Chapter 6 Administrative Law Food and Drug Administration Consumer Product Safety Commission Wednesday February 26 2014 11 57 AM 1 PART ONE I INTRODUCTION TO ADMINISTRATIVE AGENCIES A Primary Tool for Regulation by Government 1 2 Primary vehicles for imposing federal regulatory law Called Fourth Branch of Government a b c Constitution only specifies three branches but this term gives you an idea of how important federal bureaucracies have become Exercise broad authority Very powerful 1 2 3 Major influence on the shape of the legal environment of business because almost every piece of legislation calls for some role for administrative agencies in its implementation and enforcement Go after the richest most powerful people in our country This means they need a lot of power to go after people with power d e Abuse Procedural safeguard are in place In reality supplement other three branches of government rather than being a fourth branch 3 Exert a major influence of government a How b Examples Implementation of laws Enforcement of laws Product safety regulations Pollution control standards Information for disclosure for the sale of securities Workplace safety Labor organizing activities Employer hiring and promotion practices Antitrust B Overview 1 2 Substantive Laws will be seen on these examples and more in later chapters of this book This chapter will deal more with the procedural aspects of federal regulatory agencies II HISTORY OR CREATION A Why Created Result is to Usurp Other Branches Powers and Functions County shifting from agrarian to an industrial economy late 1800 s 1 a Business relations grew more complicated Businesses were taking advantage of their consumers Some of these rich people took their money and went political with it The only body to stop this political stuff was the federal government b Congress could not cover everything Did pass laws Courts to enforce laws Impossible for Congress to legislate in sufficient detail to regulate all activities c But what about routine matters 2 Result Congress delegated activities to administrative agencies MGMT 211 EXAM 3 Page 1 1 2 1 2 3 4 5 6 7 1 2 3 1 2 3 2 Result Congress delegated activities to administrative agencies a b To become the experts in certain areas and report back to Congress Delegating handing over power to administrative agencies B Creation 1 Created by and received power from enabling statutes from Congress a b Congress specifies the agencies regulatory mission organizational structure procedures and enforcement powers Enabling statute sets agencies birth certificate of regulatory agencies 1 Regulatory mission a What they are to do 2 Organizational structure a How they re organized 3 Enforcement powers a How far they can go c d Enabling Statutes are normally very broad details are left to agencies Congress has oversight as do the Courts 1 Congress can prevent actions from regulatory agencies they do this by controlling the money or having hearings 2 First agency created was the Interstate Commerce Commission 1887 a b Railroads were regulated by this commission First federal administrative agency 3 Three eras of Federal Regulatory Agencies a Historical Late 1800 s up to Depression 1 2 1887 to 1932 Mostly aimed at specific industries a b c Railroads Drug Companies Securities b New Deal FDR used these extensively 1 2 3 During FDR s Administration Used to get country out of the Great Depression Many types of agencies c Socially Conscious Time period when people were concerned with the good of all society 1 2 1960 s and 1970 s More aimed at activities across several industries a b c d Pollution control Workplace safety Product safety Hiring and firing practices in employment III TYPES OF AGENCIES 2 Ways of Viewing Industry Specific or Economy Wide A Types of Agencies Based on the Industry Regulated 1 Industry Specific Regulatory Agencies Deal with one specific industry a b c d ICC Created to regulate Railroads SEC Created to regulate Securities Industry Securities and Exchange Commission FCC Created to regulated Communication Industries Tend to lose sight of their mission over time 1 2 Regulatory Capture Agencies adopt perspective of the industry to be regulated a b c d Result is that the targeted industry benefits from regulation Acts in favor of industry Public Interest is thus ignored Industries still have a lot of political clout can give money to MGMT 211 EXAM 3 Page 2 d e Industries still have a lot of political clout can give money to presidential campaigns go back once they are elected force persuade president to put workers from that agency in charge of the agency The people from the industry that is to be regulated is in charge of regulation so there aren t as many regulations i More pronounced in a Republican Administration f If it goes unchecked the whole purpose of the agency is lost 3 4 5 However interest is that regulation is done by individuals with expertise and often these are business insiders Therefore the regulated industry becomes in charge Fox in charge of henhouse Industry also has the greatest interest in the regulation a Industry is better represented b Citizens or the public losses out Lobbyists Expert testimony Lack of funds Apathy leads to i ii i ii iii a b Free riders citizens just going along with the flow Small expected benefit of citizens who do take interest Are consumer advocate groups opposing interest groups to Big Business e f Bottom Line Business is interested and thus influences the regulation Predominate type during the first half of the century 2 Economy Wide Regulatory Agencies Cover more than one industry Time period of created a b 1 Federal Trade Commission FTC a b Prevent unfair or deceptive advertising Created during the Historical Era National Labor Relations Board NLRB 2 Regulates labor management relations in all industries New Deal Agency Goes after everyone involved with labor issues everyone 3 Explosion of Economy Wide Regulatory Agencies in Socially Conscious Era Environmental Protection Agency EPA Consumer Product Safety Commission CPSC Equal Employment Opportunity Commission EEOC Occupational Safety and Health Administration OSHA A lot of agencies come about during the Socially Conscious Era a b c a b c d e c d a b Not usually a victim of Regulatory Capture Has the greatest impact on the overall legal environment of business 3 1960 s 1970 s Marked by an explosion of legislation designed to correct economy wide economic and social problems Less likely that