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.
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?
2
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
3
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?
4
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.
5
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?
6
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
7
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
8
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?
9
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
10
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
11
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
12
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?
13
Louisiana APA

Louisiana Provisions
 LA - 955, et seq.
14
APA Provisions - Formal Adjudications

Formal (APA) Adjudications under the US APA
 US - 554, et seq.
15
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?
16
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
17
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
18
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
19
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.
20
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
21
Adjudication Procedure
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?
23
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
24
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?
25
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.
26
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
27
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
28
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?
29
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?
30
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
31
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?
32
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?
33
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?
34
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?
35
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)
 When can it be done without this process?
 What process can be substituted?
36
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.
37