Peter M. Shane: Administrative Law

Sample Final Exam Questions: Administrative Law
Professor: Peter M Shane

This is a three-hour examination. The first part, lasting 90 minutes, is a closed-book multiple-choice exam. The second part, lasting 90 minutes, is a limited open-book essay-type exam. For the second part, you may have with you (a) the Mashaw, Merrill, & Shane text, (b) notes prepared by you, and (c) copies of notes prepared by other students in this class with whom you cooperated in exam preparation. You may not have with you (1) any other commercially prepared materials, including photocopies of such materials or portions thereof, (2) any materials in the form of computer files, tapes, video, or other electronic media, or (3) any notes prepared in whole or in part by persons not enrolled in Administrative Law this semester.

Your scores on each half of the exam will count equally towards your grade. Answer all the questions. For the essay half, I strongly advise that, before writing, you read the question thoroughly, outline the issues before answering, and organize your presentation to highlight your understanding of (a) the problems presented, (b) the relevant legal principles, (c) and your analysis of the posed hypotheticals in light of existing law (including areas of ambiguity and their most reasonable resolution).

Also, please note that the second half is divided into sub-essays. It is critical that you note the number of sub-essays and pace yourself to permit some answer to each of them. You will generally be much more successful offering some analysis on each sub-part than treating some sub-parts in extraordinary depth, but omitting others altogether.

BE SURE, in preparing your answers, to follow these rules:

A. On the multiple choice exam, mark your sheet clearly with the pencil provided. Do not mark more than one answer per question.
B. For your essay, write or type on ONE SIDE OF THE PAGE ONLY!
C. For your essay, write or type only on every other line.

When the exam is over, you are required to return the questions and any notes you take as well as your actual answers. In grading your exam, however, I will refer only to the machine-graded answer sheet and the essay answers that appear in your designated answer books. UNDER NO CIRCUMSTANCES WILL ANY WRITTEN MATERIAL PREPARED PRIOR TO THE EXAMINATION, INCLUDING CLASS NOTES OR OUTLINES, BE ACCEPTED AS PART OF YOUR ANSWERS.

Part One

Imagine that Congress authorizes the Department of the Interior to make grants of up to $500,000 each to state-planned and implemented conservation projects. The statute requires the Department to promulgate criteria for awarding such grants and a process for states to submit applications. There is no other reference in the Act to administrative process. Imagine that the Department of the Interior issues a rule on eligibility criteria without providing prior notice or an opportunity for public comment. Idaho submits an application for project funding that is turned down in a letter from the Secretary indicating those criteria under which the Idaho proposal assertedly falls short.

1.
Idaho sues in federal court on the ground that the Secretary could not lawfully deny Idaho a grant without a hearing. What is the likeliest result?
A.
Idaho wins because, under federal law, agencies must always hold hearings in connection with adjudicative decisions.
B.
Idaho wins because it is entitled to a hearing under the due process clause of the fifth amendment.
C.
Idaho loses because the grant rejection is not an adjudicative decision.
D.
Idaho loses because no statute requires that the grant disapproval decision be made on a record after opportunity for an agency hearing.

2.
Idaho challenges the rule because the Interior Department failed to follow з 553 notice and comment procedures. What is the likeliest result?
A.
Idaho wins because з 553 procedures apply to the promulgation of all agency statements of general applicability future effect designed to implement law and policy.
B.
Idaho wins because the lack of notice and comment opportunity denied Idaho due process.
C.
Idaho loses because agencies need not follow з 553 procedures for rules concerning grant eligibility.
D.
Idaho loses because the specification of grantmaking criteria is a form of adjudication, not rulemaking.

An airline that wants to provide service between the U.S. and an overseas destination must receive a license (called a "certificate") to operate that route from the U.S. Department of Transportation (USDOT). Assume that the law permits USDOT to issue a license summarily if it determines that the airline meets all relevant criteria, but may deny or revoke a license only on a record and after opportunity for an agency hearing.

3.
USDOT issues a rule providing that any airline convicted of a felony for failing to comply with US aircraft maintenance and safety rules shall be barred for five years from operating an overseas route. Acme and Smith Airlines both apply to operate a new route that has become available between New York and Ankara, Turkey. Smith was convicted last year of falsifying safety reports, a federal felony. USDOT writes to the President of Smith Airlines, "Your application is hereby denied under (the rule mentioned above)." Smith Airlines sues on the ground that it was entitled to a hearing at which it could try to show that, despite the felony conviction, it was better qualified than Acme to operate the New York-Ankara route. What is the likeliest result?
A.
Smith wins because the statutory provision for a hearing requires USDOT to determine all issues relevant to a license denial on a case-by-case basis.
B.
Smith loses because the statutory provision for a hearing does not prevent an agency from exercising its rulemaking authority to limit the issues to be decided on a case-by-case basis.
C.
Smith loses because зз 556 and 557 do not apply to license applications under the applicable statute
D.
mith wins because it is entitled to a comparative hearing against any contemporaneous applicant for a mutually exclusive government benefit.

4.
USDOT concludes that the facts presented by Acme in its application are insufficient to enable USDOT to conclude summarily that Acme is qualified for a license. USDOT grants Acme a hearing. After reviewing the record, USDOT determines that Acme does not qualify as a "likely effective operator" of the route, as the statute requires, because it has insufficient personnel to handle ticketing and rescheduling. USDOT had not previously issued any rule on this subject. If Acme challenges the denial of the license, what is the likeliest result?
A.
Acme loses because agencies ordinarily have the discretion to make new policy through case-by-case adjudication.
B.
Acme wins because agencies are entitled to make new general policies only through з 553 rulemaking.
C.
Acme wins because making new policy through adjudication is a denial of due process under the fifth amendment.
D.
Acme loses because agencies have unreviewable discretion to deny licenses, but not to revoke them.

5.
Under a new Airline Safety Act of 1999, Congress provides: "The Federal Aviation Administration shall require commercial airlines by 2001 to equip all airliners with the best available lifesaving equipment in the event of emergency or otherwise unanticipated over-water landings." The President determines that compliance with this requirement will put three airlines out of business, greatly threatening the service available to a number of midwest cities. He orders the FAA to extend the deadline for compliance to 2003. If the FAA implements the President's order and is challenged by the Airline Passengers Association, what is the likeliest result?
A.
The order is lawful because the President has inherent power to require agencies to regulate in the national interest.
B.
The order is unlawful because the President has no power to vary Congress's statutory deadline.
C.
The order is lawful if the FAA is an agency performing executive functions.
D.
The order is unlawful unless the FAA gives the Airline Passengers Association an adjudicative hearing.

Suppose that Congress in 1995 authorized a new program of guaranteed year-to-year student loans to be administered by the US Department of Education (DoE). After operating the program for four years under an initial set of rules, Doe issues a notice of proposed rulemaking indicating that Doe may tighten the eligibility requirements by lowering the amount of student family income that is permissible before a student may qualify for a loan.

6.
John Smith has received two guaranteed loans under DoE's original rules, but has a family income too high to qualify if the proposal suggested by the Notice of Proposed Rulemaking is adopted. If he sues to enjoin the Department from going forward with its rulemaking, which of the following threshold doctrines would be the strongest barrier to his suit?
A.
Standing
B.
Ripeness
C.
Reviewability
D.
Primary Jurisdiction

7.
Doe goes ahead and adopts its proposal. Imagine that Acme University, in which John Smith is enrolled, challenges the final rule. The statute authorizing the loan program has no provision discussing judicial review or its availability. Acme attaches to its complaint an affidavit from Smith indicating that, without the loan, he will be unable to attend Acme next year, but would attend if he could receive a loan. Which, if any, aspect of the standing rules applicable to administrative challenges of this kind is likeliest to prove a problem for Acme?
A.
The injury requirement
B.
The causality requirement
C.
The redressability requirement
D.
The zone of interests

8.
In the event Doe denies a loan to any applicant, the applicant is entitled to challenge the denial at a formal Doe hearing before an ALJ. Doe rules provide, however, that the ALJ's determination becomes final only if affirmed on appeal to the Doe's Board of Loan Denial Review or after the time for administrative appeal (60 days) has expired. Should the disappointed party appeal to the Board of Loan Denial Review, the ALJ's decision is deemed suspended pending the outcome. Lois Layne is denied a loan and obtains a hearing. The ALJ determines that she is not qualified. Lois does not appeal to the Board, but, after another 60 days pass, brings suit in federal district court to challenge the ALJ's order. What is the likeliest result?
A.
Dismissal for lack of exhaustion
B.
Dismissal for lack of finality
C.
Dismissal for lack of ripeness
D.
Dismissal for lack of standing

9.
The statute authorizing the loan program directs the Secretary of Education to set income qualifications that would reserve the loans for students genuinely in financial need and are otherwise appropriate. The reason that the Secretary offers for making the income requirements more stringent is that the number of truly poor applicants is much higher than originally anticipated, and the money available for the program will not be reserved for the neediest students unless the requirements become more stringent. If John Smith challenges the final rule as arbitrary and capricious, what is the likeliest outcome?
A.
The decision is arbitrary and capricious because the agency considered factors in its decisionmaking that were forbidden by the governing statute.
B.
The decision is arbitrary and capricious because, although the agency considered factors in its decisionmaking that were permissible, it reached an irrational conclusion.
C.
The decision violates the "equal protection component" of the fifth amendment Due Process Clause.
D.
The decision is unreviewable.

10.
Many political scientists think government administration works best when Congress delegates substantial policymaking discretion to agencies. What would be a likely reason why these same political scientists would also want Congress to have legislative veto powers?
A.
Legislative vetoes increase presidential control over agency policymaking.
B.
Legislative vetoes make it more likely that agencies will follow statutes as originally drafted.
C.
Reserving legislative veto power to itself may make Congress more willing to delegate broad authority to agencies in the first place.
D.
Legislative vetoes speed up administrative decisionmaking.

Essay Question

The enactment of a massive welfare reform act (the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) promises, of course, to pose a host of administrative law issues in the years to come. In addressing the issues below, assume that all relevant rules of administrative law in East Dakota are identical to their federal counterparts.

The new Act requires each state, as a condition of receiving a federal bloc grant for public assistance support, to bar any individual from receiving more than 24 consecutive months of public assistance under the federal grant, and from receiving more than 60 total months of such public assistance over the course of the person's lifetime. The Act provides, however, that each state may, by regulation, grant public assistance to individuals in excess of these statutory limits provided that, at any given time, the number of persons funded by the state in excess of these limits shall not constitute more than 20 per cent of the state's total public assistance caseload. Imagine that the Act further provides: "Nothing in this Act shall be deemed to limit the obligation of states to observe constitutional guarantees of due process in the procedural implementation of the State's obligations under this Act."

To implement these requirements, the State of East Dakota has adopted the following regulations, due to take effect on May 1, 1997:

Sec. 2000.1 (a) Time limits. No individual in East Dakota shall receive more than 24 consecutive months of public assistance or more than 60 months of such public assistance over the course of the person's lifetime, unless granted an exemption pursuant to paragraph (b) of this section.

(b) Grounds for exemption. The state shall exempt an individual from the time limits on public assistance specified in paragraph (a) of this section if the applicant is not currently employed in a job paying more than 60 per cent of the federally determined poverty level, and is either (A) not employable at any such job or (B) not employed due solely to the lack of such employment available within the state to persons of the individual's age, education, work experience, and physical and mental capacity.

(c) Termination of exemption. Notwithstanding an exemption granted under paragraph (b), any individual receiving an exemption shall be terminated from the public assistance rolls if it is determined that the criteria specified in paragraph (b) no longer apply to the recipient.

Sec. 2000.2 (a). Informal exemption applications. When an individual has received either 20 months of consecutive public assistance or 56 months of public assistance over his or her lifetime, that individual shall be duly notified by the state, in writing, of the terms of Section 2000.1. If, within 45 days of such notice, the individual applies in writing for an exemption from the time limits of Section 2000.1(a), the Department of Human Resources shall determine, based on the recipient's written application, whether or not to exempt the recipient from those time limits.

The Department shall furnish written forms for the purpose of making such an application, and shall issue its decision in writing on any given case within 45 days of receiving the written application.

(b) Formal exemption applications. An individual whose receipt of public assistance has expired because the individual has received either 24 consecutive months of public assistance or 60 months of public assistance over the course of his or her lifetime may apply for a formal hearing before the Department of Human Resources to determine whether the individual shall receive an exemption from the time limits of Section 2000.1(a). There is no limit to the number of exemption applications a person may file provided that no application shall be entertained within 60 days of the denial of a previous application pursuant to a formal hearing. (In applying the previous sentence, the informal denial of an exemption pursuant to a written application under Section 2000.2(a) shall not be relevant.)

(c) Appeals of exemption revocation. Before terminating an exemption granted under Section 2000.1(b) to any individual, the Department of Human Resources shall grant the individual, upon request, a formal hearing.

Sec. 2000.3 (a) Hearing Board. A formal hearing conducted pursuant to this section shall be tried before a three-member Exemption Board in the Department of Human Resources. The decision of the Board shall be final, unless appealed within 5 days to the Secretary of Human Resources, in which case the decision shall be stayed until the Secretary concludes his or her review.

(b) Hearing Procedures. Except as provided by Sec. 2000.3(a), formal hearings before the Department of Human Resources shall comply with the relevant procedures of Title 5, United States Code, зз 554, 556, 557, and 701-706, as if the Department were a federal agency.

The East Dakota Supporters of Public Assistance (EDSPA) is an organization of citizens concerned with the fair treatment of persons receiving public assistance and of the working poor more generally. Many of its members are past or current recipients of public assistance in East Dakota, including at least 20 who have either received 24 or more consecutive months of public assistance or more than 60 months of such assistance during their lifetimes. EDSPA seeks to challenge the foregoing regulation on the ground that it would deny recipients of public assistance procedural due process in the termination of their assistance. If EDSPA files suit in federal court on February 1, 1997 to prevent the regulation from taking effect:
1.
Would EDSPA have standing?
2.
Would the suit be ripe?
3.
If the court were to reach the merits, would the procedures afforded by the East Dakota regulation comply with the demands of procedural due process as they might apply to applicants for exemption from the time limits?

EDSPA and several individuals currently receiving public assistance have simultaneously petitioned to the Department of Human Resources for a new rulemaking to increase procedural protections for persons faced with a termination of benefits due to the time limits. In a letter to the petitioners, DHS responds:
The advent of the new bloc grant system will substantially reduce the budgetary resources available for public assistance. Unless ordered by a court to afford more procedure than the current rules contemplate, the Department of Human Resources is determined to use as much of its resources as possible for the actual provision of aid, rather than for mechanisms of dispute resolution.

As it happens, the Secretary of DHS has also addressed this subject in a talk to the East Dakota Association of Social Workers, as follows:
What EDSPA and some of their fellow travelers do not understand is that the sixties are over. This isn't Sweden. This is America. We're not going to exhaust every dime in the treasury creating more and more rights and fewer and fewer jobs.
4.
Is the decision not to conduct a new rulemaking reviewable?
5.
Should the Secretary of Human Resources be disqualified from deciding on the new rulemaking on grounds of bias and prejudgment?
6.
If the decision not conduct the new rulemaking were to be reviewed on its merits, would it likely be upheld or overturned?

In June, 1997, the Department of Human Resources adopts a new set of rules for determining when work is available in East Dakota to applicants for exemption under Section 2000.1(b). The rules take the form of a grid on which, if you trace the applicant's age, educational level, work experience, and mental and physical capacity, the table indicates whether suitable employment is or is not currently available within the state. Steve A. Dore, who has previously received over 60 months of public assistance, now applies for an exemption from the 60-month limit. At a formal hearing, the Exemption Board rejects his application on the ground that a DHS psychologist, who has never personally examined Mr. Dore, testifies that Dore's supposed clinical depression, as indicated in his medical records, is not so severe as to render Mr. Dore unemployable. Further, the new DHS grid indicates the availability of qualifying work for Mr. Dore to perform. Mr. Dore immediately challenges this ruling in East Dakota state court:
7.
Does lack of finality, failure to exhaust, or lack of ripeness bar Mr. Dore's suit?
8.
If the Court were to reach Mr. Dore's case on the merits:
a.
Would the DHS's use of its decisional grid to limit the issues at Dore's hearing be impermissible?
b.
Would the DHS have acted impermissibly in relying on its doctor's hearsay testimony?