ADMINISTRATIVE AGENCY

ADMINISTRATIVE AGENCY

An official governmental body empowered with the authority to direct and supervise the implementation of particular legislative acts. In addition to agency, such governmental bodies may be called commissions, corporations (e.g., FEDERAL DEPOSIT INSURANCE CORPORATION), boards, departments, or divisions.

Administrative agencies are created by the
federal Constitution, the U.S. Congress, state
legislatures, and local lawmaking bodies to man-
age crises, redress serious social problems, or
oversee complex matters of governmental con-
cern beyond the expertise of legislators.
Although Article I, Section 1, of the federal Con-
stitution plainly states that “[a]ll legislative Pow-
ers herein granted shall be vested in a Congress
of the United States,” the “necessary-and-
proper” clause, in the eighth section of the same
article, states that Congress shall have power
“[t]o make all Laws which shall be necessary and
proper for carrying into Execution the foregoing
Powers, and all other Powers . . . in any Depart-
ment or Officer thereof.” With this language,
many have argued that the Framers of the Con-
stitution expected, indeed encouraged, the cre-
ation of powerful administrative agencies. This
argument prevailed, and courts therefore have
allowed the U.S. Congress—and other legislative
bodies—to make laws that delegate limited law-
making authority to administrative agencies.
The substance of an administrative agency’s
powers must be intelligible, and a system of con-
trols must be in place to limit those powers, but
courts almost always find that administrative
agencies meet these requirements.

Administrative agency rules and regulations
often have the force of law against individuals.
This tendency has led many critics to charge that
the creation of agencies circumvents the consti-
tutional directive that laws are to be created by
elected officials. According to these critics,
administrative agencies constitute an unconsti-
tutional, bureaucratic fourth branch of govern-
ment with powers that exceed those of the three
recognized branches (the legislative, executive,
and judiciary). In response, supporters of
administrative agencies note that agencies are
created and overseen by elected officials or the
president. Agencies are created by an enabling
statute, which is a state or federal law that gives
birth to the agency and outlines the procedures
for the agency’s rule making. Furthermore,
agencies include the public in their rule-making
processes. Thus, by proxy, agencies are the will of
the electorate.

Supporters of administrative agencies note
also that agencies are able to adjudicate relatively
minor or exceedingly complex disputes more
quickly or more flexibly than can state and fed-
eral courts, which helps preserve judicial
resources and promotes swift resolutions.
Opponents argue that swiftness and ease at the
expense of fairness are no virtues, but while the
debate continues, administrative agencies thrive.

Governmental representation in an admin-
istrative capacity of any kind can be considered
administrative agency. The president is an
administrative agent whose enabling statute is
the federal Constitution. The thirteen executive
departments reporting to the president are
administrative agencies. For example, the
DEPARTMENT OF JUSTICE is a cabinet-level exec-
utive department, but it functions as the admin-
istrative agency that addresses the legal concerns
of the U.S. government and its people. The
departments housed within the Department of
Justice, such as the DRUG ENFORCEMENT ADMIN-
ISTRATION and the FEDERAL BUREAU OF INVES-
TIGATION, are also administrative agencies, and
they have procedures and rules of their own.

An administrative agency that falls under the
direction of the EXECUTIVE BRANCH is referred
to as an executive agency. However, an enabling
statute may establish an independent agency,
commission, or board, which does not fall under
the direction of the president. The primary dis-
tinction between an executive agency and an
independent agency is that the statute creating
an independent agency typically precludes the
president from removing the head of the agency
without cause. By contrast, a head of an execu-
tive agency generally serves at the pleasure of the
president. The U.S. Supreme Court on several
occasions has considered whether independent
agencies are constitutional. In Humphrey’s
Executor v. United States, 295 U.S. 602, 55 S. Ct.
869, 79 L. Ed. 1611 (1935), the Court held the
President FRANKLIN D. ROOSEVELT could not
remove the commissioner of the FEDERAL
TRADE COMMISSION (FTC) without cause. The
statute that created the commission permitted
removal of the commissioner only for ineffi-
ciency, neglect of duty, or malfeasance of office.
Roosevelt purported to remove FTC Commis-
sioner William E. Humphrey, who had been
nominated by President HERBERT C. HOOVER to
a seven-year term in 1931, in order to replace
Humphrey with an individual of Roosevelt’s
own selection. The Court held that because
Humphrey was not an executive officer, the
president could not remove him from office
except for the causes set forth in the statute.

Many of the administrative agencies that
affect everyday activities are independent agen-
cies. Among the numerous examples of independent agencies are the CENTRAL INTELLIGENCE
AGENCY, ENVIRONMENTAL PROTECTION
AGENCY, the NATIONAL LABOR RELATIONS
BOARD, and the SECURITIES AND EXCHANGE
COMMISSION. Because the president is generally
able to appoint the chairs or fill vacancies within
these agencies, the president is often able to
influence their activities, notwithstanding the
limitation on the removal of the heads of the
agencies.

Administrative agencies are made up of
experts in the field in which the agency operates.
For example, the Maritime Administration
employs experts in the areas of sea commerce
and navigation to set its rules on merchant
marine activities.Many agencies have the power
to assess fines or otherwise deprive persons of
liberty in hearings conducted by their own judicial
bodies, or administrative boards. Given the
specialized knowledge within administrative
agencies, ADMINISTRATIVE LAW judges (ALJs),
who hear agency claims and disputes, are loath
to overturn the legal conclusions reached by
administrative boards. Determinations and
sanctions made by ALJs are subject to review by
state or federal courts, but a party must exhaust
all appeals within the agency before suing in
civil court.

An agency’s actions must be in accordance
with its enabling statute, and courts will examine
the agency records to determine whether the
agency exceeded its lawmaking or judicial powers.
Rigorous judicial oversight of agencies
would defeat a cherished feature of administrative
agency by eliminating agency flexibility in
resolving conflicts. To avoid this outcome, most
enabling statutes are worded vaguely, in such a way as to allow the agencies broad discretion in
determining their rules and procedures. To keep
agencies from wielding unbridled power, the
ADMINISTRATIVE PROCEDURE ACT OF 1946
(APA) (5 U.S.C.A. § 551 [1982]) sets standards
for the activities and rule making of all federal
regulatory agencies. The APA provides federal
courts with a framework for reviewing the rules
made and procedures used by administrative
agencies. Individual states have similar statutes
to guide their own courts.

History of Administrative Agency

The first administrative agency was created
by Congress in 1789 to provide pensions for
wounded Revolutionary War soldiers. Also in
the late 1700s, agencies were created to determine
the amount of duties charged on imported
goods, but it was not until 1887 that the first
permanent administrative agency was created.
The INTERSTATE COMMERCE COMMISSION
(ICC), created by the INTERSTATE COMMERCE
ACT (49 U.S.C.A. § 10101 et seq. [1995]), was
enacted by Congress to regulate commerce
among the states, especially the interstate transportation
of persons or property by carriers.
The ICC was designed to ensure that carriers
involved in interstate commerce provided the
public with fair and reasonable rates and services.
To buttress the Interstate Commerce Act,
the Federal Reserve System was established by
the Federal Reserve Act of 1913 (12 U.S.C.A.
§ 221) to serve as the United States’ central bank
and execute U.S. monetary policy. One year
later, the Federal Trade Commission was established
by Congress to promote free and fair
competition in interstate commerce by preventing
unfair methods of competition.

In 1908, the Federal Bureau of Investigation
(FBI) was established to investigate violations of
federal laws not assigned to other federal agencies.
The FBI is charged with solving crimes such
as KIDNAPPING, ESPIONAGE, sabotage, bank
ROBBERY, EXTORTION, interstate transportation
of stolen property, CIVIL RIGHTS violations,
interstate gambling violations, FRAUD against
the government, and the assault or killing of a
federal officer or the president. As an agency
concerned with criminal apprehension, the FBI
is considered an arm of the government, and its
directorship is subject to presidential approval.
However, the FBI carries out its investigations
independent of political influence. It can, for
example, probe the actions of presidents and
legislators, the very persons responsible for its
existence.

Administrative agencies are usually created
in response to a felt public need. Some older
agencies, for example, were created after the
Civil War to address economic matters critical to
the United States’ expanding government. After
the STOCK MARKET crash of October 1929, and
during the Great Depression of the 1930s, Congress
created numerous agencies in an effort to
regulate the production and marketing of
goods. Agencies such as the SOCIAL SECURITY
ADMINISTRATION (created by the SOCIAL SECURITY
ACT OF 1935 [42 U.S.C.A. § 301 et seq.]),
the Federal Savings and Loan Insurance Corporation
(established by a 1933 amendment to the
Federal Reserve Act, 12 U.S.C.A. § 264, and now
codified at 12 U.S.C.A. §§ 1811–1831) helped
provide financial security for many Americans.
The NATIONAL INDUSTRIAL RECOVERY ACT
(NIRA) (15 15 U.S.C.A. §§ 701 et seq., 40
U.S.C.A. § 401 et seq.) created the NATIONAL
RECOVERY ADMINISTRATION to ensure fair market
competition. However, the NIRA gave the
president limitless authority to impose sanctions,
and it was declared invalid by the Supreme
Court in the “Sick Chicken” case, SCHECHTER
POULTRY CORP. V. UNITED STATES, 295 U.S. 495,
55 S. Ct. 837, 79 L. Ed. 1570 (1935). The
National Labor Relations Board (created by the
National Labor Relations Act of 1935 [29
U.S.C.A. § 151 et seq.], later amended by acts of
1947 and 1959) also helped to ease the devastating
effects of the depression, by protecting
employees’ rights to organize, preventing
UNFAIR LABOR PRACTICES, and promoting COLLECTIVE
BARGAINING between employers and
LABOR UNIONS.

Congress installed the Federal Radio Commission
(FRC) in 1927 after entrepreneurs discovered
the commercial potential of radio
airwaves. In 1934, the FRC was merged into the
FEDERAL COMMUNICATIONS COMMISSION
(FCC), which was created by the Communications
Act of 1934 (47 U.S.C.A. § 151 et seq.) to
tackle the myriad issues presented by the sudden
widespread use of radio waves. In the wake of
television’s popularity, the Communications
Satellite Act of 1962 (47 U.S.C.A. §§ 701–744)
was enacted by Congress to broaden the FCC’s
powers to include regulation of television
broadcasting; telephone, telegraph, and CABLE
TELEVISION operation; two-way radio and radio
operation; and satellite communication.

When the United States entered WORLD WAR
II, more agencies were created or enlarged to
mobilize human resources and production and
to administer price controls and rationing. The
social upheaval of the 1960s spawned agencies
designed to improve urban areas, provide
opportunities for people who were historically
disadvantaged and marginalized, and promote
artistic endeavors. In the 1970s, 1980s, and
1990s, pressing issues such as human and environmental
health were addressed through the
creation of agencies such as the Environmental
Protection Agency and a new, enlarged DEPARTMENT
OF ENERGY.

Federal Administrative Agencies

On the federal level, business and individual
matters are addressed by such agencies as the
FARM CREDIT ADMINISTRATION, SMALL BUSINESS
ADMINISTRATION, COMMODITY FUTURES
TRADING COMMISSION, Federal Trade Commission,
Federal Deposit Insurance Corporation,
OFFICE OF THRIFT SUPERVISION, INTERNAL
REVENUE SERVICE, DEPARTMENT OF COMMERCE,
Interstate Commerce Commission, and
Securities and Exchange Commission.

Governmental money matters are overseen
and assisted by the GENERAL ACCOUNTING
OFFICE, OFFICE OF MANAGEMENT AND BUDGET,
Office of the Comptroller of the Currency, TREASURY
DEPARTMENT, GENERAL SERVICES ADMINISTRATION,
CONGRESSIONAL BUDGET OFFICE,
and FEDERAL RESERVE BOARD.

Public services are handled by administrative
agencies that include the DEPARTMENT OF
EDUCATION, DEPARTMENT OF TRANSPORTATION,
Environmental Protection Agency, FOOD
AND DRUG ADMINISTRATION, DEPARTMENT OF
HEALTH AND HUMAN SERVICES, DEPARTMENT
OF HOUSING AND URBAN DEVELOPMENT,
Department of Interior, Immigration and Naturalization
Service, and National Highway Traffic
Safety Administration.

Work-related administrative agencies
include the TENNESSEE VALLEY AUTHORITY,
Office of Technology Assessment, Occupational
Safety and Health Administration,Occupational
Safety and Health Review Commission,
National Labor Relations Board, Mine Safety
and Health Administration, Mine Safety and
Health Review Commission, MERIT SYSTEMS
PROTECTION BOARD, DEPARTMENT OF LABOR,
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,
and Office of Personnel Management.

Police and military functions are served by
the Central Intelligence Agency, DEPARTMENT
OF DEFENSE, Department of Justice, DEPARTMENT
OF VETERANS AFFAIRS, Federal Bureau of
Investigation, and NATIONAL SECURITY COUNCIL.

The administrative agency that directly
affects the most U.S. citizens is the Social Security
Administration (SSA). The SSA collects
contributions from workers and pays out cash
benefits when a worker retires, dies, or becomes
disabled.

As the needs of the nation change, Congress
continues to establish new agencies and abolish
existing agencies. The Interstate Commerce
Commission, for instance, was established in
1887 to regulate carriers engaged in the transportation
of interstate and foreign commerce in
the United States. Over time, many of the commission’s
functions were transferred to other
agencies or otherwise abandoned, and Congress
abolished the commission in 1995. A more
recent example of the development of an
administrative agency is the creation of the
HOMELAND SECURITY DEPARTMENT in 2002 to
prevent terrorist attacks in the United States and
to reduce the country’s vulnerability to TERRORISM
in the aftermath of the SEPTEMBER 11TH
ATTACKS.

State and Local Administrative Agencies

State and local administrative agencies often
mirror federal agencies. Thus, the individual
states have agencies that control transportation,
public health, public assistance, education, natural
resources, labor, law enforcement, agriculture,
commerce, and revenue. Any regulation
established by such an agency that conflicts with
a federal regulation will not be legally valid, but
this fact does not keep state agencies from developing
regulations that differ from those promulgated
by their federal counterparts. In the spirit
of administrative agency, state and local governments
also create agencies that help address
compelling, peculiarly local concerns.

Just like federal agencies, state and local
administrative agencies are often empowered to
hold hearings. These hearings are conducted by
their administrative boards, which are obligated
to represent the public interest. By contrast,
courts must remain impartial to the two parties
before them. A PAROLE board, for example,
holds informal hearings during which prisoners are allowed to offer evidence of their suitability
for early release from incarceration. The strict
rules observed in a courtroom do not apply to
these hearings, and the board’s decisions must
account for the public interest as well as the
rights of the prisoners.

FURTHER READINGS
Aman, Alfred C., Jr., and William T.Mayton. 2001. Administrative
Law. 2d ed. St. Paul,Minn.:West Group.
Barksdale, Yvette M. 1993. “The Presidency and Administrative
Value Selection.” American University Law Review
42.

Diver, Colin S. 1987. “The Uneasy Constitutional Status of
the Administrative Agencies, Part II: Presidential Oversight
of Regulatory Decisionmaking: Commentary:
Presidential Powers.” American University Law Review
36.

Pierce, Richard J., Jr. 2002. Administrative Law Treatise. 4th
ed. New York: Aspen Law & Business.
U.S. Government Manual Website. Available online at
(accessed November
10, 2003).

CROSS-REFERENCES
Administrative Conference of the United States; Administrative
Law and Procedure; Bureaucracy; National Industrial
Recovery Act of 1933; Schechter Poultry Corp. v. United
States. See also entries for specific federal agencies (e.g., Food
and Drug Administration).