Hi, welcome to week three, Introduction to Agencies. In unit one, we're going to talk about what agencies are and what they do. So agencies are located within the executive branch, and agencies often contain sub-agencies, which are also called agencies or sub-units. So for example, within the Department of Justice, there are several agencies, including the FBI and the DEA.
But there are also independent agencies that are not as embedded in the executive branch. And examples of those independent agencies could be the Federal Trade Commission, the Securities and Exchange Commission. The CIA is actually an independent agency, as is the EPA, or Environmental Protection Agency.
So agencies are located pretty much in departments under the executive branch. Those are the highest status agencies. And there are heads of those departments. often called secretaries, who form the president's cabinet and give advice and counsel. The one exception to the title secretary, of course, would be the attorney general, who's the head of the Department of Justice.
And the president appoints those heads with the advice and consent of the Senate, and they serve at the pleasure of the president, which means they can be fired for any reason. Departments, as we mentioned, have these sub-entities that are also agencies. So within the Department of Agriculture, you find subunits. that are agencies such as the Forest Service. Now we have two different types of agencies, as I mentioned, executive agencies and independent agencies.
So almost all of the departments and the agencies within those departments are agents, are executive agencies. But independent agencies are not actually part of any department. So for example, for example, the National Labor Relations Board and the SEC and FTC mentioned earlier, are not within any department.
They're independent agencies. And that keeps them a little bit separate from presidential influence. So these independent agencies are usually headed by a multi-member group, not a single individual. And that group makes decisions by majority vote.
The members of the group can only be removed for cause. They don't serve at the pleasure of the president. And often they serve their terms on a staggered basis.
which means the president wouldn't be able to replace the whole group in a single term. Often the statutes that create these independent agencies require that no more than a simple majority come from a single political party, and that also helps protect against undue political influence, which helps keep the agencies independent. So when it comes to the laws governing agencies, there's really three sets of laws that we are interested in. One of the most important is the Administrative Procedure Act, or APA, which we'll be talking about quite a bit this week.
Then, of course, there are the statutes enacted by Congress that create these agencies. And there's also parts of the Constitution that govern agencies, in particular the Due Process Clause. So if we look at the APA's definition of an agency, it defines an agency as each authority of the government of the United States, whether or not it is within or... subject to review by another agency.
And it specifically includes Congress and the courts from that definition, but it doesn't explicitly mention the president. So of course, the question came up in litigation as to whether the president is an agency. And the Supreme Court held that the president is not an agency based on the separation of powers concerns that that would raise. So I'd like to give you a little historical background about the APA.
It was created after the Great Depression of the... 1930s. Obviously, the country was in dire straits, and there was a large need for special services to help people economically. And so under FDR's New Deal, there were many agencies created, including the Social Security Administration, the Public Works Administration, Federal Housing, Federal Emergency Relief, and others.
And so these were to help get people back on their feet, and the country back on its feet. The Administrative Procedure Act took 10 years of pain-taking study to create, and it was ultimately hammered out after the end of World War II. And what it ended up doing is combining a highly formal process of adjudication and a much more informal process called rulemaking, which is supposed to be an easier process, but as we'll see, it's not really easier. And that was a compromise between those who wanted to do it and those who didn't.
to empower the administrative state and those who wanted to sort of constrain it. But the way history turned out, it wasn't quite as envisioned. So we actually see that rulemaking has become quite a complex process involving voluminous documents.
Even though it's called informal rulemaking, it is now probably more cumbersome and time consuming than formal rulemaking. So to go over briefly some of the pros and cons of more procedures. The pros are that procedures can create a greater sense of fairness, involve the public. Some think that more procedures could result in a more accurate decision, though others may dispute that. The cons, of course, include the cost to the government and to private entities, the amount of time it takes when you have more procedures, and the sense that it can interfere with an agency's ability to do its work.
when it's complying with excessive procedures. Now there's also a concern, given how powerful and large agencies have become, that they're sort of an unwieldy fourth branch of government. They're not elected, but they have enormous power. They make laws, as we'll see, and they enforce them.
They also tend to win a majority of the time in litigation. So there was an empirical study done in 2011 that found that courts uphold 70% of agency actions. And when an agency is interpreting its own rules or regulations, the court upholds that interpretation 91% of the time. So that means that agencies are indeed very powerful, and it's difficult to sort of constrain them through judicial review, which is something we'll be talking a lot more about in week six. In terms of the types of agencies, we have regulatory agencies that regulate private conduct.
So those enforce laws. that address consumer protection, environmental protection, health and safety, trade practices, et cetera. So some examples would be that the FTC prohibits sellers from false or deceptive acts or practices. The FDA requires pharmaceuticals to test drugs and review the results to ensure they're safe and effective.
And state agencies license certain occupations like doctors, lawyers, nurses, architects, et cetera, to ensure competent services. These are all regulatory actions by regulatory agencies. So there are several justifications for regulation. One is that markets are imperfect and that the government can mitigate or remedy those imperfections through regulation. Another is that regulation helps conform market outcomes to social values such as fairness or equity.
A third justification is that regulation can make markets more efficient when the government reduces or eliminates market failures. A fourth is that some markets lack sufficient competition, for example, utilities, and A last justification is that making companies pay for harm to people or the environment is something that regulations can do. Basically, taking care of those spillover costs. Then there are agencies that administer entitlement programs. So unlike regulatory agencies, these agencies deal with entitlement programs.
And so they focus on dispensing funds for specific purposes. Their job involves ensuring that the recipients for those funds are not affected by the those funds actually qualify for the program. And they can also have other effects like price control or incentivizing people to change their behavior. So examples of entitlement programs that you may be familiar with, probably are familiar with, are Social Security, Medicare, Medicaid, welfare, food stamps.
And the justifications for these entitlement programs are that they increase the general welfare of society. They can also be justified with altruistic reasons and utilitarian ones. So that concludes Unit 1, and next we'll turn to Unit 2, Types of Agency Action, Willmaking, Adjudication, and Investigation.