I. Introduction - ADMINISTRATIVE PROCEDURE ACT (APA)

(1) Judicial Review - (what standards apply and when it is available) § 701- 7063

Four decision making procedures that agencies can or must use:

1. Formal adjudication - §§ 554-557

a. “Decision on the record after an opportunity for an evidentiary agency hearing.”

b. Outside consultants must provide all parties the opportunity to participate

c. Judicial Review- § 702: Anyone wronged by final agency action is entitled to review

2. Informal adjudication - § 555

3. Informal Rulemaking - (three step process: notice, comment, final rule) - §553

a. Notice: Publication in the Federal Register

b. Comment: Industry participation and consideration of proposed rule

c. Issuance: Final rule accompanied by reasons and rationale

4. Formal Rulemaking - §§ 553, 556, 557

(2) Competing analysis/paradigms - the act doesn’t really tell an agency when to use one procedure or another: Some can be likened to any of these three: (1) Judicial; (2) Trial Legislation; (3) Bureaucracy - increasingly courts are using the analogy of some of each.

Congress President Courts

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Agencies

Agencies are subservient to the 3 branches, however, each has some degree of control over the agencies. It varies w/ the decision-making context.

II. AGENCY ADJUDICATIONS

(1) APA §§ 554-557 - (There are almost 120 million agency adjudications a year, so the act describes a procedure that combines all elements above for the sake of efficiency). The APA says that procedures (formal) under §§ 554-557 only apply to “decisions on the record after opportunity for agency hearing.” If the statute doesn’t specifically say that the APA applies,

1. You have a right to a lawyer

2. You have a right to a brief reason for denial

3. You have a right to any documentation you have submitted

(2) Other Sources of Agency Law:

1. The agency itself - may have its own internal reason for procedural safeguards or there may be congressionally mandated rules.

2. Due process Clause - how much due process can be limited before it deprives a person of “life liberty and property.”

III. Adjudicatory Due Process

(1) Supreme Court: The government can’t deprive a person of “life liberty or property.” w/o the due process of law.

(2) Due Process Rights –Individualized Facts v. Class of Persons (legistlative)

a. Londonner v. Denver (Individualized Rule Enforcement): The city of Denver sends P a notice that the agency has determined his property has increased in valued, and therefore P must pay the increase in property taxes. P demanded a hearing to bring forth and contest evidence. The city denies P a hearing and threatened seizure. P brings suit. H: Supreme Court says that due process entitles P to some kind of hearing. The city is clearly trying to deprive P of property w/o due process, bases on contested evidence of an increase in property value. R: Where there is deprivation based on individual facts, due process with some hearing is required.

b. Bi-Metallic Investment v. Denver (Community-based Rule Enforcement): Another Denver resident is notified that his property taxes are to increase, b/c of rising administrative costs. P brings suit and demands a hearing. H: The Supreme Court holds that Londonner has no application to this case b/c the prior case was based on the claim that the property had increased on value, and this is about a tax that is levied on an entire class of persons (generalized legislative facts). Therefore, the P’s claim is more appropriately adjudicated in the political arena. R: In contrast to Londonner, a government decision that imposes a burden on a class of persons, based on facts that is in the realm of the legislature, does not entitle an individual to rule of law or due process, only access to the political process.

A. Outside Boundaries of Due Process Rights

Goldberg v. Kelley (Supreme Court): NY residents receiving welfare from a federal aid program (AFDC) didn’t receive a hearing or notice prior to the termination of their aid. P’s challenged the constitutionality of those procedures b/c there was no opportunity for the recipient to appear personally, for examination or cross examination. Holding:

(1) Statutory Entitlements like welfare benefits are considered property;

(2) Due process requires a recipient to receive a full pre-termination oral evidentiary hearing (b/c waiting until after directly affects the livelihood of the recipient). The court holds that the govt.’s interest in fiscal conservation does not override in the welfare context b/c they can be prevented thru efficient pre-termination hearings;

(3) Type of Hearing- The hearing doesn’t have to be a judicial one; it must provide an initial determination (no need for a record, comprehensive opinion

(4) Note: AFDC replaced with TANF that says in that statute. does not give the individual a property right .

B. Matthews v. Eldridge Test

Matthews v. Eldridge (Supreme Court): A pre-termination hearing is not required prior to the termination of disability benefits b/c the present administrative procedures comport with due process. The procedure used by the agency to cut of social security disability benefits was similar to Goldberg, in a hearing was only required post-termination. The court finds that the plaintiff is not entitled to the pre-termination hearing because social security benefits are different than welfare benefits in that they are not means tested (not based on income - in Goldberg it was about depriving a person’s means w/ which to live), welfare beneficiaries are generally less educated, while the disability recipient does not need to articulate his/her side because the doctors do most of the work) Therefore unless it is like the elements of Goldberg, i.e. sheer livelihood, and no way to articulate in writing, etc, an oral hearing is not required. R: The court used an interest balancing 3 factor test to see is a pre-termination hearing is required. (these are highly subjective and very difficult to apply, however)

(a) The importance of the interests at stake.

i. Welfare (“critical aid”) v. Disability

(b) Risk of error through the use of procedures made available and incremental value of additional procedures.

i.Goldberg: Decision based solely on eyewitness testimony- high error risk

ii. Matthews: Written medical reports “reliably” described condition- no error risk

(c) The governmental interest in procedural efficiency (the cost of additional procedures)

i. Financial burden alone is not enough

ii. Must consider administrative costs

C. Modern Test (Roth Two-Step)

(1) Determine if Due Process Applies: Life, Liberty or Property Interest

a. Is there a property right? You need to see if:

1. There is a statutorily conferred benefit on a class of persons (entitlement) or a job that is in a statute where you can only be fired for cause.

(a) Goldberg where the statute confers an entitlement

2. There is a contract (employment contracts/personal services), or

(a) Board of Regents v. Roth , Perry v. Sinderman 1972: Professors not rehired where 10-year prof at non-tenure college ( Perry ) and two year at will prof where took four to get tenure ( Roth ). H: Court draws distinction between mere unilateral expectation to continue work (Roth) AND a justifiable expectation to continue (Perry)

(b) Loudermill: Termination of a public school teacher where statute describes that discharge procedures but you only have a post-deprivation hearing. Loundermill is fired & says they should provide a hearing before terminating me. The state responds with “bitter w/the sweet” & then the state says a full post-deprivation hearing afterwards must be enough. H: Bitter with the Sweet Dead! Due Process (procedures) doesn't get decided by the legislature, but by the courts. Teacher entitled to some pre-termination hearing - even if not full evidentiary - just to contest decision in someway before being fired.

i. Rehnquist’s “bitter with the sweet”= If the legislature determines a right or entitlement exists then they determine the procedural scope.

3. State common creates a property interest

4. There is a real property interest

b. Is there a liberty interest?

1. Freedom from Official Stigmatization coupled with deprivation of a tangible interest.

(a) Constantineau: Authorities publish a list of known drunks and says don’t sell booze to anybody on the list. H: The Supreme Court says Government can’t deprive you of your reputation without first providing you with due process (ability to say you are not known drunks).

(b) Paul v. Davis: List of known shop-lifters sent to stores. H: The court says in constantineu we weren’t concerned about stigmatization. We were concerned about stigmatization and depriving him of ability to get booze.

2. Liberty can include any other constitutionally protected interest (think bill rights)

(a) Roth - can't be punished for exercising a liberty interest (free speech)

i. If fired for no reason or in a way that doesn't hurt reputation, no protected interest.

3. Applies in Government employment cases where people are canned for religious beliefs even though they were “at will.”

(2) Apply the Matthews v. Eldridge factors

a. The importance of the interests at stake.

b. Risk of error through the use of procedures made available and incremental value of additional procedures.

c. The governmental interest in procedural efficiency (the cost of additional procedures)

*******You might distinguish and apply Goldberg if deprivation truly affects a person’s basic livelihood*********

D. Federal Statutory Hearing Rights

(1) Finding a Hearing Right

a. Florida East Coast Railway: The ICC raises rates on RRs based on resolution of contested legislative facts - what does "hearing" mean (congress gave ICC power - w/ hearing and considering certain facts). They can only take this action “after a hearing.” ICC - hearing occurred by giving notice and allowing RR to submit information, etc. - after that ICC raised rates. RR claims no hearing and due process violated

(a) The Sup. Ct says that “hearing” in 553-4 (informal rulemaking) is an ambiguous term and you only need:

(1) Notice of intention;

(2) Some opportunity to submit views (written); and

(3) Conclusions on why / reason by gov’t (does not have to include cross-examination).

(b) The court distinguishes btw APA 553 “hearing” and 556-7 “hearing” that only applies where statute “on the record after opportunity for an agency hearing.”

(c) Presumption favoring informal procedures is only overcome by strong evidence of Congressional intent to require formal rulemaking.

i. Note: Under Chevron, Sup. Ct says that any ambiguous term that is defined by the agency in particular way and provides an explanation then the agency wins (now they can define hearing).

b. Yamasaki: SSA must recoup overpayments from the applicant unless it was without fault or the recoupment would be inequitable. SSA determines whether you were at fault through written submissions.

(a) Avoid constitutional issues IF can resolve issue on Statutory Basis (avoidance canon)

(b) SSA not require hearing to determine if recipient overpaid BUT NEED a hearing to determine if recipient was without fault and to determine equity

i. Significant impact on private party with little added administrative burden

ii. Risk of Error: Imperfect factual judgment by Secretary- 30% later reversed

(2) On-the-Record Adjudicatory Process

1. Agency head may receive evidence otherwise inadmissible by FRE (like hearsay—APA § 556 – “all relevant evidence” allowed).

(a) Richardson v. Perales: Disability hearing (post-deprivation) where ALJ gets evidence from five specialists who are not present—classic hearsay. The ALJ rules against applicant even though he testified. H: Agency can admit such evidence if it is reliable and useful. An agency can base a finding of fact exclusively on hearsay even when Pedro & his doctor are the only truly admissible evidence as along as the hearsay evidence is reliable.

i. Can subpoena witnesses (like 5 specialists) to cross them, but if not subpoenaed, then no right to cross

(1) ALJ discretion whether to grant subpoenas

2. Res Judicata: If an issue of adjudicated fact (labor dispute) is decided, res judicata is applied.

(a) For legislative facts, the agency must be able to come back and make new decisions (ex--relationship btw thermal pollution or effects on aquatic life).

i. Make sure it is the same facts (disability for same person in 2003 v. 2005—no RJ)

3. Stare Decisis: Agencies are not bound by precedent, but must explain why it is not adhering to precedent (standard to overturn=arbitrary and capricious).

4. Collateral Estoppel:

(a) Issue of Fact: Collateral Estoppel precludes an individual from re-litigating:

(1) If it the same issue of fact

(2) The agency provides enough procedural safeguards (circuit split):

a. Some courts demand court like procedures (cross/evidentiary hearing)

b. Some courts only ask for due process

(b) Issue of Law:

(1) Collateral Estoppel applies if an agency makes a determination of the applicability of some law to a person, the agency is bound to that decision. It is not bound to that decision with respect to any other person.

i. No Collateral Estoppel for legal/policy issues

ii. No Collateral Estoppel against the gov’t.

5. Equitable Estoppel: No equitable estoppel against the gov’t (no case has ever found EE for gov’t—maybe in a case of gross intentional misrepresentation)

(1) IRS hotline and Federal Crop Insurance—even where the gov’t misinforms you no EE.

6. Agency non-acquiescence: Agency has to follow the orders of a court in a particular case, but does not have to follow the ruling of the court in similar cases. Judges hate this practice.

(3) Formal Adjudication and Bureaucratic Decision-Making

1. General

a. Bureaucracy v. adjudication

i. Adjudication: Court style where get an independent, detached view by the judicial mind to aid the individual

ii. Bureaucracy: Wants to find efficient, low cost way to maximize accuracy and consistency (no focus on individual)

b. Individual Decision (judge) or Institutional Decision (bureaucrat)

i. APA 554-557: highly independent judges & impossible to discipline.

ii. APA 557(b): agency can substitute its own opinion and findings of fact for the ALJ’s decision and they do that a fair amount.

iii. Then you look at 706(2)(E): Court must uphold the agency’s findings of fact if they are based on substantial evidence. Deference to the agency not the ALJ.

2. Separation of Functions

a. Agency Decision making model (merging functions): the agency makes the rules, enforces the rules, investigates violations, prosecutes violations, and then adjudicates.

b. APA Model v. Split Enforcement Model

i. APA: Functions merged with separation within agency. ALJ adjudicates, bureaucrats investigate and prosecute, agency head can overrule ALJ.