Foundations of the Legal Environment of Business International Edition 2nd Edition by Marianne M. Jennings - Test Bank

Foundations of the Legal Environment of Business International Edition 2nd Edition by Marianne M. Jennings – Test Bank

 

Instant Download – Complete Test Bank With Answers

 

 

Sample Questions Are Posted Below

 

Chapter 5: Administrative Law

 

TRUE/FALSE

 

1. Before administrative agencies’ rules become law, there must be congressional approval.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Creation

 

2. An administrative agency is neither a legislative nor a judicial body.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Nature

 

3. Administrative agencies can exist at any level of government.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Types

 

4. Administrative agencies are created by some legislative body.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Creation

 

5. An enabling act is an act approving rules promulgated by an administrative agency.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Enabling Acts

 

6. Administrative agencies serve as courts for hearings on rule violations.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Purpose

 

7. The Privacy Act is part of the Administrative Procedures Act.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Privacy Act

 

8. The Freedom of Information Act is part of the Administrative Procedures Act.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FOIA

 

9. Under a Freedom of Information Act request, a member of the public can obtain all information in the files of a federal agency.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FOIA

 

10. Reverse FOIA suits are suits by agencies to stop disclosures.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FOIA

 

11. The Federal Privacy Act restricts the free exchange of information among federal agencies.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Privacy Act

 

12. Law enforcement agencies are exempt from the Federal Privacy Act.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Privacy Act

 

13. The Government in the Sunshine Act is often referred to as an open-meeting law.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Sunshine Act

 

14. The Government in the Sunshine Act applies to all federal administrative agencies.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Sunshine Act

 

15. The Government in the Sunshine Act created the Code of Federal Regulations.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Sunshine Act

 

16. The Federal Register Act is part of the Administrative Procedures Act.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Federal Register System

 

17. The U.S. Government Manual contains information on national and regional agency offices.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Federal Register System

 

18. The Code of Federal Regulations contains all the regulations of federal agencies.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   CFR

 

19. The Federal Register is a daily update of changes and proposed changes in the Code of Federal Regulations.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Federal Register System

 

20. Formal rule making requires publication of proposed rules.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Formal Rulemaking

 

21. Informal rule making does not require publication of proposed rules.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Informal

 

22. To withstand challenges, proposed agency rules must be supported by some studies or evidence.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

23. The Regulatory Flexibility Act allows agencies flexibility in rule making by not requiring publication of proposed rules.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

24. During the public comment period for a proposed rule, only affected businesses can make comments.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Public Comment

 

25. Hearings are required in all federal rule proposals.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Hearings

 

26. Once a rule is proposed, it cannot be withdrawn.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

27. A rule is arbitrary and capricious if there is no evidence to support its promulgation.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rule Challenges

 

28. The substantial evidence challenge cannot be used in cases where formal rule-making procedures were followed.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rule Challenges

 

29. An ultra vires challenge is a challenge of the agency’s jurisdictional authority on a rule.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rule Challenges

 

30. City governments cannot create administrative agencies.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Types

 

31. Hearings conducted by agencies for enforcement purposes need not provide due process for the parties.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Enforcement

 

32. Many federal agencies use licensing as a means of enforcement.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Enforcement

 

33. An administrative agency is a statutory creation within the executive branch.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Creation

 

34. A consent decree is similar to a nolo contendere plea.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Consent Decree

 

35. The Department of Labor Relations Boards is an Executive Department.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Executive Departments

 

36. The decision of an administrative law judge can be appealed to the agency heads.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Hearings

 

37. Appeals of federal administrative agency decisions go to federal district court.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Hearings

 

38. Administrative remedies must be exhausted before a court will review agency actions.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Hearings

 

39. Due process rights before an administrative agency require that formal trials be held before rights are taken away.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Hearings

 

40. The Federal Register System includes the Federal Register, the Code of Federal Regulations, and the United States Code.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Federal Register System

 

41. Administrative agencies have no authority to act unless a property right has been infringed.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Due Process

 

42. Inspections are a means of enforcement for administrative agencies.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Enforcement

 

43. Inspections by administrative agencies require a search warrant unless the business owner gives permission.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Inspections

 

44. Under the FOIA, agencies are not permitted to charge for copying costs.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FOIA

 

45. The Federal Register Act is part of the Administrative Procedures Act.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Federal Register System

 

46. Both formal and informal rule-making processes include public hearings.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

47. An ultra vires challenge to an administrative regulation is one brought on the grounds of procedural error.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Challenges

 

48. The Department of Homeland Security has authority over terrorism issues, but not natural disasters.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Department of Homeland Security

 

49. Informal rule making is not permitted for promulgation of rules.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

50. An FOIA request can be denied if national security information is involved.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FOIA

 

51. Law enforcement purposes are an exception to the prohibited exchanges of information among agencies under the Federal Privacy Act.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Privacy

 

52. Only businesses can provide input during the comment period of rule making.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

53. Federal agencies do not have the authority to issue fines.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Enforcement

 

54. Only businesses can provide input in the formal rulemaking process.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

55. A public comment period must be a minimum of 30 days.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

56. If an administrative agency decides to withdraw proposed rules after the comment period, it must have another comment period concerning the decision to withdraw the proposed rules.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Proposed Regulations

 

57. A consent decree is a guilty plea.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Enforcement

 

58. An agency that fails to investigate the issues before proposing a rule has acted arbitrarily and capriciously.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Challenges

 

59. The Government in the Sunshine Act requires advance notice of agency meetings and hearings.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Sunshine Act

 

60. Comment periods are not required for modifications of rules, only new rules.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

61. Only consumers have rights of comment during the public comment period.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Comment Period

 

62. The Code of Federal Regulations is published every business working day.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

63. Exhausting administrative remedies is suggested, but not required, before litigation.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Remedies

 

64. Administrative laws and agencies seldom impact the business world directly.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Agencies

 

65. Appeals of federal agency decisions to courts of appeal require a grant of certiorari.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Enforcement

 

66. The Administrative Procedures Act requires each federal agency to decide what procedures will be used for promulgating new regulations.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   APA

 

67. Only published agency information can be obtained through a Freedom of Information Act request.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FOIA

 

68. Federal agencies are not allowed to charge fees for copies of reports released under the Freedom of Information Act.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FOIA

 

69. The Federal Register System provides the means for the Government in the Sunshine notices and publication of agency rules and procedures.

 

ANS:  T                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Federal Register System

 

70. Government in the Sunshine is another name for the Freedom of Information Act.

 

ANS:  F                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FOIA|Government in the Sunshine Act

 

MULTIPLE CHOICE

 

1. All administrative agencies:

a.	are at the federal level.
b.	promulgate regulations.
c.	are created by the U.S. President.
d.	are under sunset laws.

 

 

ANS:  B                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Agencies

 

2. Enabling acts:

a.	are regulations of administrative agencies.
b.	are nonlegislative provisions.
c.	establish administrative agencies and their authority.
d.	must contain sunset provisions.

 

 

ANS:  C                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Enabling Acts

 

3. The Administrative Procedures Act includes:

a.	the Freedom of Information Act.
b.	the Federal Register Act.
c.	enabling legislation.
d.	all of these.

 

 

ANS:  A                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   APA

 

4. An FOIA request (to be valid):

a.	must be in writing.
b.	must describe the reason the documents are sought.
c.	can request any information in an agency’s file.
d.	must include prepayment of copy fees.

 

 

ANS:  A                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FOIA

 

5. Which of the following is not exempt from an FOIA request?

a.	national defense or foreign policy information
b.	internal agency policies on copy charges
c.	trade secrets
d.	investigation records

 

 

ANS:  B                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FOIA

 

6. A reverse FOIA suit is:

a.	one brought by an administrative agency.
b.	a suit to stop disclosure of information.
c.	not available at the federal level.
d.	a suit brought by an agency against another agency.

 

 

ANS:  B                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FOIA

 

7. The Federal Privacy Act:

a.	prohibits release of information (by public agencies) on individuals.
b.	does not apply to all agencies.
c.	provides a disclosure exemption for law enforcement purposes.
d.	does not cover medical records.

 

 

ANS:  C                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FPA

 

8. The Government in the Sunshine Act:

a.	is often called an open-meeting law.
b.	applies to federal agencies whose heads are appointed by Congress.
c.	requires all agency meetings to be public.
d.	applies to congressional committee meetings.

 

 

ANS:  A                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Sunshine Act

 

9. Formal rule making differs from informal rule making in:

a.	public notice is required for formal rule making not informal.
b.	a public comment period is needed for formal rule making but not informal.
c.	no modification period exists in formal rule making.
d.	none of the above

 

 

ANS:  D                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

10. Public hearings:

a.	are required in both formal and informal rule making.
b.	can be held regionally.
c.	are required under the Regulatory Flexibility Act.
d.	none of the above

 

 

ANS:  B                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

11. Which of the following is not grounds for challenging an administrative regulation?

a.	arbitrary and capricious
b.	lack of substantial evidence
c.	ultra vires
d.	lack of a congressional hearing

 

 

ANS:  D                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rule Challenges

 

12. Enforcement of federal administrative regulations:

a.	is a function of the executive branch.
b.	is a function of the Justice Department.
c.	is part of the agency’s role.
d.	none of the above

 

 

ANS:  C                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Enforcement

 

13. A consent decree is:

a.	comparable to a not guilty plea.
b.	comparable to a nolo contendere plea.
c.	a guilty plea to agency charges.
d.	not made public.

 

 

ANS:  B                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Enforcement

 

14. Sanctions that can be imposed by agencies include:

a.	injunctions.
b.	fines.
c.	loss of license.
d.	all of the above

 

 

ANS:  D                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Enforcement

 

15. Appeals from federal administrative agency decisions go:

a.	to federal district court.
b.	to U.S. Court of Appeals.
c.	directly to the U.S. Supreme Court.
d.	none of the above

 

 

ANS:  B                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Challenges

 

16. The Federal Privacy Act:

a.	is the same as the Regulatory Flexibility Act.
b.	does not apply to medical and employment histories.
c.	is part of the Administrative Procedures Act.
d.	applies to all law enforcement information exchanges.

 

 

ANS:  C                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FPA

 

17. Which of these can create an administrative agency:

a.	Congress
b.	state legislature
c.	city government
d.	all of these

 

 

ANS:  D                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Agency Creation

 

18. The National Transportation Safety Board has proposed a new regulation that would require children under the age of two to be strapped into car seats in their own seats on airplanes. Currently, children under the age of two are nonpaying passengers who ride on their parents’ laps. What opportunities will airlines and parents have for input on the proposed rule?

a.	They can write their congressional representatives.
b.	They can send in comment letters to the NTSB.
c.	They can seek a presidential veto.
d.	They can go to court to block the proposal.

 

 

ANS:  B                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

19. The public comment period:

a.	need not be 30 days if there are formal hearings.
b.	need not be 30 days if the Regulatory Flexibility Act is followed.
c.	can never exceed 90 days.
d.	must be at least 30 days.

 

 

ANS:  D                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

20. Ralph Watkins is the president of Animal Crackers, Inc. Animal Crackers operates childrens’ clothing stores. Ralph has just received notice of charges by the Federal Trade Commission (FTC) against Animal Crackers for deceptive advertising. Watkins wishes to know the company’s rights. Which of the following statements is true?

a.	Animal Crackers is entitled to a jury trial.
b.	Animal Crackers could dispose of the matter through a consent decree.
c.	Animal Crackers is facing criminal charges.
d.	Animal Crackers will have a 30-day comment period.

 

 

ANS:  B                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Enforcement

 

21. Which of the following meetings would be subject to the open-meeting provisions of the federal sunshine laws?

a.	a meeting of the staff attorneys of the SEC enforcement division
b.	a meeting of the division heads of the Federal Trade Commission
c.	a meeting of the nine justices of the U.S. Supreme Court
d.	a meeting of three of the five commissioners of the Federal Aviation Administration

 

 

ANS:  D                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Sunshine Act

 

22. Which of the following is not an example of an enabling act?

a.	Government in the Sunshine Act
b.	Securities Exchange Act of 1934
c.	Federal Trade Commission Act
d.	Occupational Safety and Health Act

 

 

ANS:  A                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Enabling Acts

 

23. Which of the following is not part of the Administrative Procedures Act?

a.	Freedom of Information Act
b.	Privacy Act
c.	Government in the Sunshine Act
d.	Federal Register Act

 

 

ANS:  D                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   APA

 

24. The Federal Register averages about _____ pages of proposals and notices every working day.

a.	700
b.	7,000
c.	2,500
d.	250

 

 

ANS:  D                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Federal Register System

 

25. “Reverse FOIA suits” are:

a.	lawsuits brought by federal agencies to stop disclosure of information.
b.	suits challenging the constitutionality of the FOIA.
c.	suits by citizens brought to enforce their rights in FOIA requests.
d.	none of the above

 

 

ANS:  D                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FOIA

 

26. Which of the following is not an exemption for following the disclosure requirements under the Federal Privacy Act?

a.	medical records
b.	FBI investigations
c.	SEC stock-trading records
d.	Congress

 

 

ANS:  A                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FPA

 

27. Notice of a proposed federal regulation in The Federal Register need not contain:

a.	the name of the proposing agency.
b.	the statutory authority for promulgating the rules.
c.	the environmental impact of the proposal.
d.	the language or the proposed rule or a summary.

 

 

ANS:  C                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

28. The Regulatory Flexibility Act:

a.	created the process of hybrid rule making.
b.	requires publication of rule notices in trade magazines.
c.	requires a six-month comment period in formal rule making.
d.	allows regulators to promulgate rules without prior notice.

 

 

ANS:  B                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

29. A court challenge to a promulgated rule based on the theory that the agency exceeded its authority is:

a.	a substantial evidence challenge.
b.	an arbitrary and capricious challenge.
c.	an ultra vires challenge.
d.	all of the above

 

 

ANS:  C                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

30. Other parties with an interest in an administrative case are known as _____.

a.	co-defendants
b.	cross-plaintiffs
c.	intervenors
d.	speculators

 

 

ANS:  C                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Intervenors

 

31. All administrative agency actions against accused violators start with a:

a.	prosecution.
b.	consent decree.
c.	complaint.
d.	cease-and-desist order.

 

 

ANS:  C                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Complaints

 

32. Andrew Flint is the CEO of a small, publicly held company based in Idaho Falls, Idaho. Flint earned $76,000 last year as CEO. Investors in Flint’s firm are earning nearly 15 percent on their shares. Flint has learned that the SEC is considering a proposed rule mandating salary studies for all publicly held firms. Flint has priced such studies and has estimates ranging from $27,000 to $40,000. Flint would like the SEC to understand his firm’s position. Which of the following statements is true?

a.	Flint will need to hire a lawyer to present evidence to the SEC.
b.	Flint can challenge the rule only after promulgation.
c.	Flint’s challenge must be made in court.
d.	Flint can simply write to the SEC to voice his concerns.

 

 

ANS:  D                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

33. Four of the five commissioners for the Federal Trade Commission were working late one evening in their Washington, D.C. offices. The four were catching up on their electronic mail. The four soon discovered each others’ presence on electronic mail. One commissioner wrote to the other three, “Let’s get some business done so long as we’re all here. We could resolve that unfair competition case that’s pending for next month. We can iron out our differences via e-mail.” The electronic exchanges of the commissioners would:

a.	be protected because they are internal agency actions.
b.	violate the Government in the Sunshine Act open meeting laws.
c.	be considered law enforcement issues and would be protected from open-meeting laws.
d.	not be a meeting without some staff members present.

 

 

ANS:  B                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Procedure

 

34. Which is not a role administrative agencies play?

a.	rule making
b.	enforcement
c.	adjudication
d.	Administrative agencies play all of the above roles.

 

 

ANS:  C                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Roles

 

35. Addison Winchell is the CEO of a printing firm located in Lexington, Kentucky. The state office of environment quality has proposed a rule mandating the use of soy inks and recycled paper by all printers in the state. Winchell says the expense will put him out of business. What can Winchell do?

a.	Provide comments to the proposed rule.
b.	Go directly to court with a constitutional challenge.
c.	Present evidence if a trade group supports him.
d.	All of the above.

 

 

ANS:  A                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

36. Choose the answer with the proper order for administrative rulemaking.

a.	study of the problem, notice of rulemaking, public comment period, promulgation
b.	study of the problem, public comment period, notice of rulemaking, promulgation
c.	notice of proposed rulemaking, study of the problem, public comment period, promulgation
d.	notice of proposed rulemaking, public comment period, study of the problem, promulgation
e.	notice of proposed rulemaking, consent decree, public comment period, study of the problem, promulgation

 

 

ANS:  A                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

37. What is the difference between formal rulemaking and informal rulemaking?

a.	Formal requires notice while the latter are simply immaterial changes to rules.
b.	Formal requires a public comment period and informal rulemaking does not.
c.	Formal requires public hearings and information does not.
d.	Formal requires Government in the Sunshine Notices and informal does not.
e.	none of the above

 

 

ANS:  C                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

38. Choose the answer with the correct order for administrative agency enforcement proceedings.

a.	charges, consent decree, hearing, appeal
b.	charges, information gathering, consent decree, fines
c.	charges, hearing, findings and decision, administrative agency decision, judicial appeal
d.	charges, hearing, findings and decision, judicial appeal
e.	charges, hearing, consent decree, judicial appeal

 

 

ANS:  C                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Enforcement

 

39. What is the effect of a consent decree?

a.	The agency’s charges are dismissed with no sanctions.
b.	The party makes no admissions as to conduct.
c.	There is still judicial appeal from a consent decree.
d.	It is no longer available under the Regulatory Flexibility Act.
e.	none of the above

 

 

ANS:  B                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Consent Decree

 

40. Which law simplified rulemaking for businesses?

a.	Regulatory Flexibility Act
b.	Freedom of Information Act
c.	Administrative Procedures Act
d.	both a and b
e.	none of the above

 

 

ANS:  A                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

41. Ultra vires means:

a.	“a bad violation of law.”
b.	“beyond its powers.”
c.	“arbitrary.”
d.	“capricious.”

 

 

ANS:  B                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Ultra Vires

 

42. Where could a business find notices of proposed rules?

a.	The Code of Federal Regulations
b.	The Federal Register
c.	industry trade publications
d.	both b and c

 

 

ANS:  D                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

43. The FDA had approved a new diet drug for the market. The agency pulled the approval and the drug off the market because a staff member said, “This drug didn’t work for me.” The manufacturer of the drug could challenge the FDA action:

a.	as arbitrary and capricious.
b.	on the basis of a failure to follow ADA procedures.
c.	lack of substantial evidence.
d.	any of the above

 

 

ANS:  D                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

44. John Forsyth is the head of the Securities Exchange Commission. There are new rules pending before the SEC that would require lawyers to blow the whistle on their clients. The American Bar Association, which is opposed to the legislation, has just offered Mr. Forsyth’s son a full scholarship to the law school of his choice.

a.	The in-kind contribution to his son is a violation of the law.
b.	A scholarship to Mr. Forsyth would be illegal, but not to his son.
c.	The ABA has not violated any law if there is no connection between the proposed rule and the scholarship.
d.	none of the above

 

 

ANS:  C                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

45. Choose the one with the correct ordering of rulemaking functions from among the following:

a.	enabling statute, comment period, studies of issues, promulgation
b.	enabling statute, studies of issues, promulgation, comment period
c.	enabling statute, studies of issues, comment period, promulgation
d.	None of the above is in correct order.

 

 

ANS:  C                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

46. If a company challenges a penalty imposed by an administrative agency, which of the following is the correct order for its appeal?

a.	ALJ, agency commissioners, judicial challenge
b.	judicial challenge, ALJ, agency commissioners
c.	agency commissioners, ALJ, judicial challenge
d.	None of the above is in the correct order.

 

 

ANS:  A                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Enforcement

 

47. The Federal Maritime Commission approved the charter for an inter-island ferry service in Hawaii but did so without a study of the environmental impact of adding the ferry service. Federal agencies are required to determine environmental impacts of all actions. The airlines that fly between the islands wish to challenge the ferry approval by the Maritime Commission. What grounds could they use?

a.	arbitrary and capricious
b.	failure to comply with statutory procedures
c.	favoritism
d.	none of the above

 

 

ANS:  B                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Challenges

 

48. The Department of Homeland Security has been given the responsibility for the construction of a fence along the border between the United States and Mexico. The Department has not followed the 30-day comment rule on the composition and location of the proposed fence. Secretary Chertoff says that the fence is a matter of national security. The Department:

a.	has not complied with the rulemaking requirements and cannot proceed with the fence.
b.	is using the emergency exception for the time waiver on rulemaking.
c.	does not have the authority to waive the time requirements.
d.	both a and c

 

 

ANS:  B                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

49. The Department of Justice requires escrow and title companies to maintain records of transactions and report those transactions that involve more than $10,000 in cash. Title companies are worried about disclosure of the information to federal agencies. Which of the following is correct?

a.	The information may be disclosed if it is being used for law enforcement purposes by the agency.
b.	The information is financial and private and disclosure would be arbitrary and capricious.
c.	The information cannot be disclosed unless there is a prior disclosure of the agency request to the parties involved.
d.	none of the above

 

 

ANS:  A                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   FOIA

 

50. When an agency uses some aspects of formal rulemaking and some aspects of informal rulemaking, it is called:

a.	mixed rulemaking
b.	combination rulemaking
c.	hybrid rulemaking
d.	cross rulemaking

 

 

ANS:  C                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Rulemaking

 

51. Which of the following is not one of the functions of administrative agencies?

a.	adjudicating rules
b.	enforcing rules
c.	interpreting statutes
d.	promulgating regulations

 

 

ANS:  C                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Agency Functions

 

52. Why must an agency research the problem it seeks to address?

a.	The agency must establish the purpose for any new rules proposed.
b.	The agency must present evidence that the regulation will accomplish its purpose.
c.	The agency must determine if the regulation will be cost effective.
d.	All of the above are reasons an agency must research the problems it is addressing.

 

 

ANS:  D                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Agencies

 

53. Which of the following is not one of the purposes of agency inspections?

a.	ensuring safe working conditions for employees
b.	protecting investors
c.	ensuring safety for consumers
d.	enforcing regulations

 

 

ANS:  B                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Inspections

 

54. Who presides over the hearing between a federal agency and a defendant accused of a violation of the agency’s rule?

a.	administrative law judge
b.	federal district judge
c.	hearing officer
d.	the director of the agency

 

 

ANS:  A                    PTS:   1                    NAT:  AACSB: Analytic

TOP:   Hearings

 

ESSAY

 

1. The FTC has proposed a series of regulations to require disclosure of repair/accident history in the sale of used cars. The Classic Car Club believes that historical vehicles (1960 and earlier) should be exempt from the requirements. What can the club do to voice its concerns?

 

ANS:

Send letter during public comment period; appear at public hearings if they are held; voice objections before promulgation.

 

PTS:   1                    NAT:  AACSB: Analytic                           TOP:   Public Comment

 

2. Draw a flowchart that illustrates the formal rule-making process.

 

ANS:

Students should be able to reproduce and explain Figure 5.3 in the textbook.

 

PTS:   1                    NAT:  AACSB: Analytic                           TOP:   Rulemaking

 

3. Benzene is a colorless, aromatic liquid used in manufacturing a variety of products including motor fuels, solvents, detergents, pesticides, and other organic materials. Benzene is a toxic substance and rapid inhalation can be fatal. Exposure has also been shown to lead to various types of nonmalignant diseases such as blood disorders (including leukemia).

 

OSHA passed a regulation limiting maximum benzene exposure for employees. OSHA set a 1 ppm maximum, even though the medical evidence only discussed exposures at 10 ppm and more. The petroleum industry wishes to challenge the regulation. Can they do so? On what basis?

 

ANS:

First, they must have voiced their concerns during the promulgation. Second, they can challenge the regulation in court by establishing that it is arbitrary and capricious or not supported by substantial evidence. An ultra vires challenge is inappropriate since OSHA can clearly regulate industrial hazards. However, the regulation is much more stringent than the level of exposure required for the documented medical effects. See Industrial Union v. American Petroleum, 448 U.S. 607 (1980).

 

PTS:   1                    NAT:  AACSB: Analytic | AACSB: Reflective Thinking

TOP:   OSHA

 

4. Discuss the types of penalties administrative agencies can impose for violations.

 

ANS:

Cease and desist orders; injunctions; civil penalties; loss of license; in some cases, criminal penalties, corrective advertising; restitution to defrauded consumers; they have wide discretion in developing appropriate penalties.

 

PTS:   1                    NAT:  AACSB: Analytic                           TOP:   Agencies

 

5. Discuss the Administrative Procedures Act and its amendments and purpose.

 

ANS:

Passed in 1946 to establish uniform procedures for rule making. FOIA – Freedom of Information Act – is an amendment that allows individuals to request information from federal agencies. (There are nine exemptions, including trade secret information.) Federal Privacy Act – amendment that limits exchange of information on individuals among agencies – requires notification unless for law enforcement purposes. Government in the Sunshine Act – 1976 amendment often called the open-meeting law; applies to agencies with heads appointed by the president; requires advance public notice before agency heads meet; except for executive session, the meetings are public.

 

PTS:   1                    NAT:  AACSB: Analytic                           TOP:   APA

 

6. Name the three government publications covered under the Federal Register Act.

 

ANS:

The Federal Register; the U.S. Government Manual; and the Code of Federal Regulations.

 

PTS:   1                    NAT:  AACSB: Analytic                           TOP:   Federal Register System

 

7. The FDA has proposed rules that would classify cigarettes as a medical device and thereby severely restrict the types of advertising that could be used. What forms and types of feedback would the tobacco companies have during the rule-making process by the FDA?

 

ANS:

The companies could provide the usual forms of input during rule making. However, the tobacco companies could (and have) challenged the authority of the FDA to regulate tobacco. The ultra vires challenge to the FDA’s authority is ongoing.

 

PTS:   1                    NAT:  AACSB: Analytic                           TOP:   FDA

 

8. Discuss the ways a business could challenge a promulgated agency rule.

 

ANS:

By establishing that the rule was ultra vires, by establishing that the rulemaking process was flawed, or by establishing that the rulemaking was arbitrary and capricious.

 

PTS:   1                    NAT:  AACSB: Analytic                           TOP:   Agencies

 

9. The National Park service withdrew its proposed rules on the use of snowmobiles in national parks. Describe any legal issues that might exist in its withdrawal of the rules.

 

ANS:

Just as an agency cannot make rules without studies, public comment and support, it cannot withdraw rules without the same procedural compliance.

 

PTS:   1                    NAT:  AACSB: Analytic                           TOP:   Procedure

 

10. Why are there so many administrative agencies?

 

ANS:

Having many agencies allows each individual agency to specialize in a narrow area to develop the required expertise for making, interpreting,and enforcing laws.

 

PTS:   1                    NAT:  AACSB: Analytic                           TOP:   Agencies

 

11. The Department of Homeland Security has asked the Internal Revenue Service for the tax returns of U.S. citizens who have been identified as having ties to terrorist organizations. The IRS has declined to turn over the tax returns. Discuss the rights of the individuals and the authority of the two agencies.

 

ANS:

The exchange of information is prohibited unless the Department of Homeland Security is engaged in law enforcement activity. In this situation, the Department is charged with enforcement of the anti-terrorist laws and it may be able to do so with access to financial information. The IRS need not seek permission from the individuals because of the law enforcement purpose.

 

PTS:   1                    NAT:  AACSB: Analytic | AACSB: Reflective Thinking

TOP:   Agencies

 

12. What does the Freedom of Information Act provide?

 

ANS:

The FOIA allows citizens to access certain agency information and requires that the agencies publicly disclose their procedures and decisions.  Most information contained in unpublished agency documents, such as results of studies, research on issues and factors that were considered in a rulemaking decision, is available upon request.  Some information, such as trade secrets and personnel records, is exempt from disclosure.

 

PTS:   1                    NAT:  AACSB: Analytic | AACSB: Reflective Thinking

TOP:   FOIA

 

13. What role does Congress play in administrative agencies?

 

ANS:

Congress passes the enabling act — a statute that specifies the problem that needs to be addressed and if necessary, creates the agency that will address it.  Once the enabling act has been passed, the agency is responsible for determining what rules are needed to address the problem.  Congress may object to an agency’s rules by passing a resolution urging it to change or drop certain guidelines or requirements.  A resolution does not revoke the agency’s authority, but simply sends a message to the agency.  Finally, Congress may challenge an agency’s actions if those actions are beyond the scope of the enabling act.  The results of such a challenge are usually determined by a court, and can include a ruling that the regulations are arbitrary and capricious or that the actions are outside the scope of their powers.  Or, a challenge may be issued based on the agency’s procedures if it does not follow the requirements of notice, publication and public input.

 

PTS:   1                    NAT:  AACSB: Analytic | AACSB: Reflective Thinking

TOP:   Agencies

 

14. Describe the roles of administrative agencies.

 

ANS:

Administrative agencies are specialists in their particular area of law, so they provide expertise in that area. This allows them to regulate complex issues. The provide a form of due process so that affected parties can be heard before their property, rights or income are taken.  They also accomplish social goals such as protecting employees and providing for the health and welfare of children or citizens who have been affected by a disaster.

 

PTS:   1                    NAT:  AACSB: Analytic                           TOP:   Agencies