APA formal adjudications – the ban on ex parte contacts

1. APAformal adjudications – the ban on ex parte contacts • In formal proceedings, ex parte contacts are prohibited during the entirety of the proceedings. • No “interested person”may knowingly have an ex parte communication “relevant to the to the merits of the proceeding” with “any member of the body comprising the agency, ALJ, or other employee reasonably expected to be involved with the decisional process.” Sec. 557(d)(1)(A) • No “member of the body comprising the agency, ALJ, or other employee reasonably expected to be involved with the decisional process” may knowingly have an ex parte communication “relevant to the to the merits of the proceeding” with an “interested person.” Sec. 557(d)(1)(B)

2. Some specifics about the prohibitions in Sec. 557(d) (1): • Who is an interested person under the statute? • Sec. 557(d)(1) does not prevent random members of the public from occasionally expressing their “casual or general” opinions to agency members about pending proceedings (and vice versa) • It is meant to prevent people with a “special interest in the matter regulated”from communicating ex parte on matters relevant to the merits when such communications might improperly influence the outcome. • What is a matter relevant to the proceeding? • Usually substantive matters related to facts/law being adjudicated • Maybe communications on procedural issues if they affect outcome

3. Ex parte contacts, formal adjudications and the President • Organic statute in Portland Audubon triggered formal adjudicatory hearing requirements of the APA, including prohibition on ex parte contacts • How does court view thelegalityof the communications between members of President Bush’s staffand members of ESC during the pendency of the exemption application? • How does the court treat the President’s arguments that the APA should not apply here?

4. What remedy if an inappropriate ex parte contact has occurred? • Agency must disclose communications on public record: • Written communication, memoranda of oral communications, and any written responses and or memoranda regarding oral responses. Sec. 557(a)(1)(C) • If communication came from a party, presiding agency official can issue show cause order re why the party’s claim or interest in the proceeding shouldn’t be dismissed, denied, disregarded, or otherwise adversely affected. Sec. 557(a)(1)(D) • If proceeding goes forward, reviewing court has discretion to dismiss proceeding. • Will determine whether to dismiss, etc. depending on whether it thinks the ex parte communication had a substantial effect on the agency’s decision or substantially disadvantaged another party.

5. Combination of functions in formal adjudications • Recall Withrow v. Larkin: • Combination of functions – investigation, prosecution, adjudication – does not alone offend constitutional procedural due process requirements • But concerns about bias/undue influence still exist when agency officials engage in all of these tasks during a single case. So: • Legislatures have stepped in to fill some of this void • APA – separates functions and insulates ALJs somewhat • Missouri – In state law administrative issues, Missouri General Assembly created the Administrative Hearing Commission (independent agency that hears appeals from various agencies in certain areas)

6. APA and the separation of functions in formal proceedings – Sec. 554(d) Employee who presides at the reception of evidence shall NOT • Consult any person or party on a fact in issue, unless on notice/opportunity for all parties to participate. • This is in addition to Sec. 557(d)’s prohibition on ex parte contacts with outsiders • Be responsible to or supervised by any employee/agent who investigates or prosecutes for the agency • Conversely, no employee w/ investigation/prosecution functions in that case or a factually related case may participate in or advise in a decision, recommended decision or review of that decision • That employee can participate as a witness or counsel in public proceedings

7. Some exceptions to the APA’s separation of functions • Section 554(d) does not apply to: • Hearings re applications for initial licenses • Hearings re validity/application of public utility or common carrier rates • To the agency or members of the body comprising the agency • Why these exceptions: • In the first two – the agency/regulated entity usually aren’t adversarial despite hearing’s formality • Note – Sec. 557(d) prohibitions on ex parte contacts still apply • In the last – exemption for agency heads or “members” (heads of multi-member agencies) is necessary. • Often have prosecution/investigation duties. Without the exception, they would be unable to (1) sit in review of ALJ decisions or (2) ever supervise ALJs.

8. APA hypos: do the following violate Sec. 554 (assume formal proceeding)? Assoc. Dir. of the CPSC filed a complaint against a crayon manufacturer because the crayons allegedly contained dangerous chemicals. Critical to this prosecution is whether the chemicals found in the crayons “pose an unreasonable danger to the health and safety of” children as required in the applicable statute. • If the ALJ takes evidence and testimony on the issue but still is unclear on some of the scientific issues, can she consult a CPSC scientist for help? • Can she consult a CSPC lawyer for aid in interpreting the statute? What if the ALJ issues an initial decision in favor of the CPSC and the manufacturer appeals. After the appeal is heard and still pending, CSPC Commissioner A talks to the Associate Director about the pending case. • Have either of them violated the APA?

9. Separation of functions and Missouri’s Administrative Hearing Commission • Missouri Administrative Hearing Commission exists as an independent agency that can hear certain kinds of cases • AHC hears appeals/original claims arising from various agencies in contested licensing cases, tax cases, some personnel disciplinary issues and other miscellaneous issues • Contested case = adversarial hearing similar to APA formal adjudication • See Mo. Rev. Stat. § 536.010(4): contested case = proceeding before an agency in which legal rights, duties or privileges of specific parties are required by law [statute, regs or constitution] to be determined after [adversarial] hearing.” • Contested hearings before the AHC provide some separation of functions from the initial prosecution/investigation (and sometimes initial decision)

10. NEW TOPIC – agencies & the courts • The relationship between agencies and courts is primarily defined by the review that courts engage in when aggrieved parties challenge agency action. • Given that Congress has delegated a great deal of authority to agency officials to make policy, what role should/do judges have in policing agency decisions? • We will study two primary areas: • What standards of review do courts use? • What barriers to judicial review are there?

11. Start first by looking at judicial review of lower court decisions An appeal from a lower court decision involves an identifiable dispute and lower court hearing. Depending on whether a bench trial, motion practice or jury trial is at issue there may be different findings. They involve different review standards: • Standard of review • Review of what? • Lower court legal conclusion • Lower court fact finding • Lower court evidentiary/procedural rulings • Jury fact finding • De Novo • Clearly erroneous • Abuse of Discretion • Deference/jury standard

12. Challenges to agency action are different • Challenges can arise from agency actions that are like court proceedings • Will likely involve findings of fact and conclusions of law • But many challenges arise from the agency’s enactment of a particular rule • These MAY involve findings of fact (rarely if informal rulemaking) • Often, however, challengers argue that the agency has no authority to make the rule or the agency has misinterpreted a statute or the rule is arbitrary and it should be overturned • These are very different types of challenges • Finally, agencies engage in actions that don’t look like rulemaking or adjudication – e.g., Secy’s release of funds in Overton Park • How do you challenge that action or can you challenge that action?

13. The purpose of judicial review re courts and agencies • Appellate courts use different standards of review because they have different purposes when reviewing law & facts – i.e., allocating decision-making authority between lower courts/jury or appellate courts. • Judicial review of administrative decisions has the same goal – allocation of decision-making authority to either the reviewing court or the agency • But the reasons for that allocation are different because the nature of the action challenged can be so different from a lower court hearing • Tend to see substantially increased deference with judicial review of agency decisions.

14. Overton Park & Sec. 701 • APA '' 701, 702 & 704 are the primary statutes providing that judicial review is available to challenge agency actions. • Sections 702/704 generally provide that anyone aggrieved by agency action is entitled to judicial review. • Section 701 also provides that judicial review of agency action (see §§ 702 & 704) is available UNLESS: • Judicial review is precluded by statute (§ 701(a)(1)) • Why isn’t judicial review precluded in Overton Park? • Agency action is committed to agency discretion by law (§ 701(a)(2)) • Why does SCT rule the Secy’s action is not committed to agency discretion?

15. Overton Park and the feasibility of judicial review • Why should we infer from congressional silence in specific highway funds statutes that judicial review of the Secretary’s decision to release highway funds is available/appropriate? • Does this kind of action (releasing highway funds) lend itself to judicial review? • What barriers are there to judicial review? • Why might judicial review be important anyway?

16. APA standards of review – section 706 Which standard(s) of review did SCT find appropriate to discuss in Overton Park? APA ' 706 requires “reviewing court shall. . . . (2) hold unlawful and set aside agency actions, findings, conclusions of law found to be (A) arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law; (B) contrary to constitutional right, power, privilege or immunity’ (C) in excess of statutory jurisdiction, authority . . . ; (D) without observance of procedure required by law; (E) unsupported by substantial evidence if a case subject to §§ 556, 557 [(i.e., an on-the-record proceeding)]; (F) unwarranted by facts to the extent the facts are subject to trial de novo by reviewing court; …”