Review of Administrative Decisions: of Courts, ALJ’s and the DAL

Professor John Devlin

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Preliminary Reminders

Agencies are not and should not be “neutral” with respect to the laws they administer; they are established by Congress or state legislatures for the purpose of pursuing certain policies.

Agencies are entitled to establish and pursue policy either through rulemaking or through case-by-case adjudications. S.E.C. v. Chenery Corp. , 332 U.S. 194 (1949).

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Administrative Adjudications

Under both the federal APA and the LAPA, administrative agencies make many case-by-case decisions, many without formal adjudicative processes. As ALJs, these will generally never come before you for decision.

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Administrative Adjudications Before ALJs

Under both the federal APA and the LAPA, ALJs hear only a subset of such decisions, generally those non-rulemaking actions that are required by law to be made “on the record after opportunity for an agency

hearing” 5 U.S.C. 554 (a); or “on the record after notice and an opportunity

for a hearing” La.R.S. 49:951.1(1),(3).4

Process of Formal Administrative Adjudication: the Traditional Model of the Federal APA

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Role of the “Traditional” ALJ

Agency usually makes initial decision by informal internal processes.

Person aggrieved by agency decision may seek review through relatively trial-like de novo hearing before an agency ALJ.

ALJs are located within and are considered part of the agency, though their independence is protected by statute and organizational structure.

ALJ develops expertise in particular field.6

Review of ALJ’s Decision

Decision of ALJ is subject to review within the agency

Ultimate review and final decision is (potentially) by head of the agency.

Person aggrieved by final decision of agency may seek judicial review, as provided in the organic statute or by the APA.

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Process of Administrative Adjudication: Louisiana’s Department of

Administrative Law

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Agency Decisions and the DAL

As with the traditional federal model, the agency makes and reviews its decision by internal procedures, and a person aggrieved may seek review through a relatively trial-like hearing before an ALJ

However, unlike the traditional model, the ALJs have been removed from the individual agencies, and concentrated in an independent body, the Department of Administrative Law (“DAL”). 9

Role of the DAL ALJ: Hearing

The DAL ALJ does not necessarily have personal expertise in the subject matter of the hearing

The DAL ALJ acts as a neutral, independent arbiter whose role is to resolve disputes between an agency and a person aggrieved by one of the agency’s decisions.

The DAL ALJ does so by holding a relatively trial-like de novo hearing, using procedures set out by the LAPA and the DAL’s procedural rules. LaR.S, 49:992, 955 et seq.

Unlike in the traditional federal model, the agency’s role in that hearing is simply that of one litigant. 10

Role of the DAL ALJ: Decision

In contrast to the traditional model of the federal APA, a decision by a DAL ALJ is the “final agency” action on the matter, subject only to judicial review.

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Review of the ALJ’s Decision

“A person who is aggrieved by the final decision or order” of a DAL ALJ may seek judicial review of that decision or order. La.R.S. 49:964(A)(1).

However, no agency or person acting on behalf of the agency may seek judicial review of an adverse decision or order. La.R.S.964(A)(2); 992.B.(3).

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Consequences of the Louisiana Model for the Agency

For the Agency, the Louisiana DAL model means that it no longer retains all of its ability to interpret law or to formulate and implement policy through case-by-case decisions.

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Consequences of the Louisiana Model for the DAL ALJ

For the DAL ALJ, the Louisiana DAL model means that, at least in cases where the decision is adverse to the agency, you have become the final word on interpretation of law and legitimacy of policy.

Your role has become, in effect, more like that of a reviewing court, at least in part. Thus your exercise of your role perhaps should be guided, at least to some extent, by the legal principles that have been developed to govern judicial review of administrative action.

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Judicial Review of Administrative Decisions under the Federal APA and the LAPA

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Standards of Judicial Review Under the Federal APA

Section 706(2) of the federal APA provides that a reviewing court shall be set aside if found to be: (a) “arbitrary, capricious, an abuse of discretion of

otherwise not in accordance with law;” (b) contrary to [the Constitution]; (c) in excess of statutory jurisdiction . . . ; (d) without observance of procedure required by law; (e) unsupported by substantial evidence [in cases

required to be decided on the record before ALJs].16

Standards for Judicial Review Under the Federal APA: Translated

Judicial review of final actions of federal agencies essentially involves four broad categories of inquiry by the reviewing court: Review of the agency’s procedures; Review of the agency’s findings of fact; Review of agency’s interpretation and application of

law; and Review of agency’s exercise of judgment and

discretion.17

Standards of Judicial Review Under the LAPA

La.R.S. 49:964(G) provides that a reviewing court “may reverse or modify the [an agency adjudication] if: “substantial rights of the appellant have been

prejudiced” “because the administrative findings,

inferences, conclusions, or decisions are:

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(1) In violation of constitutional or statutory provision; (2) In excess of the statutory authority of the agency; (3) Made upon unlawful procedure; (4) Affected by other error of law; (5) Arbitrary or capricious or characterized by abuse of

discretion or clearly unwarranted exercise of discretion; or

(6) Not supportable by a preponderance of the evidence as determined by the reviewing court.

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Standards of Judicial Review Under the LAPA: Translated

Judicial review under the LAPA involved the same four basic categories of inquiry by the reviewing court: Review of the agency’s procedures; Review of the agency’s findings of fact; Review of agency’s interpretation and application of

law; and Review of agency’s exercise of judgment and

discretion.

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Judicial Review of Administrative Factfinding: the Federal Analysis

In cases involving formal proceedings before ALJs, federal courts give great deference to the agency’s findings of fact. Such findings will be upheld if supported by “substantial evidence” in the record viewed as a whole. 5 U.S.C. 706(2)(E).

Decision by ALJ, while not the “final” agency decision subject to judicial review, is nonetheless part of the “record as a whole” reviewed by the court. Universal Camera Corp., 340 U.S. 474 (1951).

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Judicial Review of Administrative Factfinding: the Louisiana Analysis

Basic rule: de novo review of the record, court makes its own determination of “preponderance of the evidence.” La.R.S. 49:964(G)(6).

Because the court does not see the witnesses or receive evidence directly, the court is directed to give “due regard” to agency determinations of credibility. Id.

Courts should give some deference to agency’s expertise when drawing inferences from the facts shown. Armstrong v. La. State Board of Medical Examiners, 868 So.2d 830 (4th Cir. 2004). 22

Judicial Review of Agency Interpretation of Laws: the Federal Analysis

Federal Courts give substantial deference to an agency’s interpretation of its governing statute.

Agency interpretations which result from careful consideration with public input are evaluated by a two part test; If the statute is clear, its plain terms control; but If the statute’slanguage is subject to more than one

construction, the court should defer to the agency’s interpretation if that interpretation is “reasonable.”

Chevron USA v. NRDC, 467 U.S. 837 (1984).

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Judicial Review of Agency Interpretation of Law: the Louisiana Analysis

Louisiana courts decide all issues of interpretation of law de novo, and give “no special weight” to the agency’s interpretation. Women’s and Children’s Hosp. v. D.H.H., 984 So.2d 760 (1st Cir. 2008)

Indeed, some questions of – such as challenges to the constitutionality of a statute – may be presented only to a court. Albe v. La. Workers’ Comp. Corp., 700 So.2d 824 (La. 1999).

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Judicial Review of Agency’s Exercise of Judgment and Discretion: Federal Analysis

Federal courts engage in careful but searching review of an agency’s exercise of judgment and discretion, including whether the agency: made a clear error of judgment; considered all of the relevant factors and all alternative courses

of action; responded to contrary evidence and arguments; and Articulated a connection between the facts found, the agency’s

statutory mandate, and the choices the agency made.

Motor Vehicle Mfrs’ Assn. v. State Farm, 463 U.S.29 (1983); Citizens to Protect Overton Park v. Volpe, 401 U.S.402 (1971).

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Judicial Review of Agency’s Exercise of Judgment and Discretion: the Louisiana Analysis

Recent Louisiana cases generally conceive of agency “abuse of discretion” and “arbitrariness” as involving only whether the agency’s decision was supported by evidence or against the weight of the evidence. Wise v. Bossier Parish School Board, 851 So.2d 1090 (La. 2003)

Older cases suggest a broader inquiry into an agency’s exercise of discretion, including by requiring articulation by the agency of how its decision furthers its statutory mandate. Save ourselves, Inc. v. La. Environmental Control Commission, 452 So.2d 1150 (La. 1984)

In appropriate cases, courts will defer to the agency’s expertise. Armstrong v. Bd. of Med. Examiners, 868 So.2d 830 (4th Cir. 2004).

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Standards for Judicial Review Under the Federal APA and the LAPA Compared

Similar in outline: both sets of courts review administrative procedure, factfinding, interpretation of law and exercise of discretion

Quite different in the degree of deference given by reviewing court to administrative decisions

However, even Louisiana courts give some deference to agency exercise of judgment and discretion

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What All This Means For DAL ALJs

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DAL ALJs / Louisiana Judges: Relevant Similarities & Differences

Differences in Status and Role: La.Const Art. V vests judicial power of the state

exclusively in judiciary. Moore v. Roemer, 567 So.2d 75 (1990).

Some decisions (e.g. constitutionality of statutes) can only be made by courts. Albe v. La. Workers’ Comp. Corp., 700 So.2d 824 (1997).

Election gives judges a democratic legitimacy that appointed ALJs lack.

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Functional Differences: Primary difference: At least with respect to factual

issues, DAL ALJs act as primary decisionmakers, not as a reviewing tribunal. Bell Oaks, Inc. v. La. Dept. of Health & Hospitals, 697 So.2d 739 (1st Cir. 1997).

DAL ALJs conduct hearings and hear the witnesses and see the evidence for themselves. Judges review the record produced at the administrative hearing.

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Functional Similarities: Like judges (and unlike federal ALJs), DAL ALJs’

primary role is to assure fairness to litigants, not to promote the agency’s policy goals

Like judges (and unlike federal ALJs), DAL ALJs are generalists rather than specialists, who generally do not share the agency’s substantive expertise.

Like Louisiana judges, (and unlike federal judges) DAL ALJs find facts de novo, based upon a preponderance of the evidence. 31

No Deference to Agency Factfinding

Since DAL ALJs hear the witnesses and see the evidence for themselves, there is little reason to defer to agency determinations of the facts. La.R.S. 49:964(G)

Indeed, since ALJs hear the witnesses for themselves, there is no reason to apply the statutory admonition to judges to give “due regard” to agency determinations of credibility.

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Limited Deference to Agency Interpretation of its Governing Statute

With respect to issues of agency interpretation of law, DAL ALJs do function somewhat in the manner of a reviewing tribunal.

However, since ALJs are not judges, they are not bound by the rationale of the Louisiana courts’ refusal to give deference to agency interpretation of governing statutes.

In the absence of such a binding rule, strong arguments support giving some degree of deference to agency interpretations of their governing statutes.

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Real Deference to Agency Exercise of Judgment and Discretion

Also with respect to issues of agency exercise of discretion and judgment, DAL ALJs do function somewhat in the manner of a reviewing tribunal.

Louisiana law is not clear regarding how such exercises of judgment and discretion should be reviewed by courts, other than that they must be supported by evidence.

In the absence of clear law to the contrary, strong arguments support giving some degree of deference to agency interpretations of their governing statutes.

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Fairness: To Whom?

Traditional due process has focused on the rights of the individual.

Since the 1970s decision in Mathews v. Eldridge, the United State Supreme has recognized that the public interest must also be considered. The court recognizes that individual interests

must be balanced against the costs to society of providing extensive procedural safeguards

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