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Business Law Chapter 43 Homework Sec Made Extensive Use Data That Was

Page Count
9 pages
Word Count
5057 words
Book Title
Business Law: Text and Cases 14th Edition
Authors
Frank B. Cross, Kenneth W. Clarkson, Roger LeRoy Miller
1
CHAPTER 43
ADMINISTRATIVE AGENCIES
ANSWER TO CRITICAL THINKING QUESTION
IN THE FEATURE
DIGITAL UPDATECRITICAL 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
successful in doing so before. Others may bring lawsuits that concern the independence of the
Federal Communications Commission. In principle, a regulatory agency is not supposed to be
ANSWERS TO QUESTIONS
AT THE ENDS OF THE CASES
CASE 43.1CRITICAL 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.
In the Loving case, the court construed that statute in its original and recodified versions.
The previous statute plainly did not cover tax-return preparers, who were not “agents” or
CASE 43.2CRITICAL 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
waits to review an agency order until it has gone through the entire procedural process and can
be considered final. Courts discourage the filing of petitions for review until after an agency
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,
not arbitrary and capricious. A court does not need to conclude that the agency’s interpretation
was the only one it could have adopted or even that it was the same interpretation the court
would have applied.
CASE 43.3LEGAL 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
on informed judgment rather than concrete evidencebecause of the often revealing nature of
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
case should have revealed the reasons for its decision before Olivares filed a suit challenging it.
But its failure to do so was not fatal to that decision, because the agency did reveal its reasons,
4 UNIT NINE: GOVERNMENT REGULATION
In the Olivares case, the court cautioned, however, that the Administrative Procedure Act
(APA) required a contemporaneous explanation for an agency’s action. Thus, agencies, like the
Transportation Safety Administration here,
will be well advised to obey the explicit command of [the APA] rather than counting on being able to
salvage their actions later, after the losing party has been forced to seek redress in court. Persistent
scofflaw behavior might cause the courts to insist that the contemporaneous explanation actually be
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
The new rule is likely arbitrary and capricious because little rationale was provided for a major
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
new regulation. The new rule is a major expansion of regulatory power and it is not clear it was
the intent of Congress to go this far.
4A. Interpretive rules
Interpretive rules are not subject to the same level of judicial review as are new substantive
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
separate from the agency’s investigative and prosecutorial staff. Ex parte communications 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
Register. A public hearing is held at which proponents and opponents can offer evidence and
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
be held legal. As long as an agency has both rulemaking and adjudicatory powers, the agency
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
procedures beyond those of the APA. Courts will, however, compel agencies to follow their own
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
court held that “the extra-record materials did not merely supplement the rulemaking record
without prejudice to the Chamber, and the public availability of those materials, in this instance,
does not merit an exception to the comment requirement” under the APA. The SEC’s “reliance
upon extra-record materials . . . in determining not to modify the two conditions . . . required
43-4A. BUSINESS CASE PROBLEM WITH SAMPLE ANSWERSAgency 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.
According to the Court, the definition, which includes “any” air pollutant, embraces all airborne
compounds “of whatever stripe.” The EPA's focus on Congress’s 1990 amendments (or their
lack) indicates nothing about the original intent behind the statute (and its amendments before
1990). Nothing in the statute suggests that Congress meant to curtail the agency’s power to
treat greenhouse gases as air pollutants. In other words, the agency has a pre-existing mandate
to regulate “any air pollutant” that may endanger the public welfare.
The EPA also argued that, even if it had the authority to regulate greenhouse gases, the
435A. 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
supported by substantial evidence in the administrative record, and the decision as a whole
436A. 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
437A. 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
body’s ruling, the party can appeal the decision to a federal appellate court. If the party appeals
and a review is denied, the order of the ALJ or the governing body becomes the final order in
the case. If the party appeals and the case is accepted for review, the final order will come from
the reviewing court.
438A. 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
defers to an agency’s interpretation of a statute if the interpretation is reasonable.
Reasonableness is particularly important when the statute’s language is ambiguous. An
interpretation that meets the standards for notice-and-comment rulemaking is assured of
deference.
The Federal Mine Safety and Health Actthe statute at the center of this problem
designates a violation as “significant and substantial” (S&S) when it “could significantly and
substantially contribute to the cause and effect of a coal or other mine safety or health hazard.”
The U.S. Department of Labor charged Knox with violations of the Mine Act that were
determined to be S&S. In Knox’s challenge to this determination in a federal court, the Labor
43-9A. A QUESTION OF ETHICSRulemaking
(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
new model, arguing that it had been an integral part of the agency’s analysis of the limits on
drivers. The FMSCA responded that interested parties would have known from the overturning
of the 2003 revisions of the regulations that it “would have had to adjust the model.”
The court concluded that the FMSCA violated the Administrative Procedure Act (APA) by
not making the new model public sooner than it did. The agency should have given interested
parties an opportunity to comment on the methodology of the crash-risk model used. The court
(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.
The court also recognized that the FMSCA failed to adequately explain this critical
element. “This complete lack of an explanation for an important step in the agency’s analysis
was arbitrary and capricious” in the court’s view.
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
either by position (flight attendant) or by location (France). The subpoena requires extensive
(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.
The major U.S. law regulating employment discriminationTitle VII of the Civil Rights Act
of 1964applies extraterritorially to all U.S. employees working for U.S. employers abroad.
Generally, U.S. employers must abide by U.S. discrimination laws unless to do so would violate
the laws of the country where their workplaces are located.

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