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Reforming the Abuse of Agency Authority

Michael Greve recently wrote a great post about how administrative agencies abuse their authority and impose harm on private parties.  They are able to do this in a variety of different areas where their actions are not effectively subject to review by the courts.

Greve’s example is a letter sent by the Labor Department to businesswoman, Rhea Lana Riner, claiming that people she regarded as volunteers were actually employees and therefore had to be paid the minimum wage and overtime.  The Department sent Riner a demand letter, ordering her to pay the volunteer/employees or threatening “hundreds of thousands of dollars in civil penalties.”  According to Greve, the Department has “placed Riner in regulatory purgatory.” While the Department has threatened Riner, a federal court has ruled that there is no judicial review because the Department has not yet issued a formal complaint.  And Greve notes that the Department may never issue such a complaint, “because then, they’d have to defend their position in court.”

This appears to be another example of administrative agency action cynically taken in a way to avoid judicial review.  I have written about this in the past, including in the context of the Department of Education, which has largely transformed sexual assault rules on campuses through guidances that are used to threaten universities but are not subject to effective review in court.

It is essential to the rule of law to develop reforms that will prevent administrative agencies from engaging in this type of behavior.  In the context of guidance documents, which claim not to be binding regulations but nonetheless often have similar effects, I believe there is a solution.  The solution is to allow judicial review of challenges to guidance documents that harm parties.  While the details of this harm standard would need to be worked out, it would in general focus on situations where a guidance document induces a party to behave differently than he would otherwise behave in its absence.  This would tend to occur in situations where there are significant penalties – legal or practical – that would result by violating the guidance.

While this standard would work in the context of guidance documents, which function like regulations, agencies take a great variety of actions and it seems apparent that a single rule or procedure will not sensibly govern all of them.  Greve understands this and his post is an attempt to start to think about the underlying principles that are needed to address these issues – a first step toward developing specific reforms.

Here, I want to briefly discuss the possibility of a reform of the specific practice that Greve discusses – the demand letter issued in the Riner case.  Normally, actions prior to the issuance of a complaint in court or before an agency takes action are not subject to judicial review.  These are deemed to be part of the decisionmaking process that will only have significant effects on private citizens once the agency files a lawsuit or makes an administrative decision.  And it makes sense not to allow judicial interference before an agency has even decided to act.

But perhaps there are exceptions.  Consider the following reform.  There will be judicial review of an agency’s action prior to the issuance of a complaint or administrative decision if (1) the agency makes a claim that a private party is in violation of the law, (2) the consequences of that violation is not simply injunctive relief, but may result in damages or civil penalties, and (3) the agency does not issue the complaint or take the administrative action within a specified time period (such as 180 days).  Under those circumstances, one might then allow judicial review of the legal interpretation offered by the agency (but not the factual claims).

This reform would appear to address the problem of the Riner case, where the agency was threatening significant civil penalties.  But it is obviously a narrow exception designed to deal with one type of problem.  Ultimately, the rule of law will require the development of other specific reforms as well as the articulation of legal principles governing the abuse of agency authority.

Reader Discussion

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on November 05, 2015 at 19:36:40 pm

Well your solution is just fine for this SPECIFIC problem AND given a continuing passive acceptance of the Legislature and the Courts, not to mention our fine citizenry who are apparently oblivious or otherwise unconcerned about this "extra"- legal system of governance -

BUT

Why not attack the real issue which is the legality of the Administrative Procedures Act?

Why must we be content with placing a Johnson & Johnson Band-Aid (a rather small one at that) on a festering pustulent appendage that our governing elite seem content to deploy against us? (when in fact we should do all in our power to see to it that it continues to fester and eventually die off).

The buggers in the FAS will only devise another work around and the Courts, no doubt, will see their way to divine another doctrine of deference to avoid having to confront the real issue of the expansion of prerogative powers in the Executive.

As in the posts below, there is a little hope that a populace grown fat and lazy will ever muster the energy or desire to address the issue - certainly not while a cornucopia of "benefits" is still on offer. Sadly, it appears that our hopes, faint as they are, rest with the Black Robes!!!!

anybody feeling good about that?

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gabe
on November 05, 2015 at 20:18:09 pm

Not a bad idea. But the more general problem, or one aspect of it at least, is that good government entails ruling and being ruled in turn. Civil service regulations work against that. How about term limits for tenured civil servants, perhaps 12 years?

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Richard S
on November 05, 2015 at 21:35:51 pm

I "luv'it" - but can I bid it down to 6 years and THEN off to a lobbying firm!

You know it is kind of ironic that a "progressive" reform intended to mitigate one abuse, i.e., the recurring turnover of civilian employees of the Federal Government as a result of partisan politics, would inevitable lead to a different, yet, to my mind at least, a far more serious abuse, i.e., entrenched ideologues having sway over almost every facet of the daily lives of the citizenry.

Wait a minute - I am lowering my opening bid:

Let them serve during the term that their party controls the Executive Branch - one wonders what would happen to all those "determinations" and guidance(s) that the bureaucracy is fond of promulgating. (And I don't mean only the agency heads, but the whole lot of them).

Ward politics did have some advantages, not the least of which was to provide the voter with a sense that their vote ACTUALLY was meaningful and that policies would change. Let us provide the Federal Government with these benefits.
OMG - I am starting to think more favorably of that Ole Rascal, Andrew Jackson.

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gabe
on November 05, 2015 at 22:12:36 pm

I understand why the agency action would not fall within the Administrative Procedure Act for review under 5 U.S.C. § 704 as there is no "final agency action" that has occurred to review. What I don't understand is why people like Ms. Riner cannot seek a declaratory judgement under the Declaratory Judgment Act. She is being told by the agency that she is violating the law, and if she continues to violate the law that they will seek prosecution. The most common defense would be one of ripeness. But do you know a way to appeal a demand letter? Additionally, any such demand letter purports to interpret the underlying statute or regulation to apply to their actions. Surely that regulation or statute is a "final agency action" right? Then why cannot a person use the Declaratory Judgment Act to seek a declaration that their contemplated actions do not fall within the meaning of that already issued and final statute or regulation. Taking away the sword of damocles from hanging over the head of those threatened with litigation is exactly the purpose of the Declaratory Judgment Act (and not the APA).

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Devin Watkins
on November 06, 2015 at 10:00:17 am

Agency authority abuse often occurs under the color of the law because American citizens will volunteer to set aside their Constitutional Rights and come under the jurisdiction of a government administration. How many citizens are incorporated,have drivers licenses,Social Security numbers,file various tax forms,have business and professional licenses,have 501c3 nonprofits,have volunteer organizations that are incorporated,etc.etc. The list is endless. Anytime American citizens volunteer to come under the jurisdictions of the various government agencies,whether local,county,state or Federal they give up certain rights in exchange for certain privileges. As there can be no rule making when it comes to rights,there can be innumerable rules,regulations and penalties when it comes to privileges. Including the power of the administrative state to take away those privileges. Such as a person losing their drivers license,a doctor or lawyer losing their license to practice or a business their license to sell certain items. The list is endless. The whole point is that the administrative state is based on the "volunteer compliance" of the people they control. By "volunteering" into the jurisdiction of the administrative state,that is by volunteering to apply for a "privilege" a citizen must comply with the rules of the administers. Even if the rules are nonsensical. What is the judicial remedy? How can there be a judicial remedy when we are dealing with men not with objective "law."

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libertarian jerry
on November 06, 2015 at 10:50:06 am

Devin:

Ok, understood re: Declaratory Judgement Act.

Question: Could you, in ten minutes or less, come up with an effective counter for the DJA? I would bet that you could - or at least a plausible one?

My concern is that there are far too many clever folks in the Agencies who will devise some countering strategy - no matter what the proposed antidote. Is this not the history of AdLaw machinations?

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gabe
on November 06, 2015 at 11:58:02 am

All the arguments are going to be around finality, ripeness, and exhaustion. The more the demand letter looks like, "we think you might be violating the law and are still considering it, can you tell us why you are not violating the law." The court is likely to throw out anyone seeking a declaratory judgement. The more it is "You are hereby notified that you have violated the law and if you continue to do so will be prosecuted. -signed by head of agency" The more likely the court is to consider it, especially if the agency cannot point to other ways to contest it within the agency. The harder problem occurs when you "can" contest it within the agency, but the agency decides to take a decade to make a decision meanwhile you are prohibited from doing anything while they decide.

The primary cause the guides this is Abbott Laboratories v. Gardner, 387 U.S. 136 (1967) ("The injunctive and declaratory judgment remedies are discretionary, and courts traditionally have been reluctant to apply them to administrative determinations unless these arise in the context of a controversy ‘ripe’ for judicial resolution."). These kinds of cases are going to be hard, but when a person has been threatened by an agency, I think the situation should be considered concrete enough for judicial review (as to precedent when it is or not is a rather hazy line right now, I would love to see a more bright line that any such cease and desist letter be considered enough for the issue to be ripe).

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Devin Watkins
on November 06, 2015 at 16:03:08 pm

Devin:

Thanks again and sadly this appears to be the case with our neighborhoods problem with the local county EPA. We just ain't ripe!!!!

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gabe

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