2. 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.
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?
• 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?
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 avoid 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)?
• 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 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?
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?
• 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?