Business Law And the Regulation of Business 11th Edition by Richard A. Mann - Test Bank

Business Law And the Regulation of Business 11th Edition by Richard A. Mann – Test Bank

 

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Sample Questions Are Posted Below

 

Chapter 5—Administrative Law

 

TRUE/FALSE

 

1. Over the last half-century, the scope of administrative law has expanded enormously because of the increasing complexity of the social, economic, and industrial life of the United States.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

2. When a decision is made by an administrative law judge, it is final; there is no recourse for appeal.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

3. Administrative agencies establish rules, and then act as both prosecutor and judge in determining whether the rules have been violated.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

4. Agencies create more legal rules and adjudicate more controversies than all the nation’s legislatures and courts combined.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

5. Congress appoints and removes the chief administrators of federal executive administrative agencies.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

6. Legislative rules may, in certain circumstances, exceed the authority granted to an agency by the enabling statute.

 

ANS:  F                    DIF:    Difficulty: Moderate                        NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Analysis

 

7. A statute may preclude judicial review of an agency action.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

8. Under the informal rulemaking procedures of the APA, an agency must provide notice of a proposed rule only if there is a good cause.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

9. Enabling statutes may not impose more stringent requirements for promulgating rules than those found in the APA.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

10. Generally, legislative rules must be promulgated in accordance with the procedural requirements of the APA.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

11. Interpretative rules of administrative agencies are automatically binding on the private parties the agency regulates.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

12. Interpretative rules of administrative agencies are not automatically binding on the courts.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

13. In general, procedural rules are exempt from the notice and comment requirements of the APA.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

14. An administrative agency must always use formal procedures to resolve matters.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

15. In 1990, Congress enacted the Administrative Dispute Resolution Act to require agencies to use alternative dispute resolution.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

16. Only documentary evidence may be admitted at an administrative hearing.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

17. Administrative hearings are held before a jury, just as are court hearings.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

18. The 1990 Negotiated Rulemaking Act requires agencies to use negotiated rulemaking in the majority of circumstances.

 

ANS:  F                    DIF:    Difficulty: Moderate                        NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Comprehension

 

19. Administrative law judges are appointed by the President and confirmed by the Senate just as are judges in the U.S. District Court.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

20. An important and fundamental part of administrative law is the limits imposed by judicial review upon the activities of administrative agencies.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

21. When reviewing factual determinations of an administrative agency, the courts must always use the arbitrary and capricious test.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

22. Formal rulemaking is the most frequently used rulemaking procedure for administrative agencies.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

23. Interpretative rules are exempt from the APA’s procedural requirements of notice and comment.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

24. Congress enacted the Administrative Procedure Act in 1946.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

25. An administrative agency’s discretion to compel the disclosure of information is subject to any legal privileges to withhold such information.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

26. When reviewing factual determinations, the court uses one of three different standards: arbitrary and capricious, substantial evidence, or unwarranted by the facts.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

27. If the decision of an ALJ is appealed to the governing body of the agency, the case may be decided de novo.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

28. The Freedom of Information Act and the Government in the Sunshine Act are different names for the same statute.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

29. Federal agencies may not charge for providing records to a person requesting access to the agency’s files.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

30. Only records specifically exempted from disclosure because of national defense and security reasons are inaccessible under the FOIA.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

31. Nancy has no right to review or copy federal agency records about herself which are subject to protection under the Privacy Act.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

32. The Government in the Sunshine Act allows for closed meetings if they concern agency participation in pending or anticipated litigation.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

33. All agency decisions must include a statement of findings of fact and conclusions of law and the reasons or basis for them, as well as a statement of the appropriate relief.

 

ANS:  T                    DIF:    Difficulty: Moderate                        NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Comprehension

 

34. There are more than twice as many federal judges as there are administrative law judges.

 

ANS:  F                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

35. Federal administrative agencies must, within one year after creating records, make them available by electronic means.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

36. An agency may impose in its orders sanctions, such as seizing property or revoking a license.

 

ANS:  T                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

37. The technical common law rules governing admissibility of evidence are used by most administrative agencies during hearings.

 

ANS:  F                    DIF:    Difficulty: Moderate                        NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Comprehension

 

MULTIPLE CHOICE

 

1. Administrative statutes issued by an agency are known as:

a.	legislative rules or regulations.
b.	interpretive rules.
c.	hybrid rules.
d.	procedural rules.

 

 

ANS:  A                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

2. Where there has been informal rulemaking or informal adjudication by an administrative agency and the decision by that agency is then appealed to the courts, the court will generally apply what standard in reviewing factual determinations?

a.	The unwarranted by the facts standard.
b.	The substantial evidence standard.
c.	The arbitrary and capricious standard.
d.	The beyond a reasonable doubt standard.

 

 

ANS:  C                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

3. The president has significant control over administrative agencies housed within the executive branch by virtue of his power to:

a.	remove commissioners for causes set forth by statute.
b.	appoint and remove the chief administrator of those agencies.
c.	impound moneys appropriated to the agency by Congress.
d.	All of the above.

 

 

ANS:  D                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

4. Federal legislation that requires agencies to maintain in their records only that information about an individual that is relevant and necessary to accomplish an agency function and to collect information to the greatest extent practicable directly from the individual is the:

a.	FOIA.
b.	Privacy Act.
c.	Government in the Sunshine Act.
d.	APA.

 

 

ANS:  B                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

5. Much of federal, state, and local law in this country has been established by __________, which people label as the “fourth branch of government” because they possess tremendous power.

a.	executive committees
b.	administrative agencies
c.	the courts
d.	legislatures, including Congress

 

 

ANS:  B                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

6. The letters ALJ refer to:

a.	American Law Judges.
b.	the Administration’s Legal Judge.
c.	Administrative Law Judge.
d.	Administrative Local Judiciary.

 

 

ANS:  C                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

7. Rulemaking powers of federal agencies are primarily governed by the:

a.	SEC.
b.	APA.
c.	FCC.
d.	NHTSA.

 

 

ANS:  B                    DIF:    Difficulty: Moderate                        NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Comprehension

 

8. Parties that seek to challenge agency action must:

a.	have standing.
b.	have exhausted their administrative remedies.
c.	be a party injured by the agency action.
d.	All of the above.

 

 

ANS:  D                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

9. Which of the following is characteristic of an executive administrative agency?

a.	It has complete independence from the president.
b.	It deals only with executives of major corporations.
c.	It is housed within the executive branch of the government.
d.	It has complete independence from Congress.

 

 

ANS:  C                    DIF:    Difficulty: Moderate                        NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Analysis

 

10. The legislature may exercise control of administrative agencies in various ways. These are:

a.	through its budgetary power.
b.	through the power to appoint and remove chief administrators.
c.	by amending an enabling statute to increase, modify, or decrease an agency’s authority.
d.	Both (a) and (c).

 

 

ANS:  D                    DIF:    Difficulty: Moderate                        NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Synthesis

 

11. If an agency order is appealed, the governing body of the agency may decide the case de novo. In this context, the term de novo means:

a.	agency hearings produce evidence of general conditions.
b.	the agency may hear additional evidence and arguments in deciding whether to revise the findings and conclusions made in the initial decision.
c.	without regard to new evidence.
d.	an agency may impose in its orders sanctions such as penalties.

 

 

ANS:  B                    DIF:    Difficulty: Moderate                        NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Comprehension

 

12. Administrative agencies perform what basic function?

a.	Rulemaking.
b.	Law enforcement.
c.	Adjudication.
d.	All of the above.

 

 

ANS:  D                    DIF:    Difficulty: Moderate                        NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Comprehension

 

13. An administrative law judge for the Federal Trade Commission decides a case against a retail store chain. The company then appeals the decision to the commission itself. Which of the following is correct regarding the appeal of the case from the administrative law judge to the commission?

a.	The commission may decide the case de novo.
b.	There is no appeal from the decision of the ALJ.
c.	The commission will decide the case by having a jury trial.
d.	The rules of evidence will be strictly applied by the commission in deciding the case.

 

 

ANS:  A                    DIF:    Difficulty: Easy

NAT:  BUSPROG: Reflective Thinking      STA:   AICPA: BB-Legal

TOP:   A-Head: Operation of Administrative Agencies                 KEY:  Bloom’s: Knowledge

 

14. Which of the following statements is true regarding administrative law judges?

a.	ALJs are appointed by the president with the approval of the Senate.
b.	ALJs may be removed only for good cause.
c.	There are more than twice as many federal judges as there are administrative law judges.
d.	Administrative law judges preside over jury cases within the area of expertise of the agency.

 

 

ANS:  B                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

15. The Environmental Protection Agency (EPA) would like to adopt some new rules regarding environmental impact statements, but it is afraid that if too many people know about them ahead of time, the adverse publicity will force the agency to amend them. To avoid any public comment, the agency seeks to adopt the rules without publishing them. Which of the following statements is true regarding the agency’s actions?

a.	The agency has a right to act in this way and a duty to be efficient with taxpayer money.
b.	The rules in this instance are procedural in nature and therefore are not required to be published.
c.	The agency is seeking to adopt the rules by a procedure that violates the rulemaking procedures set forth in the APA.
d.	The agency has no rulemaking authority, because only Congress can make legislative rules.

 

 

ANS:  C                    DIF:    Difficulty: Moderate

NAT:  BUSPROG: Reflective Thinking      STA:   AICPA: BB-Legal

TOP:   A-Head: Operation of Administrative Agencies                 KEY:  Bloom’s: Analysis

 

16. A federal agency that wishes to adopt administrative rules must do so in compliance with the:

a.	Administrative Procedures Act.
b.	U.S. Constitution.
c.	agency’s enabling statute.
d.	All of the above.

 

 

ANS:  D                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

17. In reviewing an agency action, which of the following are included in the questions of law a court will consider?

a.	Whether the agency violated any constitutional provision.
b.	Whether the agency acted contrary to the procedural requirements of the law.
c.	Whether the agency exceeded its authority.
d.	All of the above.

 

 

ANS:  D                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

18. What standard does a court use in reviewing the factual determinations of an administrative agency?

a.	Whether the agency had a rational basis for reaching its decision.
b.	Whether the conclusions reached are supported by substantial evidence.
c.	Whether the conclusions were unwarranted by the facts.
d.	Any one of the above, depending on the particular situation.

 

 

ANS:  D                    DIF:    Difficulty: Moderate                        NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Synthesis

 

19. How are ALJs selected?

a.	They are appointed by the president and then confirmed by Congress.
b.	They are elected by Congress.
c.	They are appointed by the president without confirmation by Congress.
d.	They are appointed by the agency through a professional merit selection system.

 

 

ANS:  D                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

20. What is required by the substantial evidence test?

a.	The conclusions reached must be supported by such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
b.	It permits the court to try the facts de novo.
c.	It requires that the agency set aside action if it is prejudicial.
d.	It requires proof beyond a reasonable doubt.

 

 

ANS:  A                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

21. The Government in the Sunshine Act covers all but which of the following agencies?

a.	Consumer Product Safety Commission.
b.	Commodity Futures Trading Commission.
c.	Environmental Protection Agency.
d.	Securities and Exchange Commission.

 

 

ANS:  C                    DIF:    Difficulty: Moderate                        NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Synthesis

 

22. Congress has enacted disclosure statutes to enhance public and political oversight of agency activities. These statutes include:

a.	Freedom of Information Act.
b.	Government in the Sunshine Act.
c.	All of these are correct.
d.	None of these are correct.

 

 

ANS:  C                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

23. The APA’s requirements that the agency provide prior notice of a proposed rule, an opportunity for interested parties to participate in the rulemaking, and publication of a final draft containing a concise general statement of the rule’s basis and purpose are the requirements for issuance of rules in accordance with:

a.	formal rulemaking.
b.	hybrid rulemaking.
c.	informal rulemaking.
d.	negotiated rulemaking.

 

 

ANS:  C                    DIF:    Difficulty: Moderate                        NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Comprehension

 

24. The __________ is the federal public records statute requiring most records in agency files to be open to the public.

a.	FOIA
b.	APA
c.	ALJ
d.	Government in the Sunshine Act

 

 

ANS:  A                    DIF:    Difficulty: Moderate                        NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Comprehension

 

25. In investigating conduct to determine whether the enabling statute has been violated, an agency is subject to all but which of the following limitations?

a.	The investigation must be authorized by law and undertaken for a legitimate purpose.
b.	The information sought must be relevant.
c.	The information sought must be privileged.
d.	The demand for information must be sufficiently specific.

 

 

ANS:  C                    DIF:    Difficulty: Moderate                        NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Comprehension

 

26. The court in the American Airlines, Incorporated v. Department of Transportation case held:

a.	the APA expressly requires notice in informal or formal adjudications.
b.	courts have inferred a requirement of notice in informal adjudications.
c.	to be valid, legislative rules must not exceed the actual authority granted to the agency by the enabling statute.
d.	the doctrine of standing requires a plaintiff seeking injunctive relief to show he is under threat of suffering injury in fact that is concrete.

 

 

ANS:  B                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Knowledge

 

27. After an FOIA request has been made, an agency has __________ working days within which to indicate whether it intends to comply.

a.	three
b.	ten
c.	twenty-one
d.	thirty

 

 

ANS:  B                    DIF:    Difficulty: Easy                               NAT:  BUSPROG: Analytic

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Knowledge

 

ESSAY

 

1. Compare the adjudication process in an administrative hearing to the judicial process. What takes place at an administrative hearing in contrast to what takes place at a trial in court?

 

ANS:

When informal methods to resolve an administrative matter fail, then the agency must follow some sort of formal adjudicatory process. However, the procedures in these agency hearings vary from agency to agency. The hearing is presided over by an administrative law judge and is prosecuted by the agency. Juries are never used in administrative hearings; either a judge or a jury can decide a case in the judicial system. In both agency and court hearings, either party may introduce both oral and documentary evidence. The rules of evidence apply in a court hearing; evidentiary rules in administrative proceedings are usually more relaxed, because there is no need to protect a jury from unreliable evidence. The appeal from an agency hearing is to the governing body of the agency, and then to the Court of Appeals. An appeal from a federal district court goes directly to the Court of Appeals.

 

DIF:    Difficulty: Challenging

NAT:  BUSPROG: Communication | BUSPROG: Reflective Thinking

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Analysis

 

2. What limits are imposed on administrative agencies by each of the following: (a) the courts; (b) Congress; and (c) the executive branch?

 

ANS:

The courts exercise a check on administrative agencies by means of judicial review. Courts may either compel agency action unlawfully withheld or set aside impermissible agency actions. Congress exercises control of administrative agencies through its budgetary power; by amending the agency’s enabling statute or even by eliminating the agency; by confirming high-level appointments to administrative agencies; and by reversing or changing agency rules. The executive branch appoints and can remove high-level executives; has a central role in the budgeting process of an agency; and can impound moneys and reorganize or abolish executive agencies.

 

DIF:    Difficulty: Challenging

NAT:  BUSPROG: Communication | BUSPROG: Reflective Thinking

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Analysis

 

3. What is an administrative agency? What powers does an administrative agency possess? How does an administrative agency utilize its powers?

 

ANS:

Administrative agencies are governmental entities, other than courts and legislatures, having authority to affect the rights of private parties through their operations. Administrative agencies possess whatever powers are granted to them by the enabling statute passed by Congress or the state legislature. They (1) make rules; (2) enforce the law; and (3) adjudicate controversies.

 

DIF:    Difficulty: Challenging

NAT:  BUSPROG: Communication | BUSPROG: Reflective Thinking

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Synthesis

 

4. The SEC would like to adopt some new rules to protect investors. What factors should it consider as part of the administrative process?

 

ANS:

Administrative rules can be legislative, interpretative, or procedural. The commission members should carefully check their enabling statute before adopting new rules. More than likely the rules it will be adopting would be considered legislative rules, which are substantive rules under the authority granted to the agency by the legislature. Most legislative rules must be promulgated in accordance with the Administrative Procedure Act, which generally requires: (1) prior notice of the proposed rule, usually by publication in the Federal Register; (2) an opportunity for interested parties to participate in the rulemaking procedure; and (3) publication of a final draft containing a concise general statement of its basis and purpose at least 30 days before the rule takes effect.

 

DIF:    Difficulty: Challenging

NAT:  BUSPROG: Communication | BUSPROG: Reflective Thinking

STA:   AICPA: BB-Legal                           TOP:   A-Head: Operation of Administrative Agencies

KEY:  Bloom’s: Synthesis

 

5. a.  What is the purpose of the Freedom of Information Act?
6. To what categories of records does the FOIA allow denial of access?

 

ANS:

a.		The purpose of the Freedom of Information Act is to give the public access to most records in files of federal administrative agencies.
b.		The FOIA allows agencies to deny access to:
	1.		Records authorized in the interest of national defense or foreign policy to be kept secret.
	2.		Those exempted by statute.
	3.		Trade secrets and commercial or financial information that is privileged or confidential.
	4.		Investigatory records compiled for law enforcement.
	5.		Records that relate solely to internal personnel rules and practices of an agency.
	6.		Inter- or intra-agency memoranda.
	7.		Personnel and medical files.
	8.		Records relating to regulation of financial institutions.
	9.		Certain geological and geophysical information and data.

 

 

DIF:    Difficulty: Challenging

NAT:  BUSPROG: Communication | BUSPROG: Reflective Thinking

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Synthesis

 

6. Explain what is considered a “major rule” and the effect of an administrative rule’s being in this category.

 

ANS:

The Congressional Review Act enacted in 1996 subjects most administrative rules to an extensive form of legislative control. The Act requires agencies to submit newly adopted rules to each house of Congress before the rules can take effect. If the rule is a “major rule,” it does not become final until Congress has had an opportunity to disapprove it. A major rule is any rule that the Office of Management and Budget finds has resulted in or is likely to result in (1) an annual effect on the economy of at least $100 million; (2) a major increase in costs or prices; or (3) a significant adverse effect on competition, employment, investment, innovation, productivity, or international competitiveness of U.S. enterprises.

 

DIF:    Difficulty: Challenging

NAT:  BUSPROG: Communication | BUSPROG: Reflective Thinking

STA:   AICPA: BB-Legal                           TOP:   A-Head: Limits on Administrative Agencies

KEY:  Bloom’s: Synthesis