Chapter 3 Introduction 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? Was there a right to a jury in civil trials? Government regulation Did you get a hearing when the King told you what to do?

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 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 also based in part on agency expertise. Agency adjudications have very different procedures and due process requirements 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 Adjudications to Make Policy Are courts charged with making law and policy thought 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

8 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

9 Adjudications to Set Policy - California Dental Association 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?

10 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 Almost completely dysfunctional process in LA

11 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

12 Basic Procedure for Adjudications: Section 555 Federal Administrative Procedure Act Louisiana 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

13 Who Gets to Appear Before the Agency? Persons who are required or entitled to appear before the agency may be represented by counsel Who pays for counsel? 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?

14 Louisiana APA Louisiana Provisions LA - 955, et seq.

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

16 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, Why do we call informal adjudications non-APA adjudications?

17 Formal and Informal in the Real World Formal adjudications, triggered by 554 and conducted under 556 and 557, look like trials. Since they can have multiple parties with the right to present evidence and cross examine, they can be very long and complex 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

18 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 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

19 Judicial Limitations on Formal Adjudications Most of the circuits and the United States Supreme Court are reticent to order formal adjudications unless clearly intended by the legislature. 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 In practice, if the issue has not been settled for your hearing type, this can be an important dilatory practice It can also be important if you want to intervene

20 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.

21 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

Adjudication Procedure

23 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?

24 Burden and Standard 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 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

25 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?

26 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? What was the Residuum Rule? This has been replaced by the "substantial evidence" standard used for all agency evidence LA uses "sufficient evidence" - may not be the same standard.

27 Hearing Procedure Discovery Not provided for by the APA Some agencies allow discovery Why is it less of an issue than in Art. III trials? ALJ's opinion v. Art. III judge's opinion How is the ALJ's opinion different? Keep this in mind when we read Wooley They do also decide matters of law, but it is not binding on the agency

28 How does the Agency Treat the ALJ's Opinion? What is an initial decision, in contrast to a recommended decision? 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? Keep this in mind when we read Wooley We will discuss agency rejection of ALJ opinions in the chapter on judicial review

29 Ex Parte Communications Art 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? Are the APA restrictions on ex parte communications like those for Article III trials?

30 Ex parte Communications in Formal Adjudications No ex parte communications - 557(d)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?

31 Separation of Functions How does this cure 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 States - often outside the agency (central panel), losing all expertise

32 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?

33 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?

34 Licensing and Permitting as Non-Trial Adjudications Using lawyers as an example, what are the basic legal requirements for licensing? 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? Pit bull ordinances versus dangerous dog laws?

35 Section 558 Section 558 applies to licensing Notice and a hearing before revocation Exception for immanent threats to public health and safety Why does the nature of state licensing boards potentially lead to bias? Who sits on state licensing boards? What about the ones for small industries? What due process problems does this pose?

36 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? How does this change the adjudication? What is the basic due process requirement for revoking a license? (558 (c)1&2)(558 (c)1&2) When can it be done without this process? What process can be substituted?

37 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.