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Administrative agencies exercise certain powers as they perform their important function in modern society The processes that exhibit these powers are investigation, rulemaking, and adjudication.

Investigation Almost all administrative agencies have the authority to investigate. Without information, administrative agencies would not able to regulate industry, protect the environment, prosecute fraud, collect taxes, and attempt to reduce the consequences of identity theft or issue grants. Most administrative actions are conditioned by the information obtained through the agency’s prior investigation.

As regulation has expanded and intensified, the agency’s quest for facts has gained momentum. Some agencies are created primarily to perform the fact-finding or investigative function. The authority to investigate helps distinguish agencies from courts. This authority is usually exercised to perform properly another primary function, that of rulemaking.

Congress has traditionally given federal agencies broad investigative powers. In turn, agencies may use several methods to gather information. These methods include requiring reports from regulated businesses and conducting inspections. If these resources prove inadequate, the agency may seek further information by calling in witnesses or documents for examination, or by conducting searches.

Rulemaking Rulemaking is the single-most important function performed by government agencies (Kerwin, 2003). It defines the mission of the agency and essentially involves the formulation of a policy or an interpretation that the agency will apply in the future to all persons engaged in the regulated activity. As quasi-legislative bodies, administrative agencies issue three types of rules—procedural, interpretive, and legislative. Procedural rules identify an agency’s organization, describe its methods of operation, and list the requirements of its practice for rulemaking and adjudicative hearings. Interpretive rules guide both agency staff and regulated parties as to how the agency will interpret its statutory mandate. These rules range from informally developed policy statements announced through press releases to authoritative rulings binding upon the agency and are issued usually after a notice and hearing. Legislative rules are, in effect, administrative statutes. In issuing a legislative rule, the agency exercises lawmaking power delegated to it by the legislature.

Adjudication Administrative agencies, of all kinds and at all levels, must settle disputes or mediate among conflicting claims. Adjudication is the administrative equivalent of a judicial trial. It applies policy to a set of past actions and results in an order against (or in favor of) the named party.

Much of this adjudication is handled informally through the voluntary settlement of cases at lower levels in an agency. At these levels, agencies dispose of disputes relatively quickly and inexpensively, and they take an immense burden off the courts. But this practice is not without criticism (Feldman, 2016). Many individuals—in particular, lawyers pleading cases before the agencies—have expressed concern over the extent ofjudicial power vested in agencies. They complain that administrators violate due process of law by holding private and informal sessions, by failing to give interested parties an adequate hearing, and by basing their decisions on insufficient evidence.

These complaints stem, in part, from the institutional differences between agency and court trials. Agency hearings, unlike court hearings, tend to produce evidence of general conditions, as distinguished from the facts relating specifically to the respondent. This distinction is due to one of the original justifications for administrative agencies—the development of policy. Another difference is that, in an administrative hearing, a case is tried by a trial examiner and never by a jury. As a result, the rules of evidence applied in jury trials, presided over by a judge, are frequently inapplicable in an administrative trial. The trial examiner decides both the facts and the law to be applied. Finally, the courts accept whatever cases the disputants present. As a result, their familiarity with the subject matter is accidental. By contrast, agencies usually select and prosecute their cases. Trial examiners and agency chiefs either are experts or at least have a substantial familiarity with the subject matter, because their jurisdictions tend to be restricted. Courts do exercise some judicial review of agency procedures and decision making but do not ordinarily take on the role of determining agency rules and regulations. For example, courts will not set tariffs, allocate airline routes, or control the development of satellite communications (Breyer and Stewart, 2006).

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