Chapter 44
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
A1. Like statutory law, administrative law is created by legislatures.
A2. State regulation, when not preempted, may cover many of the same activities as
federal regulation.
A3. Federal administrative agencies can regulate beyond the powers granted by enabling
legislation.
A4. Federal executive agencies are outside the federal executive departments.
A5. Administrative agencies can not make legislative rules, or substantive rules, that are
as legally binding as laws that the Congress passes.
A6. A court will not review an administrative agency’s decision until the case is “ripe for
review.”
A7. A party can challenge an administrative regulation as so irrational as to be arbitrary
and capricious.
A8. Rulemaking—the formulation of new administrative regulations—is a major function
of Congress, not administrative agencies.
A9. Final administrative rules have binding legal effect unless the courts later overturn
them.
A10. The period for persons to comment on a proposed administrative rule must be at
least thirty days.
A11. If the meaning of a statute’s language is unclear and an agency interprets it, a court
must overturn the interpretation.
A12. Informal agency actions are exempt from the Administrative Procedure Act’s
requirements.
A13. Many agency rules require compliance reporting from regulated entities, and such a
report can not trigger an enforcement investigation.
A14. There are no limits to the information that an administrative agency can demand from
an individual or organization.
A15. In most instances, an agency is not required to obtain a search warrant before a
physical search for evidence is conducted.
A16. If an investigation reveals a suspected violation of an administrative rule, the agency
can not issue a formal complaint against the suspected violator.
A17. Frequently, disputes over violations of administrative rules are resolved through
informal adjudication proceedings.
A18. 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.
A19. Every portion of every meeting of a federal administrative agency does not have to be
open to public observation.
A20. 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
A1. Boxy’s Packaging Materials Company 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.
A2. 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.
A3. 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.
A4. 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.
A5. The Federal Aviation Administration uses notice-and-comment rulemaking. The final
rule in such a proceeding has binding legal effect
a. after a court affirms it.
b. until the next presidential election.
c. once Congress approves it.
d. unless a court overturns it.
A6. The Securities and Exchange Commission decides to create a new rule relating to the
dissemination of material nonpublic information through corporate blogs, tweets, and
Web sites. The first step is to
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.
A7. 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.
A8. The U.S. Fish and Wildlife Service uses 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.
A9. 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.
A10. 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.
A11. 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.
A12. 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.
A13. The Federal Trade Commission (FTC) orders GR8 Steaks Company to reveal certain
information. GR8 Steaks complains to a court, arguing that the order is an abuse of
the FTC’s discretion. Like other agencies, the FTC can use a subpoena to
a. compel a party to testify, but not to obtain documents.
b. obtain any information except what a party refuses to reveal.
c. pressure a party to settle an unrelated matter.
d. reveal violations of the law.
A14. 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.
A15. The Internal Revenue Service (IRS) wants to seize certain documents of Mortgage
Bank, Inc. Deciding 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.
A16. 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.
A17. 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.
A18. Guard Personnel Company is charged 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.
A19. 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.
A20. 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
A1. 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?
A2. 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 dis–
close whatever information they may have concerning it? If so, how should the firm
make its request? What federal law applies? Is any information exempt?
