Statutory procedural requirements for adjudications – the APA framework

1. The consequences of the Supreme Court’s Due Process jurisprudence – statutory procedural protections • As a result of the Mathews v. Eldridge balancing, the pre-deprivation hearing required to satisfy due process need not be all that formal. • You must be given such a “hearing” after adequate notice – but it might not look like an adjudicative hearing. • Thus, most requirements that an agency have an adjudicative-type hearing come from statutes (APA or organic) or the agency’s own regulations.

2. Statutory procedural requirements for adjudications – the APA framework Formal – Sec. 554, 556, 557 Informal – Sec. 555(e) Prompt notice shall be given of denial in whole or part of a written application . . . of an interested person made in connection with any agency proceeding. Unless the agency is affirming a prior denial or the denial is self-explanatory, notice of denial must contain brief statement of the grounds for denial. • Notice of agency hearing(§554(b)) • Separation of investigation and adjudication functions (§554(d)) • Right to submit oral/written evidence and to conduct cross-ex (§556(d)) • Initial decision by an ALJ, the agency, or qualified agency employee (§556(b)& 557(b)) • No ex parte contacts with interested persons (§557(d)) • Decision based on findings of fact, supported by substantial evidence and conclusions of law (§557(c)) • Decision is appealable to the agency head(s) (§557(b))

3. So when are the “formal” adjudicatory procedures of APA Sections 556 & 557 triggered? • Section 554(a) – the formal requirements of Sec. 556 & 557 apply “in every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing.” • Portland Audubon notes 3 things are required to trigger Section 554’s (and thus, Sec. 556/557’s) formal requirements • Adjudication • Required to be “on the record” • After “opportunity for agency “hearing” • What do these terms mean & why does it matter in Portland Audubon? • ESC granted BLM an “exemption” re several tracts of forest so logging could occur; Environmental group appealed because of harm to spotted owl and argued that proceeding was covered by formal provisions of APA

4. “Adjudication” – was there one in Portland Audubon? • Endangered Species Act § 1536 : • Any agency wanting to engage in actions otherwise prohibited by ESA (destruction of habitats of threatened species) must apply for an “exemption” from the ESA. • “Exemption” application is submitted to Sec’y of Interior who “in consultation w/ E.S. Committee” must hold a formal hearing and prepare a report to the Committee regarding the issues • The ESC must grant the exemption if it determines “on the record based on the report of the Sec’y, the record held of the Sec’ys] hearing,” and “such other testimony or evidence as it may receive” that exemption was warranted (§1536(h)(1)) • Why is the exemption process an adjudication according to the 9th Circuit?

5. 9th Circuit reasoning re adjudication & some other thoughts • The ESC’s decision to grant an exemption was an adjudication: • Because it involves “adjudication of facts in particular cases” (unlike rulemakings which involve “policy judgments to be applied generally in cases that may arise in the future”) • Sounds a lot like the Londoner/Bimetallic definition of adjudication although those cases do not apply here • APA definitionsalso explain outcome: • Rule: any agency statement of general or particular applicability/future effect designed to implement ... law or policy [or procedure] (§ 551(5)) • Adjudication – the agency process for the formulation of an order (§ 551(7)) • Order – the whole or part of a final agency disposition [that results from something] other than rule-making (§ 551(6)) • The decisions in PAS were clearly not general policymaking – so by default they were adjudications

6. Portland Audubon – the requirements of “on the record” after “opportunity for agency hearing” • Hearing: • Statutes usually clearly set out “hearing” requirement in the text • In Portland Audubon, although the term “hearing” wasn’t used directly re ESC’s “exemption” determination, that decision amounted to a hearing “at least in part.” This was presumably true because it was in conjunction with Secy’s report & Secy’s original hearing was also a formal adjudication. • On the record: • Textually, §1536(h)(1) of the ESA required an “on the record” determination re the exemption, which the Portland Audubon court found triggered APA Sec. 554, 556, 557 • Unlike Portland Audubon, mostcases involve statutes clearly requiring a “hearing.” The primaryquestion is whether the statute sufficiently indicates an “on the record” requirement to trigger APA’s formal adjudication requirements. • Do courts follow the FECR/Allegheny-Ludlum Steel approach that SCT used with rulemakings or do they do something else?

7. Three competing judicial approaches to interpreting vague “hearing” requirements in statutes – how do courts deal with the “triggering” issue? • Courts presume that the term “hearing” in a statute providing for adjudicatory hearings = formal “on the record” hearing under APA UNLESS there is clear congressional intent otherwise (Marathon Oil p. 660) Reasoning – adjudications are fact specific & contextual & due process concerns are significant enough that a court can presume Congress wants formal hearings w/ adjudications absent some indicated intent for informal procedures • Courts presume that the term “hearing” in a statute providing for adjudicatory hearings does not trigger formal APA hearing requirements unless appropriate language akin to “on the record” is used Essentially same approach as in FECR/Allegheny-Ludlum Steel • Courts will defer to agency interpretations of statutory “hearing” requirements if the courts deem the term “hearing” to be ambiguous and the agency’s interpretation of what procedures are required is reasonable Essentially a Chevron deference approach (Chemical Waste Mgmt. p. 660)

8. How a typicalformaladjudication hearing proceeds – a generalframework & timeline: • Initiation of the Proceeding • Who initiates depends on type of proceeding • Notice of agency hearing - Sec. 554(b): • Time/place of hearing, legal authority/jurisdiction, matters of fact/law asserted • Individualized notice is required; notices will often look like a complaint because of this last requirement - in fact, they often are called “complaints” – see, e.g., Cinderella Career & Finishing Schools. • Hearing: • Agency(e.g., head(s) of agency), member of the agency (e.g., one of the commissioners), or ALJ shall preside at the hearing - (Sec. 556(a)) • Presiding individual shall provide opportunity for parties to present • Oral or documentary evidence, rebuttal evidence, cross-examination - Sec. 556(d) • Presiding officer has significant power to collect evidence – Sec. 556(c)

9. How a typical formal adjudication hearing proceeds – a general framework, continued: The Decision and Appeals W/in the Agency • When the agency did not preside at hearing (which is almost always the case), the person presiding shall issue either an initial or tentative decision • Prior to either of these decisions, the parties can submit proposed findings or exceptions – Sec. 557(b)&(c) • If the decision was an initial decision, it becomes final if there is no appeal to the agency • If there is an appeal to the agency, it will be treated much as a judicial appeal – i.e., based on a defined record - Sec. 556(e) • BUT the reviewing agency has the same powers as the initial decision maker (unless it limits the issues by notice or rule) so it can accept or reject their findings as it wants - Sec. 557(b) • If decision was tentative, it automatically goes to the agency for final decision • Again, the agency will make its decision based on the record in Sec. 556(e) although it can accept and reject findings as it wants

10. APA’s prohibition on ex parte contacts in formal adjudications • One significant aspect of the use of formal proceedings is that ex parte contacts during the entirety of the proceedings (in the previous slides) are prohibited. • 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)

11. Some specifics about the prohibitions in Sec. 557(d) (1): • Who is an interested personunder the statute? • APA Sec. 557(d)(1) does not prevent random members of the public from occasionallyexpressing their “casual or general” opinions to agency members about pending proceedings (and vice versa) • But it was designed to prevent people who have 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: • Ex: parties, competitors, public officials, nonprofit or public interest organizations • What is a matter relevant to the proceeding? • Usually substantive matters related to facts/law being adjudicated • But possibly communications on procedural issues fall into this category if they can affect outcome

12. Ex parte contacts, formal adjudications and the President • The organic statute in Portland Audubon triggered formal adjudicatory hearing requirements of the APA • Including the prohibition on ex parte contacts • What is the legality of the communications between members of President Bush’s staff and members of ESC during the pendency of the exemption application? • Bush White house had summoned members of the ESC to the White House to pressure them to vote for the exemption

13. Sec. 557(d) (1) applies to the President • President is a “public official” normally thought to be an interested person (assuming he otherwise meets the reqm’ts of Sec. 557(d)(1)) • For purposes of adjudication, court refuses to equate the President and the agency. • Court rejects govt’s argument that because the President IS the agency he is NOT an “an interested person.” • Note how govt’s argument is based in “unitary executive” theory – President can control the actions of his executive subordinates • Court rejects argument for 2 reasons: • Courts have allowed President to exert political influence through ex parte contacts only in rulemakingcontext • There is no separation of powers problem in preventing President from interfering with agency’s adjudicative role; even Myersalluded to restrictions on President’s right to interfere with executive’s adjudicatorypowers.

14. What remedy if an inappropriate ex parte contact has occurred? • Agency must disclose communications on public record including: • Written communication, memoranda of oral communications, and any written responses and or memoranda regarding oral responses. Sec. 557(a)(1)(C) • If the ex parte communication came from a party, presiding agency official can issue an order to show cause 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.