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1
CHAPTER 43
ADMINISTRATIVE AGENCIES
ANSWER TO CRITICAL THINKING QUESTION
IN THE FEATURE
DIGITAL UPDATE—CRITICAL THINKING
Some observers predict that numerous lawsuits will be filed against the FCC in the
immediate future. Why would this be likely? Undoubtedly, broadband providers such as
Verizon and Comcast will challenge the FCC’s authority to regulate them. After all, they were
ANSWERS TO QUESTIONS
AT THE ENDS OF THE CASES
CASE 43.1—CRITICAL THINKING
LEGAL ENVIRONMENT
As a policy matter, some observers might argue that the IRS should be allowed to
regulate tax-return preparers more strictly. Under the reasoning of the court, who has the
authority to give effect to this policy and how would it be accomplished? Under the
reasoning of the court, Congress is the branch of the government that has the authority to give
effect to the policy stated in the question and set out how it would it be accomplished.
CASE 43.2—CRITICAL THINKING
ECONOMIC
Why should a court wait to review an agency’s order until it has gone through the entire
procedural process and can be considered final? In the interest of judicial economy, a court
LEGAL ENVIRONMENT
Under what standard does a court defer to an agency’s interpretation of a statute? Did
the court in this case appear to have applied that standard to the DEA’s interpretation of
the Controlled Substances Act? Discuss. Under the holding of the Chevron case discussed
earlier in this chapter, an agency’s interpretation of a statute must be reasonable and, therefore,
CASE 43.3—LEGAL REASONING QUESTIONS
1. What impact did the Vara Declaration have on the court’s ruling in this case? The Vara
Declaration made clear that Alberto Olivares’s (Petitioner’s) record “raised concerns that
Petitioner might use his flight training to advance the interests of a criminal enterprise, which
could include an enterprise that seeks to do harm to the United States.” That perspective
supported the agency’s action to deny Olivares’s application to attend an Federal Aviation
CHAPTER 43: ADMINISTRATIVE AGENCIES 3
2. Is a court’s evaluation of an agency’s assessment of a risk to national security
different from a review of other agency determinations? Explain. Yes, a court’s evaluation
of an agency’s assessment of a risk to national security is different from a review of other
agency determinations. In assessing risks to national security, conclusions must often be based
3. Should the agency at the center of this case have revealed the reasons for its decision
before Olivares filed a suit challenging it? Explain. Yes, the agency at the center of this
4 UNIT NINE: GOVERNMENT REGULATION
ANSWERS TO QUESTIONS IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
1A. Type of agency
The SEC is an independent regulatory agency, because the president does not have the power
to appoint and remove federal officers at the SEC. Because federal officers at the SEC are not
2A. Arbitrary and capricious
change in a rule that should have been subject to notice-and-comment proceedings.
3A. Chevron deference
The SEC will probably not get Chevron deference and the courts will give careful review to the
4A. Interpretive rules
ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
Because an administrative law judge (ALJ) acts as both judge and jury, there
should always be at least three ALJs in each administrative hearing. It is unfair to give an
ALJ so much power within any administrative agency. After all, each ALJ works for the
CHAPTER 43: ADMINISTRATIVE AGENCIES 5
administrative agency that she or he is supposed to judge in any dispute. How can we assume
that an ALJ will be unbiased? There will always be a tenancy for ALJs to favor the actions of
administrative agencies. There is at least a chance of more unbiased decisions if at least three
ALJs hear each case
ANSWERS TO ISSUE SPOTTERS
AT THE END OF THE CHAPTER
1A. The U.S. Department of Transportation (DOT) sometimes hears an appeal from a
party whose contract with the DOT has been canceled. An administrative law judge (ALJ),
who works for the DOT, hears this appeal. What safeguards promote the ALJ’s fairness?
Under the Administrative Procedure Act (APA), the administrative law judge (ALJ) must be
2A. Techplate Corporation learns that a federal administrative agency is considering a
rule that will have a negative impact on the firm’s ability to do business. Does the firm
have any opportunity to express its opinion about the pending rule? Explain. Yes.
Administrative rulemaking starts with the publication of a notice of the rulemaking in the Federal
ANSWERS TO BUSINESS SCENARIOS
AT THE END OF THE CHAPTER
43-1A. Rulemaking and adjudication powers
The court will examine first whether the agency followed the procedures prescribed in the
Administrative Procedure Act (APA). If so, the Federal Trade Commission (FTC) rules will likely
43-2A. Informal rulemaking
The court will consider first whether the agency followed the procedures prescribed in the
Administrative Procedure Act (APA). Ordinarily, courts will not require agencies to use
ANSWERS TO BUSINESS CASE PROBLEMS
AT THE END OF THE CHAPTER
43-3A. Rulemaking
The U.S. Court of Appeals for the District of Columbia Circuit reviewed and vacated the new
conditions, holding that the SEC violated the Administrative Procedure Act (APA) when the
agency reaffirmed the conditions without reopening the opportunity for public comment. The
did not show that its comments on the information would have altered the result in this instance.
43-4A. BUSINESS CASE PROBLEM WITH SAMPLE ANSWERS—Agency powers
The United States Supreme Court held that greenhouse gases fit within the Clean Air Act's
(CAA’s) definition of “air pollutant.” Thus, the Environmental Protection Agency (EPA) has the
authority under that statute to regulate the emission of such gases from new motor vehicles.
CHAPTER 43: ADMINISTRATIVE AGENCIES 7
43–5A. Judicial deference
A court of appeals reviews the legal issues raised in an administrative appeal but accords
deference to relevant factual finding. An ALJ’s factual determinations must be upheld if they are
43–6A. Arbitrary and capricious test
Yes, the agency’s decision to revoke Manin’s certification was arbitrary and capricious. When
reviewing an agency decision, a court considers whether the agency’s actions were arbitrary,
capricious, or an abuse of discretion. An action is arbitrary or capricious if, for example, the
43–7A. Adjudication
GoJet can appeal the decision of the Federal Aviation Administration (FAA) to the appropriate
federal court of appeals. After a hearing before an administrative law judge (ALJ), the ALJ
8 UNIT NINE: GOVERNMENT REGULATION
issues an initial order. Any party to the case can appeal this decision to the board or
commission that governs the agency. If any party is further dissatisfied with the governing
43–8A. Judicial deference to agency decisions
Yes, in this case, the court can defer to the Secretary’s interpretation of the language in the
Mine Act, but only if the court decides that the interpretation is reasonable. A court generally
defers to an agency’s analysis of facts that pertain to its area of expertise. A court also generally
43-9A. A QUESTION OF ETHICS—Rulemaking
(a) The FMSCA analyzed the crash risks due to driver fatigue according to a new
model to justify an increase in the maximum number of daily and weekly hours that long-haul
truck drivers could drive and work. The agency did out reveal this new methodology, however,
until it was too late for public comment. Public Citizen objected to the agency’s reliance on the
(b) Public Citizen claimed that the graph made it appear as if the risk of a crash after a
higher number of hours on the job was significantly lower than it actually was. The plaintiff
argued that the agency should have explained its reason for depicting the data in this way.
10 UNIT NINE: GOVERNMENT REGULATION
ANSWERS TO LEGAL REASONING GROUP ACTIVITY QUESTIONS
AT THE END OF THE CHAPTER
43-10A. Investigation
(a) The court should not order UAL to comply with the subpoena. The information
sought goes far beyond an inquiry into whether and for whom UAL makes French social security
payments. It is not limited to individuals who may be considered similarly situated to Droge
(b) The Equal Employment Opportunity Commission (EEOC) does not have the
authority to force a U.S. company that is operating oversees to provide the same (disability)
benefits to employees located there as it does to employees in the United States.
