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Chapter 5

COB 218 Chapter Notes - Chapter 5: Ope, Regulatory Flexibility Act, Administrative Law Judge

College of Business
Course Code
COB 218
David Parker

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Chapter 5: Powers and Functions of Administrative Agencies
I. Practical Significance
i. Administrative agencies have resources to create detailed
rules/regulations necessary to carry out statutes
ii. Legislatures adopt general statutes and leave implementation for
b. Administrative Agencies Exist at All Levels of Government
i. Federal executive agencies
1. Numerous agencies within cabinet departments
2. Subject to authority of president
a. Has power to appoint/remove officers
ii. Federal independent regulatory agencies
1. President has less power
a. Officers serve for fixed terms and cannot be removed
without just cause
iii. State/Local
1. Often parallel to federal agency
2. Federal agency regulations take precedence over conflicting state
c. Agencies Provide a Comprehensive Regulatory Scheme
i. Enabling legislation creates administrative agencies
ii. Agencies at various levels work together (interagency cooperation) to
share responsibility of creating/enforcing regulations
II. Agency Creation and Powers
a. Enabling Legislation
i. Statute enacted by Congress that authorizes the creation of an
administrative agency and specifies the name, composition, and powers
of the agency being created
b. Agency Powers and the Constitution
i. Administrative agencies’ ihe
1. Legislative rules, substantive rules
a. Legally binding laws created by administrative agencies
2. Interpretive rules
a. Not legally binding
b. Indicate how an agency plans to interpret/enforce its
statutory authority
c. Provide enforcement guidelines for agency officials
3. Delegation Doctrine
a. Article 1, Section 8
b. Grants Congress power to establish administrative
agencies & delegate to them power to create rules for
implementing laws
4. Bureaucracy
a. Administrative agencies, 4th branch of gov.
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b. Act independently with only certain controls by 3 branches
of gov.
ii. Executive Controls
1. President appoints federal officers
2. Pesidet’s eto poe
a. Enabling legislation
b. Attepts to odif eistig age’s authoit
iii. Legislative Controls
1. Enabling legislation
a. Sets powers, timeframe & funding limits on programs
b. Control funding
2. Alter/abolish powers through legislation
3. Investigate implementation of its laws & agencies created
4. feeze efoeet of egulatios efoe egulatios take
iv. Judicial Controls
1. Administrative Procedure Act
a. Judicial review of most agency decisions
b. Exhaustion Doctrine
i. Party seeking court review must FIRST exhaust all
administrative remedies
1. Formal complaint hearing final agency
v. The Administrative Procedure Act: sets forth rules and regulations that
govern procedures administrative agencies follow in performing duties
1. The Arbitrary and Capricious Test
a. Couts should hold ulaful ad set aside age
atios foud to e aita, apiious, a ause of
disetio, o otheise ot i aodae ith la
b. Courts typically consider if agency has:
i. Failed to provide a rational explanation for its
ii. Changed its prior policy without justification
iii. Considered legally inappropriate factors
iv. Failed to consider a relevant factor
v. Rendered a decision plainly contrary to evidence
2. Fair Notice
a. Before changing application of regulatory principles, fair
notice of future conduct must be given
III. The Administrative Process
a. Rulemaking
i. Notice of the Proposed Rulemaking
1. Federal Register
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