Administrative Adjudication - Module 4 of 5




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Module 4: Administrative Adjudication

Federal agencies employ adjudication proceedings as an important means of implementing policy. The main alternative approach, rulemaking, is useful for generating broad, widely publicized prospective rules of general applicability. By contrast, adjudication is useful when agencies seek to establish precedent on narrow grounds applicable to particular groups or organizations.

When federal agencies hold adjudication hearings, the hearings are generally presided over by administrative law judges. Administrative law judges are designated agency employees who serve as the finders of fact and decision-makers in adjudicatory proceedings. Officials other than administrative law judges may preside at formal hearings if Congress designates them to play the presiding roles.[1]

After hearing a case, the administrative law judge or another designated presiding official issues a ruling. If the law requires that the hearing take place “on the record”, this ruling is known as an initial decision. Following the initial decision, the petitioner may appeal the ruling to the agency. Should there be no appeal, the initial decision becomes the final, binding decision of the agency.

Impartiality and Bias

As with judges in civil and criminal trials, for parties to receive a fair hearing it is critical that administrative law judges and other agency officials involved in the adjudication process be free of bias. To ensure impartiality and independence, administrative law judges are not supervised by those in the agency responsible for prosecution or investigation of matters before the agency.[2] Likewise, agency employees who are involved in investigatory or prosecutorial functions may not play any role in the adjudicatory decision or the agency review of the decision.[3]

Administrative law judges are hired by a single federal agency, the Office of Personnel Management, rather than by the agencies in which they are to be employed. Additionally, they may only be fired for good cause as determined by another federal agency, the Civil Service Commission.[4] Note that agency heads are exceptions to some of these provisions. An agency head may be involved in the prosecution or investigation of a case and then adjudicate and make a final decision on the case.[5]

The Administrative Procedures Act provides a procedure for a petitioner to challenge the administrative law judge or presiding official on the grounds of bias or prejudice. The petition is filed as an affidavit alleging personal bias or another disqualification, and the agency makes the final determination on the petition as part of the decision in the case.[6] The affidavit alleging bias must be filed in a timely manner. Failure to make an immediate motion to disqualify the decisionmaker can be considered a waiver of the right to do so.[7]

One type of bias which may be alleged concerns the personal or pecuniary interests of the decisionmaker. Holding a financial stake in the outcome of the decision will disqualify an administrative law judge or another agency official from participating in the adjudication.[8] Likewise, decisionmakers will be disqualified if there is sufficient evidence of personal animus towards one of the parties. Prior statements concerning the party or the group with whom the party affiliates may be brought as evidence demonstrating such hostility.  

Statements made by presiding officials during the adjudication are generally not grounds for alleging bias against a party, even when the presiding official criticizes the party’s evidence or rejects the party’s assertions in harsh terms. However, if the presiding officer conducts the hearing with highly irregular procedures, then these may be taken in conjunction with harsh statements as evidence of bias.[9]

Aside from personal animus or holding a financial interest in the case, another source of prejudice which may disqualify a decisionmaker is evidence that the decisionmaker has prejudged facts relevant to the case. For example, a commissioner of a federal agency was disqualified from presiding over a hearing due to public statements he had made while serving in a different position in which he expressed his belief that a company had violated anti-trust laws. Since the same company was the subject of the adjudication over which he was to preside, his previous statements on the matter constituted disqualifying evidence of prejudgment of fact.[10]  

At the same time, publicly expressing an opinion regard law or policy at issue in an adjudication is not sufficient grounds for disqualifying an administrative law judge or another presiding agency official. Developing principled positions regarding an agency’s legal and policy position are an expected and beneficial part of an agency employee’s role. So, it does not necessarily diminish the ability to adjudicate cases fairly.[11]

External parties

Since adjudication hearings follow trial-like procedures, influence from third parties can undermine the integrity of the process. Unlike in the case of rulemaking, the Administrative Procedures Act and the courts have taken steps to insulate adjudication from outside pressures.

For example, parties from outside the agency who have an interest in the resolution of the adjudication may not communicate with the administrative law judge regarding the merits of the case outside the presence of the other party.[12] The prohibition of such ex parte communications applies to all those whose interest in the case is greater than that of the general public.[13] Likewise, the President and the presidential staff are considered outside parties, who may not discuss the merits of an adjudication with agency officials ex parte. This is true even when such communications might be helpful for the agency to receive useful information concerning the agency’s regulatory program.[14]

Should improper ex parte communications occur, the substance of the communication must be placed in the record. It will be up to the court which reviews the agency process to determine whether the nature and degree of the ex parte communication is sufficient to require that the adjudication decision be vacated. In making such a determination, the court should consider whether it is likely that the communication influenced the decision, whether the party who made contact likely benefited from the communication and whether the other party had an opportunity to respond to the substance of the communication.[15]

Note that ex parte communications are only prohibited if they relate to the substance of the adjudication. If the contacts concern procedural issues or requests for status updates, these are not considered to be impermissible contacts.[16]

Finally, the intervention of Congress in agency adjudications may undermine the validity of agency action. In one case, in the presence of agency officials, a congressional committee criticized the initial decision of an administrative law judge which was being reviewed by the head of the agency. The court held that such direct pressure eroded the impartiality of the agency officials involved in the decision-making, and therefore violated the due process rights of the petitioning party.[17] 

The Adjudication Process

As with formal rulemaking, parties must receive notice of a pending adjudication. The notice must contain information regarding the time and place of the hearing, the legal authority under which the adjudication will be held and the substance of the facts and law at stake in the adjudication.[18] The notice also must contain instructions for the party regarding any required submissions to respond to claims to be adjudicated in the hearing.

Federal law does not require prehearing discovery. Instead, fact finding is accomplished through the mandatory disclosure of information by agency officials.  

Parties to the adjudication can also compel witnesses to appear at the hearing through the issuance of subpoenas and may compel the witnesses to present documents at the hearing. Some agencies require the party requesting a subpoena to demonstrate that the evidence being sought is relevant and the scope of the subpoena is reasonable.[19] Some governmental information is also available through the use of Freedom of Information Act requests.[20]

Parties have the right to cross-examine witnesses at adjudication proceedings.[21] The courts, however, have upheld agency decisions limiting cross examination to cases in which a party has made sufficient showing that they are necessary.[22]

The rules of evidence for an agency hearing differ from those of a trial. The general rule for an agency hearing is that any relevant evidence is admissible. Rules limiting the admissibility of evidence in civil litigation, such as the rule against admission of hearsay, do not apply to agency adjudications. Administrative Law Judges may, however, exclude evidence on the grounds that it is immaterial or repetitious.[23]

Generally, the agency may only rely on evidence that is part of the official record when deciding an adjudication. The record consists of testimony transcripts, exhibits and documentation filed over the course of the hearing.[24] If an agency relies on evidence, such as scientific data, which is not part of the official record, this may constitute a violation of due process.[25] However, agency officials may utilize expertise they have gained while serving as adjudicators for specific policy areas to weigh the evidence before them. This may include rejecting the findings of expert testimony as presented in the hearing.[26]

Deciding the Adjudication

A decision issued by an agency conducting an adjudication, including an initial or final decision, must state the findings and conclusions of the decision-maker regarding all matters of law and fact, as well as the basis for the decision. The decision itself may take the form of an order, a sanction, a grant of relief or a denial of any of these.[27]

The requisite statement of findings and reasons provides a basis for a petitioner to decide on the grounds for an appeal for judicial review of the agency’s actions. It can also serve as the basis for the courts to review the decision, should the case be subject to judicial review. The Administrative Procedures Act also provides an opportunity for a party to submit a proposed statement of finding and reasons, and the decision-maker must address the proposed statement in its statement of findings and reasons.

Note than when agency heads simply affirm the initial decision of an administrative law judge, they need not issue a separate statement of findings and reasons.[28]

The courts have imposed a requirement that the agency head, or whoever makes the final determination, be sufficiently familiar with the evidence and arguments presented at trial in order to render a valid decision. This requirement stemmed from a case in which the Secretary of Agriculture made a determination regarding stockyard rates without reading the evidence or arguments presented at the adjudication hearing at which a subordinate presided. The court held that the inattention to the record constituted a denial of the right of the parties to a “full hearing.”[29]

In practice, however, it is difficult to establish a violation of this familiarity requirement to a degree necessary to vacate an agency decision.

Agencies generally follow previously decided matters of law based on the principle of precedent and consistency of policy. However, agencies may overturn prior agency precedent based on new considerations or shifts in policy priorities. When agencies depart from precedent, they must explain the reasons for choosing not to follow previous rulings.[30]

The standard of proof by which a decision-maker decides a case is the preponderance of the evidence standard.[31] This is the standard most often employed in civil litigation, and is generally understood to mean that the weight of the evidence leans more towards one side than the other or that it is more likely than not that the claim presented to the court is meritorious. This standard is in contrast with those requiring more exacting levels of evidence such as “clear and convincing evidence,” which applies to some civil matter, or “evidence beyond a reasonable doubt,” which applies to criminal cases.

The Administrative Procedures Act places the burden of proof on the party seeking the issuance of a rule or order from the presiding decision-maker.[32] So, for example, if the government seeks to impose a civil penalty on a party for violating pollution regulations, the burden would be on the government to prove that the violation took place by a preponderance of the evidence. Conversely, one who seeks an order to have welfare benefits reinstated after the government cut them off bears the burden of proving that he meets the relevant statutory criteria.

Informal Adjudication

Not all agency adjudicatory hearings require the agency to apply all Administrative Procedures Act provisions governing the formal adjudication proceedings. The Act recognizes a class of agency actions known as informal adjudications, which are agency enforcement decisions that are not required to be “on the record.”[33] Since this definition covers a wide array of governmental actions, the category of informal adjudication applies to many more cases than formal adjudication. These cases do not involve trial-type hearings, and the Act requires only minimal procedures and protections for the agency decision-making process.  

These include the right to personally appear before the agency and to be represented by counsel. They also include the requirement of a timely conclusion of the matter, an explanation of a denial of an application or request when relevant and the enforcement of subpoenas when required by law.[34]

In addition, when an informal adjudication involves the revocation or suspension of a license, the Act requires the agency to issue a warning and provide an opportunity for the target to correct the underlying conduct at issue. Note that this warning provision does not apply in cases of willful misconduct or if it involves public health or safety.[35]

Even when the requirements of formal adjudication do not apply, the agency must keep a basic record containing the final order along with agency considerations in making the determination. The record is needed because informal adjudication is subject to judicial review, and the reviewing court needs a basis on which to assess the agency decision.[36]

Note that while courts may not impose additional procedures on agencies conducting adjudications, the agencies themselves may decide to provide formal adjudication procedures even when not required to do so by law.[37]

Finally, since orders or decisions under informal adjudications are government actions which may deprive people of liberty or property rights, the adjudications may be subject to due process protections, including sufficient notice of an adjudication and the guarantee of a neutral decision-maker.[38]

In our last module, we’ll look at judicial review of administrative actions and the extent to which people can sue administrative actors in their capacities as agents of state and federal governments.