Nature and Source of Power of Administrative Agencies
At federal and state levels, administrative agencies gain whatever power they have by delegation-that is to say, that they don’t have inherent, constitutionally mandated power to act. Rather, a, higher level of government, normally the legislature, must delegate some of its own power to the agency.
How much power is that? It depends. In order for an agency to exist, it must first be created by the enabling legislation. This statute is a device that sets up the basic framework for the agency, and the set of rules and limitations by which it must live. These may include a variety of things including organizational matters, staffing, salaries and procedures for conducting business. The most important is the delegation of power and its limitation. The delegation may be quite broad, giving the agency virtually complete power within an area (e.g., all taxation matters within a jurisdiction), or it may be quite specific and restrict the agency's authority to a very narrow range of activities, such as operating a single toll road.
An agency may only exercise authority within the delegation of authority provided for in its enabling legislation, or subsequent legislation granting specific additional power. This specified authority is all the authority the legislature has "handed over" to the agency, and since the agency has no inherent authority outside of this "handed over" authority, there is no other authority to wield.
The limitation of agency power is an important concept, since actions taken by an agency which turn out to be outside the scope of its authority are not binding. A good deal of litigation between agencies and regulated parties concerns the question whether the agency acts within the scope of authority delegated to it, or whether it acts in a manner contrary to the act of the superior branch of government.
Since the delegating body has such a wide degree of latitude in deciding how much power to delegate, there is no absolute rule as to how much power an agency has. If the question arises, the first step is to read the enabling legislation or decree, and subsequently granting or restricting its authority. These define the parameters of the agency's power. However, since, in most cases, the whole point of creating the agency is to get the legislature out of the business of day-to day management of some area of activity, delegations of power tend to be fairly broad.
Meaning and Significance of the Enabling (Establishment) Act
The F.D.R.E. constitution imposes a duty on the house of people’s representatives to create some agencies. Can you mention some of those agencies?
Even though their establishment has a constitutional basis, is there any way tin which hey may materially exist in the absence of the act of the parliament?
Whatever forms a new administrative agency takes the legislature must enact a statute creating the agency. This statute, sometimes called an agency’s organic act, parent act, or establishment act but more frequently is referred to as an agency’s enabling act, is the fundamental source of an agency’s power. The principle that the legislature creates agencies and sets limits on their authority should be regarded as cardinal rule number one of the administrative law.
Many people running the administrative machinery and on occasion even legal professionals lose sight of this fundamental principle. A misunderstanding of this basic concept can lead to erroneous assumptions about an agency’s ability to deal with a particular issue or a problem.
Some enabling acts contain specific provisions establishing agency procedures, but more often than not, when the legislature creates an agency, that agency acquires a specific substantive mission but derives its procedures from a general statue setting out procedural requirements for all agencies sharing its jurisdiction. One such example is the American Administrative Procedure Act of 1946 that uniformly governs the adjudicative and legislative procedure of administrative agencies. In Ethiopia, neither such broad, uniformly applicable administrative procedure, nor specific law detailing agency procedure exist at all. The first attempt was made under the imperial government in 1967. At that moment, a draft of proclamation dealing only with adjudicatory procedure of administrative agencies was prepared. However, it remained as a draft. Currently, the justice and legal system research institute has prepared a similar draft of the administrative procedure which is more or less similar to the 1967 draft.
Agencies make a great deal of policy within the boundaries of their enabling acts. They also establish procedures for efficient and fair decision – making. Enabling acts and administrative procedure acts often establish only minimum standard and requirements for individual agencies.
These statues are often so broadly phrased that agencies have enormous leeway to fill in the gaps, both procedural and substantive aspect of the legislation so long as they keep within the terms of the governing statutes. The areas in which many agencies are left free to set their own policies and procedures are quite extensive. We refer this to the freedom of action as agency’s discretion. Agency discretion is a second fundamental concept to keep constantly in mind in the study of administrative law.
Unfortunately, the concept of agency discretion is one of the least studied and most poorly understood aspects of administrative law. It is so little analyzed that it is frequently referred to as “the hidden component” of administrative law. A complete understanding of administrative law mainly requires a closer examination and appreciation of this phenomenon.
Classification of Powers of Administrative Agencies
Administrative agencies, in order to realize their purpose efficiently and effectively, need wider power and discretion. For this reason, they blend together three powers of government: executive, legislative and judicial powers. Even though in principle the later two powers belong to the legislature and courts, granting such powers has become a compulsive necessity for an effective and efficient administration.
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 constitutional directive that laws are to be created by elected officials. According to these critics, administrative agencies constitute an unconstitutional, another bureaucratic branch of government with powers that exceed those of the three recognized branches (the legislative, executive, and judiciary). In response, supporters of administrative agencies note that agencies should be created and overseen by elected officials, or the president. Agencies are created by an enabling statute; a state or federal law gives birth to 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 also note that agencies are able to adjudicate relatively minor or exceedingly complex disputes more quickly or more flexibly than the state and federal courts, which helps to preserve judicial resources and promotes swift resolutions. Opponents argue that swiftness and ease at the expense of fairness are not virtues, the thrive of the administrative agencies.
The following is a brief discussion of the nature of the three powers of the administrative agencies.
Legislative (Rule Making) Power
Legislative power of administrative agencies, usually known as rule- making power and more formally delegated legislation, is the power of agencies to enact binding rules through the power delegated to them by the legislator. The complex nature of the modern state is that such elected representatives are not capable of passing laws to govern every situation. Many of their lawmaking powers, as well as the power to administer and implement the laws, are therefore delegated to administrative agencies. These agencies are involved in virtually every area of government activity and affect ordinary citizens in many ways, whether these citizens are home owners needing a building permit to erect a new room, or injured employees seeking workers' compensation, or farmers selling their produce.
Efficient and effective administration necessarily requires promulgation of laws, flexible to the existing situation and dealing with detailed technical matters. These laws have to be provided in the required quantity and quality. However, due to the limitation of the on parliament as regards to the availability of sufficient time and expertise, the lawmaker will be compelled to delegate some of its powers to the administrative agencies.
When legislative power is delegated to administrative agency, it has to be exercised fairly and only with a view to attain its purpose. The agency should also enact rules within the limits of delegation set by the lawmaker.
Practically, it is difficult to avoid instances in which power may corrupt. Thus the lawmaker when delegating power should simultaneously introduce controlling mechanisms to ensure that individual’s liberty and freedom is not violated by the administration. Most importantly, the lawmaker, when granting power, is expected to provide specific procedure of rule-making. In most countries, an administrative agency exercising its legislative function is required to give notice to the public of the proposed rule and incorporate comments from the public. This ensures public participation in the administrative process. The rules issued by the agencies should also be published in a formal instrument, which is easily accessible to the public, thus, encouraging openness in the public administration.
Judicial (Decision – Making) Power
Efficient and effective administration also requires that those entities in charge of implementing the law be armored with judicial power, to some extent, similar to the power of the ordinary courts. Enforcement of law demands imposition of sanction and taking administrative measures and decisions. When agencies exercise their judicial powers, they are in effect applying the facts to the law just like a court. Consequently, they determine rights, entitlements and benefits of individuals. The decisions may greatly affect individual’s rights and benefits, for example, revocation of license, deportation of aliens, determining whether an applicant is entitled to pension, imposition of administrative fines for non- compliance, dismissal of a civil servant, dismissal of a university student, etc … are judicial decisions that by nature that affect the rights of individuals.
When an agency exercises its judicial function it is engaged in adjudication, a process very much similar with a trial court. While adjudicating a case, it will conducts an oral hearing with direct and cross examination, administers oath, decides on the admissibility of evidence and may compel an individual or a company to produce evidence. Then by weighting evidences of the applicant and respondent applies and interpreters the law to give a reasoned decision. To ensure impartiality and fairness the person deciding the matter should be relatively neutral from agency influence.
Still there is likelihood that agencies may abuse their decision- making power. As a result, the lawmaker, while granting such powers, is expected to provide minimum procedures applicable in the adjudication process.
Administrative power is the residual power that is neither legislative nor judicial. It is concerned with the treatment of a particular situation and is devoid of generality. It has no procedural obligations of collecting evidence and weighing argument. It is based on subjective satisfaction where decision is based on policy and expediency. It does not decide on a right though it may affect a right. Advisory and investigative power of agencies may be mentioned as two typical examples of administrative power. In its advisory function, an agency may submit a report to the president or the head of executive and the legislature. Cases falling under advisory function include proposing a new legislation to the legislature, and informing the public prosecutor the need to take measure when there is violation of law. Disclosing information to the general public that should be known in the public interest and publishing advisory opinions are also regarded as advisory (administrative) functions.
Investigation is one of the major functions of administrative agencies. While exercising their investigative powers, agencies 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. In exercising their investigative functions, agencies may use the subpoena power. A subpeona is a legal instrument that directs the person receiving it to appear at a specified time and place either to testify or to produce document require reports, examine witnesses under oath, examine and copy documents, or obtain information from other governmental offices. This power of investigation complements the exercise of the agency’s powers, especially the power to adjudicate.
Administrative agencies are established by the legislator to perform specific tasks assigned to them by law. What they actually do is to enforce a specific law. They are usually charged with the day-to-day details of governing. The agencies carry out their tasks by making decisions of various sorts and supervising the procedures by which the decisions are carried out.
The function of administrative agencies is closely related to the reasons for their creation. A certain administrative agency comes into existence when the legislator creates an agency for either of those reasons. The agency, by making use of its expertise and giving close attention to detail and technical matters, takes the necessary administrative action, which may be legislative or judicial in order to enforce the law. Accordingly, the following may be summarized as purposes of the administrative agencies.
One of the key reasons for regulating economic activities by the government is the inability of business to regulate itself. When the government decides to regulate a certain sector, it entrusts the task to the administrative agencies. Agencies offer several advantages over regulation through the legislature and courts in the management of complex and technical regulatory problems. Because they are specialized bodies, they can consider technical details more effectively than the legislature.
When the government regulates business its aim is to minimize the negative impacts of a free economy. In the absence of regulation, business does not respond to concerns over the environment and consumers. Some of the justifications for regulation include:
To control monopoly power
Agencies are often created to replace competition with regulation. In this case the agency may determine rate (e.g. transportation, or electricity). Sometimes the difference in bargaining power may be a ground for regulation, avoiding monopoly power of one party. Such instances include regulation of banking, insurance and labour relations.
To control excess profit
The agency regulates business to ensure that business is not collecting excess profit, which may endanger the laws of free market and also may pose a danger to consumers.
To compensate for externalities
“Externalities” occasionally referred to as “spillovers”, that occur when the cost of producing something does not reflect the true cost to society for producing the goods. One example is manufacturing process that creates air pollution for which society pays the clean up costs. A business organization, unless otherwise it becomes sure that there is also corresponding participation by other companies, will not install costly pollution control equipment. Doing so will drive up that company’s costs which makes it unable to compete with other companies in producing the same product without equipment and selling their products at a lower price. So, some entity i.e. a government agency must require all companies to make those investments (installing equipments) in order to spread the costs of pollution control over the entire industry.
To compensate for inadequate information
Compensating for inadequate information is a justification for a great deal of legislation for consumer protection. Purchasers of food, for instance, cannot analyze the nutritional content or the health hazards of various food products so that there has to be some organ that ensures these tests are fulfilled.
To compensate for unequal bargaining of powers
Contracts between banks & customers, insurers & the insured, employees & employers are adhesive in their nature. Either the consumer has to take it or leave it. Hence, it becomes self-evident to regulate and set minimum standards to minimize the effect of unequal bargaining of power.
B) Government exactions
In addition to regulation, administrative agencies may also engage in government exactions. Government exactions are the traditional powers and responsibilities of agencies. Such functions include collection of tax and military conscription.
C) Disbursement of money or other commodities
This purpose of administrative agencies is also the prominent one which characterizes the welfare state. In this regard, through the social security programme and other government systems of insurance or compensation, agencies disburse public money as payment of pensions for veterans or assistance for the aged, the disabled, the unemployed and generally the needy. The payments may be directly through cash or food rations.
D) Provision of goods and services
Nowadays, the government is in charge of building and maintaining roads, high ways and dams, the provision of police force and other protective services. Funding public education and the health service may also be mentioned as additional examples. More recent additions include mass transit communications, satellite systems, government research and development programmes, public hospitals and public housing.
Mode of Creating an Agency
In Ethiopia, whether it is at the Federal or state level, agencies are creatures of the legislature. They do not spring up on their own, and courts or the council of ministers cannot create them. The F.D.R.E. constitution expressly requires the establishment of some independent agencies. They do not have i.e. material and legal existence unless the house of people’s representatives enacts a specific law for their establishment. Hence, agencies that are in function so far those that a legislature has given them the authority to function. The authority may be exceptionally broad or incredibly narrow.
Hence, it may be said that agencies are created in two ways: one is through the constitution, and the second is through act of parliament. However, one important point that should be emphasized. Is that the independent agencies, which have a constitutional basis, still require an enabling act of the parliament for their legal existence. The only difference between the two modes of creating an agency is that when the constitution requires the establishment of some agencies the house of people’s representatives has a duty to promulgate the enabling act for that specific agency. When an agency is created only through the enabling act, in the absence of constitutional duty from the parliament, its existence is totally dependent on the will or option of the parliament.
Apart from the above two modes, there is no other means of creating an agency. Neither the prime minister, nor the council of ministers has the power to create an administrative agency.
3.2.2 Reasons for the Creation of Agencies
Agencies are created and assigned specific tasks by the legislature. They carry out the tasks making decisions of various sorts and supervising the procedure by which the decisions are carried out. There are many reasons why administrative agencies might be needed. Almost every governmental agency has been created because of a recognized problem in society, and from the belief that an agency may be able to help in solving the problems. The following are the main reasons for the creation of the administrative agencies.
A. Providing Specificity
The legislative branch of government cannot legislate in sufficient detail to cover all aspects of many problems. The house of the people’s representatives cannot possibly legislate in minute detail and, as a consequence, it uses more and more general language in stating its regulatory aims and purposes. For instance, the house of people’s representatives cannot enact a tax law that covers every possible issue that might arise. Therefore, it delegates to the council of ministers and ministry of revenue the power to make rules and regulations to fill in the gaps, and create the necessary detail to make tax laws workable. In many areas, the agency has to develop detailed rules and regulations to carryout the legislative policy.
It is also true that courts could not handle all disputes and controversies that may arise. They simply do not have the time or the personnel to handle the multitude of cases. For instance, the labour relations board entertains and resolves so many number of collective labour disputes between employees and employers. Similarly, the tax appeal commission and the welfare (pension) appeal tribunal adjudicate and decide vast number of administrative litigations within their jurisdiction. The creation of such adjudicatory agencies (usually known as quasi- administrative agencies) is necessary, because of the fact that they have, specialized knowledge and expertise to deal effectively with the detailed, specific and technical matters, which are normally beyond the competency of judges of ordinary courts.
A reason many agencies are created is to refer a problem or area to experts for solution and management. The National Bank of Ethiopia, Ethiopian Science and Technology Commission, Intellectual Property Office are examples of such agencies with expertise beyond that of the house of people’s representatives or council of ministers. The development of sound policies and proper decisions in many areas requires expertise. Similarly, administrative agencies often provide needed continuity and consistency in the formulation, application, and enforcement of rules and regulations governing business.
B. Providing Protection
Many government agencies exist to protect the public, especially from the business community. Business has often failed to regulate itself, and the lack of self- regulation has often been contrary to the public interest. For instance, the Environmental Protection Agency is created to regulate environmental pollution. In the absence of such agency, business could not voluntarily refrain from polluting the environment. The same can be said with respect to quality of private higher education and unjustified and unreasonable increase in the price of essential goods. The Ministry of Education and Ministry of Trade and Industry, regulate respectively both of these cases to protect consumers and the public at large.
Most of the time, an agency protects the public from the negative impacts of business through regulation. When a business organization is given monopoly power, it loses its freedom of contract, and a governmental body is given the power to determine the provisions of its contract. We have some government companies that have monopoly power in Ethiopia, like the Ethiopian Electric and Light Corporation and Ethiopian Telecommunication Corporation, which have the monopoly of power over electricity and telecommunication. Previously, there was no agency regulating such business. Currently, we have the Electric Agency and Telecommunication Agency, which have the power to set the rate for the utility.
Similarly, agencies also regulate transportation, banking and insurance because of the disparity in bargaining power between the companies and consumers. The ministry of transport for instance determines the rate taxi and bus owners may charge the customer for their service. The National Bank of Ethiopia is given wider power to regulate banking and insurance due to the difference in bargaining power between bankers and customers.
C. Providing Services
Many agencies are created simply out of necessity. If we are to have roads, the Ethiopian Roads Authority is necessary. Welfare programs require government personnel to administer them. Social security programs necessitate that there should be a federal agency to determine eligibility and pay benefits. The Ethiopian Social Security Authority is established to process pension payment and to determine entitlement to such benefit. The mere existence of most government programs automatically creates new agencies or expands the function of the existing ones.
3.3 Structure and Organization
The structure and internal organization of an administrative agency may greatly vary depending on the government policy and the programme it is expected to accomplish. Some of them may have different departments enjoying a substantial portion of power given to the agency by the enabling act. Still there will be lower organs labeled usually as sections with the specific tasks of the day-to-day governing. Usually, the arrangement of the internal organization will take so many factors into considerations, like budget implication. However, the main objective of the form of structure is aimed at ensuring efficiency and effectiveness in administration. Since this requires expertise, such task is left to the executive branch. In Ethiopia, the constitution specifically authorizes the council of ministers to determine the structure and organization of the administrative agencies.
Due to the limitation on parliament to deal with structure and organization of an agency, which is justified on the lack of expertise, the pardiment does not interfere with the internal form of that agency. The enabling act simply provides in broader terms, the function, power, duty and rights of the agency. This being the case, it has to be noted that the enabling act greatly influences the form and scope of structure and organization that an agency assumes. The type and scope of government programme, the extent of its power and the nature of mission to be accomplished by the agency outlined in the enabling act are factors to be taken in to consideration before designing the appropriate structure and organization.
Agencies are created with varying size, structure, functions and powers. Some of them may be established with broader powers; in charge of regulating a certain sector of the economy. This is typically the case with ministries, which are headed by a high-level government minister. Ministries not only enforce a government program or policy, but they also supervise and overview other lower agencies that are accountable to them. Others are comparatively small in structure and are charged with a very specific task of implementing a certain portion of government policy or programme. With the exception of few, almost all agencies are under the direct control and supervision, in their day to today implementation of government task law, or policy assigned to them by the enabling act. The remaining very small agencies function independently outside the direct control of the executive branch and they are accountable to the legislature. Agencies are classified or categorized based on such mode of accountability.
Accordingly, those agencies directly accountable to the executive branch are known as executive agencies, where those accountable to parliament are called independent agencies. In Ethiopia, executive agencies are usually accountable to a certain ministry, or council of ministries, or the prime minister. Even though the enabling act may subject an agency to the control of another ministry, it has also to be noted that they are ultimately accountable to either the council of ministers, or to the prime minister. This is true because the F.D.R.E constitution grants the highest executive authority to the Prime Minister and the Council of Ministers (Article 72 sub 1 of F.D.R.E constitution). This fact can also be inferred from the cumulative reading of Articles 74(2) and 77(3) which similarly confer the power of ensuring the implementation of laws, regulations, directives and decisions of the house of people’s representatives. Such powers mainly include the power to follow up and supervise the activities, functions and exercise of power of specific administrative agencies. Besides, even though an agency is made accountable to a certain ministry or another, superior agency or authority of the ministry is directly accountable to the Prime Minister, or the Council of Ministers.
The executive impacts the work of agencies in so many ways. The Prime minister may freely appoint the head of an agency, and dismiss him at any time even without valid reasons. However, the appointment of ministers and other commissioners is subject the approval of the house of people’s representatives. An executive agency has also a duty to submit report of its activities to the higher executive organ. The budget to be allocated to a certain executive agency is also greatly determined and influenced by the decision of the executive branch. Even though the budget has to be prepared and be submitted to the house of people’s representatives for approval, most of the time the demand of the executive is affirmatively accepted by the house.
Can you mention at least two executive agencies having the name of a ministry, authority, agency and commission?
It has been said that independent agencies, are accountable to parliament, i.e. to the house of people’s representatives. The establishment of these agencies, even though they need the act of the house of people’s representatives for their material and legal existence, their is predetermined by the constitution. This implies that their creation is not dependent on the will of the parliament. Normally, the parliament retains exclusive right to bring a certain executive agency into existence, which includes the power to modify, increase, or decrease the power and function of that agency. By the same token it is up to the parliament to terminate that agency. However, this is not the case with independent agencies. The constitution clearly imposes a duty to establish independent agencies indicated in the constitution. There are time agencies falling under this category are listed below.
- The Federal Ombudsman
- The Human Right Commission
- The National Election Board
- The Auditor General
- The Population and Census Commission
With respect to these agencies parliament has the right to appoint heads. and remove them if there are valid reasons.