Content compliments of D. W. Brodie
Formal adjudication is a decisional procession involving an adversarial hearing mandated by a statute. The focus here is on APA formal adjudication, but the organic statute of the agency may prescribe the hearing requirements apart from the APA. This section focuses on formal adjudication as distinguished from informal adjudication or other forms of agency action. Formal adjudication usually affects individual rights, not group. It often has a retroactive impact, rather than being prospective in impact, unlike rulemaking.
In the formal adjudication, the ALJ will usually make the initial decision, which may then be reviewed at the agency level. The agency heads have the full power to substitute their judgment for that of the ALJ on all issues of law, fact, and credibility, with the possible exception of demeanor credibility.
Where a hearing on the record is required, as in formal adjudication, the credibility of witnesses may be significant. Demeanor credibility determinations must be made by an observer. The ALJ usually holds the hearing that creates the record and will be the observer. The agency heads are limited in their review of demeanor credibility findings, however the agency has the full power to draw its own inferences from the demeanor credibility findings of the ALJ. Nondemeanor credibility as evidenced by the statements in the record can be determined as easily by the agency heads as by the ALJ.
A party generally has the right of either cross examination or rebuttal in a formal adjudication. Since hearsay is admissible under the APA and is not subject to meaningful cross examination, the party must frequently rely on rebuttal evidence. Where error is claimed based on the denial of cross examination, the complaining party must prove that specific, not general prejudice resulted from the denial. This will often be difficult because the party will have to demonstrate that rebuttal was an inadequate substitute.
When an agency decision must be based on a closed record, as required in formal adjudication, the decider cannot be biased by off the record considerations. A claim of bias might involve the combination of the functions of prior investigation and subsequent deciding. All error must be shown with specificity. Absent the showing of substantial prejudice, this claim of combination of function will be rejected by the reviewing court. If the prior investigation can be shown to have resulted in the use of nonrecord information in making the formal adjudication decision, the court may find error.
The agency decision to give formal adjudication notice of an enforcement action against an individual or to not give notice is one of the most important decisions that an agency can make. Statutes and courts generally permit the agency a broad realm of prosecutorial discretion in making this decision to proceed or not proceed.
The findings requirements are a critical statutory requirement element of the agency decision in a formal adjudication. A variety of different findings are likely to be required, including a finding on jurisdiction, findings as to each element of each rule violation that is found, and findings of fact adequate to support the original complaint. Findings are the explanation that reviewing courts need in order to determine whether substantial evidence exists and whether various elements of the adjudication order are adequately explained. Inadequate findings are a common reason for remanding the agency order back to the agency.
The full and fair hearing requirement may be the product of due process or the product of statutory mandate. The basic requirement is that the record must be adequate for findings on all required elements. While this is the duty of lawyers representing their clients in most cases, where lawyers are not used, the duty of insuring a complete record may fall on the ALJ if the unrepresented party does not fully meet their burden for a full and complete record. To meet the full and fair hearing requirement, the ALJ may be required to ask questions or suggest lines of questioning. The ALJ may have to impose the requirement or make the suggestion as to what type of evidence is needed and where it might be found. In short, the ALJ may have to take an active role in looking out for some of the interests of one of the unrepresented parties if they cannot initially meet the full record of decisionmaking requirement. Later the ALJ must revert to a neutral stance to make the initial decision.
The general Morgan case requirement is that the responsible agency decider named in the statute must make a personal decision in the final decision for the agency in formal adjudication. The agency heads need not personally read the entire record nor write the entire final decision, but must use their mental processes to some extent in applying the law to the facts and issues. Paradoxically, the decider usually cannot be called into court to prove that this use of mental processes actually occurred.
In the formal adjudication, the agency order may impose a sanction on the offender. The organic statute may give the agency discretion to mitigate the sanction upon application and argument of the offender. Mitigation should be viewed as a discretionary matter with the agency that must be based on a reasonable explanation of how the mitigation will help to achieve the goals of the statute. Mitigation is not an arbitrary power of the agency head.
An order is the result of a formal adjudication, as defined in most APAs. The order usually consists of findings of fact and conclusions of law, with detailed reasons and analysis. The order of the agency may look much like an appellate court decision.
The agency decider may be able to use outside assistance in reaching the final decision. These aides may not make the actual decision, nor are they permitted to add facts to the record in giving their advice. Some statutes may specifically provide for this type of assistance, others may be silent. See also, agency head, exparte contact; adjudication, formal, record.
The prehearing conference is usually held prior to a complex formal adjudicatory hearing. Large agencies frequently have promulgated elaborate procedural rules detailing the nature of the prehearing conference. Like its trial counterpart, the prehearing conference will often result in binding agreements concerning the introduction of evidence, the use of witnesses, and may limit the issues. It is also the last time the parties may make a final effort to settle the issues without having go into a formal adjudication. The prehearing conference will often conclude with a written agreement about the matters that could be resolved and this agreement will be binding on the parties.
A common procedural path in adjudication involves the following steps: investigation to determine any rule or statutory violations, notice, hearing at ALJ level, ALJ decision, opportunity to comment at agency level, agency review and decision, demonstration of eligibility for judicial review, judicial review.
In formal adjudication, the record is the proceedings of the hearing, including prehearing conference agreements, official notice, and the decision by the ALJ. The closed record is the sole source for fact finding at the agency level and the sole source for application of the substantial evidence test in judicial review.
The named parties to a formal adjudication generally have the right to be represented by hired counsel. There is no right to appointed counsel in the administrative process except in a few exceptional circumstances.
The agency has great discretion in imposing a sanction on a party where a finding of violation of a rule has resulted from the formal adjudication. The sanction must be one permitted by the statute and it must be within the range identified in the statute. Consistency of application of the sanctions is not required.
The scope of review of facts under an APA in a formal adjudication is usually the substantial evidence test. On questions of law, the court may substitute its judgment. The scope of review at the judicial level must be distinguished from the agency authority to review the ALJ decision and from the burden of proof at the agency hearing level.
Informal adjudication is an ill defined but broad category of agency action. The APA's do not specifically define informal adjudication. A working definition of informal adjudication is that it is a statutorily required decisionmaking process that may or may not require a hearing and is neither formal adjudication nor rulemaking. If the process does not involve formal adjudication or rulemaking, it may come under the default heading of informal adjudication. The decisionmaking process is more likely to be defined in the agency organic legislation than in the APA, but the scope of judicial review is usually found in the APA. The Federal Overton Park case is the initial source for identifying a number of the characteristics of the informal adjudication. There are vastly more decisions made in informal adjudications than in formal adjudications.
Informal adjudication may or may not require a hearing process as part of the decisional process. If a hearing is required, it will not be a closed record, adversarial hearing as used in formal adjudication. If a hearing is required, it may or may not be an oral hearing. The statute authorizing the decisional process is the first place to look for any hearing requirements.
The decision in an informal adjudication will usually be subject to judicial review. The Federal Overton Park case illustrates one level of judicial review. The organic statute of the agency that delegates the decisionmaking authority to the agency will be the first place to look for judicial review elements. In the federal system, the informal adjudication may be reviewed under the broad category of "agency action." In a state APA, the scope of review may be patched together by considering the factual, legal, and other components of the decision.
The procedure used in informal adjudication decisionmaking is most likely to be found in the organic legislation authorizing the decision. The prescribed procedures may be implicit or explicit. The prescribed procedures are likely to vary greatly from one statute to the next.
The informal adjudication decision must be based on a record, although it is not the closed record that is required in formal adjudication. A record is required either because of the terms of organic statute or because otherwise the court will have no basis for judicial review in the absence of a record. The record may consist of the agency order, any public submissions, agency studies or investigations, or any matters considered by the agency. The record on review cannot be based on post hoc rationalizations.
The use of ADR (alternative dispute resolution) techniques is expanding in administrative law. One of the more common techniques, especially at the federal level, is regulatory negotiation or regneg. It is used by some agencies prior to the statutorily required rulemaking hearing. The goal of regneg is to bring representatives of the contending parties and agency together to reach as much agreement or consensus about the terms of a proposed rule as can be accomplished. If substantial agreement can be reached, the parties may agree not to challenge the promulgated rule in court after it is issued. Court challenges of rules can often take years of litigation. The regneg is a prelude to the hearing, it is not a substitute for the hearing under existing legislation.
The agency itself is the most profitable source of information about the agency. A close working relationship with agency staff based on mutual respect will be the most valuable tool that a lawyer will have. Most agency advice and information will be of an informal oral nature or be in the form of documents which are readily shared but which may or may not be formally indexed or published. In some situations, more formal forms of information may be required. This section discusses some of these.
Statutes may permit individuals to seek advice about agency concerns by submitting a question to the office of the appropriate attorney general.
An APA may provide for a procedure to use to request a formal answer to a specific, written question from the agency. The agency usually has discretion not to respond to such an inquiry. Where a response is given, the APA usually will provide that the agency is bound by its response on that particular factual situation.
Statutes may permit individuals to seek a formal declaratory order from a court about the agency.
Statutes and agency legislative rules often do not give detailed, specific information. A party may request information from the agency about a specific matter. The most common form of inquiry will be to approach an employee of the agency on an informal basis and specify the request. The issue arises as to whether the informal advice received is binding on the government. The general answer is that the informal advice is not necessarily binding. These doctrines are equitable in nature and courts will have to decide each of these cases on its particular facts.
Agencies may provide interpretative rules, as compared to legislative rules. Interpretative rules are not usually the product of a specific APA procedure. They may appear in the form of memos, handbooks, or even in speeches. They are often a significant source of information about how the agency will exercise its delegation of authority. Since interpretative rules do not require notice and comment procedures, the agency can change them at any time. In that sense, they do not "bind" the agency. Courts may substitute their judgment for that of the agency when an interpretative rule is challenged, although courts will frequently defer to the agency's expertise in the interpretation.
Due process does not necessarily prohibit the combination of investigation and decisionmaking, each case must be resolved on its own peculiarities. Advocacy and decisionmaking may entail a much greater risk. Specific statutes may impose greater prohibitions on combination of functions than is required under minimal due process.
Ex parte contact may give rise to disqualifying bias, especially if it involves the agency head in a personal or financial interest in the outcome. Given the broad range of duties of the agency head, however, it may be impossible to isolate the decisionmaker. Stricter prohibitions may be imposed on the ALJ under an APA.
The agency head is generally responsible by statute for making all final decisions. Decisionmaking usually requires a personal decision, but the question becomes one of how much preliminary assistance can be given to the agency head. In the range of agency actions, the most sensitive requirements of personal decisionmaking involve adversarial adjudications while the least sensitive involve notice and comment rulemaking. The agency head frequently must make a personal decision and not simply rubberstamp a decision made by staff. This does not mean that the agency head must personally read all of the record or write the decision. The usual requirement is that the agency head be aware of major issues and use some personal mental faculties in making the decision. The requirement for a personal decision does not mean that the agency head can be called to court to testify whether or not that was the way a particular decision was made. Outside advisory groups may be permitted to assist the decisionmaker so long as the sanctity of the record is maintained, the final decision is personal with the decisionmaker, and the decision is made on the basis of the statutory factors alone.
The intermediate report or the preliminary decision is that of the ALJ in most cases. Sometimes the agency will request that the ALJ forward the record without decision in some state systems. In practice, the ALJ decision may be the last decision because the parties are unable to get the agency head to review or because the party has exhausted their time, patience, or money.
The ALJ has full authority to run all aspects of the prehearing conference and the subsequent formal adjudication hearing. The ALJ has the responsibility to make a full record, to rule on all motions, and usually had the duty to make the first level decision based upon that record.
Central panel procedures involve an effort to attempt to eliminate possible bias and to promote efficiency. In this system, the ALJ is employed by an ALJ "agency" that assigns the ALJ to the particular agencies as they may be needed. This contrasts with systems where the ALJ is an employee of the agency that makes the final decision and where the ALJ may be subject to the same pressures as any other employee. Several states use one form or another of the central panel process but most do not. Central panel systems seek to minimize the type of agency intrusion into ALJ decisionmaking that may have been present in the "Belmon" review of social security ALJs.
The ALJ may be disqualified for reasons similar to those disqualifying a judicial judge. The motion must be raised at the hearing and the ALJ will rule on it. The ALJ decision does not disqualify him or her and often will not be immediately subject to appeal and the hearing will go on. The agency head will review the ruling later. Prior involvement as in the same matter or bias will often be the basis for a motion to disqualify.
Legislation usually seeks to limit or prevent ex parte communication with the ALJ. Communication with the ALJ should take place after notice to the other parties so all parties have a chance to be present.
The ALJ may be under a statutory or judicial obligation to provide a full and fair hearing. This obligation may be at its maximum when the nongovernmental party is not represented by a lawyer. The goal is to bring forth every issue necessary for a complete record on all issues. The ALJ may have to question witnesses and urge the introduction of necessary evidence if the unrepresented, nongovernmental party does not seem capable. There is rarely a right to appointed counsel in agency proceedings. Federal social security benefits hearings are an example of situations which may invoke the full and fair hearing requirement.
The ALJ will be primarily responsible for the conduct of the prehearing conference in the adjudication context. Often agency rules will prescribe in detail the nature of the prehearing conference.
The ALJ decision is likely to be sent to the agency head for final decisionmaking, although some agency rules may provide that the agency grant permission before it will be considered. On review, the agency head has the full power to substitute his or her judgment for that of the ALJ on all issues of law, fact, and credibility. The only exception will be that since the agency did not see the witnesses, the agency is not in a position to make demeanor credibility determinations.
Many topics are included in the range of things that may suggest bias. Bias claims may involve issues of fact, law, policy, financial interest, or personal interest. In addition, the type of agency action that is involved is important. Bias is of relatively little concern where the decision need not be made on the record, and it is of most concern where the decision must be based upon a closed record created by an adversarial hearing process. In degree of seriousness, bias involving financial or personal interest are the most likely to lead to disqualification, while bias as to policy or law are, relatively speaking, the least likely to lead to disqualification. Bias as to facts will depend, in part, on whether the facts were legislative or adjudicative in character, to use the Davis descriptors. Bias must generally be demonstrated by showing specifics rather than a general atmosphere of distrust, and substantial prejudice must be shown to have resulted from the alleged bias.
Where prejudicial bias can be shown the decisionmaker may be disqualified. The agency head who must run the agency, however, has many statutory duties that may involve him or her in the matter prior to the final decision. For example, the agency head may need to authorize the initial investigation or may need to give approval to the sending of notice of adjudication to the nongovernmental party. The ALJ may have no statutory duties beyond conduction of the hearing and deciding. The differences in duties will impact on courts when they are asked to decide if there was disqualifying bias.
This doctrine generally provides that if the only authorized decisionmaker is subject to disqualification for bias, necessity may require that the biased person make the decision anyway, since there is no one else authorized by statute to so act.
Ex parte contact can lead to disqualifying bias, especially where the other side has no way of knowing what adjudicative facts it should be attempting to rebut.
Several functions may be involved, including investigation, advocating, judging or deciding, and the settlement function. The decisionmaker usually can be involved in settlement efforts without disqualification. As a matter of due process, combining investigation and deciding is not per se prohibited. The combination of advocacy and deciding is likely to come closest to showing a disqualifying bias, where specifics can be shown.
A general allegation of bias will not be adequate to show error in the agency action. Specific bias resulting in specific and substantial prejudice must be shown. For example, members of a given profession in a trade association may be sharply divided over many fundamental issues. In one case, self employed optometrists had negative views about the activities of corporate employed optometrists. The mere showing of such divisions is not necessarily proof of disqualifying bias. When the agency head makes a speech or issues interpretative rules showing a definite bias as to the meaning of a statute, this will not usually be treated as disqualifying bias. Where disqualification is sought, the burden is on the proponent to prove specific instances involving substantial prejudice. General allegations or demonstrating an unfriendly atmosphere will not be sufficient. Showing bias without showing prejudice will not result in a successful challenge of agency action.
Agency files may be used like any other source of evidence where the agency is not bound to decide on the basis of a closed record. Where a closed record decision is required, use of outside evidence from any source, including agency files, would violate the whole record requirement. If evidence is needed from the agency files, the record must be reopened with notice and opportunity for comment given all parties. Where a party seeks discovery of the contents of agency files that are not subject to open records requirements, the party may have to demonstrate a specific need.
The agency decision in an adjudication is based upon the whole record, including the ALJ decision. The agency has essentially de novo decisionmaking authority when it receives the ALJ decision. The final decision includes rulings on motions made at the ALJ hearing. The APA usually provides that the parties have an opportunity to comment on the ALJ decision. This comment may be written or oral, depending upon the procedural rules of the agency.
The burden of proof lies upon the proponent of a position. The most common burden of proof for agency level decisionmaking is the preponderance of the evidence test. In exceptional situations, clear and continuing evidence may be needed. The agency level burden of proof requirement should not be confused with the judicial scope of review test that is authorized by most APAs, the substantial evidence test.
Agencies usually have a delegation sufficiently broad to permit them to change policies over time. In rulemaking, of course, a new rule usually means a change of policy. The agency must meet whatever statutory requirements there are for justifying the promulgation of a rule. In adjudication, the agency may be required by case law or APA to give some reasons for a policy shift. Without an agency explanation, the courts may remand the decision back to the agency. An agency is required to follow its legislative rules until they are changed by new legislative rulemaking procedures. The doctrine of estoppel is an equitable doctrine which the courts may or may not apply to agency advice in a given situation. That is to say, the agency is not necessarily bound by what it has informally done or said in the past. When the agency seeks to change its policy developed through adjudication, it must give reasons for the change. Sanctions are not required to be consistent application from case to case so long as the sanctions remain within the statutory delegation.
Findings may be required in a number of decisions. Findings may be formal or informal. The findings requirement is most common in formal adjudication. Where there is a change in policy announced by formal adjudication, an explanation may be required. Where strong evidence is rejected, there may be a requirement to explain the rejection. In due process hearings, findings may be required, but not the complete type of findings required in a formal adjudication. An adjudicatory decision must be accompanied by findings of fact and conclusions of law. In informal adjudication, some findings may be required in order to provide a basis for judicial review. Findings are needed to demonstrate that the agency has jurisdiction over a matter. Findings must be based upon the considerations as they existed at the time of decisionmaking, and post hoc rationalizations will generally be rejected. Findings are needed when it is necessary to show that the decisionmaker took into account all of the factors required to be weighed in the legislation. Demeanor credibility determinations may be required to be based upon objective criteria, a general requirement of findings. Where multiple allegations were made in the notice of hearing, findings must be used to demonstrate which particular allegations were found to be proven. Oregon has a general judicial requirement of substantial reasons that accompanies its use of the statutory substantial evidence rule in contested cases.
When the decision must be made on the basis of a closed record, as in formal adjudication, the decision must match the statutorily mandated factors with the facts in the record. If the decision relies on facts obtained by ex parte contact outside of the record, such as influence or political considerations it may be found to be in violation of whole record requirement.
Courts often are quite differential to the agency's interpretation of its own statutes. Justification for this deference is commonly found in the agency's experience and expertise compared to the generalized, nonexpert experiences of the court. Where the statute is clear in its meaning or where the court finds itself with comparable expertise, the court is likely to feel itself less bound by the agency interpretation. The more vague the statute, the more interpretative discretion will be given to the agency.
The doctrine of nonacquiescence is primarily a feature of the federal system. A federal agency is likely to have nationwide constituency which means that the agency may find itself in different federal courts of appeal on essentially the same issues. The agency will frequently be attempting to establish a single national policy, but one appeals court may find the policy to be invalid. In another circuit court of appeals, the agency may not acquiesce in the prior circuit decision. Instead it maintains its national policy. The practical impact is that similarly situated individuals may be treated differently depending upon the circuit in which they live, unless the agency adopts a policy consistent with the dissenting circuits or the US Supreme court eliminates the circuit conflicts.
Public participation in the decisionmaking hearing process varies with the type of decision involved. In legislative rulemaking, the general public has a right to comment. In formal adjudication, the public may only have a discretionary intervention opportunity. Only the parties have a right to participate in an adjudication hearing. In informal adjudication, rights of participation will vary greatly depending upon the terms of the statute involved and the procedural rules promulgated by the agency. The language of the statute in question may give a clue on participation. The word "parties" is usually used to designate individuals with participation rights. The word "persons" is usually used to designate members of the public with an opportunity to participate. The word "intervenor" usually is used to designate individuals who may participate in the discretion of the agency.
Where a decision must be based solely upon the record created at an adversarial hearing, no evidence outside of the record can be considered. This is generally the case in a formal adjudication. Where no closed record is required, as is generally the case in rulemaking and is frequently the case in informal adjudication, the decider can look to any source for information right up to the moment of decision. Without a record, there is little for a court to do in judicial review. Identifying the contents of the record in various types of agency actions can be a difficult task.
Most agency disputes are settled before the matter goes to formal adjudication, in the same way that most legal disputes are settled before trial. Settlement is likely to be pressed by the ALJ at the prehearing conference if it has not been reached prior to that point. Various ADR techniques are receiving increasing attention by government agencies as aids in the settlement process.
Discretion is one of the hallmarks of agency action or inaction. Courts are inclined to give agencies discretion in many decisions, which has the effect of either not making the decision subject to judicial review or making the exercise of discretion subject to limited judicial review. Statutes may commit action to agency discretion. The decision to act or not act is often discretionary. The selection between reasonable choices is usually discretionary. The decision to respond to requests for information is often discretionary. The choice of rulemaking or adjudication as the vehicle to promulgate policy may be discretionary. Agencies have enormous "prosecutorial discretion." The interpretation of a statute may be left to the discretion of the agency where the statute is not clear on its face. Some exercises of discretion may be subject to review on the basis of abuse of discretion or reasonableness. Where there is no law to apply, the exercise of discretion will not be subject to judicial review.
Due process may mandate that certain individuals be given a hearing right before the agency can act. There is no one type of due process hearing procedure, rather the agency must balance several factors. Usually, something less than a full evidentiary hearing is required and the hearing is not required to be error free. The minimal purpose of the hearing process is to give the individual notice and an opportunity to comment on the agency action. The comment opportunity need not be in an oral hearing, an opportunity for a writing may be sufficient.
Minimal due process requirements are notice and opportunity to respond. The opportunity to respond does not necessarily mean an oral response, a writing may be sufficient. These minimal requirements, of course, have no application where a due process procedure is not required or where statutes apply greater obligations.
The type of due process hearing is also dependent upon whether a property interest (more procedural protection) or a liberty, usually reputational interest (less procedural protection) is at stake. The due process right that is granted is procedural, a hearing, rather than substantive. For example, due process may be invoked when the state discharges certain employees, repossess property, or proposes to terminate certain welfare benefits.
Due process requirements apply only to state action. It has no application to private action when the state is not involved.
The hearing might take place before the government has acted or it might follow government action. This can be a critical issue for the party involved. Due process does not require that every due process hearing take place before the government acts.
In an emergency situation, an agency is given a greater right to decide to take emergency action before any form of hearing is required. For example, contaminated food may be seized and destroyed without a prior property hearing. Emergency rules may be promulgated under the APA without hearing and will continue to be effective for a limited time until a rulemaking hearing can be held.
Many agencies have issued elaborate rules concerning how evidence should be handled, especially in a formal adjudication. The lawyer should be fully aware of these rules. They will prescribe, for example, how copies of original documents should be handled, questions of admissibility, introduction of business or other records, and many other matters.
Cross examination is commonly considered to be an effective way to determine whether the witness is testifying truthfully or less than fully truthfully. However, cross examination is more effective on some matters than on others. Using Davis' description, cross examination of legislative facts is less likely to be useful than cross examination of adjudicative facts. Legislative facts tend to be of a general, conclusory nature, while adjudicative facts are about specific elements in individual situations. Expert witnesses are less likely to be undermined than lay witnesses, because the expert is often used to the cross examination experience and because the expert may have a base of knowledge about a subject that is greater than the lawyers. In addition, there are numerous exceptions to the hearsay rule which make evidence admissible without reliance on cross examination.
A critical element in many hearing processes is who the decisionmaker chooses to believe. In a hearing in which other factors are essentially in balance, the winner will be determined by which side is the most credible. One type of credibility is determined by the demeanor of the witness, whether the witness gave the overall appearance of speaking the truth. Another type of credibility is determined by comparing the statements of several witness to determine, among other things, consistency. The credibility determination should be distinguished from the inferences drawn from the demeanor or statements. Only a first hand observer, usually the ALJ, can measure actual demeanor. The agency is able to draw its own inferences from the finding of credibility. Courts sometimes distinguish issues of veracity from issues that solely involve, for example, the professional disagreement that may exist between doctor witnesses.
Evidence may consist, in part, of matters that are within the experience of common persons or it may involve highly technical matters. The agency is generally considered to be an expert in its area. Courts may recognize that the agency has the expertise to interpret the evidence that the generalist court does not have. Under this circumstance, the court may be highly deferential toward the agency evaluation of the evidence. This deference may be particularly noticeable where there is scientific uncertainty and the agency must make a judgment call in its decision. While the court may be willing to concede such issues to the agency, it may do so only if the agency provides adequate findings to support its choice. An agency is entitled to evaluate and interpret the evidence in the record in an adjudication. However, it cannot use its expertise to add facts to the record by way of evaluation after the record has been closed in a formal adjudication.
Evidence that is received without notice to the other side cannot be used in a closed record decisional process. In an adjudication, the APA requires the agency to base its decision solely upon the evidence in the record and not upon evidence that may have been provided in an ex parte communication. In rulemaking, ex parte contacts will be permitted.
The agency will be required to explain its use of the evidence. In a formal adjudication, the explanation will be in the form of findings. In rulemaking, the explanation will be in the form of a basis and purpose statement if the APA so requires. In a due process hearing, findings may be required but not the formal type of findings required in the adjudication process. Where strong and compelling evidence is rejected by the agency, the courts may require that the agency decisionmaker explain in findings as to why the evidence was rejected. Where there is evidence on only one side of an issue and the agency seeks to ignore that uncontradicted evidence, the agency may have to meet a very high standard of explanation.
Hearsay evidence carries the connotation of being less trustworthy than evidence presented by a witness who is subject to cross examination. Hearsay is of greatest concern in formal adjudication where there may be a right to cross examination. However, hearsay is admissible and can be relied upon as the sole basis for an agency decision. It is usually defined, in part, as evidence that would be relied upon by a reasonably prudent person. To show such reliance, it may necessary to identify what factors would lead to such reliance. It is also important to understand that the question of admission of evidence is different from the question of what weight the decider will give the evidence. There are many exceptions that would permit hearsay evidence to be admitted into a judicial court proceeding and if they were needed, they would also apply at the agency level. For example, business records including computer printouts can usually be demonstrated to be sufficiently reliable for admission purposes without cross examination of all of the persons involved in producing them. Where cross examination is not used, the opposing party should be given an opportunity to submit rebutting evidence in formal adjudication.
Administrative law authority Professor Davis divides facts into legislative facts and adjudicative facts. Legislative facts are of a broad nature, often involving opinion or the exercise of judgment to identify. Adjudicative facts are specific facts about specific persons or corporations. This distinction is a useful one to use in looking at evidence in agency decisionmaking. It helps, for example, to determine whether the denial of cross examination is prejudicial error in a given circumstance. Prejudice is more likely to arise if it involves adjudicative facts, and less likely if it involves legislative facts. The legislative fact is not really subject to the same degree of verification as the adjudicative fact.
Official notice is a method of adding evidence to the record without introducing the actual evidence. Official notice is similar to judicial notice, except that it covers more types of evidence. Evidence is sometimes said to be subject to official notice if it is readily verifiable. Once evidence meets the test of being subject to official notice, the APA requires the other side to be given an opportunity to rebut. Legislative and not adjudicative facts are more likely to be subject to official notice. In this process of using evidence that has not been introduced as such, it is important to distinguish between the process of adding facts to the record and interpreting facts that are already in the record. The addition of facts requires notice, the interpretation of facts already in the record does not require notice.
Rebuttal is the process of putting evidence into the record to challenge evidence that is already there. In the absence of cross examination, rebuttal evidence should always be permitted. Rebuttal is appropriate, for example, where official notice has been taken and where cross examination has been denied. Denial of the right to rebut may be prejudicial error in these circumstances.
Trade secrets may be given special treatment in the agency hearing. The holder of the trade secret may be protected against having to reveal any aspect of it. If the material is introduced into evidence, the number of persons having access to it may be greatly limited in order to diminish the chances of losing its protected nature.
The APAs usually set forth the requirements for informal or notice and comment rulemaking and formal adjudication hearings. Some, like the Model State APA may describe several types of adjudication. Other types of agency action may be included in the judicial review provisions, but not described in the procedural sections.
The federal case of Matthews v Eldridge is the seminal minimal due process case that identifies a balance of several factors as an aid of determining the specific procedures to be used under due process. Critical concerns include whether cross examination is required and whether oral presentations are required. There is no single type of procedure that covers all due process situations.
Informal adjudication and other hearing decisionmaking processes may be found in the agency's organic statute, either directly or by implication. These procedures may involve some form of oral presentation, but they may also be limited to the exchanges on paper. Due process requirements do not necessarily demand an oral hearing. The APAs often give the agency discretion in rulemaking on whether oral or paper hearings can be used. Formal adjudication usually provides for some oral presentations, but much of the evidence can be required to be submitted in a nonmoral manner.
Site visits may be used in agency decisionmaking. They substitute for a portion of a formal or informal hearing process. Where a full record is required, the results of the site visit must be preserved in the record in some form for possible agency and judicial review.
Telephone hearings may be used in a variety of situations where they are authorized. The telephone hearing will remove the element of visual demeanor credibility, but voice tones and changes can be monitored. The fact that a telephone hearing prevents personal confrontation does not necessarily offend due process. Paper documents can be distributed in advance by mail or fax.
Testing may substitute for a hearing in a variety of circumstances. For example, steam boiler testing is often mandated by statutes as being superior to oral hearings on the issue of safety.
While investigation may occur at many different points in the administrative process, a common scenario is for investigation to precede the rule making hearing. Investigation will also follow the promulgation of legislative rules. The investigation will determine whether are any apparent rule violations that should lead to the next step of issuing notice of formal adjudication. The decision to investigate and the decision of what steps to take as the result of an investigation are critical decisions so far as the client is concerned. Judicial review of these decisions is either minimal or unavailable. The agency is given broad prosecutorial discretion to make the decisions.
Under the federal APA, abuse of discretion is one element used in describing the scope of review. Discretion may be found to be abused where, for example, no facts support the decision or the decision is the result of an irrational process of deciding.
The exercise of discretion may have to be accompanied by an explanation to show its reasonableness under the particular language of the authorizing statute. Without adequate explanation, the decision might be found to be an abuse of discretion, or irrational.
An agency can act only within the delegation given in its statute. The statute will determine whether the agency has formal adjudication or legislative rulemaking authority. The agency must define its view of its delegation in the first instance. Courts are inclined to be deferential to the agency interpretation in many situations. The court is least likely to be deferential when the statute is clear on its face or the statute uses nontechnical language familiar to the court. In these circumstances, the court may substitute its interpretation where the agency has reached a contrary interpretation.
The exhaustion doctrine requires that the party seeking review demonstrate that the party has exhausted all the possible avenues of redress within the agency. Under exceptions to the doctrine, the party might attempt to show that no adequate remedy would available from a continuation of following agency procedure to its final point.
Facts may be described in many ways. Where a court characterizes facts as being of a general nature or being common knowledge (not technical), the court is more likely to substitute its judgment for that of the agency. When facts are characterized as technical and scientific facts, courts are more likely to defer to the agency interpretation of the their meaning and implication. Courts picture themselves as generalists, not specialists.
Under the terms of most APAs, only final agency action is reviewable. The most obvious final agency actions occur when the rule is promulgated or the adjudication order is made and served by the agency. The many agency decisions that proceed final agency action are not likely to be subject to judicial review, absent special circumstances.
Many factors influence courts in judicial review. Some authors have referred to these many factors as "mood factors." Obviously, the main factors influencing judicial review are the basic tests such as the substantial evidence for facts and whether findings were properly made and explained. Other factors include the floodgates arguments (courts do not want to make a decision that will open the floodgates of litigation), the degree of interference with agency functions, the confidence that the agency has won from its past record of action and litigation, the value of uniformity of agency decisions over time (courts are seen as likely to give less uniform responses), the reluctance of courts to get involved in the application of the facts to the law, the special judicial sensitivity to such issues as individual liberty, the judicial reluctance to interfere until the fact gathering process has ended and the agency has exercised the full extent of its discretion. Courts often identify the importance of maintaining the separation of powers doctrine in the federal system and do not make decisions that would tend to put the judiciary in a predominant position. In brief, judicial review should be seen as both a technical subject of legal doctrine and statutory interpretation as well as an eminently practical process that also looks to the impact of court decisions on the day to day operations of both the agency and the court.
The party seeking judicial review will often seek to stay agency pending the completion of judicial review. The issuance of this type of injunction is not usually automatic and must be specifically sought. The party will often be required to first ask the agency to agree to stay its action before going to the courts for a judicial injunction.
Here as elsewhere the parties must carefully determine whether there is a period of limitations after which judicial review may be obtained. A common time limit in APAs is 60 days after the agency has finally decided.
Judicial review of an agency decision almost always involves an interplay between at least two statutes, the general APA and the specific legislation which authorizes the agency to act. It is important to the practitioner to refer to both, because the specificity of the organic agency legislation may impact on the generality of the APA. The organic statute will set out the factors that the agency must consider in reaching the decision.
Agencies may seek to short-circuit a request for judicial review by arguing that the party should instead be seeking reconsideration from the agency as a prelude to judicial review. This is a variant of the exhaustion argument. More modern APAs usually do not require the party to seek reconsideration once the agency has made its initial final decision.
The APA or appropriate organic statute must be carefully reviewed to determine the power of the court to act after finding that the agency has erred. A court may have the power, in some instances, to remand, to enter a new decision, or to completely overturn what the agency has done.
Courts use numerous presumptions in the process of judicial review. There is a general presumption of honesty and integrity afforded to agency decisionmakers. There is a presumption of regularity, that the agency was likely to follow its own rules and procedures. There is a presumption of reviewability applied to many decisions, but there is also a presumption of unreviewability applied to some types of decisions. The challenging party will have the burden of overcoming these presumptions that help an agency.
Judicial review of agency decisions does not simply ask the broad question of whether the agency decision was right or wrong. The agency decision is broken into its component elements and the appropriate scope of review is applied to each element. Questions of fact will be reviewed under the deferential substantial evidence test. Questions of law will be reviewed in the light of the court's authority to fully substitute its judgment for that of the agency. Mixed questions of fact and law may be further broken down with different elements allocated primarily to the court or to the agency. Each element of the decision must be separately identified and discussed in light of the scope of review afforded to that element.
The court reviews the record of the agency decision. Sometimes the record will be a closed record developed at an adversarial hearing like an adjudication. Other records for other decisions may be less formal and broader in their potential content. Without a record of some kind, the court cannot conduct meaningful review. The record might consist of any of the following items, to identify only some of the possibilities: submissions to the agency, documents expressing agency action, other documents identified by agency, any information that considered by the agency in making its decisions, and documents required to be prepared by the statute. Some APAs may require that staff communications with the decisionmaker be included in the record.
Usually the record must represent what was available at the time the decision was made. Judicial review may occur months or years later. Post hoc rationalization or reasons identified for the decision based on post hearing information usually cannot be used.
Some courts may give attention to the residuum rule which requires that the agency decision cannot be based exclusively on hearsay evidence. There must be a residuum of "legal" evidence. Many jurisdictions do not recognize this rule at the judicial review level. At the agency level decisionmaking process, however, agencies may require that the decision have a basis in legal evidence, not based solely on hearsay.
An agency action must be ripe for judicial review. This requirement often seeks to identify the concreteness of the issues and involves concerns as to whether the court can resolve the matter if it intervenes at the requested time. A twofold test may be used. The fitness of the decision for judicial review and the hardship to the parties if judicial review is not available at that time. Final agency action meets the ripeness test.
Judicial review is the final procedural step in the administrative process. There are many perspectives on the role and practice of judicial review. One view of judicial review might emphasize its role in allocating final decisionmaking authority between the court and the agency. Another view might emphasize its role in terms of the separation of powers between courts and the executive branch. From the point of view of the parties, judicial review arguments can often be summarized as to whether the party wants to sustain or overturn the agency decisions. Arguments will then be made in terms of doctrine and facts that reasonably support the goal to be reached on the basis of the facts of the particular case.
The various APAs and court decisions identify a wide range of tests that courts might use on various elements of the agency decision being reviewed. The federal APA uses, in part, the arbitrary and capricious test. Some opinions identify the clear error of judgment test. Courts might require that the agency explain when strong, contrary evidence has been rejected by the agency. Where there are conflicting choices identified, the court may permit the agency to have the option of choosing any of the conflicting choices that meet a reasonableness test. A common expression used by courts is to say that the agency decision need only be reasonable, it need not be "right," under, for example, the substantial evidence test. Before a court will find reversible error, it will frequently require that the complaining party show specifically that they suffered substantial prejudice from the agency error. The substitution of judgment language is often used, indicating that the court will not substitute its judgment for that of the agency if the agency is reasonable in questions of fact, but the court can substitute its judgment on matters of law. If evidence is uncontradicted, the agency will be told that it cannot simply disregard it. The substantial evidence test that is used on agency fact finding has been described as involving a variety of elements. Detracting must be considered. Uncontradicted evidence cannot be ignored. Generally, the court will not or cannot weigh the evidence in the manner that the agency does under its use of the preponderance of the evidence test. The court will not substitute its judgment of the facts for that of the agency. Delegation of authority issues may be given special treatment. In the federal system, the Chevron case is the leading example. Under that test, the agency interpretation is given great deference unless the wording of the statute is clear and the agency did not follow its clear mandate. If the wording is ambiguous, the agency interpretation will be given deference so long as it is reasonable. Sanctions decided upon by the agency will also be given great deference. The courts will often accept the agency choice of sanctions if they are within the range identified by the statute. The court may not impose a general requirement of consistency between cases and may not require that the agency show that it considered less drastic alternatives.
The standing requirement is a major hurdle that must be passed in order to qualify for judicial review. Standing for judicial review has constitutional, statutory, and prudential overtones. This is to be distinguished from standing at the agency level where the constitutional and prudential considerations are not likely to be present. The prudential elements of the doctrine refer to the court not wanting to open the floodgates of litigation and the court's efforts to insure that those who appear before a court are among those best able to articulate the issues because they have the most intimate experience with the alleged agency problem. The most common test used under most APAs is the injury in fact test. Where organizations seek standing, they will generally be required to show that either the organization itself has been injured in fact or that one of their members have and they represent that member. These approaches preclude members of the public from showing standing when their claim is one that is likely to be shared in common with most other members of the public. The person who is injured in fact must also meet the tests of traceability (the injury can be directly traced to the agency in question) and redressability (the identified agency can provide realistic relief to the injured parties.) Other tests are also articulated in some cases, such as the test of being within the zone of the interests that the statute in question sought to protect, or the legal interest test which grants standing where the person can show the invasion of a legally protected interest.
Discretion may be committed to agency decisionmaking under APAs like the federal one. Where discretion is committed to the agency and there are no standards that the court can find (no law to apply), then it becomes unreviewable. The organic statute of the agency may contain an express preclusion, such as in the original version of some veterans benefits legislation. Other statutes may include an implied preclusion of judicial review, often of a limited nature but nonetheless sufficient to keep certain parties out of judicial review at least during certain times.
The federal APA and many state acts require that the promulgated rule be accompanied by a basis and purpose statement. This statement can be analogized, to some extent, with the requirement of findings of fact and explanation that is required in adjudication. In the federal system, the adequacy of the basis and purpose statement is frequently at the center in judicial review of the rule. The basis and purpose statement may be required to demonstrate that the agency gave meaningful consideration to alternative formulations of the rule. Where there are fact based elements in the rule, the supporting facts must be identified in the statement.
A fundamental tenet of administrative law is that an agency must follow its own rules in order to make valid decisions. One of the first things that the party does when a challenge to the agency is considered is to obtain copies of the agency rules and analyze whether what the agency did and the way that it did it was in compliance with the rules.
Judicial review of informal legislative rules is less rigorous than judicial review of adjudication. The major issues in rulemaking will include the adequacy of the notice, whether the rule was within the statutory delegation of authority given to the agency, whether the basis and purpose statement is adequate, if one is required, and whether the minimal procedural steps were followed.
Before an agency promulgates a legislative rule, notice and an informal hearing process may be required. The notice can later be used to test whether the promulgated rule is within the terms identified in the notice. If the notice and the final rule diverge too greatly, the rule may be upset for failure to follow statutory procedures. The requirement of a hearing is frequently interpreted to mean that the agency must disclose the basis of the proposed rule with sufficient detail so that participants in the hearing can address the real concerns of the agency.
The APA might provide that persons can petition the agency for rulemaking. This would be used where no rules exist or where an amendment to existing rules is sought. The agency has the discretion not to grant the petition.
Rulemaking activities come in at least three forms. The most common is the promulgation of rules following the statutory requirements. Related to this is the recision of rules which generally must follow the same procedures as the promulgation. An agency may begin a rule making procedure and then decide not to finally promulgate a rule. In this nonpromulgation situation, the agency is not required to follow any particular procedures.
Regulatory analysis is a general way of describing legislation that requires that various studies be run prior to the promulgation of a rule, particularly at the federal level. The analysis may cover such matters as the impact of the rule on small business, the impact of the rule on record keeping requirements, and similar matters that seek to limit the bureaucratic superstructure that seems to result from many rules. The statutes often require that elaborate studies be run and conclusions be reached, but they also usually provide that failures to fully meet the statutory requirement will not be subject to judicial review. In Oregon, the notice requirements may have to contain much of this analysis information.
Rules come in various types. Under the federal APA, in rare instances, formal rulemaking may be required. This requires about the same procedures as would be used in an adjudication. The more common rulemaking procedure is notice and comment rulemaking, also called informal rulemaking. In this procedure, notice is followed by an opportunity to comment, which may or may not involve an oral hearing. Where an oral hearing is held, there is no statutory requirement for a closed record or for cross examination. Statutes may provide for many variations off the general theme of notice and comment rulemaking. The variations may relate to proof of facts or to cross examination. These variations are sometimes referred to as hybrid rulemaking. While congress can provide for hybrid methods, the courts cannot alter the hearing requirements that are identified in the statute. Interpretative rulemaking is the issuance of rules, often in the form of a handbook, that explain the agency working interpretation of the statute. Interpretative rules are not binding on courts. The authority to issue interpretative rules is usually implied in the agency and is not the product of a delegation of authority to the agency. Usually there are no procedural requirements for the announcement of procedural rules.
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