Ch2. Agency Action — Formation, Legal Effect, and Defects

What Is an Agency Action?

Agency Action: a unilateral act by an agency, performed under legal authority, that determines or affects the rights and obligations of a specific party in a specific situation.

Characteristics of an Agency Action:
① Unilateral — no consent of the affected party required.
② Creates public-law effects.
③ Legally binding (subject to challenge only through
   designated procedures).

Types of Agency Action

Command-Type Actions

Command-Type Actions (imposing or releasing obligations):
- Order / Command: imposes positive or negative duties
  (e.g., cease-and-desist order, compliance order).
- License / Permit: lifts a statutory prohibition for a
  specific person (driver's license, building permit).
- Exemption: releases a specific person from a
  statutory obligation.

Constitutive Actions

Constitutive Actions (creating, modifying, or
extinguishing legal status):
- Grant / Franchise: creates a new right or status
  (patent, mining rights, civil service appointment).
- Approval / Authorization: completes or validates a
  private legal transaction (charter approval for
  a nonprofit corporation).
- Administrative substitution: agency acts on behalf
  of a private party.

License vs. Grant (Permit vs. Franchise):

	License / Permit	Grant / Franchise
Nature	Lifts a prohibition	Creates new right
Pre-existing right	Yes (restored)	No (created)
Examples	Building permit, operating license	Civil service appointment, patent

Legal Effects of Agency Action

Presumption of Regularity

An agency action, even if unlawful, is treated as valid
until set aside by a competent authority (the agency
itself or a court).
A party dissatisfied with an agency action must use the
designated appeal or review procedures — it cannot
simply disregard the action.

Binding Force

Binds both the agency and the affected party. This is the substantive content of the action.

Finality (Preclusion of Challenge)

Once the statutory period for challenging an agency
action expires, the action can no longer be contested.

APA judicial review: typically 60 days from final order
  (agency-specific statutes may vary).

After finality: further appeals or litigation are barred.
Exception: void actions — no time limit applies.

Non-Alteration (Quasi-Judicial Finality)

Once rendered, a quasi-judicial agency decision (e.g., a merit-board ruling, an EEOC final determination) cannot be unilaterally modified by the agency itself.

Defects in Agency Action

Void vs. Voidable

Void (null and void from the outset):
- Fundamental and apparent defect.
- No time limit to challenge.
- May be raised collaterally
  (in civil, criminal, or other proceedings).

Voidable (valid until set aside):
- Defect exists but is not fundamental.
- Must be challenged within the applicable deadline.
- Retroactively void once properly set aside.

Fundamental + Apparent Defect Standard:

Fundamental: violates a core constitutional or
  statutory principle (e.g., action taken entirely
  without statutory authority).
Apparent: the defect is obvious on the face of the
  record without need for further investigation.

Examples of void actions:
- Action by an agency that has no authority over the
  subject matter.
- License revocation that patently violates the
  governing statute.
- Action purportedly taken by a non-existent authority.

Rescission and Revocation of Agency Action

Rescission

Agency-initiated rescission: the issuing agency sets aside its own prior unlawful or improper action, with retroactive effect.

Limits on rescinding favorable (benefit-conferring) actions
(legitimate expectations):
Where the beneficiary has already complied with the
  conditions of the action, or where rescission would
  cause disproportionate harm → rescission may be
  restricted or require compensation.

Appeal-based rescission: the action is set aside through administrative appeal or judicial review.

Revocation

The agency terminates a previously valid action prospectively, based on a subsequent change in circumstances.

Grounds for revocation:
- Change in governing law or regulations.
- Breach of a condition attached to the action.
- Overriding public interest.

Revocation: prospective effect only.
Rescission: retroactive effect.

Conditions Attached to Agency Actions

Condition / Attachment: a supplementary term added to an agency action to limit or qualify its effect.

Types of Conditions:
- Condition precedent/subsequent: effect tied to the
  occurrence or non-occurrence of an uncertain event.
- Time limit: effect begins or ends on a fixed date.
- Obligation (burden): imposes a separate duty on
  the beneficiary (most independent — may be
  enforced separately).
- Reservation of revocation: action may be revoked
  if a specified circumstance arises.

Presumption of Regularity ★★★★★ : An unlawful agency action is still treated as valid until set aside. This is not a presumption of legality — it is a rule about who must act to undo the action. Memory tip: Unlawful ≠ automatically invalid; must be set aside.

Void vs. Voidable ★★★★★ : Void = fundamental + apparent defect; no time limit. Voidable = lesser defect; must challenge within the deadline. Memory tip: Void = no expiry; voidable = time limit.

Obligation (Burden) Condition ★★★★☆ : The most independent type of condition — it imposes a separate enforceable duty and can be challenged or enforced apart from the main agency action. Memory tip: Obligation condition = independent duty.

Practice Quiz

Q. An agency revoked a food-service operating permit for a regulatory violation. What is the filing deadline to challenge the revocation?

Challenge the revocation through an administrative appeal within the period specified in the governing statute (often 30–60 days from receipt of notice), or seek judicial review within the applicable deadline (APA default: 60 days from final agency order). Waiting beyond these deadlines will render the action final and unchallengeable.

Q. What is the practical difference between rescission and revocation?

Rescission is retroactive — it treats the original action as if it never existed, and parties must restore what they received. Revocation is prospective — it ends the effect of the action going forward while leaving in place anything that already accrued under the action (e.g., rights exercised before the revocation).