Title: Administrative Agencies: Their Structure and Powers | Business and the Legal Environment
Headings: Administrative Agencies: Their Structure and Powers
Administrative Agencies: Their Structure and Powers
Learning Objectives
Why Have Administrative Agencies?
Why Regulate the Economy at All?
Ideal Conditions for a Free Market
History of Federal Agencies
Classification of Agencies
Powers of Agencies
The Constitution and Agencies
Key Takeaway
Exercises

Content: Describe the constitutional issue that questions whether administrative agencies could have authority to make enforceable rules that affect business. Why Have Administrative Agencies? The US Constitution mentions only three branches of government: legislative, executive, and judicial (Articles I, II, and III). There is no mention of agencies in the Constitution, even though federal agencies are sometimes referred to as “the fourth branch of government.” The Supreme Court has recognized the legitimacy of federal administrative agencies to make rules that have the same binding effect as statutes by Congress. Most commentators note that having agencies with rule-making power is a practical necessity: ( 1) Congress does not have the expertise or continuity to develop specialized knowledge in various areas (e.g., communications, the environment, aviation). ( 2) Because of this, it makes sense for Congress to set forth broad statutory guidance to an agency and delegate authority to the agency to propose rules that further the statutory purposes. ( 3) As long as Congress makes this delegating guidance sufficiently clear, it is not delegating improperly.