19
Powers Chapter and Functions of
Administrative Agencies
TRUE/FALSE QUESTIONS
1.
Administrativeagenciescreateadministrativelaw.
ANSWER: T
PAGE: 640
NAT:AACSBReflective AICPALegal
2.
TYPE:
+
642
AICPALegal
TYPE:
+
Enablinglegislationispassedbyanadministrativeagencybeforeitbe gins
anyregulatoryactivities.
ANSWER: F
PAGE:
NAT:AACSBAnalytic
5.
640
AICPALegal
Congresscancreateanewfederaladministrativeagency.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
4.
N
Administrativeagenciesissueadministrativeregulations.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
3.
TYPE:
642
AICPALegal
TYPE:
N
A federal administrative agency may exercise only those powers that
Congressdelegatestoit.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
71
642
AICPALegal
TYPE:
N
72UNITFOUR:THEREGULATORYENVIRONMENT
6.
ThepresidentoftheUnitedStateshasthepowertoappointthemembersof
federaladministrativeagencies.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
642
AICPALegal
TYPE:
N
CHAPTER19:POWERSANDFUNCTIONSOFADMINISTRATIVEAGENCIES 73
7.
The executive, judicial, and legislative branches of government do not
exerciseanycontroloveradministrativeagencypowersandfunctions.
ANSWER: F
PAGE:
NAT:AACSBAnalytic
8.
647
AICPALegal
TYPE:
N
647
TYPE:
AICPACriticalThinking
N
647
AICPALegal
TYPE:
N
648
AICPALegal
TYPE:
N
Congress issues legislative rules when it creates an administrative
agency.
ANSWER: F
PAGE:
NAT:AACSBAnalytic
14.
N
Interestedpartiesmustbegivenanopportunitytoexpresstheirviewsona
proposedagencyrule.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
13.
TYPE:
Therearebasicstepstoformaladministrativerulemaking.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
12.
645
AICPALegal
Themajorfunctionofanadministrativeagencyisrulemaking.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
11.
N
Themajorfunctionofanadministrativeagencyistheenforcementofits
administrativerules.
ANSWER: F
PAGE:
NAT:AACSBAnalytic
10.
TYPE:
Anagencyactionmaybesetasideifitisarbitraryorcapricious.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
9.
643
AICPALegal
648
AICPALegal
TYPE:
N
Afederaladministrativeagencysfinalruleispublishedinthe United States
Code.
74UNITFOUR:THEREGULATORYENVIRONMENT
ANSWER: F
PAGE:
NAT:AACSBAnalytic
648
AICPALegal
TYPE:
N
CHAPTER19:POWERSANDFUNCTIONSOFADMINISTRATIVEAGENCIES 75
15.
Finaladministrativerulesdonothavebindinglegaleffect.
ANSWER: F
PAGE:
NAT:AACSBAnalytic
16.
648
AICPALegal
TYPE:
N
653
AICPALegal
TYPE:
=
654
AICPALegal
TYPE:
N
Administrativeagencieshavethepowertoresolvedisputesthroughformal
adjudication.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
21.
650
AICPALegal
An administrative agency can compel a witness to appear at an agency
hearing.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
20.
N
Administrativeagenciescanobtaininformationthroughonsitesearches.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
19.
TYPE:
An administrative agency can issue an interpretive rule through an
informalmethodofpolicymaking.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
18.
N
A federal administrative agency must follow formal procedures to make
policy.
ANSWER: F
PAGE: 650
NAT:AACSBReflective AICPALegal
17.
TYPE:
655
AICPALegal
TYPE:
N
Mostdisputesoveradministrativeactionsareresolvedthroughnegotiated
settlementsattheirinitialstages.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
655
TYPE:
AICPACriticalThinking
N
76UNITFOUR:THEREGULATORYENVIRONMENT
22.
Anadministrativelawjudgemakesdeterminationsoffacts.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
23.
657
AICPALegal
TYPE:
N
657
AICPALegal
TYPE:
N
657
AICPALegal
TYPE:
+
657
AICPALegal
TYPE:
N
TYPE:
N
Onceanagencyhasbeencreated,itcannotbeabolished.
ANSWER: F
PAGE:
NAT:AACSBAnalytic
29.
N
To challenge an agency action, a party must have at least an abstract
disagreementoveranadministrativepolicy.
ANSWER: F
PAGE:
NAT:AACSBAnalytic
28.
TYPE:
Judicialreviewofadministrativeagencyactionsisautomatic.
ANSWER: F
PAGE:
NAT:AACSBAnalytic
27.
656
AICPALegal
Aregulatedpartycantakeadisputeabouttheregulationtoacourtrather
thangoingthroughtheadministrativeadjudicatoryprocess.
ANSWER: F
PAGE:
NAT:AACSBAnalytic
26.
+
Thejudicialbranchexercisescontroloveradministrativeagenciesthrough
itsreviewofagencyactions.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
25.
TYPE:
Anypartytoacasemayappealtheorderofanadministrativelawjudgeto
theboardorcommissionthatgovernstheagency.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
24.
655
AICPALegal
658
AICPALegal
Congresscanreviewnewfederalregulationsbeforetheytakeeffect.
CHAPTER19:POWERSANDFUNCTIONSOFADMINISTRATIVEAGENCIES 77
ANSWER: T
PAGE:
NAT:AACSBAnalytic
30.
658
AICPALegal
TYPE:
=
Congresscanfreezetheenforcementofaregulationbeforeittakeseffect.
ANSWER: T
PAGE: 658
NAT:AACSBReflective AICPALegal
TYPE:
N
78UNITFOUR:THEREGULATORYENVIRONMENT
31.
Mostmeetingsofafederalagencymustbeopentopublicobservation.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
32.
659
AICPALegal
TYPE:
N
660
AICPALegal
TYPE:
N
Congress maycreate astate agency as a paralleltoa federal agency to
providesimilarservicesonalocalbasis.
ANSWER: F
PAGE:
NAT:AACSBAnalytic
35.
=
FederalagenciesmustprepareguidesthatexplaininplainEnglishhow
smallbusinessescancomplywithfederalregulations.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
34.
TYPE:
Under the Regulatory Flexibility Act, administrative agencies have the
flexibilitytoissueanyregulationthatwillhaveasignificantimpact.
ANSWER: F
PAGE:
NAT:AACSBAnalytic
33.
659
AICPALegal
660
AICPALegal
TYPE:
+
Thepriorityamongconflictingfederalandstatelawsisbasedonthesu
premacyclauseoftheU.S.Constitution.
ANSWER: T
PAGE:
NAT:AACSBAnalytic
660
AICPALegal
TYPE:
=
MULTIPLE CHOICE QUESTIONS
1.
National Ladder Company is subject to regulations issued by the
OccupationalSafetyandHealthAdministration(OSHA).Likeotherfederal
administrativeagencies,theOSHAwascreatedby
a.
b.
c.
d.
Congress,throughenablinglegislation.
theFederalTradeCommission,throughtherulemakingprocess.
thepresident,throughanexecutiveorder.
theU.S.DepartmentofLabor,throughafinalorder.
CHAPTER19:POWERSANDFUNCTIONSOFADMINISTRATIVEAGENCIES 79
ANSWER: A
PAGE: 642
NAT:AACSBReflective AICPALegal
2.
notpartofthegovernmentsexecutivebranch.
outsidethemajordepartmentsofthegovernmentsexecutivebranch.
subagenciesofexecutiveagencies.
subjecttomoreexecutiveauthoritythanexecutiveagencies.
ANSWER: B
PAGE: 642
NAT:AACSBReflective AICPALegal
=
Congress,throughenablinglegislation.
thecourts,throughtheadjudicatoryprocess.
theU.S.Constitution,throughtheFirstAmendment.
theU.S.DepartmentoftheTreasury,throughafinalorder.
ANSWER: A
PAGE: 642
NAT:AACSBReflective AICPALegal
TYPE:
N
PersonswhofavorthecreationofaNationalBiotechAgencytoregu latethe
productionofgeneticallyalteredagriculturalproductsshouldcon centrate
theirlobbyingeffortson
a.
b.
c.
d.
Congress.
federaladministrativeagenciesthatoverseeagriculturalproducts.
theUnitedStatesSupremeCourt.
thepresidentoftheUnitedStates.
ANSWER: A
PAGE: 642
NAT:AACSBReflective AICPALegal
5.
TYPE:
SeafoodRestaurantCompanypaysincomeandothertaxescollectedbythe
InternalRevenueService(IRS).Likeotherfederaladministrativeagencies,
theIRSwascreatedby
a.
b.
c.
d.
4.
N
Independent regulatory agencies such as the Federal Trade Commission
are
a.
b.
c.
d.
3.
TYPE:
TYPE:
=
CongressleavesittotheBureauofPrisonstooverseethepromulgationof
detailedregulationsinareasundertheagencysjurisdiction.Thisis
80UNITFOUR:THEREGULATORYENVIRONMENT
a.
b.
c.
d.
divineright.
thedelegationoflegislativepowers.
gapfillingpower.
unconstitutionalconduct.
ANSWER: B
PAGE: 643
NAT:AACSBReflective AICPALegal
TYPE:
=
CHAPTER19:POWERSANDFUNCTIONSOFADMINISTRATIVEAGENCIES 81
6.
BeforeadoptingnewregulationstogovernInternetbasedphoneservices,
theFederalCommunicationsCommissionmaynot
a.
b.
c.
d.
holdhearingstoacquirefactspertinenttotheproposedrules.
ignoretheAdministrativeProcedureActtostreamlineproceedings.
ordermanufacturerstoprovidecertaindocuments.
solicittestimonyfrominterestgroupsandconsumers.
ANSWER: B
PAGE: 644
NAT:AACSBReflective AICPALegal
7.
followedaconsiderationoflegallyappropriatefactors.
justifiablychangedtheagencyspriorpolicy.
wasaccompaniedbyarationalexplanation.
wasplainlycontrarytotheevidence.
ANSWER: D
PAGE: 645
NAT:AACSBReflective AICPALegal
TYPE:
N
Pure Water Company is subject to a decision by the Environmental
Protection Agency. Pure Water appeals the decision, arguing that it is
arbitraryandcapricious.Thiscouldmeanthatthedecision
a.
b.
c.
d.
changedtheagencyspriorpolicywithoutjustification.
followedaconsiderationofallrelevantfactors.
wasaccompaniedbyarationalexplanation.
wasplainlywarrantedbytheevidence.
ANSWER: A
PAGE: 645
NAT:AACSBReflective AICPALegal
9.
=
TruckTransportCompanyissubjecttoadecisionbytheNationalLabor
RelationsBoard.TruckTransportappealsthedecision,arguingthatitis
arbitraryandcapricious.Thiscouldmeanthatthedecision
a.
b.
c.
d.
8.
TYPE:
TYPE:
N
To notify the public of a proposed rule, the Food Safety and Inspection
Service,likeotherfederalagencies,publishestheproposal
a.
b.
inanationallydistributednewspaper.
inatradejournalavailabletomembersoftheindustry.
82UNITFOUR:THEREGULATORYENVIRONMENT
c.
d.
intheFederal Register.
onapublictelevisionstation.
ANSWER: C
PAGE: 647
NAT:AACSBReflective AICPALegal
TYPE:
=
CHAPTER19:POWERSANDFUNCTIONSOFADMINISTRATIVEAGENCIES 83
10.
The Securities and Exchange Commission decides to create a new rule
relating to the dissemination of material nonpublic information through
corporateWebsites.Thefirststepis
a.
b.
c.
d.
compiletherulewithothersintheCode of Federal Regulations.
conductanonsiteinspection.
publishanoticeoftheproposedrulemaking.
solicitpubliccomment.
ANSWER: C
PAGE: 647
NAT:AACSBReflective AICPALegal
11.
b.
c.
d.
judges, legislators, and the president are asked about a proposed
rule.
potentialviolatorsofaproposedrulearenotifiedandpublicized.
theadministratorsnoticeaproblemandcommentonit.
thepublicisaskedtocommentonaproposedrule.
ANSWER: D
PAGE: 648
NAT:AACSBReflective AICPALegal
TYPE:
=
TheU.S.CitizenshipandImmigrationServiceissuesarule.Liketherules
ofotherfederaladministrativeagencies,thisruleiscompiledin
a.
b.
c.
d.
theAdministrative Register of the Federal Government.
theCode of Federal Regulations.
theFederal Rules of Civil Procedure.
theUnited States Code.
ANSWER: B
PAGE: 648
NAT:AACSBReflective AICPALegal
13.
N
TheU.S.FishandWildlifeServiceutilizesnoticeandcommentrulemak
ing.Thisinvolvesaperiodduringwhich
a.
12.
TYPE:
TYPE:
=
TheFederalAviationAdministrationusesnoticeandcommentrulemak ing.
Thefinalruleinsuchaproceedingissometimesreferredtoas
a.
b.
alegislativerule.
aninterpretiverule.
84UNITFOUR:THEREGULATORYENVIRONMENT
c.
d.
anadjudicatoryorder.
anexecutiveedict.
ANSWER: A
PAGE: 648
NAT:AACSBReflective AICPALegal
14.
bindingasalawpassedbyCongress.
persuasiveasanexpertsopinion.
suggestiveasanewspaperseditorial.
unenforceableasasalespersonspuffery.
ANSWER: A
PAGE: 648
NAT:AACSBReflective AICPALegal
TYPE:
=
After noticeandcomment rulemaking, the U.S. of Bureau Land
Management(BLM)issuesanewruleandappliesittoLonghornCattle
Company.Longhornappealstheapplicationtoafederalcourt.Thecourt
willmostlikelydefertotheBLMsinterpretationof
a.
b.
c.
d.
factandlaw.
factonly.
lawonly.
neitherfactnorlaw.
ANSWER: A
PAGE: 650
NAT:AACSBReflective AICPALegal
16.
N
TheMeritSystemsProtectionBoardissuesarule.Likeotheradminis tra
tiveagencieslegislativerules,thisruleisas
a.
b.
c.
d.
15.
TYPE:
TYPE:
N
Inreviewing theactions ofthe U.S. Office ofNuclear Energy andother
agencies,thecourts
a.
b.
c.
d.
areusuallyreluctanttoreviewquestionsoffact.
rarelydefertothetechnicalexpertiseofadministrativeagencies.
oftenruleonthemeritsofpolicydeterminations.
allofthechoices.
ANSWER: A
PAGE: 650
NAT:AACSBReflective AICPALegal
TYPE:
=
CHAPTER19:POWERSANDFUNCTIONSOFADMINISTRATIVEAGENCIES 85
17.
TheU.S.PatentandTrademarkOffice(USPTO)wantstoreviewcertain
recordsofVerityCorporation.TheUSPTOcangainaccesstotherecords
through
a.
b.
c.
d.
asubpoenaonly.
neitherVeritysconsentnorasubpoena.
Veritysconsentonly.
Veritysconsentorasubpoena.
ANSWER: D
PAGE: 653
NAT:AACSBReflective AICPALegal
TYPE:
=
86UNITFOUR:THEREGULATORYENVIRONMENT
18.
TheEqualEmploymentOpportunityCommission(EEOC)ordersFatcheck
FinancialCompanytorevealcertaininformation.Fatcheckcomplainstoa
court,arguingthattheorderisanabuseoftheEEOCsdiscretion. Like
otheragencies,theEEOCcanuseasubpoenato
a.
b.
c.
d.
obtainanyinformation,withoutlimits.
obtaintestimonyordocuments.
obtaindocuments,butnottocompelapartytotestify.
pressureapartytosettleanunrelatedmatter.
ANSWER: B
PAGE: 654
NAT:AACSBReflective AICPALegal
19.
N
The Federal Trade Commission (FTC) orders GR8 Steaks Company to
revealcertaininformation.GR8Steakscomplainstoacourt,arguingthat
theorderisanabuseoftheFTCsdiscretion.Likeotheragencies,theFTC
canuseasubpoenato
a.
b.
c.
d.
compelapartytotestify,butnottoobtaindocuments.
obtainanyinformationexceptwhatapartyrefusestoreveal.
harassanuncooperativebusinessorindividual.
revealviolationsofthelaw.
ANSWER: D
PAGE: 654
NAT:AACSBReflective AICPALegal
20.
TYPE:
TYPE:
N
The Food and Drug Administration (FDA) is investigating reports that
Caplets Pharmaceutical Corporation is putting potentially harmful ad di
tives in Doze, a new painrelief medication. The FDAs demands for
particulardocumentsfromCaplets
a.
b.
c.
d.
mustbespecificandadequatelydescribethematerialbeingsought.
mustnotbespecificoranincriminatingitemmightbeoverlooked.
mustbegeneralsoastoforceanuncooperativepartyscompliance.
may,butneednot,bespecificbecausetheFDAisafederalagency.
ANSWER: A
PAGE: 654
NAT:AACSBReflective AICPALegal
TYPE:
N
CHAPTER19:POWERSANDFUNCTIONSOFADMINISTRATIVEAGENCIES 87
21.
The Internal Revenue Service(IRS)wants toseizecertaindocuments of
MonetaryPropriety,Inc.WhetheritispermissiblefortheIRStorequestor
seizethedocumentsdependsonwhetherthedocumentsare
a.
b.
c.
d.
incriminating.
relevant.
technical.
valuable.
ANSWER: B
PAGE: 654
NAT:AACSBReflective AICPALegal
22.
appearinguncooperative.
eliminatingtheneedforadditionalproceedings.
rectifyingtheproblemtotheNRCssatisfaction.
savingtheexpenseofformalproceedingsandlaterappeals.
ANSWER: A
PAGE: 654
NAT:AACSBReflective AICPARiskAnalysis
TYPE:
N
The U.S. Mine Safety Administration conducts searches of certain
businesses. This agency and other administrative agencies can conduct
warrantlesssearchesin
a.
b.
c.
d.
allindustries.
highlyregulatedindustries.
noindustries.
newlyregulatedindustriesonly.
ANSWER: B
PAGE: 654
NAT:AACSBReflective AICPALegal
24.
=
The Nuclear Regulatory Commission (NRC) files a complaint against
General Construction Corporation (GCC). GCC may want to set tle the
dispute,beforeformaladjudicatoryproceedingsbegin,toavoid
a.
b.
c.
d.
23.
TYPE:
TYPE:
=
The functions of the Social Security Administration, like those of other
administrativeagencies,include
a.
adjudication.
88UNITFOUR:THEREGULATORYENVIRONMENT
b.
c.
d.
declaration.
enunciation.
pronunciation.
ANSWER: A
PAGE: 655
NAT:AACSBReflective AICPALegal
TYPE:
=
CHAPTER19:POWERSANDFUNCTIONSOFADMINISTRATIVEAGENCIES 89
25.
NursingHomeCareCompanyischargedwithviolatingaruleoftheSocial
SecurityAdministration.Mostlikely,NursingHomeCarewillberequired
toappearatahearingpresidedoverby
a.
b.
c.
d.
afederalappellatecourtjudge.
afederaldistrictcourtjudge.
anadministrativelawjudge.
aU.SMarshal.
ANSWER: C
PAGE: 655
NAT:AACSBReflective AICPALegal
26.
N
The Federal Emergency Management Agency (FEMA) discovers that
GoodnuffTrailers,Inc.,isviolatingaFEMAregulation.Ifthissituationis
resolvedlikemostsuchdisputes,theoutcomewillbe
a.
b.
c.
d.
anegotiatedsettlement.
atrialandafine.
atrialandanappealtoahigherauthority.
atrialandthedissolutionofthebusiness.
ANSWER: A
PAGE: 655
NAT:AACSBReflective AICPALegal
27.
TYPE:
TYPE
=
LaborRecruiters,Inc.,hasbeenorderedtoappearatahearingbe forean
administrative law judge of the National Labor Relations Board. A
significantdifferencebetweenatrialandanadministrativehearingisthat
a.
b.
c.
d.
attorneysarenotallowedtoattendadministrativehearings.
clientsarenotallowedtocommunicatewiththeirattorneysdur ing
administrativehearings.
hearsaycanbeintroducedasevidenceinanadministrativehearing.
theburdenofproofisonthechargedpartytoproveinnocence.
ANSWER: C
PAGE: 655
NAT:AACSBReflective AICPALegal
TYPE:
+
90UNITFOUR:THEREGULATORYENVIRONMENT
28.
GuardPersonnelCompanyischargedwithusinghiringpracticesthatdo
not meet requirements set by the Transportation Safety Administration
(TSA).TheadministrativelawjudgeordersGuardtocomplywiththeTSAs
regulations.Guardmay
a.
b.
c.
d.
appealtothecommissionthatgovernstheTSA.
appealtoCongress,whichcreatedtheTSA.
appealtoadifferent,separateagency.
ignoretheorder.
ANSWER: A
PAGE: 656
NAT:AACSBReflective AICPALegal
29.
anactualcontroversyatissue.
standingtosue.
theexhaustiondoctrine.
theripenessdoctrine.
ANSWER: C
PAGE: 657
NAT:AACSBReflective AICPALegal
TYPE:
N
ExecutivecontrolovertheFederalCommunicationsCommission,andother
agencies,maybeexercisedthroughapresidentialvetoof
a.
b.
c.
d.
Congresssmodificationsoftheagencysauthority.
theagencysfinalrules.
theagencysfinalorders.
noneofthechoices.
ANSWER: A
PAGE:
NAT:AACSBAnalytic
31.
=
PlastixProduxCompanyissubjecttoadecisionbytheConsumerProduct
SafetyCommission.Opposedtothedecision,PlastixProduxwantsacourt
to review it. First, however, the firm must use all of the potential
administrativeremedies.Thisis
a.
b.
c.
d.
30.
TYPE:
658
AICPALegal
TYPE:
=
AfailureoftheFederalBureauofInvestigationtocomplywitharequest
undertheFreedomofInformationAct(FOIA)maybechallengedin
a.
afederaldistrictcourt.
CHAPTER19:POWERSANDFUNCTIONSOFADMINISTRATIVEAGENCIES 91
b.
c.
d.
ahearingbeforetheU.S.FreedomofInformationAgency.
ameetingwithCongresssFOIAsubcommittee.
aspecialconferencewiththepresidentoftheUnitedStates.
ANSWER: A
PAGE: 659
NAT:AACSBReflective AICPALegal
TYPE:
=
92UNITFOUR:THEREGULATORYENVIRONMENT
32.
VonseeksinformationaboutWesandotherwellknownbusinesspersons
undertheFreedomofInformationAct.Toobtaintheinformation,Vonmust
a.
b.
c.
d.
agreenottorevealanytradesecrets.
reasonablydescribetheinformation.
getacourtorder.
haveWessandtheotherspermission.
ANSWER: B
PAGE: 659
NAT:AACSBReflective AICPALegal
33.
nofederalorstatelaw.
theFreedomofInformationAct.
theGovernmentintheSunshineAct.
thePublicAccountabilityAct.
ANSWER: C
PAGE:
NAT:AACSBAnalytic
659
AICPALegal
TYPE:
=
TheRegulatoryFlexibilityActhashelpedreducerecordkeepingbur dens
forHometownGasCompanyandothersmallbusinessfirmsintheareaof
a.
b.
c.
d.
accountingpractices.
assetacquisition.
hazardouswastemanagement.
taxreporting.
ANSWER: C
PAGE: 659
NAT:AACSBReflective AICPACriticalThinking
35.
=
With some exceptions, every portion of every meeting of the Federal
Reserve System Board of Governors and other federal administrative
agenciesmustbeopentopublicobservationunder
a.
b.
c.
d.
34.
TYPE:
TYPE:
=
The U.S. Social Security Administration is a federal agency. The Iowa
DepartmentofSocialServicesisaparallelstateagency. Iftheseagencies
actionsconflict
a.
b.
c.
thefederalagencysactionswillprevail.
thestateagencysactionswillprevail.
thetwoagenciesactionswillbegivenequalweight.
CHAPTER19:POWERSANDFUNCTIONSOFADMINISTRATIVEAGENCIES 93
d.
thetwoagenciesactionswillcanceleachother.
ANSWER: A
PAGE: 660
NAT:AACSBReflective AICPALegal
TYPE:
=
94UNITFOUR:THEREGULATORYENVIRONMENT
ESSAY QUESTIONS
1.
Administrative agencieslike the Securities and Exchange Commission,
theFederalTradeCommission,andtheFoodandDrugAdministration
makerules.Whatarethetwobasictypesofrulescalled,andhowbind ing
arethey?WhatmustanadministrativeruleNOTdo?
ANSWER: Therulesthataremadeaccordingtothenoticeandcomment
rulemakingproceduresaresometimesreferredtoaslegislativerules,and
theyareasbindingasthelawsthatCongressmakes.Suchrules,likelaws,
mustnotviolatetheConstitution.Unlikelaws,however,suchrulesmust
notexceedthepowerthatCongressconferredontheagencyinitsenabling
legislation.
Agencies can adopt rules through less formal actions. These rules
maybereferredtoasinterpretiverulesandarespecificallyexemptfrom
the requirements of the Administrative Procedure Act of 1946.
Interpretative rules declare an agencys interpretation of its enabling
statutesmeaning,withoutimposingdirect,legallybindingobligationsor
establishing legal rights. They may have practical significance, however,
becausetheycanindicatethatformalrulemakingmayoccuriftheseless
formalpositionsareignored.
PAGES:
647650
TYPE: N
NAT:AACSBReflective AICPADecisionModeling
2.
GrappleMarketShareCorporationwouldliketoknowwhatinformation
federalagencieshaveaboutGrapplesoperations,sothatthefirmwillknow
whatitscompetitorsmaybeabletolearnaboutit.CanGrapplerequirethe
agenciestodisclosewhateverinformationtheymayhaveconcerningit?If
so,howshouldthefirmmakeitsrequest?Whatfederallawapplies?Isany
informationexempt?
ANSWER: TheFreedomofInformationAct(FOIA)of1966requiresthe
federalgovernmenttorevealcertainrecordstoanypersononrequest.
The request may be made via email or fax, or more traditional print
methods, and needs to contain only a reasonable description of the
informationsought.Anagencyhastwentyworkingdaystorespondtoa
request. There are exemptions, but the agency must notify the party
seekingtheinformationwhat isbeingwithheldandwhichexemptions
nationalsecurity,ortheconfidentialorpersonalnatureoftheinformation,
CHAPTER19:POWERSANDFUNCTIONSOFADMINISTRATIVEAGENCIES 95
forexamplearebeingasserted.Anagencys refusaltocomplywiththe
FOIA can be challenged in court. Generally, all records must be made
available electronically on the Internet, on CDROMs, and in other
electronicformats,andclearlyindexed.Documentsmustbemadecomputer
accessiblewithinayearoftheircreation.
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NAT:AACSBReflective AICPADecisionModeling