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
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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?
2
Defining an Adjudication
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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
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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?
4
The Core Importance of Expertise in
Understanding Agencies
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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.
5
ALJs versus Article III Judges
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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?
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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
Notice

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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?
7
Burden of Proof
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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.
8
Shifting the Burden
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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
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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)
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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
Hearsay
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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.
12
Discovery
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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.
13
Federal ALJs
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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
What is the Legal Status of an ALJ's
Opinion?
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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.
15
Ex Parte Communications
Art III Trials v. Adjudications
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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?
16
Adjudications to Make Policy
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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
17
Adjudications to Set Policy - California Dental
Association v. FTC, 526 U.S. 756 (1999)
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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?
18
Why Make Policy Through Adjudications?
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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
19
Wetlands Example
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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 20
Inspections as Adjudications
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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
21
Adjudication Procedure
Basic Procedure for Adjudications:
Section 555
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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
23
Louisiana APA
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Louisiana Provisions
 LA - 955, et seq.
24
Who Gets to Appear Before the Agency?
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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?
25
APA Provisions - Formal Adjudications
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Formal (APA) Adjudications under the US APA
 US - 554, et seq.
26
Formal (APA) v. Informal (Non-APA)
Adjudications
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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?
27
Formal Adjudications in the Real World
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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.
28
Informal (Non-APA) Adjudications
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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
Administrative Cost and Formal
Adjudications
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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
30
Practice Issues
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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.
31
Practical Considerations in Adjudications
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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.
32
The Nature of the Agency and Formality of
the Process
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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
33
Ex parte Communications in Formal
Adjudications
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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?
34
What Communications are Allowed?
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http://biotech.law.lsu.edu/Courses/study_aids/adl
aw/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
Separation of Functions
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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
36
EPA Example
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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?
37
Consumer Product Safety Commission
Example
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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?
38
Licensing and Permitting as Non-Trial
Adjudications
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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.
39
Administrative Cost Issues
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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
Licensing under the APA
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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?
41
Disciplining License Holders - Section 558
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Section 558 applies to licensing
 Notice and a hearing before revocation
 Exception for imminent threats to public health
and safety
42
LA Law Note - Title 49, Chapter 13, §961.
Licenses
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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.
43
Bias in Licensing Boards
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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
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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