.S Marshal.
28. Labor Recruiters, Inc., has been ordered to appear at a hearing before an
administrative law judge of the National Labor Relations Board. A significant
difference between a trial and an administrative hearing is that
a. attorneys are not allowed to attend administrative hearings.
b. clients are not allowed to communicate with their attorneys during
administrative hearings.
c. hearsay can be introduced as evidence in an administrative hearing.
d. the burden of proof is on the charged party to prove innocence.
29. Guard Personnel Company is charged with using hiring practices that do not
meet requirements set by the Transportation Safety Administration (TSA). The
administrative law judge orders Guard to comply with the TSA’s regulations.
Guard may
a. appeal to the commission that governs the TSA.
b. appeal to Congress, which created the TSA.
c. appeal to a different, separate agency.
d. ignore the order.
30. In reviewing the actions of the U.S. Office of Nuclear Energy and other
agencies, the courts
a. are usually reluctant to review questions of fact.
b. rarely defer to the technical expertise of administrative agencies.
c. often rule on the merits of policy determinations.
d. never defer to an agency’s interpretation of law.
31. After notice-and-comment rulemaking, the U.S. Bureau of Land Management
(BLM) issues a new rule and applies it to Clearcut Timber Company. Clearcut
appeals the application to a federal court. The court will most likely defer to the
BLM’s interpretation of
a. the facts and the law.
b. the agency’s authority.
c. procedural requirements.
d. the Constitution.
32. Beck seeks information about Donatello and other well-known businesspersons
under the Freedom of Information Act. To obtain the information, Beck must
a. agree not to reveal any trade secrets.
b. reasonably describe the information.
c. get a court order.
d. have the businesspersons’ permission.
33. A failure of the Federal Bureau of Investigation to comply with a request under
the Freedom of Information Act (FOIA) may be challenged in
a. a federal district court.
b. a hearing before the U.S. Freedom of Information Agency.
c. a meeting with Congress’s FOIA subcommittee.
d. a special conference with the president of the United States.
34. With some exceptions, every portion of every meeting of the Federal Reserve
System Board of Governors and other federal administrative agencies must be
open to public observation under
a. no federal or state law.
b. the Freedom of Information Act.
c. the Government in the Sunshine Act.
d. the Public Accountability Act.
35. The Regulatory Flexibility Act has helped reduce record-keeping burdens for
Hometown Gas Company and other small business firms in the area of
a. accounting practices.
b. asset acquisition.
c. hazardous waste management.
d. tax reporting.
ESSAY QUESTIONS
1. Administrative agencies—like the Securities and Exchange Commission, the
Federal Trade Commission, and the Food and Drug Administration—make
rules. What are the two basic types of rules called, and how binding are they?
What must an administrative rule NOT do?
2. Grapple Market Share Corporation would like to know what information federal
agencies have about Grapple’s operations, so that the firm will know what its
competitors may be able to learn about it. Can Grapple require the agencies to
disclose whatever information they may have concerning it? If so, how should
the firm make its request? What federal law applies? Is any information
exempt?
CHAPTER 38: ADMINISTRATIVE LAW 19