Choosing the Appropriate Standard for Review

1. Choosing the Appropriate Standard for Review • Parties’ Choices Overton Park: The Court had to pick a standard from Section 706 • Options were: a. The arbitrary/capricious standard; or b. The substantial evidence standard or c. De novo review

2. Substantial Evidence Review • Consolidated Edison Co. v. NLRB, 305 U.S. 197 (1938) • Court construed the term evidence as it was used in the LMRA to mean “substantial evidence” • Substantial evidence is “something more than a mere scintilla.” “relevant evidence as a reasonable mind might accept as adequate to support a conclusion.”

3. Substantial Evidence • Reasonableness • Objective factor • Does it matter what the judge thinks? • No, if a reasonable person could have arrived at the same conclusion as an agency, then agency’s decision • STANDS

4. Universal Camera • Written by Justice Frankfurter, a professor of administrative law prior to being named • Written just after APA enacted • Determined that Congress’ use of the term “substantial evidence” was consistent with Congress’ use prior • Synonymous with earlier usages of the term

5. Universal Camera • “must do more than create a suspicion of the existence of the fact to be established…[i]t must be enough to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be drawn from it is one of fact for the jury.” • Does this make everything crystal clear?

6. Universal Camera: Process of Substantial Evidence Review • Two stages: 1. Fact gathering stage: proceeding before the ALJ 2. Final agency determination stage • Manner in which court reviews the agency record: Burden falls on the lower federal courts • Must review the record as a whole

7. Picking the Standard: Factual Determinations • Overton: citizens’ group wanted either substantial evidence test or a de novo review • Government wanted arbitrary/capricious standard

8. De Novo Review: Overton • Does a court have the authority to provide a de novo hearing? Usually-- no • May be warranted : 1. “ when the action is adjudicatory in nature and the agency’s fact-finding procedures are inadequate”’ Or 2. “when issues that were not before the agency are raised in a proceeding to enforce nonadjudicatory agency action

9. Substantial Evidence Review • Express language of ¶706 • Review is performed “in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute….” • Decision in Overton not the outgrowth of formal adjudication

10. Arbitrary/Capricious Review • Residual ground in ¶706 • If reviewable and no other standard fits

11. Picking the Standard: Questions of Law • “Somewhat different” tests applied • Distinguishing between questions of fact and law: sometimes difficult • How to distinguish: no bright line test • Mixed questions of fact and law or “questions of ultimate fact”

12. The general standard of judicial review • Appellate court: authorized to set aside finding of fact if … “clearly erroneous” • District judge may set aside jury findings…”if no reasonable jury could reach the factual determination at issue” • Jury is accorded “extra measure of deference”

13. APA • 5. U.S.C. ¶¶556 and 557: [fact finding]: then fact finding must rest on “substantial evidence.” ¶706(2)(E) • 5 U.S.C. ¶706(2)(A): fact finding may be set aside only if “arbitrary [or] capricious.”

14. “Mixed question” of fact and law • NLRB v. Hearst Publications • NLRB requires employers to negotiate with “employees” • Are “newsboys,” employees of the newspaper publishers?

15. Hearst: Background • No dispute about what the “newsboys” did • Had permanent newsstands in various locations and sold Hearst newspapers • Generally compensated only for paper sold • Not on salary; no guarantee of employment • If don’t sell the paper, don’t get paid

16. Hearst: Background • Hearst did not challenge the statute on constitutional grounds • Management regarded newsboys as independent contractors • Hearst fought their unionization because 1. not employees 2. LMRA applied to employer/employee 3. therefore, no union 4. If no union, no obligation to bargain

17. Hearst: Background • NLRB: cites Hearst fro unfair labor practice • Ninth Circuit: uses common law definition of respondeat superior: reversed NLRB, newsboys were not employees and therefore not eligible to bargain • Supreme Court …..

18. Hearst • Supreme Court reverses • Agrees with NLRB • Looks at the legislative history: LMRA indicates that the common law was not dealing with the problems of labor-management relations • Any reliance on common law concepts to interpret statute is …..MISPLACED

19. Hearst • Defer to the agency • “[w]here the question is one of specific application of a broad statutory term in a proceeding in which the agency administering the statute must determine it initially, the reviewing court’s function is limited….” • “Warrant in the record” and “reasonable basis in the law”

20. Scientific Judgment: Interplay of Fact, Policy, and Interpretation • Industrial Union Department v. American Petroleum Institute (p. 846) • Benzene Case • OSHA had to promulgate a standard for workplace exposure to benzene • First Secretary adopted a legal limit of 10 ppm averaged over 8 hours of exposure (American National Standards Institute)

21. Benzene case • OSHA then received a report from NIOSH—stating benzene exp could cause leukemia—recommended a lower exp limit • OHSA position vis a vis carcinogen—no level safe • OSHA sets a 1 ppm/8 hrs maximum exp limit as an emergency standard in 1977 • OSHA conducts elaborate rulemaking, including oral hearing. Final rule 1 ppm

22. Benzene Case • OSHA’s command is to regulate “to the extent feasible” and “on the basis of the best available evidence.” • To set a standard “which most adequately assures…that no employee will suffer material impairment of health or functional capacity ….” if regular exposure to the hazard over working life

23. Benzene Case • OSHA interprets with a pro-safety thrust • OSHA looked at: (a) whether its standard was tech. achievable (b) whether it would “threaten the financial welfare of the affected firms or the general economy.” • OSHA determines 1 ppm feasible

24. Benzene Case • Supreme Court reverses • Interprets the Act as requiring Sec. of Labor to find that workplaces are not safe and the proposed standard reasonably necessary to remedy a “significant risk” of material health • Court looks to the statutory def. of occupational safety and health”

25. Benzene Case • Statutory definition : “means a standard which requires conditions, …reasonably necessary or appropriate to provide safe or healthful employment and places of employment.” • OSHA did not focus on this standard • Failed to demonstrate there were provable dangers to workers exposed to 10 ppm

26. Benzene Case • Justice Stevens: provides practical grounds for judicial caution in 2nd guessing complex policy making • How does a Court decide this? • Judgment often follows the Courts’ built-in level of confidence in the agency that is judging

27. Availability of Judicial Review • Should review be made available? • Availability depends on statutes

28. Reviewability: Whether • APA lists two categories of cases that are NOT reviewable: 701(a)(1): statute precludes review 701(a)(2): when agency action is committed to agency discretion by law

29. a. Statutory preclusion • Johnson v. Robison, 415 U.S. 261 (1974) • Plaintiff had done alternative service in lieu of serving in the military • Argued that the VA’s refusal to provide alternative service was violation of equal protection • When challenge the constitutionality of the enabling act on its face, preclusion does not apply

30. Express Preclusion • “The decisions of the Admin on any question of law or fact under any law administered by the VA providing benefits for veterans and their dependents or survivors shall be final and conclusive and no other official or any court of the US shall have power or jurisdiction to review any such decision by an action in the nature of mandamus or otherwise.”

31. Express preclusion • Language interpreted by courts to permit review of constitutional challenges and, sometimes, of other generic challenges—unless language is absolutely express and clear • Clearly erroneous vs. substantial evidence standard—which standard provides more latitude for courts’ authority to second-guess?

32. Express/Implied Statutory Preclusion • Whether broad agency discretion already exists; • The expertise and experience necessary to understand the subject matter; • The managerial nature of the agency • The propriety of judicial intervention and the ability of a court to insure correct results;

33. Express/Implied Statutory Preclusion • The need for informality and speed in agency decisions; and/or • Whether other controls on agency discretion exists

34. Implied Preclusion • Block v. Community Nutrition Institute: • Bizzare? • Is this preclusion or standing? • Bottom line: If Congress wants to preclude review by statute, it must spell it out.

35. Preclusion of Action: Committed to Agency Discretion • Remember Overton Park: “committed to agency discretion”?