• Contesting Agency Conduct Part I: What Kind of Agency Conduct Can Be Challenged?

    Final Agency Action: What Constitutes Agency Action?

    In order to challenge agency conduct, it must be considered a final agency action. Agency action is used in a very specific sense in administrative law—not all agency conduct constitutes agency action. Agencies can act in a variety of ways such as promulgating a rule or regulation, enforcing a rule or regulation, or adjudicating a dispute. Some conduct by agencies is not considered an action and thus not reviewable. A denial to act, like not enforcing a rule or regulation, is not considered an action unless the agency was statutorily mandated to act. Conduct that is not the culmination of the decision-making process is likewise not considered agency action. For instance, printing a not yet finalized rule for public commentary is not considered action; it is simply part of the decision-making process. Plans are similarly not considered action because plans are subject to change.

    The action must also be final. Finality is the stage where the agency has consummated its decision-making process and rights and obligations have been determined. Promulgation of a rule, for instance, is final because the issued rule is the culmination of the decision-making process and the regulated parties will have rights and obligations determined under the rule. The same is true of adjudications. A final judgment from an administrative law judge is actionable because the judgment is the culmination of the judge’s decision-making process and it determines the rights and obligations of the parties before the judge.

    There are some circumstances where it is debatable whether an agency has committed itself to an action. For instance, agencies sometimes issue letters interpreting the meaning of their own rules. On one hand, the interpretive letter has no binding effect- only the results of adjudications and rulemakings are binding. On the other hand, agencies will frequently expect that parties will act in conformity with the interpretation. In this circumstance courts find that when an agency acts like it is bound by a statement, that statement constitutes final agency action. Another instance is where an agency has irreversibly committed significant resources to a proposed action, such conduct can be considered to be final decision by an agency, even without a issuing a rule or judgment.

    Review of Agency Conduct and Access to Courts

    Once an agency has acted, there is a presumption that such an action is reviewable by the courts. There are two major exceptions to when agency action is not reviewable: where review is expressly prohibited by statute and where the action is committed to agency discretion. Generally speaking, courts go out of their way to read a statute as not expressly forbidding all judicial review. It is rare that a defendant agency has wholly succeeded in preventing review through this method.

    Agency action that is discretionary is also not subject to review. Where the statute does not provide any legal standard to apply to the circumstance, the court does not have the ability to rule on the issue. This exception is also read fairly narrowly, but it has been used as a defense to judicial review more successfully than the express prohibition exception. A court is most likely to find no law to apply where the statutory language is discretionary in nature. For instance, using may instead of shall is often seen as a grant of discretion. Enforcement is also widely considered to be a discretionary act; the agency is seen as the party most capable of determining how its limited resources are allocated.

    When a court reviews agency action, it generally examines three different aspects of agency conduct: fact-finding, policy-making, and interpretation of law. Each of these aspects carries with it its own standard and scope of review. It is important to keep in mind that each of these aspects are interdependent of each other. Fact-finding and interpreting law will influence policy-making.

    Review of Agency Fact-Finding

    In any given decisionmaking process, whether it is rulemaking or adjudication, the agency will find facts and make a decision based on those facts. The extent to which a court will review those facts depends on whether the agency used a formal or informal process. When an agency proceeds by an informal process, the court looks for whether the decision was arbitrary or capricious. When an agency proceeds in a formal process, the court looks for whether the decision was supported by substantial evidence.

    Because agencies largely prefer to proceed informally, the most common and perhaps default scope of review is searching for whether the agency conduct was arbitrary or capricious. When applied to fact-finding this standard is highly deferential. Whether an agency decision such as the form of a final rule or the decision is adjudication is based on whether there was a reasoned consideration of the evidence before it and that there was not a clear error of judgment on the part of the agency. This type of review has teeth in that the court will take a hard look at the evidence considered by the agency to see whether such a decision could have been rationally reached, but the court will not consider post hoc rationalizations by the agency.

    The scope of review used when an agency proceeds by formal adjudication or formal rulemaking is whether the decision is substantially supported by the evidence. This analysis looks at whether an agency decision could rationally stem from the facts before it. This standard is widely considered to be the same as or substantially similar to the arbitrary and capricious standard. The only major difference is that the court can only consider evidence that is available in the public record created by the proceeding.

    While there are some semantic differences in these two inquires, the results are largely identical. Under a challenge to an informal process, the agency may present evidence supporting their decision that was not actually considered in the informal process. If an agency presents supporting information it did not consider in the first instance, courts are very likely to strike down the fact finding as arbitrary and capricious for not having considered all the relevant facts. This creates an almost de facto rule that the agency can only rely on evidence that was considered in the initial proceeding, which is exactly the same scope of inquiry provided for under the substantially supported by the evidence standard.

    Review of Agency Policy-Making

    After an agency has found facts and interpreted law, the agency then determines what the appropriate response is and this is referred to as agency policy—the rules or judgments that the agency renders. Like the review of agency fact-finding, the courts review for arbitrary and capricious decision-making. Unlike in fact-finding, however, the analysis is somewhat stricter.

    The review is narrow, yet searching. The court takes a hard look to ensure that the agency considered all the factors Congress intended them to consider and that the agency did not make a clear error of judgment in applying those factors. In making this determination, the court looks at whether the agency:

    1) Relied on factors congress did not intend for them to consider; or
    2) Entirely failed to consider an important aspect of the problem; or
    3) Offered an explanation that runs counter to the evidence; or
    4) Offered an explanation so implausible that it could not be rescued by an appeal to expertise (i.e. the decision could not have been motivated by the factors not under consideration, but rather based on other considerations such as political agendas).

    Furthermore, the agency may not rely on post hoc rationalizations or evidence that was not considered at the time of the decision-making.

    Review of Agency Interpretations of Law

    Generally speaking, agencies are given the responsibility of interpreting and carrying out the mandate of their organic statutes. When that interpretation is challenged, the inquiry focuses on whether the agency has properly interpreted its organic statute. The analysis is divided into two parts. A court will first examine the statute to see if congress answers the question in the statute. If the answer can be discerned by using the traditional tools of statutory construction (they are highly varied and a subject all their own), then that answer governs the dispute. If the statute is ambiguous on the subject, then the court will defer to any reasonable interpretation by the agency. Any reasonable interpretation is a highly deferential standard, meaning that so long as the construction is permissible it will be considered reasonable even if the court thinks that it is not the best construction.

    Other Aspects of Agency Action

    There are other aspects of agency action that are reviewed by courts, but because of their nature they are relatively rare. Such aspects include unconstitutionality, exceeding authority, failures in procedure, or when De Novo review is called for by statute. Below is a brief description of each.

    The scope of review when an action is allegedly unconstitutional depends on how the action is unconstitutional. Various constitutional protections each carry different standards of review. For instance, equal protection claims are analyzed in light of the nature of the class of persons being discriminated against, and standards for denial of substantive due process depends on the right that is being infringed upon. A discussion of each constitutional protection and its accompanying standards are outside the scope of this article, but it is sufficient to say that if an agency allegedly violates the constitution then it will be reviewed by a court.

    A court will review agency conduct that exceeds the authority granted to the agency by its organic statute. This inquiry relies on an inquiry into congressional intent and is determined by using the traditional tools of statutory construction. The analysis is the same as when the court reviews agency interpretation of law, as the scope of agency authority is a matter of interpretation.

    A court will also review conduct that is a failure of procedure. The standards adopted depend on the failure, but generally this is a procedural due process analysis. This category of defective conduct could also be used when an agency fails to follow its own procedural mandate. For instance, if the organic statute calls for a formal rulemaking, but the agency fails to do so. This is a very rare occurrence.

    A court will also review agency action when such action is subject to De Novo review of fact finding. This is also incredibly rare as such a review would be available only where called for by statute. The courts are highly deferential to agency expertise in fact finding, and generally refuse to conduct fact finding on administrative issues in their own courts. Where the record is insufficient to support the agency conduct the courts will typically remand the issue back to the agency for further fact-finding.
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