ANSWERS TO PROBLEMS
1. In 1942, Congress passed the Emergency Price Control Act in the interest of national
defense and security. The stated purpose of the Act was “to stabilize prices and to
prevent speculative, unwarranted and abnormal increases in prices and rents….” The
Act established the Office of Price Administration, which was authorized to establish
maximum prices and rents that were to be “generally fair and equitable and [were to]
effectuate the purposes of this Act.” Convicted for selling beef at prices in excess of
those set by the agency, Stark appeals on the ground that the Act unconstitutionally
delegated to the agency the legislative power of Congress to control prices. Is Stark
correct in this contention?
Answer: Judicial Review of Agency Action. No, Stark’s contention is wrong, and therefore
his conviction for selling beef at inflated prices should be upheld.
Legislative rules have the force of law if they do not violate any provisions of the U.S.
2. The Secretary of Commerce (Secretary) published notice in the Federal Register
inviting comments regarding flammability standards for mattresses. Statistical data were
compiled, consultant studies were conducted, and seventy-five groups submitted
comments. The Secretary then determined that all mattresses, including crib mattresses,
must pass a cigarette test, consisting of bringing a mattress in contact with a burning
cigarette. The department’s staff supported this position by stating: “Exemption of youth
and crib mattresses is not recommended. While members of these age groups do not
smoke, their parents frequently do, and the accidental dropping of a lighted cigarette on
these mattresses while attending to a child is a distinct possibility.” Bunny Bear, Inc.
now challenges the cigarette flammability test, asserting that the standard was not
shown to be applicable to crib mattresses, since “infants and young children obviously
do not smoke.” Bunny Bear argues that the Secretary has not satisfied the burden of
proof justifying the inclusion of crib mattresses within this general safety standard. Is
Bunny Bear correct? Explain.
Answer: Judicial Review of Agency Action. The flammability standard for mattresses was
needed to protect the public against unreasonable risk of fire. The court held, “Whether
3. Reagan National Airport in Washington, D.C., is one of the busiest and most
crowded airports in the nation. Accordingly, the Federal Aviation Administration (FAA)
has restricted the number of commercial landing and takeoff slots at National to forty
per hour. Allocation of the slots among the air carriers serving National had been by
voluntary agreement through an airline scheduling committee (ASC). When a new
carrier requested twenty slots during peak hours, National’s ASC was unable to agree on
a slot allocation schedule. The FAA engaged in informal rulemaking and invited public
comment as a means to solve the slot allocation dilemma. The FAA then issued Special
Federal Aviation Regulation 43 (SFAR 43) based on public comments and a proposal
made at the last National ASC meeting, thereby decreasing the number of slots held by
current carriers and shifting some slots to less desirable times. SFAR 43 also granted
eighteen slots to New York Air. More specifically, SFAR 43 requires five carriers to give
up one or more slots in specific hours during the day, requires twelve carriers to shift
one slot to the latest hour of operations, and then reserves and allocates the yielded slots
among the new entrants and several other carriers. Northwest Airlines seeks judicial
review of SFAR 43, claiming that it is arbitrary, capricious, and not a product of
reasoned decision making, and that it capriciously favors the Washington–New York
market as well as the new carrier. What standard would apply to the agency’s actions?
Should Northwest prevail? Explain.
Answer: Judicial Review of Agency Action. Northwest should not prevail, and the court
should uphold SFAR 43. The FAA should be held to the substantial evidence test,
which requires the conclusions reached to be supported by “such relevant evidence as a
4. Bachowski was defeated in a United Steelworkers of America union election. After
exhausting his union remedies, Bachowski filed a complaint with Secretary of Labor
Dunlop. Bachowski invoked the Labor-Management Reporting and Disclosure Act,
which required Dunlop to investigate the complaint and determine whether to bring a
court action to set aside the election. Dunlop decided such action was unwarranted.
Bachowski then filed an action in a Federal district court to order Dunlop to file suit to
set aside the election. What standard of review would apply and what would Bachowski
have to prove to prevail under that standard?
Answer: Judicial Review of Agency Action. The arbitrary and capricious standard would
apply to this proceeding. This requires that Bachowski prove that the agency did not
5. The Federal Crop Insurance Corporation (FCIC) was created as a wholly
government-owned corporation to insure wheat producers against unavoidable crop
failure. As required by law, the FCIC published in the Federal Register conditions for
crop insurance. Specifically, the FCIC published that spring wheat reseeded on winter
wheat acreage was ineligible for coverage. When farmer Merrill applied for insurance
on his wheat crop, he informed the local FCIC agent that 400 of his 460 acres of spring
wheat were reseeded on the winter acreage. The agent advised Merrill that his entire
crop was insurable. When drought destroyed Merrill’s wheat, Merrill tried to collect the
insurance, but the FCIC refused to pay, asserting that Merrill is bound by the notice
provided by publication of the regulation in the Federal Register. Is the FCIC correct?
Explain.
Answer: Rulemaking. It was held in the case upon which this problem was based that
publication in the Federal Register was sufficient notice to all persons, including Merrill
6. The Department of Energy (DOE) issued a subpoena requesting information
regarding purchases, sales, exchanges, and other transactions in crude oil from Phoenix
Petroleum Company (Phoenix). The aim of the DOE audit was to uncover violations of
the Emergency Petroleum Allocation Act (EPAA). The EPAA contained provisions for
summary, or expedited, enforcement of DOE decisions. However, after the subpoena was
issued but before Phoenix had responded, the EPAA expired. The EPAA provided that
“[t]he authority to promulgate and amend any regulation, or to issue any order under
this Chapter shall expire at midnight September 30, 1981, but such expiration shall not
affect any action or pending proceedings, administrative, civil or criminal action or
proceeding, whether or not pending, based upon any act committed or liability incurred
prior to such expiration date.” Using the summary enforcement provisions of the now
defunct EPAA, the DOE sues to enforce the subpoena. Phoenix argues that because the
EPAA has expired, the DOE lacks the authority either to issue the subpoena or to use the
summary enforcement provisions. Is Phoenix correct? Why?
Answer: Enforcement. Phoenix Petroleum must comply with the administrative subpoena
issued by the DOE. The subpoena was issued for a proper purpose and further was
7. Under the Communications Act, the Federal Communications Commission may not
impose common carrier obligations on cable operators. A common carrier is one that
“makes a public offering to provide [communication facilities] whereby all members of
the public who choose to employ such facilities may communicate or transmit.” In May
1976, the Commission issued rules requiring cable television systems of a designated
size (a) to develop a minimum twenty-channel capacity by 1986, (b) to make available
on a first-come, nondiscriminatory basis certain channels for access by third parties,
and (c) to furnish equipment and facilities for such access. The purpose of these rules
was to ensure public access to cable systems. Midwest Video Corporation claimed that
the access rules exceeded the Commission’s jurisdiction granted it by the
Communications Act of 1934, because the rules infringe upon the cable systems’
journalistic freedom by in effect treating the cable operators as “common carriers.” The
Commission contended that its expansive mandate under the Communications Act to
supervise and regulate broadcasting encompassed the access rules. Did the Commission
exceed its authority under the Act?
Answer: Rulemaking. Yes. Judgment for Midwest Video. The Commission has the
authority to issue rules to promote its long-established regulatory goals of increasing the
number of outlets for local expression and diversifying programming. However, under
8. Congress enacted the National Traffic and Motor Vehicle Safety Act of 1966 (the
Act) for the purpose of reducing the number of traffic accidents that result in death or
personal injury. The Act directs the Secretary of Transportation to issue motor vehicle
safety standards in order to improve the design and safety features of cars. The
Secretary has delegated authority to promulgate safety standards to the National
Highway Traffic Safety Administration (NHTSA) under the informal rulemaking
procedure of the APA. The Act also authorizes judicial review under the provisions of the
Administrative Procedure Act (APA) of all orders establishing, amending, or revoking a
federal motor vehicle safety standard issued by the NHTSA.
Pursuant to the Act, the NHTSA issued Motor Vehicle Safety Standard 208, which
required all cars made after September 1982 to be equipped with passive restraints
(either automatic seatbelts or airbags). The cost of implementing the standard was
estimated to be around $1 billion. However, early in 1981, due to changes in economic
circumstances and particularly due to complaints from the automotive industry, the
NHTSA rescinded Standard 208. The NHTSA had originally assumed that car
manufacturers would install airbags in 60 percent of new cars and passive seatbelts in
40 percent. However, by 1981 it appeared that manufacturers were planning to install
seatbelts in 99 percent of all new cars. Moreover, the majority of passive seatbelts could
be easily and permanently detached by consumers. Therefore, the NHTSA felt that
Standard 208 would not result in any significant safety benefits. State Farm Mutual
Automobile Insurance Company (State Farm) and the National Association of
Independent Insurers (NAII) filed petitions in Federal court for review of the NHTSA’s
rescission of Standard 208. What standard of review would apply to the rescission?
Should it be set aside? Explain.
Answer: Judicial Review of Agency Action. Judgment for State Farm and NAII. The Act
indicates that motor vehicle safety standards are to be promulgated under the informal
rulemaking procedure of the APA. The NHTSA’s action in promulgating such standards
therefore may be set aside if found to be “arbitrary, capricious, an abuse of discretion, or
9. David Diersen filed a complaint against the Chicago Car Exchange (CCE), an
automobile dealership, alleging that the CCE fraudulently furnished him an inaccurate
odometer reading when it sold him a 1968 Dodge Charger, in violation of the Vehicle
Information and Cost Savings Act (the Odometer Act or the Act). The Odometer Act
requires all persons transferring a motor vehicle to give an accurate, written odometer
reading to the purchaser or recipient of the transferred vehicle. Under the Act, those
who disclose an inaccurate odometer reading with the intent to defraud are subject to a
private cause of action by the purchaser and may be held liable for treble damages or
$1,500, whichever is greater. The CCE had purchased the vehicle from Joseph Slaski,
who certified to the CCE that the mileage was approximately 22,600. The CCE did not
suspect that the odometer reading was inaccurate. After purchasing the vehicle, Diersen
conducted an extensive investigation and discovered that the vehicle’s title documents
previously listed its mileage as 75,000. Before Diersen filed this lawsuit, the CCE
offered to have Diersen return the car for a complete refund. Diersen refused this offer
and decided instead to sue the CCE under the Act. The district court granted the
defendant’s motion for summary judgment, relying upon a regulation promulgated by the
National Highway Traffic Safety Administration (NHTSA) which purports to exempt
vehicles that are at least ten years old (such as the one Diersen purchased from the
CCE) from the Act’s odometer disclosure requirements. Diersen then filed a motion for
reconsideration of the court’s summary judgment order, arguing that the older-car
exemption created by the NHTSA lacked any basis in the Act and was therefore invalid.
Should Dierson’s motion for reconsideration be granted? Explain.
Answer: Rulemaking. No. Although the district court erred in relying on the regulation
promulgated by the National Highway Traffic Safety Administration (NHTSA) which
purports to exempt vehicles that are at least ten years old (such as the one Diersen
purchased from the CCE) from the Act’s odometer disclosure requirements, the summary
ANSWERS TO “TAKING SIDES” PROBLEMS
Section 7 (a) (2) of the Endangered Species Act of 1973 (ESA) provides (in relevant part)
that:
[e]ach Federal agency shall, in consultation with and with the assistance of
the Secretary (of the Interior), insure that any action authorized, funded, or
carried out by such agency . . . is not likely to jeopardize the continued
existence of any endangered species or threatened species or result in the
destruction or adverse modification of habitat of such species which is
determined by the Secretary, after consultation as appropriate with affected
States, to be critical.
In 1978, the Fish and Wildlife Service and the National Marine Fisheries Service, on
behalf of the Secretary of the Interior and the Secretary of Commerce respectively,
promulgated a joint regulation stating that the obligations imposed by Section 7(a)(2)
extend to actions taken in foreign nations. In 1983, the Interior Department proposed a
revised joint regulation that would require consultation only for actions taken in the
United States or on the high seas. Shortly thereafter, Defenders of Wildlife and other
organizations filed an action against the Secretary of the Interior, seeking a declaratory
judgment that the new regulation is in error as to the geographic scope of Section 7(a)(2)
and an injunction requiring the Secretary to promulgate a new regulation restoring the
initial interpretation. The Secretary asserted that the plaintiffs did not have standing to
bring this action.
a. What arguments would support the plaintiff’s standing to bring this action?
b. What arguments would support Secretary’s claim that plaintiffs did not have
standing to bring this action?
c. Which side’s arguments are most convincing? Explain.
ANSWER:
a The plaintiff could argue that: (i) its members have visited foreign regions of the
world and observed the habitat of endangered species and that they intend to return
and view the endangered animals directly at some later date and the planned or
existing government-supported projects will adversely affect these habitats and
