Chapter 3Introduction to Adjudications

Every new tribunal, erected for the decision of facts, without the intervention of jury, . . . is a step towards establishing . . . the most

oppressive of absolute governments.

2

Adjudications in the Old Days

What did "jury of your peers" mean originally? How has that changed?

Government regulation Did you get a hearing when the King told you

what to do? Was there a right to a jury in civil trials?

3

Defining an Adjudication

Adjudications are the process used to make an order involving specific identified parties

What are examples of adjudications? Why is your federal student loan application an

adjudication? What is the order? What about social security disability determinations?

(more later on due process) These are examples of adjudications to find facts and

apply law in individual cases

4

Federal Agency Adjudications versus Article III Trials

Inquisitorial rather than adversarial What does this mean? How does this change the nature of trials? Why is this the norm internationally?

Expertise versus impartiality/cluelessness Do we choose federal judges based on expertise in the

matter before them? How does an expert judge and an inquisitorial system

change the nature of trials?

5

The Core Importance of Expertise in Understanding Agencies

A primary reason for congress delegating rulemaking powers to agencies is that the agency has experts in the subject matter

As we will see later in the section on judicial review, the courts generally defer to agencies. This is based in part on agency expertise.

Agency adjudications have very different procedures and due process requirements from Article III trials because the decision is being made based on the judge's expertise, not just the presentation of materials by the parties.

We will see how state efforts to make ALJs impartial undermine this core value.

6

ALJs versus Article III Judges Article III Judges Protections

Lifetime tenure Cannot reduce salary Cannot fire, only impeach Cannot discipline

Why do we have these protections? How are state judges different?

ALJs Civil service protections

Can be fired Can have salary lowered, but hard to do this Can set work standards and discipline

How are the pressures different than those on an Article III judge? What about contract ALJs that some states use?

7

Notice

What is notice? Why is it required? What has to be provided in the notice? What can complicate notice?

What about in immigration? Welfare benefits?

8

Burden of Proof

Who has the burden of proof in an administrative proceeding? What is the Social Security Disability example? What is the order in this example? Sometimes the movant is not clear - SSI recertification

This follows the judicial notion of burden of persuasion, which can be different from the burden of going forward or the burden of production.

Shifting the Burden

Old welfare system - Goldberg Beneficiary gets benefit until agency moves to

disqualify New system - TANF

Benefits have limited term No action necessary to terminate benefits.

Recertification schedules Shift the burden to recipient to show qualifications. License renewals can do the same.

9

Standard of Proof

What is the standard of proof required in an agency proceeding, unless otherwise specified in the law?

Are there other standards in administrative proceedings? The United States Supreme Court has upheld a clear

and convincing standard in mental health commitments. Congress is free to require even higher standards of

proof. When we learn about judicial deference to agencies, we

will rethink what preponderance of the evidence really means.

10

Rules of Evidence in Administrative Proceedings (Formal and Informal)

What is the purpose of the rules of evidence in Article III trials? What is the underlying theory of the rules? How does this change when there is no jury?

Why would this be different in an inquisitorial proceeding?

Does the APA set the standard of evidence? Do all agencies use the same standards?

11

12

Hearsay What is hearsay?

Why is it excluded in the rules of evidence, except for the zillion exceptions?

Why would the hearsay rule not be as important in an agency proceeding?

The Residuum Rule Once prevented adjudications from being based solely on

hearsay evidence This has been replaced by the "substantial evidence" standard

used for all agency evidence LA uses "sufficient evidence" - may not be the exactly same

standard.

13

Discovery

Not provided for by the APA Some agencies allow discovery Why is it less of an issue than in Art. III trials? Freedom of information/Open Records Acts

Parties may also be entitled to have the agency use its subpoena power on their behalf, if the agency can order discovery for itself.

Federal ALJs

What do most (75%) of federal ALJs do? Why the growth in this area? What do you think is happening during this

prolonged recession? This is the major due process problem/issue in

government benefits adjudications. ALJs are such a “PIA/protective of individual rights”

that they become another reason agencies try to use informal adjudications as much as possible.

14

15

What is the Legal Status of an ALJ's Opinion?

What is an initial decision, in contrast to a recommended decision? 557(b)

Why did the EPA switch to allowing ALJ decisions to be final decisions if the agency did not act and there were no internal appeals in 45 days?

We will discuss agency rejection of ALJ opinions in the chapter on judicial review.

16

Ex Parte CommunicationsArt III Trials v. Adjudications

Why are these forbidden in Article III trials? Why are they less of a problem in agency

proceedings? How is the relationship between a litigant and

the court different between a litigant and an agency?

Why is knowledge by the judge of the issues and parties treated differently from a trial?

17

Adjudications to Make Policy

Are courts charged with making law and policy through legal opinions? Do their opinions make law and policy? What is happening with gay marriage?

Are civil law courts bound by precedent? Why do we read civil court opinions? How do they set law and policy?

Agency adjudications can work the same way

18

Adjudications to Set Policy - California Dental Association v. FTC, 526 U.S. 756 (1999)

What did the FTC accuse the CDA of? What was the sequence of the agency review? Why are agency rulings appealed to the Circuit

courts rather than district courts? How does this adjudication set national policy, if

the adjudication is not precedent? Who will be deciding future cases?

19

Why Make Policy Through Adjudications?

Why don't legislatures write laws that are specific enough that courts have no room to set policy? When might a legislature intentionally write an

ambiguous law, knowing it will have to be resolved by a court or an agency?

Agencies face the same issues While they can make rules, as we will see, that

can be slow and cumbersome, while adjudications can be fast

20

Wetlands Example Wetlands development requires a permit from the Army

Corps of Engineers The developer must submit proof that the land to be

developed is not a wetland, or, if it is, that there will be appropriate mitigation

The Corps evaluates the application and makes a decision, which can then be appealed to an internal Corps appeals board

If the application meets the standards, the Corps will issue a permit.

In the absence of regulations, the decision reflects the Corps' policy on how it defines and regulates wetlands

21

Inspections as Adjudications

Restaurants need a food handling permit to sell to prepare food and sell it to the public Must show that you have the proper equipment Must show proper training for employees

These permits provide for surprise inspections to assure that the conditions are still being met The inspector views the facts The owner can provide input during the inspection The inspector provides written findings

Adjudication Procedure

23

Basic Procedure for Adjudications:Section 555

Federal Administrative Procedure Act Section 555 applies to all adjudications Right to bring your own lawyer

No right to appointed counsel Right to a record Right to notice of the findings and reasons

24

Louisiana APA

Louisiana Provisions LA - 955, et seq.

25

Who Gets to Appear Before the Agency?

What are the problems if interested persons who are not parties are allowed to intervene? What is the problem if they are not allowed?

What about nuclear power plant licensing? Who is interested?

How about permitting landfills?

26

APA Provisions - Formal Adjudications

Formal (APA) Adjudications under the US APA US - 554, et seq.

27

Formal (APA) v. Informal (Non-APA) Adjudications

What is the language in 554 that triggers a formal adjudication? "on the record after opportunity for an agency

hearing“ What are the subsequent provisions this triggers?

556, 557 Why do we call informal adjudications non-APA

adjudications?

28

Formal Adjudications in the Real World

Formal adjudications, triggered by 554 and conducted under 556 and 557, look like trials.

Most are like simple trials. Since they can have multiple parties with the right

to present evidence and cross examine, they can be very long and complex.

Not as bad as formal rulemaking.

Informal (Non-APA) Adjudications

The procedure for informal adjudications are determined by the legislature as part of the enabling law or left to the agency.

These range from complex trials to inspections and other very simple procedures

Most are simple proceedings that do not resemble trials

Some are very like trials, it just depends on the legislation and agency regulations

29

30

Administrative Cost and Formal Adjudications

Administrative cost is a key concept in adlaw Administrative agencies carry out huge numbers of

adjudications What would it cost if Medicare payment determination

looked like a trial? What sort of delays would you expect? What if FEMA used trials to decide on compensation

checks? This is revisited next chapter in the tension between due

process and agency costs

31

Practice Issues The book spends a lot of time on examples of arguments

for and against the court ordering a formal adjudication. You do not need this level of detail for this course

As with formal rulemaking, the courts are reticent to order formal rulemaking unless the statute is clear. If the statute is ambiguous, most circuits defer to the

agency – Chevron deference discussed later. A few do not defer, reading the law themselves.

In practice, if the issue has not been settled for your hearing type, you have to argue the issue to the court based on the circuit’s precedent. Louisiana thinks adjudications are trials.

32

Practical Considerations in Adjudications

Except for the APA provision for formal adjudications, the agencies can set their own procedures for adjudications, or congress can set them in the enabling act

Some agencies have developed rules based on the Federal Rules of Civil Procedure and Evidence, which make their hearings look like trials.

As we will discuss later, even if the proceeding looks like a trial, the ALJ's power is much more limited than that of an Article III judge.

33

The Nature of the Agency and Formality of the Process

The broader the reach of the agency actions and the more controversial the agency function, the more formal the agency process

Social Security Disability ALJs deal with individuals and their decisions do not set policy.

National Labor Relations Board adjudications set policy for unionization for whole industries It usually does not use rules for these questions, so

adjudications are even more important

34

Ex parte Communications in Formal Adjudications

No ex parte communications - 557(d) What is the extreme sanction for a party who

violated this ban? What is the loophole for agency personnel?

ex parte communication prohibition only applies to communications with interested persons outside the agency

Are agency personnel like adverse parties in a trial?

What Communications are Allowed?

http://biotech.law.lsu.edu/Courses/study_aids/adlaw/554.htm

What proceedings are exempt from section (d)? (d)(1)(C) to the agency or a member or members

of the body comprising the agency This is input from the secretary or the

commissioners if an independent agency, i.e., the people who actually make the decision.

35

36

Separation of Functions

What is separation of functions? How does this mitigate the loophole of

communication with agency personnel? Why do we care?

Separation of function has very different results in a large federal agency than in small state agencies Federal - still in the agency and focused in one area States - often outside the agency (central panel),

losing all expertise

37

EPA Example

Can the EPA ALJ consult with an EPA scientist to better understand a case? What if it is about advice on facts in issue?

Can the EPA ALJ consult with an agency lawyer about law? What about the lawyer prosecuting the case?

Can the ALJ consult with a party in the case, outside of the proceeding, to get additional facts? How can these consultations be accomplished - what

would you do in an Article III trial?

38

Consumer Product Safety Commission Example

Can the commissioner consult with his staff? Are they considered legally the same person?

What about the head of the prosecution staff? What is the key question?

What about consulting with the heads of companies not currently before the agency? Can ex parte contacts occur before a proceeding?

Why should the agency be cautious about ex parte contacts? Why do they invite remand from the courts?

39

Licensing and Permitting as Non-Trial Adjudications

A license is defined as an agency permit, certificate, approval, registration, charter, membership, statutory exception, or other form of permission. ... In short, licensing is the process by which someone obtains, is denied, or has revoked any form of federal agency permission.

Administrative Cost Issues

What are the enforcement advantages of requiring a license as compared to having the agency look for violations in an ongoing activity? Health food supplements v. drugs?

Dangerous dogs Law allows the agency to put special restrictions on

dangerous dogs, but whether a dog is dangerous is decided case by case.

Law provides for special restrictions on pit bulls How is the cost of enforcement different?

40

41

Licensing under the APA

How are the legal standards for initial licensing different from a license review or revocation? Why? - (Who is the movant?)

How are the potential parties different for a law license than for a TV station license? Competitive licensing How does this change the adjudication?

42

Disciplining License Holders - Section 558

Section 558 applies to licensing Notice and a hearing before revocation Exception for imminent threats to public health

and safety

43

LA Law Note - Title 49, Chapter 13, §961. Licenses

C. No revocation, suspension, annulment, or withdrawal of any license is lawful unless, prior to the institution of agency proceedings, the agency gives notice by mail to the licensee of facts or conduct which warrant the intended action, and the licensee is given an opportunity to show compliance with all lawful requirements for the retention of the license. If the agency finds that public health, safety, or welfare imperatively requires emergency action, and incorporates a finding to that effect in its order, summary suspension of a license may be ordered pending proceedings for revocation or other action. These proceedings shall be promptly instituted and determined.

Bias in Licensing Boards

Who sits on state licensing boards? What about the ones for small industries?

Why does the nature of state licensing boards potentially lead to bias? What due process problems does this pose?

44

Law Licenses

Using lawyers as an example, what are the basic legal requirements for getting a license?

Are there opportunities for due process hearings? What if you flunk the bar? What if they decide you do not have the

character and fitness to take the bar?

45