Drafts posted on this web site express the views of the respective reporters who have written them. The positions contained in these drafts have not been approved by the Council of the Section of Administrative Law and Regulatory Practice, and they should not be ascribed to the American Bar Association, the Section or its officers.
Croley drft/June 30, 2000
HEARING REQUIREMENTS
a. Basic Requirements
Hearings required to be conducted under the APA, as outlined in Section __ above, must follow the procedures outlined in APA section 556. In general, section 556 provides that one or more agency employees or administrative law judges attend and preside over a hearing, and that those presiding direct the course of the hearing by administering oaths, issuing subpoenas, ruling on evidentiary matters, accepting depositions, and otherwise overseeing the hearing process, including settlement.[1] Section 556(d) addresses the burdens of proof and persuasion, stating for example that the proponent of a decision bears the burden of proof, and that decisions must be supported by reliable, probative, and substantial evidence. Subsection (d) further provides that a party is entitled to present its case by oral or documentary evidence, as well as to submit rebuttal evidence and conduct cross-examination. Finally, section 556(e) provides that the all testimony and exhibits constitute the exclusive record for the purposes of the adjudication decision. While section 556 thus provides a general outline for the hearing process, it also plainly contemplates that agencies themselves will establish many of the particulars of that process.[2] Consequently, actual agency practices vary somewhat. Notwithstanding such agency variation, however, courts have provided further guidance on the essential, if sometimes implicit, requirements of section 556, as the following subsections explain.
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b. Openness
i. Open Hearings
As a general matter, agency hearings must be open to the public. There is not a great deal of case law concerning the requirement that as a general matter agency hearings shall be open to the public. Yet there appears to be little doubt surrounding the matter. One Supreme Court case often cited in connection with the requirement is FCC v. Schreiber,[3] in which the Court refers to a general policy favoring disclosure of administrative agency proceedings.[4] Other courts have held that where a partys liberty or property interests are at stake, due process requires that agency decisionmaking processes be open to the public and the press.[5] The requirement that agency hearings be open to the public has been characterized more generally as one of countless manifestations of a public policy centuries old that judicial proceedings, especially those in which the life or liberty of an individual is at stake, should be subject to public scrutiny, not only for the protection of the individual . . . but also to protect the public from lax prosecution.[6] The exact source of the requirement, however, is less clear. For example, at least one court has stated that the requirement of an open, public hearing for judicial processes cannot be seriously questioned, adding that this rule in favor of openness prevails, if not by statutory mandate, then by regulation or practice.[7] APA section 556 does not specifically state that hearings must be open, but the very idea of a hearing comparable to other types of judicial proceedings all but implies norms of openness.
APA section 557(d)s prohibition of ex part communications during the course of a hearing,[8] while advancing separate values as well, itself reflects this preference for open hearings. In fact, courts sometimes identify the values counseling against ex parte communication and those favoring open hearings in the same judicial breath.[9] Accordingly, if ex parte communications do occur, they must be disclosed in the public record.[10]
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ii. Closed Hearings
Notwithstanding the general policy favoring open hearings, courts have held that agencies may close hearings to protect potential spectators, for reasons of confidentiality, or to protect witnesses or parties to a hearing.[11] Even in such circumstances, however, courts have stated that the presiding administrative law judge may take only the most limited action necessary to sufficiently protect the interest perceived to be paramount to the interest of the public in an open hearing.[12] Moreover, the mere assertion by a party to a hearing that confidential information would be disclosed by an open hearing does not obligate the agency to close a hearing. Rather, the agency enjoys discretion in determining whether to close all or part of a hearing.[13]
c. Burden of Proof
i. General Rule
The burden of proof with respect to any decision rests with the proponent of that decision. APA section 556(d) allocates the burden of proof to the proponent of an order (and in the context of formal rulemaking conducted under 556, the proponent of a rule).[14] It is clear that, absent countervailing constitutional constraints, Congress enjoys the power to prescribe rules of evidence and to establish standards of proof for federal courts and agencies.[15] Section 556(d) constitutes an exercise of that power. In operation, this allocation of the burden of proof may mean that a private party carries the burden, or instead that the government does, depending on the context. Applicants for disability benefits, for instance, constitute an example of the former,[16] whereas an agency prosecuting a violation of rules constitutes an example of the latter.[17]
ii. Alternative allocation of burden of proof
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At the same time, however, section 556 allows that the burden of proof may be allocated otherwise by statute.[18] In other words, under section 556 a moving party bears the burden of proof by default, mutable by other legislation.[19] This default rule is probably also mutable by agency regulation, not only by statute, if an agency possesses statutory authority to so alter it. In such a case, the burden of proof would not be otherwise provided for by statute strictly speaking; rather, the statute would authorize the agency to provided for a different allocation.[20] Moreover, section 556 does not preclude an agency from placing the burden of proof on a non-moving party for the purposes of that non-moving partys affirmative defense.[21]
iii. Burden of proof/burden of persuasion versus burden of production
Although section 556 refers to the burden of proof, regrettably the meaning of that term is defined nowhere in the APA. Traditionally, if without perfect clarity or consistency, courts have distinguished between the burden of proof and the burden of production, although the term burden of proof is often used loosely to encompass both. Where distinguished, the burden of proof refers to whom must make some showing to a decisionmaker in order to prevail, often also called the burden of persuasion or the risk of nonpersuasion, whereas the burden of production, sometimes also called the burden of going forward with evidence, refers to which party must produce evidence with respect to some question. While these distinct burdens are often borne by one and the same party, at times one party may have the responsibility to step forth with evidence concerning some issueburden of productionwhile the other party simultaneously maintains the responsibility to satisfy the decisionmaker that some threshold for making a finding is metburden of proof or burden of persuasion.
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In an important recent Supreme Court case on this subject, Greenwich Collieries v. Maher Terminals,[22] the Court undertook to define burden of proof for the purposes of the APA. Canvassing the various historical meanings of the term, including the distinctions mentioned above, in the course of concluding what the understanding of burden of proof would have been when the APA was passed in 1946,[23] the Greenwich Collieries Court concluded that while the considerable ambiguity surrounded the term in 19th and early 20th centuries, by 1946 the ordinary meaning of burden of proof was the burden of persuasion, as distinct from the burden of going forward.[24] According to the Greenwich Collieries Court, by 1940 the Supreme Court itself , the Courts of Appeals, writers of evidence treatises, and even Congress had consistently followed an earlier decision of the Court, Hill v. Smith,[25] which confined burden of proof to burden of persuasion.[26] Thus: [W]e conclude that as of 1946 the ordinary meaning of burden of proof was burden of persuasion, and we understand the APAs unadorned reference to burden of proof to refer to the burden of persuasion.[27] In reaching this conclusion, the Court explicitly departed from the contrary conclusion reached in an earlier Supreme Court case, NLRB v. Transportation Management Corp.,[28] as well as lower court cases that burden of proof in 556(d) properly refers only to the burden of production.[29] In fact, by the time of Greenwich Collieries, there was considerable authority in the Court of Appeals for the proposition that section 556(d)s burden included only the burden of production, not the burden of persuasion,[30] and no authority to the contrary post the Courts Transportation Management decision (in 1983). The Greenwich Collieries Court furthermore concluded that the Senate and House Judiciary Committees Reports accompanying the APA, both of which referred to the burden of coming forward in explaining the language of 556(d), were imprecise and only marginally relevant.[31] Whatever the ultimate merits of the Greenwich Collieries,[32] the decision certainly was at odds with the majority wisdom among the commentators, who believed first that section 556(d)s burden of proof meant only the burden of production,[33] and furthermore that section 556(d)allowed agencies to determine who bears the burden of persuasion, a determination that should depend upon varying circumstances and policy considerations.[34]
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Illustration:
Agency issues rule according to which a claimant for workers disability will prevail on the claim if the evidence in support of claim is in equipoise with evidence in opposition to the claim. Agency rule requires claimant to introduce evidence in support of claim, but then effectively shifts burden of persuasion to agency by requiring agency to produce evidence against the claim that outweighs claimants evidence. Under Greenwich Collieries, the agency rule is invalid as inconsistent with APA section(d) allocation of the burden of proof.
iv. Burden of proof/burden of persuasion versus standard/degree of proof
One can distinguish further between the burden of proof, on the one hand, and the standard of proof or degree of proof on the other, although here again sometimes the former is used imprecisely to refer to both.[35] Here the distinction concerns who must satisfy the decisionmaker to reach a decisionagain, the burden of proof or persuasionas opposed to the point of threshold confidence that a decisionmaker must have before making a decision favorable to that party. Thus in criminal cases the state bears the burden of proof (or persuasion), while the standard (or degree) of proof is beyond a reasonable doubt; similarly in civil cases the plaintiff bears the burden of proof and the standard of proof typically is by a preponderance of the evidence.
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With respect to the standard of proof required of the proponent of a formal order, the Supreme Court held in Steadman v. SEC,[36] this time relying heavily on the House Judiciary Report,[37] that section 556(d) requires a party to meet its burden of proof by a preponderance of the evidence.[38] This standard is greater than the substantial evidence standard, yet lesser than the clear and convincing evidence standard. Preponderance of the evidence, moreover, concerns comparative probabilities, rather than for example comparative amounts of evidence; in probabilistic terms, the standard would translate to a more probable than not standard. In Steadman, the Court explicitly rejected any interpretation of 556(d) requiring a party to meet its burden by a standard higher than the preponderance-of-the-evidence standard.[39] Lower courts too have applied the preponderance-of-the-evidence standard, similarly stating that such a standard is contemplated by section 556(d).[40] Where, however, Congress has required a formal hearing outside of the APA and has not specified a standard of proof, courts have not been reluctant to supply one.[41]
Illustration:
Agency brings disciplinary proceeding under APA against party for violation of securities laws. Effect of unfavorable decision would be to bar party from engaging in business transactions relating to securities for three years. Given importance of the partys interests at stake and the seriousness of the consequences of an adverse decision, party argues that agency must demonstrate violations by clear and convincing evidence, rather than merely by the traditional preponderance-of-the-evidence standard. Party loses before agency employing preponderance-of-the-evidence standard. Party seeks judicial review. Agency prevails.
v. Implied symmetrical burden borne by party advocating contrary result
When two or more parties are simultaneously proposing starkly incompatible results, each side bears the burden of proof as concerns its own proposed order. That is to say, neither side stands to benefit from the fact that the other side bears the burden of proof with respect to the outcome it seeks. As explained in the Senate Judiciary Committee Report, in specific reference to the operative language of section 556(d): That the proponent of a rule or order has the burden of proof means not only that the party initiating the proceeding has the general burden of coming forward with a prima facie case but that other parties, who are proponents of some different result, also for that purpose have a burden to maintain.[42] This multiple burden of proof typically arises in the licensing context, where competitors for a license both must show that they are best situated for the license. Having said this, it is conceptually unclear how more than one party can fully bear the burden of persuasion, for as noted above strictly speaking that burden allocates the risk of nonpersuasion to the party who bears it; unless a licensing agency is prepared to withhold a license from all applicants, more than one party cannot bear the risk of nonpersuasion.[43]
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d. Rules of Evidence
i. Inapplicability of Federal Rules of Evidence
Agency adjudication need not conform with the Federal Rules of Evidence. APA section 556 contains three specific references to evidence. First, section 556(c)(3) states the agency employees presiding over a hearing may receive relevant evidence (emphasis added).[44] Second, section 556(d) provides that an agency shall provide for the exclusion of irrelevant, immaterial, or unduly repetitious evidence (emphasis added).[45] Finally, section 556(d) also requires that agency hearing decisions be supported by and in accordance with the reliable, probative, and substantial evidence (emphasis added).[46] Nowhere does the APA condition agency receipt of evidence in a hearing on the conformity with the Federal Rules of Evidence. Accordingly, agencies have not considered themselves bound by the Federal Rules of Evidence, a determination the federal courts have sanctioned. As a result, courts have described the upper bounds on an agencys discretion to accept into evidence whatever the agency sees fit with terms like probativeness and fundamental fairness,[47] and have stated that an administrative law judge as the power to make reasonable determinations as the admissibility of materials. In operation, this means that an agencys decision to accept any evidence the agency deems appropriate is limited largely if not only by an abuse of discretion or similar standard of judicial review.[48] In fact, in Steadman v. SEC the Supreme Court specifically held that the language reliable, probative, and substantial evidence in section 566 implies the enactment of a standard of proof, rather than strictly specifies the type of evidence an agency may considerin the Courts words requires that a decision be based on a certain quantity of evidence. . . [and not a] quality of evidence.[49]
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In fact, there is considerable precedent, old and new, supporting the proposition that agencies are not bound by the Federal Rules of Evidence.[50] Indeed, courts stated as much not only in the years shortly after the Administrative Procedures Act was passed in 1946,[51] but also prior to the passage of the APA,[52] and even early in the history of the modern administrative state.[53] Nothing surrounding the passage of the APA of 1946 altered that traditional understanding.
As courts have explained, agency decisionmakers do not require the same cognitive protections that the Federal Rules of Evidence may afford to lay jurors. Norms of agency expertise and autonomy thus justify agency liberalization from those rules.[54] In fact, at least one court has gone so far as to suggest that greater reliance on agency decisionmakers in place of courts is partly due precisely to escape from the rigidity of the rules of evidence.[55] However that may be, courts have made clear that agency experts do not need the benefits of the rules of evidence, and moreover may actually be inhibited in their ability to perform their tasks were they bound by those rules. As the Seventh Circuit recently put it: The reason these [Federal Rules of Evidence] are not applicable to agencies is that being staffed by specialists the agencies are assumed to be less in need of evidentiary blinders than lay jurors or even professional, though usually unspecialized, judges. Evidence that might merely confuse a lay fact-finder may be essential to the exercise of expert judgment by a specialized professional adjudicator.[56]