Functions of Administrative Agencies

Cite this article as: Jason Mance Gordon, "Functions of Administrative Agencies," in The Business Professor, updated January 4, 2015, last accessed March 29, 2020,
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Functions of Administrative Agencies
This video explains the functions of Administrative Agencies.

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What are the functions of agencies?

Administrative agencies serve “executive”, “quasi-legislative”, and “quasi-judicial” functions. As part of the regulatory process, Congress passes statutes to establish new law. The statutes, along with direction in the form of an “enabling statute”, are then turned over to administrative agencies to develop rules and regulations that further the objectives of the statutes. As such, while Congress dictates the objectives and substantive laws, the administrative agency assumes the regulatory activity of developing procedural rules for enforcing the law. This is the quasi-legislative, agency function. The statutes themselves are broad in nature, while the rules and regulations developed by administrative agencies are more specific. Disputes between the agency and those subject to regulation often arise when enforcing the substantive statutes and procedural regulations. As such, the agency may develop a tribunal or administrative law body that adjudicates these disputes. This is the quasi-judicial, agency function. Lastly, the agency carries out an executive function by carrying out or enforcing the statutory laws.

Quasi-Legislative Functions

A primary charge of administrative agencies is to develop and issue regulations that have the impact of laws. Administrative rules are internal, procedural, interpretative, or legislative. Legislative rules are the most important, as they generally have the force of law and add to the statutory law. Unlike statutory lawmaking, issuing regulations entails several procedural steps. Agencies begin by developing proposed regulations. The proposed regulations are then published to the public with a request for public comment. Some agencies also issue guidelines to supplement the issued regulations. These guidelines provide explanations or interpretations of the statutes and regulations and also explain the agency’s responsibility for enforcing the statutes and regulations. They will outline how individuals should proceed to comply with the regulations and will identify conduct that fails to comply with the regulations. Conduct that fails to comply with the statutes and regulations is illegal and may be enforced through agency procedure or civil or criminal law.

Discussion: What do you think about the ability of agencies to create regulations that have the force and effect of law? Is congressional or executive approval of these regulations a sufficient check on the quasi-legislative power of the agencies?

Discussion Input

  • Some would argue that agency rulemaking is a good thing. Agency rules are primarily procedural in nature. Substantive provisions are generally closely related to the statutory objectives. Agency personnel are generally subject-matter experts; whereas, lawmakers generally have little understanding of the mechanics necessary to carry out the laws they enact. Others would argue that the role of law making should rest with the legislature – no matter what. They might argue that Executive or Legislative oversight is insufficient to justify allocating this important role to non-elected officials.

Practice Question: Congress passes a statute that charges the Securities and Exchange Commission (SEC) with enacting regulations that allow for faster and easier private offerings of securities for sale by private companies. The statute provides the primary objectives but leaves it up to the SEC to develop the procedural rules. What is the process the SEC should undertake in carrying out this charge?

Proposed Answer

  • The SEC would first outline the requirements and limitations of the enabling statute. They would then begin to work on a draft of the measures. Once a draft is ready for public disclosure; they will post it to the public for comment. After receiving comments from interested individuals, they should take steps to incorporate this input into the draft rules. Once finalized, the rules should be posted publicly to the federal register.

Quasi-Judicial Functions

Administrative agencies often create tribunals (similar to courts) to adjudicate disputes arising under the agency’s regulations. Congress, through statute, may direct that certain types of disputes undergo an administrative process (“exhaust all administrative remedies”) before a party has standing to bring an action in a state or federal court challenging the agency’s action. If Congress fails to specifically address the topic, the Administrative Procedures Act controls the quasi-judicial process. This act generally requires that individuals with disputes concerning federal regulations exhaust all administrative remedies prior to taking judicial action.

An administrative court functions similarly to an Article III court. The court undertakes a fact-finding process and applies those facts to the applicable law. The court may resolve a dispute and hand down fines or sanctions for improper conduct. This process may include issuing cease and desist orders directing individuals to stop carrying on a certain activity and desist from any further activity that runs afoul of the regulations. Administrative courts do not employ juries. All fact finding and decision making are carried out by (an) administrative law judge(s). As such, administrative courts cannot authorize or order detention of individuals. Often agencies will seek to settle disputes with individuals  by entering into a consent order providing a resolution of the dispute. This avoids employing the administrative court to resolve the dispute. The administrative court then approves the order to officially resolve the issue. A notable advantage of this process is that consent orders give up the right to judicial review. As such, the parties cannot subsequently file a legal action contesting the administrative decision. Further, there is no admission of guilt in a consent order.

Discussion: How do you feel about agencies creating internal court systems or adjudicative processes? Can you see any Constitutional issues with forcing individuals to adjudicate certain matters before an administrative court (without a jury)?

Discussion Input

  • Without internal court systems, any disputes regarding agency decision making or actions would end up in the federal court system. They could have a very negative impact on case processing and speed of resolution. The 7th Amendment grants individuals the right to trial by jury in civil matters. There is no express grant to a jury trial for administrative disputes. Under the Due Process Clause, however, individuals are entitled to fundamental fairness in government procedures that affect their rights. As such, there is an argument that foreclosing all access to a trial court in disputing an agency decision violates one’s Due Process rights. The courts have addressed this issue by allowing individuals to bring a lawsuit against the head of an administrative agency to dispute the administrative court’s decision.

Practice Question: Dolores has a farm chemical business in Iowa that produces and sells liquid fertilizer to farmers across the country. Her business operations require the mixing and testing of all sorts of chemicals. The Environmental Protection Agency (EPA), which is charged with enforcing federal environmental statutes, inspects Dolores’s job site and finds evidence of soil contamination. The EPA undertakes an investigation that includes extensive soil sampling. The EPA determines that Dolores’s business is discharging to many chemicals into the soil and seeks to fine Dolores and cause her to cease certain operational activities. Dolores contests the pollution assessment based upon acceptable levels of foreign particulates in the soil. The EPA offers a settlement to Dolores that allows her to avoid fines by permanently ceasing certain activities. What are Dolores’s options in this situation?

Proposed Answer

  • Dolores can proceed through the administrative process. That is, she can request a hearing on the matter through the administrative court charged with adjudicating administrative issues. If she loses, she can request reconsideration by the head of the administrative agency. If her appeal to the agency head is denied, she can bring a legal action in the Federal District court to contest the agency action based upon the procedures followed.

Executive Functions

Administrative agencies perform executive functions by enforcing the regulations they pass. That is, the agency investigates complaints and identifies conduct that it deems in violation of regulations. Enforcement is partially handled through administrative courts that address the dispute and render a decision. In addition to investigating conduct potentially in violation of the regulations, the administrative agency monitors compliance and works to educate and advise lawmakers in the passing and execution of laws. The extent of investigation and advisory activities is as follows:

  • Investigation – Agencies often investigate activities that are the subject of agency regulations. It will gather and compile information about the company’s activity and investigate any areas of concern. The agency may have limited subpoena authority. In the process, they identify practices that may be illegal. It is a crime to make any false or fraudulent statement in any matter within the jurisdiction of a federal agency. As such, companies are required to be forthcoming in reporting activity to the regulatory agency.
  • Advising – Agencies evaluate common practices and issue public advisory opinions. These opinions explain how the agency views a particular type of conduct. These opinions serve to educate the public and help individuals and companies avoid disputes with the agency. The agencies also develop proposals and make reports to the President or to Congress. These reports keep Congress and the President informed of agency activity and aid them in the development and execution of laws.

Discussion: Do you believe that agencies have sufficient authority in enforcing their regulations and decisions? If no, what enforcement authority should agencies possess?

Discussion Input

  • Anyone involved in an administrative action is probably of the opinion that agencies have sufficient authority (if not too much authority) to enforce their regulations decisions. Those who argue in support of greater administrative authority would focus their arguments on the agency’s ability to monitor compliance of the regulations and enforce violations. An example of additional authority would be to allow the administrative agencies subpoena power.

Practice Question: Dolores has a farm chemical business in Iowa that produces and sells liquid fertilizer to farmers across the country. Her business operations require the mixing and testing of all sorts of chemicals. The Environmental Protection Agency (EPA), which is charged with enforcing federal environmental statutes, inspects Dolores’s job site and finds evidence of soil contamination. The EPA undertakes an investigation that includes extensive soil sampling. What are Dolores’s obligations with regard to allowing (or facilitating) the EPA investigation?

Proposed Answer

  • The administrative agency has broad authority to enforce regulations and investigate potential violations. Dolores is not compelled to comply with the investigation; however, the EPA would have the authority to take executive action against her business (such as revoking licenses, charging fines, or obtain a court order to cease operations). As such, Dolores’ only real option is to comply with the investigation.

Academic Research

White, Lawrence J., The Credit Rating Agencies and Their Role in the Financial System (June 7, 2018). Forthcoming in E. Brousseau, ed., Oxford Handbook on Institutions, International Economic Governance, and Market Regulation, Oxford University Press . Available at SSRN:

Levitin, Adam J., The Consumer Financial Protection Agency. Pew Financial Reform Project, Briefing Paper, No. 2, 2009; Georgetown Law and Economics Research Paper No. 1447082. Available at SSRN:

Shah, Bijal, Toward an Intra-Agency Separation of Powers (April 24, 2017). 92 N.Y.U. Law Review Online 101 (2017). Available at SSRN:

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