Authority for Administrative Agency Functions - Explained
How Can Administrative Agencies Exist?
Written by J. Mance Gordon
Updated at April 21st, 2024
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
-
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
- Courses
What is the Authority for Administrative Agencies?
Congress passes statutes authorizing the creation of administrative agencies. The statutes are known as, enabling statutes.
Congress's authority to create agencies is inferred from its role as a legislature.
What authority exists for creating and vesting authority in administrative agencies?
The Constitution is silent with regard to the creation of administrative agencies. The ability of the executive branch to oversee the operations of administrative agencies is inferred from its responsibility to execute the laws of the United States. The authority to vest quasi-legislative and quasi-judicial authority in the administrative agencies has come under attack at various points in history. The US Supreme Court has reviewed these allocations in a number of situations and generally deemed the allocation of authority valid.
What is the Delegation of Legislative Functions?
One of the earliest challenges to the authority of Congress to delegate quasi-legislative responsibilities to administrative agencies came in Wayman v. Southard. In this case, the Supreme Court held that administering a statute requires the ability to delegate the responsibility of filling in details to subordinate officials. This based the legislative authority of agencies on the President's authority to execute the statutory law. In 1935, the US Supreme Court reviewed the authority of Congress to delegate authority to the President, which is then delegated to the President's cabinet. The Court recognized that such a delegation is valid if Congress provides sufficient statutory instruction to guide (and limit) the President in the execution of such authority. Since that time, a few attempted delegations of power to the Executive has been overturned as too broad, while many others have been found to be constitutionally valid.
What is the Delegation of Judicial Functions?
In 1935, in Humphreys Executor v. United States, the Supreme Court held that administrative agencies may carry out quasi-judicial and quasi-legislative functions in the execution of laws as agents of the legislative and judicial branches. Congress's grant of authority to administrative agencies to issue sanctions to individuals was pursuant to the agency's regulatory function. In 1909, the Supreme Court in Oceanic Steam Navigation Co. v. Stranahan upheld this practice as constitutional.
Congress maintains the authority to control and limit agency authority. Further, Congress can pass statutes that criminalize activities regulated by agencies. Enforcement of such statutes would necessarily be the role of the executive branch, while the determination of challenges to these statutes would be the role of the judicial branch.
Related Content
- What are Administrative Agencies?
- What are the functions of Agencies?
- How are administrative Agencies Organized?
- How are key agency personnel appointed and removed?
Discussion Question
Are you convinced that the legislative and executive functions of agencies are contemplated within the constitutional authority granted the executive and legislative branches?
- It's very difficult to determine what was contemplated by the authors of the Constitution. Originalists will go do this line of reasoning when determining agency authority. Others may argue that the Constitution was drafted with the purpose of allowing continued interpretation. As such, the role of administrative agencies is a natural evolution of an increasingly complex government.
Practice Question
Darian owns a payday and title loan agency. He makes loans to individuals secured by a lien on the borrower's paychecks or vehicle title. He recently expanded his operations to include making unsecured student and training loans in exchange for a percentage of future wages post-graduation. His operations are generally regulated by the Consumer Financial Protection Bureau (CFPB). The agency investigates Darian's new business practice and seeks to levy on fine on his business for failing to make the required consumer disclosures. What are Darian's options for challenging the authority of the CFPB to regulate his business activity?
- For one, Darian can go through the administrative court process. If this fails, he can bring a legal action challenging the CFPBs actions. At trial, he can argue that regulating this type of activity is beyond the scope of the CFPBs enabling statute or argue that the administrative agencies' actions are unconstitutional based upon their functions.