Chapter 6 Administrative Law
Its Legal, Ethical, and Global Environment
Marianne M. Jennings
Business
11th Ed.
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Nonlegislative/Nonjudicial Body
Exist at every level of government
They make, interpret, and enforce regulations
Legislatures pass enabling acts
Sets up basic law, purpose, penalties
Sets up administrative agencies to handle the enforcement
What Are Administrative Agencies?
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Examples of Federal Administrative Agencies
Department of Agriculture
Department of the Interior
Federal Maritime Commission
Veterans Administration
What Are Administrative Agencies?
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The SEC
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Specialization
Needed to deal with complexities of legislation
Agencies can hire the necessary expertise
Examples: Environmental, occupational safety, nuclear, securities − regulation in these areas requires special expertise
Role of Administrative Agencies
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Role of Administrative Agencies
Protect Small Interests and Small Business
Examples: Corrective advertising, consumer complaints
Provide for More Rapid Enforcement and Relief
Do not have to use court system for enforcement
Licensing and permits can be done quickly
Achieve Social Goals
Examples: Environmental Protection Agency; Federal Home Loan Bank Board; Resolution Trust Corporation
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Laws Governing Administrative Agencies
Administrative Procedures Act (APA)
Established uniform procedures for agencies to follow in promulgating rules
Other acts have separate names but are amendments to the APA
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Freedom of Information Act (FOIA)
APA amendment passed in 1966
Purpose was to allow public access to agency records
Types of information required to be published
Location of offices
Names of responsible individuals
Rules and regulations
Reports
Policy statements
Laws Governing Administrative Agencies
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Freedom of Information Act (FOIA)
Types of information not published
Hearing orders
Non-published interpretations
Personnel policies and procedures
Laws Governing Administrative Agencies
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Freedom of Information Act (FOIA)
Unpublished information can be obtained through an FOIA request
Must be written
Must describe the information and/or documents sought
Agency can charge for time and copy costs
Laws Governing Administrative Agencies
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Freedom of Information Act (FOIA)
Wrongful refusal to supply information allows requester to bring suit and obtain court order for release as well as recovering cost
Laws Governing Administrative Agencies
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Laws Governing Administrative Agencies
Freedom of Information Act (FOIA)
Exemptions from disclosure
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Laws Governing Administrative Agencies
Federal Privacy Act
Passed in 1974 as an APA amendment
Intended to cut down on the pervasive and casual exchange of information about individuals between and among agencies
Agencies cannot obtain individuals’ records from other agencies without the consent of that person
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Government in Sunshine Act
Open meeting law passed in 1976
Federal Register Act
Authorizes a formal record of agency actions called the Federal Register
Regulatory Flexibility Act
Requires publication of proposed rulemaking in trade publications
Laws Governing Administrative Agencies
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Functions of Administrative Agencies
Promulgating Regulations − Business Input
Formal rulemaking
Congress passes Enabling Act
Agency researches a problem
Proposed regulations
Public comment period
Action on rules is taken
Challenges to adopted agency rules
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Steps in Rulemaking
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Notice of Proposed Rulemaking
Notice of Proposed Rulemaking Expanding Access to Mobile Wireless Services Onboard Aircraft
A Proposed Rule by the Federal Communications
ACTION: Proposed Rules
AGENCY: Federal Communications Commission
SUMMARY: In this Notice of Proposed Rulemaking (NPRM), the Commission proposes to revise outdated rules and adopt consistent new rules governing mobile communications services aboard airborne aircraft. These rule changes would give airlines, subject to applicable Federal Aviation Administration (FAA) and Department of Transportation (DoT) rules, the choice of whether to enable mobile communications services using an Airborne Access System and, if so, which specific services to enable. The proposed rules would also replace an existing patchwork of regulatory prohibitions on airborne use of mobile services in some, but not all, of the heavily used mobile wireless bands with a consistent regulatory framework that explicitly forbids airborne use of mobile services in those bands unless they are operating on an aircraft equipped with an Airborne Access System.
Synopsis
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Notice of Proposed Rulemaking (cont.)
I. Introduction and Background
II. Discussion
A. Changes to Current Rules Restricting Airborne Mobile Broadband Use
B. Airborne Access Systems
1. Potential Harmful Interference From Uncontrolled Airborne Mobile Devices
2. Benefits of Airborne Access Systems
3. Technical Requirements
C. Airborne Commercial Mobile Use
D. Other Issues
1. Service Below 3,048 Meters (10,000 Feet)
2. Voice Service Onboard Aircraft
Dates
Submit comments on or before February 14, 2014. Submit reply comments on or before March 17, 2014.
Paperwork Reduction Act (PRA) comments should be submitted March 17, 2014.
Addresses
You may submit comments, identified by WT Docket No. 13-301 or FCC 13-157, by any of the following methods:
Federal Communications Commission’s Web site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting comments.
Mail: FCC Headquarters, 445 12th St. SW., Washington, DC 20554.
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Activity During Comment Period
Legislative process and lobbying and donations are different from executive branch participation
Businesses can provide information/comments, but providing favors for regulators creates a fine line
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Interacting with the Executive Branch
Case 6.1 McDonnell v. U.S. (2016)
What kinds of favors and gifts were given by Jonnie Williams?
What action did Governor McDonnell take in exchange?
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Agency Options Following Comments
Promulgate the new rule
Modify and promulgate
Modify and request additional comments
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Authority of Administrative Agencies: Court Challenges
Case 6.2 Hornbeck Offshore Services, L.L.C. et al., v. Salazar (2010)
What was done with the regulation to result in this judicial decision and why?
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Sunset Laws
Agency created for a limited time
Must justify its existence within that time
Zero-Base Budgeting
Ongoing budget for agency is not assumed
Must justify its budget each year
Proactive Business Strategies in Regulation
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Enforcement Actions
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Enforcement Actions
Licensing and Inspection
Enforcement and Inspection
Up-front approval
Some checks imposed
Enforcement by inspection
Health Code violation, Occupational Safety and Health Administration (OSHA) safety inspections
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Prosecution of Business
Enforcement by prosecution
Complaint is filed
Injunction can be obtained for this period
Consent decree
Like a plea bargain in a criminal case
Like a nolo contendere plea in a criminal case
Enforcement Actions
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Enforcement Actions
Prosecution of Business
Can go to hearing without an agreements
Administrative law judge (ALJ) hears the case
ALJ is like a judge at trial
Intervenors can appear in the case
Rules of evidence are relaxed
Must allow for due process
Exhaust administrative authority before appeal
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Enforcement Actions
Prosecution of Business
Penalties
Fines
Injunctions
Repayment to buyers
Corrective advertising
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Enforcement Actions
Prosecution and Business
Go to court of appeals
Appeals of decisions go to agency heads exhausting administrative authority (unless it would be futile) before court or appeals will consider
State court appeals also go to court of appeals; however, some states require new trail in state trial court
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Roles of Administrative Agencies
Activity Steps Parties Results
Passing Rules Rule Proposed Agency New Rules
Comments Consumers Modified Rule
Modification, Business Withdrawn Rules
Withdrawal Congress
Promulgation Agency
Enforcement Licensing Agency
Business
Inspections Agency Search and
Courts (if Inspection
Warranty is
Required)
Business
Complaints Agency Fines
Penalties
Injunctions
Consent decrees
Hearings
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Administrative Agencies in the International Market
The United States is Heavily Regulated
Some businesses have argued that regulations hinders them in the international marketplace
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Complexity of Federal Regulations
Documents and Populations Grade Level
Love Story 7.64
Reading Level of U.S. Population over Age 65 9.71
Playboy 11.46
Reading Level of General U.S. Population 11.68
Sports Illustrated 12.82
Your Medicare Handbook 14.94
ERISA Summary Plan Description 15.29
The Wall Street Journal 16.34
Social Security Handbook 17.51
Reading Level of Lawyers 19.00
Albermarle (U.S. Supreme Court Ruling) 20.30
Occupational Safety and Health Act 30.79
Employment Retirement Income Safety Act 32.10
Section 18 of the Social Security Act 41.04
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National defense or foreign
policy matter
Internal personnel rules of
the agency
Statutorily protected
information
Trade secrets
Inter- and intra-agency
memos
Personnel and medical
files
Records of
investigations
Banking audits
Geological
information on w ell
sites
|
· National defense or foreign policy matter · Internal personnel rules of the agency · Statutorily protected information · Trade secrets · Inter- and intra-agency memos |
· Personnel and medical files · Records of investigations · Banking audits · Geological information on well sites |
Chapter 5 Business and the Constitution
Its Legal, Ethical, and Global Environment
Marianne M. Jennings
Business
11th Ed.
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The U.S. Constitution
Article I: Legislative Branch
Congress
House of Representatives
Senate
Article II: Executive Branch
President
Vice President
Article III: Judicial Branch
Creates U.S. Supreme Court
Authorizes Congress to create other courts
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The U.S. Constitution
Creates a System of Checks and Balances
Each branch has some power check over the others to keep any one from becoming too powerful
Examples
Nixon v. Administrator of General Services
Clinton v. Jones
Obama v. Alito
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The U.S. Constitution
Other Articles in the Constitution
Article IV: State Interrelationships
Article V: Procedures for Amendments
Article VI: Supremacy Clause
Article VII: State Ratification of the Constitution
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The U.S. Constitution
Bill of Rights
First: Freedom of speech
Fourth: Privacy
Fifth: Due process and self-incrimination
Sixth: Jury trial
Other Amendments
Fourteenth Amendment: Due Process and Equal Protection
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Role of Judicial Review
Determines the Rights Afforded by the U.S. Constitution
Determines the Scope of Rights
Plays Unique Role in Checks and Balances
Determines the appropriateness of the actions of other branches
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Limits of Economic Regulation
The Commerce Clause: Article I, Section 8
Standards for Federal Regulation of Interstate Commerce
Historical application
Initially, Court gave a narrow interpretation
Court held New Deal Legislation unconstitutional
Roosevelt proposed Court-Packing Plan
After these political battles, the court responded in NLRB v. Laughlin Steel with the affectation doctrine
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Limits of Economic Regulation
Economic Activity is an Economic Setting
e.g., Price Fixing by Multinationals
Economic Activity in a Non-Economic Setting
e.g., Loan Sharking on the Street Corner
Non-Economic Activity in an Economic Setting
e.g., Race Discrimination by a Hotel
Non-Economic Activity in a Non-Economic Setting
e.g., VAWA and Morrison?
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Table One – Part A
COMPARISON OF CONGRESSIONAL JURISDICTION FACTORS
CHILD LABOR WOMEN AND VIOLENCE
AWFUL; HORRIBLE 1. AWFUL; HORRIBLE
PERVASIVE 2. PERVASIVE
INSUFFICIENT 3. INSUFFICIENT
STATE ACTION STATE ACTION
BUSINESSES 4. MEN ARE DOING IT
WERE DOING IT
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Table One – Part B
CIVIL RIGHTS (LACK THEREOF)
CHILD LABOR GUNS IN SCHOOLS
1. DISPARATE 1. VIOLENCE IS AWFUL
2. UNSAFE–VIOLENCE 2. UNSAFE–VIOLENCE
3. INSUFFICIENT 3. INSUFFICIENT
STATE ACTION STATE ACTION
4. BUSINESSES 4. HIGH SCHOOL
WERE DOING IT STUDENTS DOING IT
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Table Two
The Factors of Wickard v. Filburn
Local Farmers
Individuals, But Still in Business
Local Commerce Affects Prices in National Market
National Economic Interest in Farm Products/Pricing
Combining Wickard with the decisions in Lopez and Morrison, we are able to develop a clear matrix on the Commerce Clause as depicted by Response to Razook Figure One and the specific examples listed in Razook Figure Two.
In the Lopez case, the court held that the act of having a gun on school property had no economic/commerce base and that federal laws could not regulate local school.
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Response to Razook Figure One
Congress May Regulated conduct Regulated conduct
Regulate is economic is performed by an
(commercial (commercial
character) character to actor)
Congress May Regulated conduct Regulated conduct
Not Regulate is non-economic is not performed by
an economic entity
(non-commercial
character)
Jennings Figure R-1
Examples of Congressional Authority/Non-Authority After Morrison and Lopez
Congress may regulate
Congress may not regulate
Congress may regulate
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Table Three
Application of the Economic/Non-Economic Actor/ Activity Test to Specific Regulations
Gun Possession
Gun possessor (actor) – non-commercial, Congress may not regulate
Act of gun possession – non-commercial, Congress may not regulate
Violence Against Women
Abuser (actor) – non-commercial, Congress may not regulate
Act of abusing – non-commercial, Congress may not regulate
Farm Regulation (Wickard v. Filburn)
Farmer (actor) – commercial (livelihood), Congress may regulate
Act of selling – commercial, Congress may regulate
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Table Three (cont’d)
Title VII Civil Rights Discrimination
Hotel/Restaurant Owner (actor) – commercial, Congress may regulate
Act of discrimination – non-commercial, Congress may regulate
Labor/Unions/OSHA
Actors are business – commercial, Congress may regulate
Or Unions Engaged in Business – commercial, Congress may regulate
Act of Work/Employment – commercial, Congress may regulate
Lending (loan sharking)
Actors are loan sharks – commercial, Congress may regulate
(Facilities are not great, but they are a source of loans)
Act of lending – commercial, Congress may regulate
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Limits of Economic Regulation
Case 5.1 National Federation of Independent Business v. Sebelius (2012)
The court found that the individual mandate violated the Commerce Clause
Court upheld the law on other grounds
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Limits of Economic Regulation
The Commerce Clause: Article I, Section 8
Standards for state regulation of commerce
If Congress has regulated, there is an overriding concern about the Supremacy Clause
If Congress has not acted, there is a benefit/burden analysis
Balance police power (state’s interest in regulation) with the burden on commerce
State law cannot give in-state businesses an advantage
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Limits of Economic Regulation
Case 5.2 Rowe v. New Hampshire Motor Transport Association (2008)
Maine passed a law that prohibited anyone other than a Maine-licensed retailer from accepting an order of tobacco
The law required a special receipt, signed by someone over the age of 18 that showed a Maine-licensed dealer had received the tobacco
Out-of-state shippers and tobacco sellers challenged the Maine law as favoring Maine sellers
Court grapples with the purpose of the law and the burden on commerce
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Limits of Economic Regulation
Congressional Regulation of Foreign Commerce
The power of Congress to regulate foreign commerce applies regardless of where it begins and ends
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Taxation of Business
Congress’ Power to Tax – Article I, Section 8: The Ability of Congress to Tax Has Been Consistently Upheld
State and Local Taxation of Interstate Commerce
Interstate business is not exempt from state and local taxes just because they are interstate businesses
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Taxation of Business
Requirements for Valid State Tax
Tax cannot discriminate against interstate commerce
Tax cannot be an undue burden on interstate commerce
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Requirements for Valid State Tax
Must be a “sufficient nexus” between the state and the business being taxed
Examples: Does business there, holds property titles there, manufactures there, inventory stored there
Must be apportioned fairly
Example: A corporation doing business in fifty states cannot have all income taxed in all fifty states – must be apportioned according to its revenues in the states
Taxation of Business
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Case 5.3 New Mexico Taxation & Revenue Department v. BarnesandNoble.com LLC (2012)
Explain Barnes and Noble’s operations
Is there a physical presence sufficient for taxation?
Taxation of Business
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The “Jock Tax”
Discuss the allocation of athletes’ income tax among cities and states and the formulas used.
What constitutional issues do you see?
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State vs. Federal Regulation
The Supremacy Clause and Preemption
Article VI exists to determine which laws control in the event both state and federal governments regulate the same thing
If state law directly conflicts with federal law, state law is invalid
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The Supremacy Clause and Preemption
Whether there is preemption is controlled by answering several questions:
What does legislative history provide?
What is the level of detail in the federal regulation?
What benefit flows from the federal regulation?
What is the nature of conflict − can the two laws survive?
State vs. Federal Regulation
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Case 5.4 Mutual Pharmaceutical Co., Inc. v. Bartlett (2013)
Federal law regulates labels for prescription drugs
State law provides product liability rights of recovery for failure to warn
Federal law does not allow generic producers to change label by manufacturer, so they cannot include additional disclosures
State law was pre-empted by federal regulation – no product liability
State vs. Federal Regulation
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First Amendment
Provides some protection for commercial speech
Commercial speech is speech used to further the economic interests of the speaker
Advertising and commercial speech protection
Can regulate advertising
Substantial government interest must be furthered
Is the regulation the least restrictive means of accomplishing the interest
Bill of Rights
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First Amendment Full Protection
First Amendment Protections
and Business Speech
Business Political Speech
Governmental Regulation of Commercial Speech
Business Advertising
Bill of Rights
Speech
on Social Issues and Business: Nike, Professions
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Bill of Rights
First Amendment
Commercial Speech Protections
Government regulation of commercial speech is permitted
Three-prong test:
Is there a substantial government interest in restricting speech?
Does the restriction accomplish the government goal?
Is there any other way to accomplish the government’s objectives?
Evolving area: Company political speech – Nike example
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Bill of Rights
First Amendment
Corporate political speech
Corporate participation in campaigns is given full First Amendment protection
Nike case was never fully litigated to determine whether advertising regulation could be applied to, for example, letters to the editor or columns by corporate executives about controversial issues that affect the company, such as Nike’s labor practices in other countries
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Bill of Rights
Case 5.5 Citizens United v. Federal Election Commission (2010)
Case returns to holding in Belotti case that First Amendment rights are not contingent on how much money or power the speaker holds
Some limits on campaign contributions are appropriate
Controls on time, place, and manner of speech in the lead-up to elections have too chilling an effect on speech and dissemination of information
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Eminent Domain
Eminent domain is the right of government to take private property for public purpose for just compensation
Public use examples: Highways, schools, urban redevelopment, limits on mining, historical preservation, economic development
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Requirements
Taking or regulating
Examples: Prohibitions on use, elimination of use
In Loretto v. Teleprompter Manhattan CATV Corp. et al. (1982)
In Nollan v. California Coastal Commission (1987)
In Lucas v. South Carolina Coastal Council (1992)
Eminent Domain
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Eminent Domain
Just Compensation
Public Purpose
New issue is question of taking property for economic development or revitalization or just new projects
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Eminent Domain
Case 5.6 Kelo v. City of New London (2005)
Issue of taking for economic development
Who owned the land?
Who would get the land under the city’s plan?
What question in eminent domain was a problem for the court?
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Requirement: Procedural Due Process
Applies to criminal, civil, and administrative proceedings
Example: Summons and complaint provide notice to defendants
Right to notice of hearings
Right to be heard
The Raisin Farmers case: Horne v. U.S. Dept. of Agriculture
Procedural Due Process
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Requirement: Substantive Due Process
State laws cannot substantively eliminate rights without some benefit
Law must be logically related to legitimate governmental purpose
Example: Sunday blue laws − stores are closed by law − states must be able to show economic, health, social benefits of such closure
Substantive Due Process
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Equal Protection
Elements of Protection for Regulation
Regulation must apply to all businesses
Example: Courts have struck laws that allow small stores to stay open on Sunday while large stores could not
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Vague statutes and regulation violate substantive due process standards
FCC v. Fox Television Stations
Needed clearer standards for obscenity
The Cookie Monster case and substantive due process and free speech
Substantive Due Process
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International Law and Constitutions
General Types of Constitutions Found in the United States and England
Code Law Countries Found in Mexico and Many European Countries
Islamic Law: Based on Religion, Governs All Aspect of Personal and Business Life Law
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Chapter 7 International Law
Its Legal, Ethical, and Global Environment
Marianne M. Jennings
Business
11th Ed.
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Sources of International Law
Common Law
England
United States
Civil or Code Law
Statutes or codes are very detailed; little reliance on precedent
France, Germany, Spain
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Islamic Law
Religious tenets integrated
Combination of Islamic law and colonizers’ laws
Former Communist Countries
In transition
Sources of International Law
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Nonstatutory Sources
Language
Environment and Technology
Authority
Nonverbal behavior
Time Concept
Sources of International Law
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Contracts for the International Sale of Goods (CISG)
Governs the sale of goods internationally
Currently adopted by 53 countries, including the United States
Similar to Article 2 of the Uniform Commercial Code
Sources of International Law
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Tax Law
Tax laws of different countries provide widely varying rates
Companies go through mergers, acquisitions, and headquarter changes to obtain the most favorable rates
Sources of International Law
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Sources of International Law
Tariffs
Fees paid for imports and exports
Processing controls (raw materials)
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Sources of International Law
European Union (EU)
Created by treaty of Rome
Purpose was open trade, unified monetary and fiscal policies, and creation of the Euro
Created European Parliament
Created European Court of Justice
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Sources of International Law
Treaties
General Agreement on Tariffs and Trade (GATT)
Multilateral treaty with 150 member nations that created the Work Trade Organization (WTO)
MFN status
Dispute Settlement Body for trade disputes
7-8
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North American Free Trade Agreement (NAFTA)
Became effective in 1994
Treaty between Canada, Mexico and the United States
Eliminated most tariffs between member countries
Sources of International Law
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Sources of International Law
Prohibition on Trade: Individual Nation Sanctions (Iran and Cuba lifts of prohibitions)
Primary and secondary boycotts
International Monetary Fund
The Hague Convention (litigation)
Climate Agreements
OPEC
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International Monetary Fund (IMF) and the World Bank
IMF is designed to foster international trade through currency stability
IMF creates the International Bank for Reconstruction and Development (The World Bank) which allows members to draw on line of credit to stabilize currency exchange rates
Sources of International Law
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Trust, Corruption, Trade, and Economics
Focus on Reducing Bribery
OECD
FCPA
7-12
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Foreign Corrupt Practices Act
Applies to all 1934 Act companies
Making, authorizing, promising payments or gifts of money or anything of value with intent to corrupt
Applies to gifts to government officials, parties, candidates, NGOs and anyone who transmits money to these persons/entities
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FCPA
Use of agents
Companies need to screen
Follow “four eyes” rule – two people must sign off on payments
Obtaining or directing business
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FCPA
Grease or facilitation payments under FCPA
Securing a permit or license
Obtaining paper processing
Securing police protection
Providing phone, water or power services
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FCPA
Enforcement and Penalties
OECD countries apply FCPA statutes to their citizens acting outside the native country
In U.S., fines of up to $250,000 per violation
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Principles
Expropriation: Act of State Doctrine
Act of foreign governments are recognized as valid whether or not such actions would be legal in the United States
Sovereign Immunity
Each nation is sovereign
Other nations do not take jurisdiction over a country’s internal operations, laws, and people
Does not apply to contractual relations
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Case 7.1
Case 7.1 In re Yukos Oil Securities Litigation (2006)
Issue of representations about income and tax laws in Russia
Securities fraud claimed
Can you claim sovereign immunity if the actions and decisions of the government affect your business?
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Principles of International Law
Hickenlooper Amendment to Foreign Assistance Act of 1962
Allows president to sanction countries that take property of U.S. companies
Treaties Afford Protections
Overseas Private Investment Corporation (OPIC) − federal agency that provides insurance for U.S. businesses against expropriation
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Repatriation
Repatriation
Limits on removal of profits from country where they are earned
Considered acts of state; cannot be litigated
Forum Non Conveniens
Dismisses cases brought in wrong court
Example: India was proper forum to bring suit against Union Carbide for what happened in Bhopal, India
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Checklist for Doing Business In Another Country
What is the economic climate?
What is the government structure?
What are the cultural attitudes about economic development?
What are the feelings of the indigenous peoples toward U.S. businesses?
What is the legal structure of the country?
How are laws passed?
How are disputes resolved?
What is the structure of the court system?
What commercial laws do they have?
What have been the experiences of other companies working there?
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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Conflicts of Law
No two countries have the exact same commercial laws
Some countries have no commercial codes
Uniform Commercial Code is widely used
Resolving Conflicts of Law
If the parties agree, autonomy controls
If parties have not agreed, law of country where the contract is performed will apply
Conflicts of Law
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Case 7.2
Case 7.2 Tiffany and Company v. Andrew (2012)
What is the impact of counterfeiting?
How can banks help in preventing counterfeiting?
7-23
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Antitrust Laws
All firms doing business here are subject to antitrust jurisdiction
Export Trading Company Act
Allows joint ventures among competitors
For business in other countries
International Protections
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Protections for Intellectual Property
International protections of intellectual property are constantly being refined
Worldwide registration of patents, trademarks and copyrights may be within reach
International Protections
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Criminal Law Protections
All those present in a country are subject to that country’s criminal law
Subject to all regulations as well
International Protections
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