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How are Administrative Agencies Organized?

Cite this article as: Jason Mance Gordon, "How are Administrative Agencies Organized?," in The Business Professor, updated January 4, 2015, last accessed April 8, 2020, https://thebusinessprofessor.com/knowledge-base/how-are-administrative-agencies-organized/.
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Administrative Agency Organization
This video explains how Administrative Agencies are organized.

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How are administrative agencies organized?

Executive and Quasi-Legislative Staff Members

An administrative agency is organized differently depending upon whether it is an executive or independent agency.

  • Executive Agencies – An executive agency falls under the supervision of a member of the President’s cabinet. As such, a single individual (director or secretary) sits at the head of the agency. The director will generally act as the senior executive administering the agency. The director will appoint subordinate officers and authorize the hiring of agency staff.
  • Independent Agencies – Independent agencies generally have a controlling board or commission that governs the agency. The board will generally consist of 5 to 7 members, one of whom is the chair. The chairperson has the power to appoint staff for the agency. The agency board will serve a high-level governance function. It will appoint or elect an executive director for administration as the chief operating official of the agency. The executive director supervises administrative functions, such as personnel matters and budgeting.

Outside of the leadership and governance structure, the operational structure of most agencies is similar. The agency secretary keeps board-meeting minutes and is in charge of all agency publication requirements. The structure of the agency may be centralized or it may have various regional offices. Regulatory administrative agencies generally have regional offices that investigate alleged violations of the law. Agencies may also establish advisory councils. The advisory councils are made up of agency outsiders who are selected because of their expertise. They provide a level of interaction between the regulators and those being regulated.

Quasi-Judicial Staff Members

The quasi-judicial staff within an administrative agency generally consists of numerous administrative law judges and their support personnel.

  • Fact Finders – Administrative law judges perform the adjudicative, fact-finding functions in disputes between the agency and those regulated. As such, the quasi-judicial staff members have a separate reporting structure from the rest of the agency. This separation serves to ensure that the quasi-judicial function is carried out in an impartial manner. Like Article III judges, administrative judges have immunity from liability for damages based on their decisions.
  • Appeals or Request for Review – Once the administrative law judge makes a decision in a dispute, a party unhappy with the decision may appeal the decision either to an internal board established to hear appeals, the agency’s governing board, or the cabinet-level official. Many state administrative law judges are not organized separately from the administrative agency. The administrative law judge is an employee of the agency. This relationship gives rise to a perception of bias. Other states establish an Office of Administrative Hearings that provides impartial administrative law judges to preside over administrative hearings.

The organization of the judicial staff will vary slightly between administrative agencies, but the primary role of administrative law personnel remains constant.

Discussion: Why do you think the organizational structure varies between executive and legislative agencies? Do you see any reporting issues with housing administrative courts within the agency?

Discussion Input

  • The organizational structure varies largely based upon function. The quasi-executive function of enforcing laws is quite different from the quasi-legislative function of making regulations. Housing administrative courts within the agency requires the upward and downward flow of information. Downward flow is traditionally unilateral, while upward flow is incomplete due to the objective of pleasing one’s superiors. Having a court within the agency can be a significant communication barrier for reporting purposes.

Practice Question: Describe the difference in organization between an executive and independent agency. Also explain how this organization affects the authority of the President to exercise authority over agency operations?

Proposed Answer

  • An executive agency falls under the supervision of a member of the President’s cabinet. Therefore one person will sit at the helm of the management of executive agency. In contrast, Independent agencies generally have a controlling board or commission that governs the agency. The board will generally consist of 5 to 7 members, one of whom is the chair. The chairperson has the power to appoint staff for the agency. The President has a clear line of authority to oversee that actions of an executive agency.  The ability (and authority) of the President to control an independent agency is rather limited because if the autonomous reporting structure.

Academic Research

Romano, Roberta, Does Agency Structure Affect Agency Decisionmaking? Implications of the CFPB’s Design for Administrative Governance (January 4, 2018). European Corporate Governance Institute (ECGI) – Law Working Paper No. 380/2018; Yale Law & Economics Research Paper No. 589. Available at SSRN: https://ssrn.com/abstract=3096356 or http://dx.doi.org/10.2139/ssrn.3096356

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