Government agencies at the state and federal levels enforce laws and regulations covering a vast range of commercial activities, such as financial disclosure requirements, workplace safety, environmental protection, and food quality and safety. Any regulatory action must be authorized by a statute passed by Congress or a state legislature, in accordance with rules established by those legislative bodies. At the federal level, government agencies must follow procedures set forth by the Administrative Procedures Act (APA). Enforcement actions must take due process and other considerations into account. Individuals, businesses, and other organizations can challenge the validity of administrative rules. Any individual or other legal entity that is the subject of an administrative investigation or enforcement can defend themselves and seek review of administrative findings.
Challenging Proposed Rules
Federal administrative agencies must follow certain procedures when creating new rules. This includes publication of a “notice of proposed rulemaking” in the Federal Register, as well as in relevant industry or trade publications. After publishing this notice, the agency must accept comments from the public regarding the proposed rule, usually for a period of at least thirty days. This gives interested parties and the general public the opportunity to weigh in on the rule, including reasons for opposing the rule in its entirety or criticizing specific aspects of the rule.
Agencies are required to respond to all public comments to a reasonable extent, and sufficient public opposition to or criticism of a proposed rule may result in modifications to the rule or, in cases of significant opposition, re-drafting of the rule with a new publication and comment period.
The process described above is known as informal rulemaking. In some situations, such as when expressly required by statute, an agency must use formal rulemaking procedures to create new rules. This involves conducting a public hearing, at which interested parties may intervene and present arguments and evidence. An administrative law judge (ALJ) usually presides over the hearing, and the ALJ’s ruling constitutes the new rule.
Challenging Final Rules in Court
Once an agency has completed the required steps in the rulemaking process, it publishes a “notice of final rule” in the Federal Register and codifies the new rule in the Code of Federal Regulations. States have similar publications for new rules.
At this stage, interested parties can challenge a new regulation in court with several possible arguments, depending on the circumstances:
The agency failed to follow the procedures outlined in the APA, rendering the new rule invalid;
The new rule exceeds the authority granted to the agency by Congress; or
The new rule violates some other constitutional or statutory right of the plaintiff.
Challenging Final Rules in Congress
The Congressional Review Act (CRA), first enacted in 1996, allows Congress to review new administrative rules within sixty days after their publication in the Federal Register. If both houses of Congress pass a resolution of disapproval and the president signs it, or Congress overrides a presidential veto, the new rule is invalidated.
Agencies are required to submit reports to the House of Representatives, the Senate, and the Comptroller General regarding any new rule covered by the CRA. The rule cannot take effect if the agency fails to submit these reports.
Defending Against Enforcement Actions
Agencies charged with enforcing specific statutes and regulations are often empowered to investigate reports of regulatory infractions and other violations, and to commence enforcement actions against alleged violators. These enforcement actions may take place before an ALJ, or they may be filed in the main court system.
Individuals and business entities accused of regulatory or statutory violations have the right to challenge the agency’s allegations. This may take place through the litigation process, or through procedures established by statute.
Appealing Agency Decisions
Once an ALJ has rendered a decision, respondents have the right to request review by another administrative body or the court system. Enforcement actions initially brought in the court system may be appealed to state or federal appellate courts.