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15 Key 1. The Commerce Clause gives rise to the federal government's power to regulate business activity. Answer: True The Commerce Clause declares "The Congress shall have Power . . . to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." The Commerce Clause gives rise to the federal government's power to regulate business activity. 2. The Commerce Clause requires analysis of the regulation of commerce among several states. Answer: True The Commerce Clause requires analysis of the regulation of foreign commerce, regulation of interstate commerce, impact on interstate commerce, and possible limitations on federal regulatory authority. 3. The power to regulate foreign commerce is vested exclusively in the state government. Answer: False The first part of the commerce clause grants the federal government power to regulate foreign commerce. The power to regulate foreign commerce is vested exclusively in the federal government, and it extends to all aspects of foreign trade. 4. The indirect or direct attempts of the state to regulate imports and exports are unconstitutional. Answer: True State and local governments sometimes attempt directly or indirectly to regulate imports or exports to some degree. Such attempts generally are unconstitutional. 5. The Commerce Clause holds that states cannot impede interstate commerce. Answer: True The Commerce Clause prohibits one state from interfering with commerce that crosses state lines. 6. The power of the federal government includes the persons engaged in interstate commerce but not the activities affecting the interstate commerce. Answer: False The power of Congress over commerce is very broad; it extends to all commerce, be it great or small. The power of the federal government includes not only persons engaged in interstate commerce but also activities affecting interstate commerce. 7. Under the Commerce Clause, the Congress is prevented from regulating an activity labeled local or intrastate. Answer: False The power of Congress over commerce is very broad; it extends to all commerce, be it great or small. Labeling an activity a "local" or "intrastate" activity does not prevent Congress from regulating it under the commerce clause. 8. Intrastate activities affecting the interstate commerce are regulated by the Congress. Answer: True The power of Congress to regulate commerce "among the several states" extends to those intrastate activities that affect interstate commerce as to make regulation of them appropriate. 9. Regulation is considered appropriate if it aids intrastate commerce over interstate commerce. Answer: False The power of Congress to regulate commerce "among the several states" extends to those intrastate activities that affect interstate commerce as to make regulation of them appropriate. Regulation is appropriate if it aids interstate commerce. 10. The Health Care and Education Reconciliation Act of 2010 requires that everyone have health insurance coverage beginning in 2014. Answer: False One provision of the Affordable Care Act of 2010 requires that everyone have health insurance coverage beginning in 2014. 11. The state and local government authority to regulate business activity arises from a concept called the eminent domain. Answer: False Whereas the authority of the federal government to regulate business activity comes from the express language of the commerce clause, state and local government authority arises from a concept known as police powers. 12. Requiring state legislation and regulation to protect the public's health, safety, morals, and general welfare gives state governments expansive power to regulate business activities. Answer: True Police powers can be summarized as requiring state legislation and regulation to protect the public's health, safety, morals, and general welfare. These words, particularly the last phrase, give state government expansive power to regulate business activities. 13. The police powers are limitless, sometimes allowing the state government to be arbitrary, capricious, or unreasonable. Answer: False The police powers are not limitless. For example, state regulations must not be arbitrary, capricious, or unreasonable. Furthermore, the state regulation must not violate the commerce clause. 14. The limitations imposed by the U.S. Constitution are referred to as the dormant commerce clause concept. Answer: True The police powers are not limitless. For example, state regulations must not be arbitrary, capricious, or unreasonable. Furthermore, the state regulation must not violate the commerce clause. These limitations imposed by the U.S. Constitution are referred to as the dormant commerce clause concept. 15. The internal matters where uniformity on a nationwide basis is essential are exclusively the concern of the state. Answer: False The subject area that is exclusively federal concerns those internal matters where uniformity on a nationwide basis is essential. 16. When a federal statute preempts a particular area of regulation, the state regulation related to the same subject is void. Answer: True When a federal statute preempts a particular area of regulation, any state or local law pertaining to the same subject matter is unconstitutional under the commerce clause and the supremacy clause, and the state regulation is void. 17. When state law is inconsistent or conflicts irreconcilably with the federal statute, it is constitutional. Answer: False When state law is inconsistent or conflicts irreconcilably with the federal statute, it is unconstitutional and void. 18. An administrative agency of quasi-legislative regulatory authority is empowered to make decisions like a court. Answer: False Administrative agencies have either one or both types of regulatory authority. The first type is called quasi-legislative in that an agency can issue rules (regulations) that have the impact of laws. The second type is quasi-judicial in that agencies can make decisions like a court. 19. The Environmental Protection Agency (EPA) regulates civil aviation to provide safe and efficient use of airspace. Answer: False The Environmental Protection Agency (EPA) administers all laws relating to the environment, including laws on water pollution, air pollution, solid wastes, pesticides, toxic substances, etc. 20. Congress uses more and more general language in stating its regulatory aims and purposes. Answer: True Congress cannot possibly legislate in minute detail, and, as a consequence, it uses more and more general language in stating its regulatory aims and purposes. 21. Agencies exercise their quasi-legislative power by issuing rules and regulations that have the force and effect of law. Answer: True Agencies often replace competition with regulation. When a firm is given monopoly power, it loses its freedom of contract, and a governmental body is given the power to determine the provisions of its contracts. Regulation is often a substitute for competition. 22. The chairperson usually signs orders and official correspondence and is responsible for publication of all actions in the Federal Register. Answer: False The secretary is responsible for the minutes of agency meetings and is legal custodian of its records. The secretary usually signs orders and official correspondence and is responsible for publication of all actions in the Federal Register. 23. Any party seeking the judicial review of any administrative agency's decision must be able to prove standing to sue. Answer: True Any party seeking the judicial review of any administrative agency's decision must be able to prove standing to sue. To establish standing, the challenging party must address issues of reviewability and aggrieved party. 24. Group of persons with standing to sue includes those who have noneconomic interests. Answer: True It is clear that persons who may suffer economic loss due to an agency's action have standing to sue. Recent decisions have expanded the group of persons with standing to sue to include those who have noneconomic interests, such as First Amendment rights. 25. The general language used in delegating quasi-judicial authority usually involves grants of substantial discretion to an agency. Answer: False The general language used in delegating quasi-legislative authority usually involves grants of substantial discretion to an agency. 26. The procedures developed by administrative agencies are less formal than judicial procedures. Answer: True Administrative agencies develop their own rules of procedure unless mandated otherwise by an act of the legislature. These procedures are far less formal than judicial procedures, because one of the functions of the administrative process is to decide issues expeditiously. 27. The doctrine of exhaustion of remedies comes into play whenever enforcement of the claim requires the resolution of issues that, under a regulatory scheme, have been placed within the special competence of an administrative body. Answer: False Primary jurisdiction applies when a claim is originally filed in the courts. It comes into play whenever enforcement of the claim requires the resolution of issues that, under a regulatory scheme, have been placed within the special competence of an administrative body. 28. Regulation decreases the cost of government. Answer: False Regulation is a form of taxation. It directly increases the cost of government. 29. Cost of paperwork contributes the least to the additional costs to the business community. Answer: False Perhaps the most disturbing additional cost to the business community is the cost of paperwork. The burden of the paperwork involved in filing applications, returns, reports, and forms is overwhelming and a major cost of doing business. 30. The primary focus of policymaking by way of social regulation has been on balancing the costs of the programs with their potential benefits. Answer: False The primary focus of policymaking by way of such social regulation has not been on balancing the costs of the programs with their potential benefits. The public, and especially consumers, has frequently been forced to pay for many things it did not want or need in the sense that the cost far exceeded the benefits. 31. Which of the following is true about regulation of foreign commerce? A. The power to regulate foreign commerce is vested exclusively in the state governments. B. The power to regulate foreign commerce is incomplete. C. The federal government has no right to prohibit foreign commerce entirely. D. Local governments can never attempt to regulate foreign commerce. E. The federal may impose restrictions on foreign commerce. Answer: E. The federal may impose restrictions on foreign commerce. The first part of the commerce clause grants the federal government power to regulate foreign commerce. In recent years, for example, the federal government has imposed trade embargoes on countries such as Iran, North Korea, and Libya. It can also allow commerce with restrictions. 32. Indirect or direct attempts by state and local governments to regulate foreign commerce to some degree are considered _________. A. legal B. ethical C. unconstitutional D. immoral E. constitutional Answer: C. unconstitutional That the federal power to regulate foreign commerce is exclusive means state and local governments may not regulate such commerce. State and local governments sometimes attempt directly or indirectly to regulate imports or exports to some degree. Such attempts generally are unconstitutional. 33. Under the regulation of interstate commerce: A. the states have the exclusive power to commerce that passes across their lines. B. activities affecting interstate commerce do not come under the power of the deferral government. C. regulation on any activity is appropriate if it aids interstate commerce. D. intrastate activities affecting interstate commerce can be regulated only by the state governments. E. the Congress cannot regulate a local activity. Answer: C. regulation on any activity is appropriate if it aids interstate commerce. The power of Congress to regulate commerce "among the several states" extends to those intrastate activities that affect interstate commerce as to make regulation of them appropriate. Regulation is appropriate if it aids interstate commerce. 34. The ________ has stated that everyone must have health insurance coverage beginning in 2014. A. Health Care Act of 2010 B. Health Insurance Portability Act of 1996 C. Healthy American Act of 2007 D. Occupational Safety and Health Act of 1970 E. Affordable Care Act of 2010 Answer: E. Affordable Care Act of 2010 The Affordable Care Act of 2010 requires that everyone have health insurance coverage beginning in 2014. 35. By requiring state legislation and regulation to protect the public's health, safety, morals, and general welfare, _______ give(s) state governments expansive power to regulate business activities. A. eminent domain B. Presidential authority C. commerce clause D. police powers E. federal authority Answer: D. police powers Whereas the authority of the federal government to regulate business activity comes from the express language of the commerce clause, state and local government authority arises from a concept known as police powers. These powers can be summarized as requiring state legislation and regulation to protect the public's health, safety, morals, and general welfare. These words, particularly the last phrase, give state government expansive power to regulate business activities. 36. Which of the following is true about police powers? A. These powers have given the federal government expansive power to regulate business. B. The powers sometimes allow the state regulations to be arbitrary. C. The powers help protect the public's health, safety, morals, and general welfare. D. The powers allow the state regulation to violate the commerce clause. E. These powers have no limitations. Answer: C. The powers help protect the public's health, safety, morals, and general welfare. Whereas the authority of the federal government to regulate business activity comes from the express language of the commerce clause, state and local government authority arises from a concept known as police powers. These powers can be summarized as requiring state legislation and regulation to protect the public's health, safety, morals, and general welfare. These words, particularly the last phrase, give state government expansive power to regulate business activities. 37. The dormant commerce clause concept: A. is the term used to refer to the police powers being limitless. B. does not allow the state regulation to violate commerce clause. C. refers to the exclusive Congressional authorization on a matter of trade. D. comes into focus when the state is acting in the business. E. permits the state regulation to be arbitrary. Answer: B. does not allow the state regulation to violate commerce clause. The police powers are not limitless. For example, state regulations must not be arbitrary, capricious, or unreasonable. Furthermore, the state regulation must not violate the commerce clause. These limitations imposed by the U.S. Constitution are referred to as the dormant commerce clause concept. 38. Which of the following is true about exclusively federal area of government regulation? A. It concerns those internal matters where uniformity on a nationwide basis is essential. B. In this area, state regulation is permitted if the Congress has failed to expressly regulate the area. C. It concerns those matters that are exclusively within the states' power. D. It includes intrastate activities that do not have a substantial effect on interstate commerce. E. It concerns those subjects over which the federal government has preempted the field. Answer: A. It concerns those internal matters where uniformity on a nationwide basis is essential. The subject area that is exclusively federal concerns those internal matters where uniformity on a nationwide basis is essential. Any state regulation of such subjects is void whether Congress has expressly regulated the area or not. 39. An exclusively state area of government regulation: A. concerns those internal matters where uniformity on a nationwide basis is essential. B. permits state regulation is permitted if the Congress has expressly regulated the area. C. includes situations in which the federal regulation of a subject matter is not comprehensive enough to preempt the field. D. includes intrastate activities that do not have a substantial effect on interstate commerce. E. concerns those subjects over which the federal government has preempted the field. Answer: D. includes intrastate activities that do not have a substantial effect on interstate commerce. In theory, those matters that are exclusively within the states' power are intrastate activities that do not have a substantial effect on interstate commerce. 40. Which of the following legislations prohibits any physician the legal right to prescribe controlled substances for the purpose of assisting suicide? A. ODWDA B. TADA C. CSA D. WDWDA E. DDNC Answer: C. CSA The state of Oregon, in 1994, legalized doctor-assisted suicide when voters approved a ballot issue enacting the Oregon Death with Dignity Act (ODWDA). In 2001, U.S. Attorney General John Ashcroft interpreted the federal Controlled Substances Act (CSA) as prohibiting any physician the legal right to prescribe controlled substances for the purpose of assisting suicide. 41. By express language or by comprehensive regulation, Congress shows that it intends to exercise exclusive control over a particular subject matter. This doctrine of interpreting regulation is known as ________. A. executive privilege B. separation of powers C. nondelegation D. federal preemption E. concurrent powers Answer: D. federal preemption By express language or by comprehensive regulation, Congress has shown that it intends to exercise exclusive control over the subject matter. Federal preemption concerns those subjects over which the federal government has preempted the field. When a federal statute preempts a particular area of regulation, any state or local law pertaining to the same subject matter is unconstitutional under the commerce clause and the supremacy clause, and the state regulation is void. 42. Which of the following is true about imposition of undue burden? A. The commerce clause validates state laws involving undue burden on interstate commerce. B. The commerce clause does not prohibit the imposing of burdens on interstate commerce. C. The states have no authority to regulate mattes of legitimate local concern. D. Even if the states regulate matters of legitimate local concern, the interstate commerce will never be affected. E. The commerce clause, however, invalidates federal laws imposing an undue burden on interstate commerce. Answer: B. The commerce clause does not prohibit the imposing of burdens on interstate commerce. The commerce clause also invalidates state laws imposing an undue burden on interstate commerce. The commerce clause does not prohibit the imposing of burdens on interstate commerce—only the imposition of undue burdens. The states have the authority under the police power to regulate matters of legitimate local concern, even though interstate commerce may be affected. 43. Which of the following is true about the prohibiting discrimination factor of the commerce clause? A. The commerce clause prohibits discrimination against intrastate commerce in favor of interstate commerce. B. Federal government often attempts to aid local business in its competition with interstate business. C. The commerce clause requires that all regulations be the same for local businesses as for businesses engaged in interstate commerce. D. A state may place itself in a position of economic isolation from other states. E. The commerce clause requires that the regulations for foreign trade be same for businesses engaged in local trade. Answer: C. The commerce clause requires that all regulations be the same for local businesses as for businesses engaged in interstate commerce. The commerce clause also has been construed as prohibiting discrimination against interstate commerce in favor of intrastate commerce. State and local governments frequently attempt by legislation to aid local business in its competition with interstate business. The commerce clause requires that all regulations be the same for local businesses as for businesses engaged in interstate commerce. A state may not place itself in a position of economic isolation from other states. 44. In no federal law, a state law is unconstitutional if it: A. is in irreconcilable conflict with federal law. B. constitutes any burden on interstate commerce. C. discriminates against intrastate commerce in favor of interstate commerce. D. discriminates against interstate commerce in favor of intrastate commerce. E. is in compromising conflict with the federal law. Answer: D. discriminates against interstate commerce in favor of intrastate commerce. The commerce clause also has been construed as prohibiting discrimination against interstate commerce in favor of intrastate commerce. 45. Which of the following is true about limitation on state taxation? A. Taxes imposed by federal government are subject to the limitations imposed by the commerce clause. B. Sales or use taxes levied by state and local governments on interstate commerce are exempt from the limitations. C. Taxation distributes the cost of government among those who receive its benefits. D. The limitations do not apply to property tax and income tax. E. Interstate commerce is exempt from state and local taxes. Answer: C. Taxation distributes the cost of government among those who receive its benefits. Since taxation distributes the cost of government among those who receive its benefits, interstate commerce is not exempt from state and local taxes. The purpose of the commerce clause is to ensure that a taxpayer engaged in interstate commerce pays only its fair share of state taxes. 46. To prevent multiple taxation of the same property or income of interstate businesses, taxes are ________. A. monopolized B. withheld C. taken D. disallowed E. apportioned Answer: E. apportioned To prevent multiple taxation of the same property or income of interstate businesses, taxes are apportioned. Apportionment formulas allocate the tax burden of an interstate business among the states entitled to tax it. 47. To justify the tax, there must be sufficient contact, connection, tie, or link between the business and the taxing state called the _______. A. chain B. nexus C. cartel D. band E. network Answer: B. nexus To justify the tax, there must be sufficient contact, connection, tie, or link between the business and the taxing state. There must be sufficient local activities to justify the tax in a constitutional sense. This connection is called the nexus. 48. Which of the following types of regulatory authorities issues rules that have an impact of laws? A. Quasi-judicial B. Quasi-executive C. Quasi-legislative D. Quasi-regulatory E. Quasi in rem Answer: C. Quasi-legislative Administrative agencies have either one or both types of regulatory authority. In a quasi-legislative, an agency can issue rules (regulations) that have the impact of laws. 49. In a _______ type of regulatory authority, an agency can make decisions like a court. A. quasi-judicial B. quasi-executive C. quasi-legislative D. quasi-regulatory E. quasi in rem Answer: A. quasi-judicial Administrative agencies have either one or both types of regulatory authority. In a quasi-judicial, an agency can make decisions like a court. 50. Which of the following is true about administrative agencies? A. The actual regulatory activity is performed by administrative agencies. B. An agency that issues rules having impact of laws is called quasi-judicial. C. State and local governments do not have agencies. D. A quasi-legislative makes decisions like a court. E. Federal government agencies license and regulate intrastate transportation. Answer: A. The actual regulatory activity is performed by administrative agencies. Typically, the actual regulatory activity is performed by administrative agencies. The term administrative agencies describes the boards, bureaus, commissions, and organizations that make up the governmental bureaucracy. 51. Which of the following protects the public against unreasonable risks of injury associated with consumer products? A. FCC B. FTC C. CPSC D. EEOC E. FERC Answer: C. CPSC Consumer Product Safety Commission (CPSC) protects the public against unreasonable risks of injury associated with consumer products. 52. ________ regulates interstate and foreign communications by means of radio, television, wire, cable, and satellite. A. FCC B. FTC C. CPSC D. EEOC E. FERC Answer: A. FCC Federal Communications Commission (FCC) regulates interstate and foreign communications by means of radio, television, wire, cable, and satellite. 53. Administering laws to prohibit distribution of adulterated, misbranded, or unsafe food and drugs is a function of ________. A. FCC B. FTC C. FRB D. FDA E. FAA Answer: D. FDA Food and Drug Administration administers laws to prohibit distribution of adulterated, misbranded, or unsafe food and drugs. 54. Which of the following is a function of Nuclear Regulatory Commission? A. It protects the public against unreasonable risks of injury associated with consumer products. B. It ensures all workers a safe and healthy work environment. C. It regulates civil aviation to provide safe and efficient use of airspace. D. It administers all laws relating to the environment. E. It promotes dependable, affordable energy through sustained competitive markets. Answer: B. It ensures all workers a safe and healthy work environment. The Nuclear Regulatory Commission (NRC) ensures all workers a safe and healthy work environment. 55. Administrative agencies are needed to provide specificity to: A. refer a problem or area to experts for solution and management. B. protect the public, especially from the business community. C. replace competition with regulation. D. develop detailed rules and regulations to carry out a legislative policy. E. provide services, having been arisen out of necessity. Answer: D. develop detailed rules and regulations to carry out a legislative policy. Legislative branches often cannot legislate in sufficient detail to cover all aspects of many problems. In many areas an agency develops detailed rules and regulations to carry out a legislative policy. 56. Administrative agencies often provide needed continuity and consistency in the formulation, application, and enforcement of rules and regulations governing business. These agencies are providing . A. specificity B. expertise C. protection D. regulation E. services Answer: B. expertise A reason many agencies are created is to refer a problem or area to experts for solution and management. The development of sound policies and proper decisions in many areas requires expertise, and thus we tend to resort to administrative agencies for this expertise. Similarly, administrative agencies often provide needed continuity and consistency in the formulation, application, and enforcement of rules and regulations governing business. 57. Business often fails to regulate itself, and the lack of self-regulation is contrary to the public interest. To counterbalance, administrative agencies exist to: A. refer the problem or area to experts for solution and management. B. protect the public, especially from the business community. C. replace competition with regulation. D. develop detailed rules and regulations to carry out the legislative policy. E. provide services, having been arisen out of necessity. Answer: B. protect the public, especially from the business community. Many governmental agencies exist to protect the public, especially from the business community. Business often fails to regulate itself, and the lack of self-regulation is contrary to the public interest. Americans tend to turn to a governmental agency for assistance whenever a business or business practice may injure significant numbers of the general public. A prevailing attitude exists that the government's duty is to protect the public from harm. 58. When a firm is given monopoly power, it loses its freedom of contract, and a governmental body is given the power to determine the provisions of its contracts. The government agency is providing ________. A. specificity B. expertise C. protection D. regulation E. services Answer: D. regulation Agencies often replace competition with regulation. When a firm is given monopoly power, it loses its freedom of contract, and a governmental body is given the power to determine the provisions of its contracts. Regulation is often a substitute for competition. 59. The mere existence of most government programs automatically creates a new agency or expands the functions of an existing one. These agencies are providing _______. A. specificity B. expertise C. protection D. regulation E. services Answer: E. services Many agencies arise simply out of necessity. The mere existence of most government programs automatically creates a new agency or expands the functions of an existing one. 60. When agencies exercise their quasi-legislative power by issuing guidelines that have the force and effect of law, they are ________. A. adjudicating B. advising C. rule making D. investigating E. determining Answer: C. rule making Agencies exercise their quasi-legislative power by issuing rules and regulations that have the force and effect of law. 61. The _________ function involves both fact-finding and applying law to the facts. A. adjudicating B. advising C. rule making D. investigating E. determining Answer: A. adjudicating Adjudicating is the quasi-judicial function that involves both fact-finding and applying law to the facts. If violations of the law are found, sanctions, such as a fine or other penalty, may be imposed. In addition, an agency may order that a violator stop (cease) the objectionable activity and refrain (desist) from any further similar violations. 62. The ________ function of an administrative agency is accomplished by making reports to the president or the Congress. A. adjudicatory B. advisory C. rule making D. investigatory E. determinacy Answer: B. advisory The advisory function of an administrative agency may be accomplished by making reports to the president or to Congress. The advisory opinion is a unique device generally not available in the judicial system, as courts deal only with actual cases and controversies. 63. Which of the following functions allows an agency to gather and compile information concerning the organization and business practices of any corporation or industry engaged in commerce to determine whether there has been a violation of any law? A. adjudicating B. advising C. rule making D. investigating E. determining Answer: D. investigating One of the major functions of all agencies is to investigate activities and practices that may be illegal. Because of this investigative power, agencies can gather and compile information concerning the organization and business practices of any corporation or industry engaged in commerce to determine whether there has been a violation of any law. 64. A(n) ________ is designated as such at the time of nomination by the president and is the presiding officer at agency meetings. A. secretary B. advisory council C. general counsel D. chairperson E. executive director Answer: D. chairperson The chairperson is designated as such at the time of nomination by the president and is the presiding officer at agency meetings. The chairperson usually belongs to the same political party as the president and, while an equal in voting, is somewhat more important than the other agency members because of visibility and the power to appoint staff. 65. As the member of an agency, a secretary: A. signs orders and official correspondence. B. is the presiding officer at agency meetings. C. represents the agency in court and often makes the decision to file suit or pursue other remedies. D. supervises usual administrative functions such as accounting, budgeting, and personnel. E. provide for interaction between regulators and those being regulated. Answer: A. signs orders and official correspondence. The secretary is responsible for the minutes of agency meetings and is legal custodian of its records. The secretary usually signs orders and official correspondence and is responsible for publication of all actions in the Federal Register. The secretary also coordinates the activities of the agency with others involved in the regulatory process. 66. Which of the following members of an agency requires Senate approval while being appointed? A. Secretary B. Advisory council C. General counsel D. Chairperson E. Executive director Answer: C. General counsel The office of general counsel is so important in many agencies that the appointment usually requires Senate approval. The general counsel is the chief law officer and legal adviser. 67. A(n) _________ has significant impact on policy and is often as powerful as a commissioner or board member. A. secretary B. advisory council C. general counsel D. chairperson E. executive director Answer: C. general counsel A general counsel represents the agency in court and often makes the decision to file suit or pursue other remedies. The general counsel has significant impact on policy and is often as powerful as a commissioner or board member. 68. Which of the following is true about an advisory council? A. It is more important than the other agency members because of visibility and the power to appoint staff. B. It coordinates the activities of the agency with others involved in the regulatory process. C. It makes the decision to file suit or pursue other remedies. D. It supervises usual administrative functions such as accounting, budgeting, and personnel. E. It is not appointed by the agency, even though it is interested in the agency's mission. Answer: E. It is not appointed by the agency, even though it is interested in the agency's mission. Advisory councils are persons not employed by the agency but interested in its mission. Persons serving on councils are usually selected because of their expertise. These councils provide for interaction between regulators and those being regulated. 69. __________ is a court-created rule that limits when courts can review administrative decisions. A. The doctrine of estoppel B. the doctrine of exhaustion of remedies C. The doctrine of lapse D. the doctrine of primary jurisdiction E. The doctrine of precedent Answer: B. the doctrine of exhaustion of remedies The doctrine of exhaustion of remedies is a court-created rule that limits when courts can review administrative decisions. Courts refuse to review administrative actions until a complaining party has exhausted all of the administrative remedies and procedures available to him or her for redress. 70. Which of the following doctrines applies when a claim is originally filed in the courts? A. The doctrine of estoppel B. the doctrine of exhaustion of remedies C. The doctrine of lapse D. the doctrine of primary jurisdiction E. The doctrine of precedent Answer: D. the doctrine of primary jurisdiction Primary jurisdiction applies when a claim is originally filed in the courts. It comes into play whenever enforcement of the claim requires the resolution of issues that, under a regulatory scheme, have been placed within the special competence of an administrative body. 71. Which of the following is an issue of administrative agencies that relates to the people involved? A. The volume of rules adopted by agencies is beyond the ability of the business community to keep up with and comply with. B. The reward system usually does not make a significant distinction between excellent, mediocre, and poor performances. C. The administrative process is overwhelmed with paperwork and with meetings. D. Enforcement of some laws varies over time. E. There is often a lack of enforcement procedures to follow up on actions taken to ensure compliance. Answer: B. The reward system usually does not make a significant distinction between excellent, mediocre, and poor performances. The reward system not making a significant distinction between excellent, mediocre, and poor performances is an issue of administrative agencies that relates to the people involved. 72. The administrative process being overwhelmed with paperwork and with meetings is an issue of administrative agencies that relates to the ________. A. process followed B. people involved C. input of information D. follow-up investigation E. substantive outcomes Answer: A. process followed The administrative process being overwhelmed with paperwork and with meetings is an issue of administrative agencies that relates to the process followed. 73. Which of the following issues of administrative agencies relates to the substantive outcome of agencies' rule-making and adjudicating authority? A. It is very difficult to discharge unsatisfactory employees. B. The reward system usually does not make a significant distinction between excellent, mediocre, and poor performances. C. The administrative process is overwhelmed with paperwork and with meetings. D. Enforcement of some laws varies over time. E. There is often a lack of enforcement procedures to follow up on actions taken to ensure compliance. Answer: D. Enforcement of some laws varies over time. The enforcement of laws varying over time is an issue of administrative agencies that relates to the substantive outcome of agencies' rule-making and adjudicating authority. 74. What is the Commerce Clause? What are the analyses required under this clause? Answer: The Commerce Clause can be found in Article 1, Section 8, of the United States Constitution. This clause declares "The Congress shall have Power . . . to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." The Commerce Clause gives rise to the federal government's power to regulate business activity. This simple-sounding clause requires analysis in the regulation of foreign commerce, in the regulation of interstate commerce, on the impact on interstate commerce, and on the possible limitations on federal regulatory authority. 75. To what extent do the federal and state governments have power to regulate foreign commerce? Answer: The power to regulate foreign commerce is vested exclusively in the federal government, and it extends to all aspects of foreign trade. The federal government can prohibit foreign commerce entirely or allow commerce with restrictions. However, a state may regulate activities that relate to foreign commerce if such activities are conducted entirely within the state's boundaries. 76. How broad is the power of Congress over commerce? Answer: The power of Congress extends to all commerce, be it great or small. Labeling an activity a "local" or "intrastate" activity does not prevent Congress from regulating it under the commerce clause. The power of Congress to regulate commerce "among the several states" extends to those intrastate activities that affect interstate commerce as to make regulation of them appropriate. 77. Summarize police powers. Answer: The state and local government authority to regulate business activity arises from a concept known as police powers. These powers can be summarized as requiring state legislation and regulation to protect the public's health, safety, morals, and general welfare. These give state government expansive power to regulate business activities. 78. Police powers have limitations. Explain. Answer: The police powers are not limitless. For example, state regulations must not be arbitrary, capricious, or unreasonable. Furthermore, the state regulation must not violate the commerce clause. These limitations imposed by the U.S. Constitution are referred to as the dormant commerce clause concept. 79. How is the exclusively federal area of government regulation different from the exclusively state area? Answer: The subject area that is exclusively federal concerns those internal matters where uniformity on a nationwide basis is essential. Any state regulation of such subjects is void whether Congress has expressly regulated the area or not. In theory, those matters that are exclusively within the states' power are intrastate activities that do not have a substantial effect on interstate commerce. 80. How has been the Controlled Substances Act (CSA) interpreted? Answer: The Controlled Substances Act (CSA) has been interpreted as prohibiting any physician the legal right to prescribe controlled substances for the purpose of assisting suicide. Under this interpretation, the attorney general concludes that it is not a legitimate medical practice to assist any patient with hastening death. Any Oregon physician complying with ODWDA is subject to punishment for violating the federal CSA. 81. How is federal preemption a dual regulation of commerce? Answer: Federal preemption concerns those subjects over which the federal government has preempted the field. When a federal statute preempts a particular area of regulation, any state or local law pertaining to the same subject matter is unconstitutional under the commerce clause and the supremacy clause, and the state regulation is void. The commerce clause combines with the supremacy clause to prohibit any state regulation. 82. Explain the joint regulation that includes situations in which the federal regulation of a subject matter is not comprehensive enough to preempt the field. Answer: No preemption includes situations in which the federal regulation of a subject matter is not comprehensive enough to preempt the field. Here state regulation is permitted. However, when state law is inconsistent or conflicts irreconcilably with the federal statute, it is unconstitutional and void. 83. What are irreconcilable conflicts? Answer: Irreconcilable conflicts exist when it is not possible for a business to comply with both statutes. If compliance with both is not possible, the state law must fall under the supremacy clause and the commerce clause. If compliance with both is reasonably possible, dual compliance is required. This usually has the effect of forcing business to meet the requirements of the law with the greatest burden. 84. How is imposition of undue burdens dealt with? Answer: The commerce clause also invalidates state laws imposing an undue burden on interstate commerce. The commerce clause does not prohibit the imposing of burdens on interstate commerce—only the imposition of undue burdens. The states have the authority under the police power to regulate matters of legitimate local concern, even though interstate commerce may be affected. 85. How does the commerce clause prohibit discrimination against interstate commerce? Answer: State and local governments frequently attempt by legislation to aid local business in its competition with interstate business. The commerce clause requires that all regulations be the same for local businesses as for businesses engaged in interstate commerce. A state may not place itself in a position of economic isolation from other states. 86. What is apportionment of business tax? Answer: To prevent multiple taxation of the same property or income of interstate businesses, taxes are apportioned. Apportionment formulas allocate the tax burden of an interstate business among the states entitled to tax it. The commerce clause requires states to use reasonable formulas when more than one state is taxing the same thing. 87. Describe administrative agencies. What are the two types of administrative agencies? Answer: The term administrative agencies describes the boards, bureaus, commissions, and organizations that make up the governmental bureaucracy. These agencies have either one or both types of regulatory authority. The first type is called quasi-legislative in that an agency can issue rules (regulations) that have the impact of laws. The second type is quasi-judicial in that agencies can make decisions like a court. 88. What are the basic functions of administrative agencies? Answer: The direct day-to-day legal impact on business of the rules and regulations adopted and enforced by these agencies is probably greater than the impact of the courts or other branches of government. Administrative agencies create and enforce the majority of all laws constituting the legal environment of business. The administrative process at either the state or federal level regulates almost every business activity. 89. Agencies are created to provide expertise. Explain. Answer: A reason many agencies are created is to refer a problem or area to experts for solution and management. The development of sound policies and proper decisions in many areas requires expertise, and thus one tends to resort to administrative agencies for this expertise. Similarly, administrative agencies often provide needed continuity and consistency in the formulation, application, and enforcement of rules and regulations governing business. 90. Regulation is often a substitute for competition. Explain with example. Answer: Agencies often replace competition with regulation. When a firm is given monopoly power, it loses its freedom of contract, and a governmental body is given the power to determine the provisions of its contracts. For example, electric utility companies are usually given a monopoly in the geographic area which they serve. A state agency such as a public service commission then has the power to set the rate structure for the utility. Regulation is often a substitute for competition. 91. Explain advising as a function of agencies. Answer: The advisory function of an administrative agency may be accomplished by making reports to the president or to Congress. Agencies also report information to the general public that should be known in the public interest, and they publish advisory opinions. Advisory opinions give a business an indication of the view an agency would take if the practice in question were challenged formally. The advisory opinion is a unique device generally not available in the judicial system, as courts deal only with actual cases and controversies. 92. Elucidate the responsibilities of a secretary. Answer: The secretary is responsible for the minutes of agency meetings and is legal custodian of its records. The secretary usually signs orders and official correspondence and is responsible for publication of all actions in the Federal Register. The secretary also coordinates the activities of the agency with others involved in the regulatory process. 93. According to U.S. Supreme Court, why should broad meaning be given to the concept of standing to sue? Answer: The Administrative Procedures Act states that a person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof. Through United States Supreme Court cases, it is known that a plaintiff must show a claim within the "zone of interest" protected by the statute under consideration. The plaintiff does not need to prove that the legislative body envisioned protecting this particular plaintiff. 94. Is delegation of a rule made by an administrative agency valid? Answer: Delegation of quasi-legislative authority to administrative agencies is subject to two constitutional limitations. First, delegation of authority must be definite or it will violate due process. Second, the delegation of authority to an agency from the legislative or executive branch must have limitations. The general language used in delegating quasi-legislative authority usually involves grants of substantial discretion to an agency. Today, it is generally agreed that delegations of authority to make rules may involve very broad language. 95. Explain the difference between the two doctrines that guide courts in the judicial review of agency adjudications. Answer: The doctrine of exhaustion of remedies is a court-created rule that limits when courts can review administrative decisions. Exhaustion applies when a claim must go in the first instance to an administrative agency alone. Primary jurisdiction applies when a claim is originally filed in the courts. It comes into play whenever enforcement of the claim requires the resolution of issues that, under a regulatory scheme, have been placed within the special competence of an administrative body. In such a case, the judicial process is suspended pending referral of such issues to the administrative body for its views. 96. What must an agency do for the courts to exercise their function of limited review? Answer: For the courts to exercise their function of limited review, an agency must provide a record that sets forth the reasons and basis for its decision. If this record shows that the agency did not examine all relevant data and that it ignored issues before it, a court may set aside the agency's decision because such a decision is arbitrary and capricious. Agencies cannot assume their decisions. They must be based on evidence, and the record must support the decision. 97. Regulation is a form of taxation. Explain. Answer: Regulation directly increases the cost of government. But these direct costs of regulation are only a small fraction of the indirect costs. Regulation significantly adds to the cost of doing business, and these costs are passed on to the tax-paying, consuming public. The consumer, for whose protection many regulations are adopted, pays both the direct cost of regulation (in taxes) and the indirect cost (when purchasing products and services). 98. List the criticisms of administrative process relating to procedures. Answer: The delay experienced in the decision-making process is quite common. The administrative process is overwhelmed with paperwork and with meetings. Rules and regulations are often written in complex legal language—"legalese"—which laypeople cannot understand. There is often a lack of enforcement procedures to follow up on actions taken to ensure compliance. The administrative process can be dictatorial. Test Bank for The Legal and Regulatory Environment of Business O. Lee Reed, Marisa Pagnattaro, Daniel Cahoy, Peter Shedd, Jere Morehead 9780073524993, 9780077437336, 9781260161793

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