Principles of Government: Federal Agencies

Written by Tyler Zimpfer, Law Fellow, National Agricultural Law Center

The beginning of a new presidential administration brings heightened awareness to areas of government that Americans don’t always consider, such as federal agencies. Recently, U.S. Senators have been reviewing the President’s nominees in confirmation hearings for leadership roles in federal agencies. These confirmation hearings matter. Nominees – often called a “secretary” or “director” – will oversee federal agencies with billion-dollar budgets and a federal workforce of over three million employees.  But why is our government structured this way? Are all federal agencies created the same? What powers do these agencies have? And how might a recent Supreme Court decision impact the future of federal agencies? 

These questions are relevant to agriculture, because farmers constantly engage with federal agencies.  For example, the USDA administers programs through the Farm Service Agency (FSA) and Natural Resources Conservation Service (NRCS) that provides crop insurance, conservation funding, and financial assistance. The EPA oversees pesticide use, air pollution, and water quality laws that impact chemical use. Food producers and processors comply with health and safety standards set by the Food and Drug Administration and the Food Safety and Inspection Service. 

Understanding the laws that establish and guide federal agencies is important for agriculture and is the focus of our third topic in the Principles of Government series. 

A Brief History of Federal Agencies 

The U.S. Constitution grants Congress the power to establish federal official positions and agencies.  The power derives from three sources: the legislative power in Article I §1, the Necessary and Proper Clause in Article I §8, and the Appointments Clause in Article II, § 2. Taken together, these constitutional provisions give Congress authority to create agencies to administer the laws Congress makes.  Congress must pass an “organic statute” – a statute that creates the agency and gives it certain responsibilities and power. After the agency is formally created, the Constitution authorizes the President to select and direct the officers that will lead the agency, with the advice and consent of the Senate. 

Agencies have therefore been around since the onset of our democracy. The first agency, created in 1789, was called the Department of Foreign Affairs, which estimated debts on any imports into the country. The agency later became what we now know as the State Department. Congress continued to create various agencies including the Department of Treasury, the Department of Justice, and the Department of Agriculture throughout the early to mid-1800s. For the first 150 years of the United States, these agencies had fewer responsibilities and were smaller in size and impact than most modern agencies. The federal government currently maintains a list of agencies, which now number in the hundreds. 

Structure of a Federal Agency 

Not all agencies are created equal by Congress. The “typical” agency (e.g., USDA, EPA, etc.) is led by a single Presidentially appointed, Senate confirmed official (e.g., Secretary of Agriculture, Administrator of the EPA), who oversees the agency’s programs and employees. These agency officials are removable at-will by the President. In slight contrast, an “independent” agency usually consists of a multi-member body with limits on the number of members from one political party versus another. The members of the independent agency can have reasonable restrictions on their removal from office. The more popular independent agencies are the Securities and Exchange Commission (SEC), the Commodity Future Trading Commission (CFTC), and the Federal Reserve.  

The Power of Agency Regulations 

The Administrative Procedure Act (APA), passed in 1946, was enacted partially in response to the boom of administrative agencies created during the Great Depression. The purpose of the APA was to promote accountability and transparency of the federal agencies who were beginning to regulate the lives of millions of Americans. The APA established the process by which agencies develop and implement “regulations or rules.”  

Regulations are especially important because they have the equal force and effect of a law Congress passes. Agencies cannot simply implement any policy they deem necessary. They must implement rules that carry out laws already passed by Congress and delegated to the agencies. Take the Clean Water Act (CWA) for example. The CWA provides the basic structure for preventing pollution into water sources around the United States. The CWA gave the EPA power to enforce and regulate the law. With the CWA as its legal authority, the EPA uses its technical expertise to write the regulations for the law, such as setting wastewater standards for industries and implementing permit programs for pollution discharges. The CWA is an “enabling statute” – a law that confers new or additional powers on an existing agency. Together with the “organic statute” that creates the agency by law, the EPA has broad authority to enforce the CWA as Congress has delegated. 

In making regulations, agencies must follow what is called the “notice and comment” process established by the APA. The agency issues a notice of rulemaking and then provides an opportunity for interested persons to comment before a final rule is made. The notice and comment period can be quick for smaller, less controversial regulations, but can last for more than a year on more comprehensive rules. On average, agencies issue 18 regulations for every one law Congress passes. 

Resolving Disputes and Enforcing Regulations 

Agencies also have the unique power to “adjudicate” various claims related to their regulations and programs. A government official follows the mandates of the APA and the agency’s own rules to resolve a dispute between a private party and the government or between two private parties arising out of a government program. Just as regulations mirror legislative functions, adjudications and orders function similar to a court system.  Administrative Law Judges (ALJs) preside over hearings and agency disputes. However, they are not part of the judicial branch but are considered executive officers and appointed by the head of an agency. After all internal processes of review are exhausted, an ALJ’s final determinations may be appealed to a federal court for review. 

Deference to Agency Expertise: Recent Developments 

This past June, the Supreme Court of the United States decided a pivotal administrative law case in Loper Bright Enterprises v. Raimondo. The Court expressly overruled the Chevron doctrine, referring to a case that gave significant deference to federal agencies in interpreting ambiguous statutes they were charged with enforcing and implementing. Under the Chevron doctrine, a court would defer to an agency’s interpretation of an ambiguous law as long as the interpretation was reasonable and even if the court would have interpreted the law differently. 

In Loper Bright, the High Court reversed this doctrine and determined that a court could question an agency’s interpretation of an ambiguous law, placing more decision-making power for interpreting ambiguous statutes largely in the hands of the judicial branch.  

Agriculture is an industry that interacts constantly with statutes that are interpreted and enforced by federal agencies. Pesticide regulations, wetland determinations, PFAS limits, and crop insurance are all areas soaked with uncertainty after Loper Bright. While the regulations do not automatically change, interested parties may be more willing to challenge regulations in the wake of the Supreme Court’s decision. The potential difference between a judge and agency interpretation of an ambiguous law may create new excitement for agricultural groups (and many other industries for that matter) for an opportunity that a court might overrule what they see as undesirable agency rules. Or will Congress be more incentivized to write unambiguous laws that give agencies clear direction in every situation because of Loper Bright? We will wait and see. Both practical and substantive impacts of the Loper Bright decision are still developing, but it could reduce agency authority to some extent. 

To learn more about federal agencies