Chapter 3 Introduction to Adjudications

1. 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. Evolution of Adjudications • What types of disputes were early courts (1400s) concerned with? • What is at issue in many modern administrative adjudications that is fundamentally different from the cases in 1400? • Why does this make juries less effective? • When is this a problem in Article III trials?

3. Defining an Adjudication • Adjudications are the process used to make an order, other than rulemaking • 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)

4. Adjudications to Set Policy - California Dental Association • What did the FTC accuse the CDA of? • What was the sequence of the agency review? • What court was this appealed to? • Why do think agency rulings are appealed to the Circuit courts rather than district courts? • How does this adjudication set national policy? • Is this like common law precedent or is this the adjudicator telling us what the agency thinks the law is? • You will see later that adjudications are not precedent

5. Licensing and Permitting as Adjudications • 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 within to a Corps appeals board • If the application meets the standards, the Corps will issue a permit • Some licenses and permits are competitive

6. 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

7. APA Provisions • Formal (APA) Adjudications under the US APA • US - 554, et seq. • Louisiana Provisions • LA - 955, et seq.

8. 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?

9. Formal and Informal in the Real World • Formal adjudications, triggered by 554 and conducted under 556 and 557, look like trials. • They can be fairly simple, and might not even involve lawyers, or they can look just like complex litigation. • The procedure for informal adjudications are determined by the legislature as part of the enabling law • These range from complex trials to inspections and other very simple procedures

10. Costs of Trial Type Adjudications • Monetary costs are high • Time costs are high • They reduce agency flexibility • Why might you want one for your client? • Why are administrative costs useful to lawyers?

11. 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 each of these 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

12. 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

13. Practical Considerations in Adjudications • Within the constraint posed by APA for formal adjudications, which is still more informal than a trial, the agency can set their own procedures • 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 latter, even if the proceeding looks like a trial, the ALJ's power is much more limited than that of an Article III judge.

14. 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 deals with individuals and their decisions do not reflect policy • Department of Labor adjudications set policy for unionization for whole industries • It usually does not use rules for these questions, so adjudications are even more important

15. 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?

16. 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? • 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

17. 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?

18. 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.

19. 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? ALJs versus Article III Judges

20. Hearing Procedure • Discovery • Not provided for by the APA • Some agencies allow discovery • Why is 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

21. 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

22. 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? • Are the APA restrictions on ex parte communications like those for Article III trials?

23. Requirements of 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?

24. 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

25. EPA Example • Can the EPA ALJ consult with an EPA scientist to better understand a case? • 557(d) • 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?

26. 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?

27. Stopped Here

28. Procedures for Informal Adjudications • Not specified in the APA • Some are specified in the agency enabling law • Key is that the agency has to follow whatever procedures it sets up • Due process is the main concern, which is the subject of the next chapter • Informal adjudications are generally heard by an AJ, not an ALJ

29. Section 555 • 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

30. 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?

31. Licensing and Permitting • 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?

32. Licensing under the APA • How are the legal standards for initial licensing different from a license review or revocation? • Why? • 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? • When can it be done without this process? • What process can be substituted?

33. Section 558 • Section 558 applies to licensing • Notice and a hearing before revocation • Exception for public health and safety • Who sits on state licensing boards? • What about the ones for small industries? • What due process problems does this pose?