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CHAPTER 1

INTRODUCTION

Before the Administration Procedure Act (APA) was passed in 1946, formal Federal administrative disputes were adjudicated by agency officials called hearing officers. These individuals not only served in the capacity of judges but sometimes as prosecutors and investigators. As with other agency employees, their promotions and efficiency ratings were subject to agency control. Accordingly, the objectivity of these individuals in adjudicating disputes was often suspect.

The APA sought to rectify this situation. It contemplated that hearing examiners--now called Administrative Law Judges (ALJ) 1/--would now preside at formal administrative hearings to resolve disputes. Section 11 of APA sought to insure the judicial capability and objectivity of these individuals by providing that examiners:

"* * * shall be assigned to cases in rotation

so far as practicable * ** shall perform no duties
inconsistent with their duties and responsibilities
as examiners** *.

"*** shall be removable by the agency ***
only for good cause established and determined
by the Civil Service Commission ***.

"*** shall receive compensation prescribed by
the Commission independently of agency recommenda-
tions or ratings ** *."

THE ADJUDICATION PROCESS AND ALJ

Agencies hold formal hearings adjudicating disputes

involving

--applications for licenses and routes for transportation by air, rail, motor vehicle, or ship;

1/The Civil Service Commission (CSC) administratively changed the title in August 1972.

--licenses for broadcasting;

--rates for postal, gas, electrical, communications, and transportation services;

--compliance with Federal standards relating to international trade, labor-management relations, advertising, communications, food and drugs, banking, corporate merger, and antitrust;

--health and safety regulations in mining, transportation, and industry;

--securities, commodities, and futures trading; and --social security issues and matters relating to mining or forestry on public lands, voters' rights, school desegration, equal rights employment, protection of the environment, consumer products safety, and international trade.

The ALJ, an agency employee with practically assured tenure until retirement, is the pivotal figure in the administrative adjudication process. A chief purpose of the APA was to assure that those who hear the case participate in the decision and to make them an important factor in the decision process. As stated in Senate Document No. 248

(79th Cong., 2d Sess., 1946), p. 366:

to

"The provisions of [the APA] are designed to make it certain that those who sign decisions or decision papers are actually the people responsible for them, that the evidence and the arguments of the private parties are fully and fairly considered, that the views of agency personnel are not unduly emphasized or secretly submitted, and that the official record alone is the basis of decision." (Emphasis added.)

Under section 7 of APA, ALJs generally have authority

--administer oaths and affirmations;

--issue subpoenas authorized by law;

--rule on offers of proof and receive relevant evidence;

--take or cause depostions to be taken whenever the ends of justice would be served;

--regulate the hearing;

--hold conferences to settle or simplify the issues with the parties' consent;

--dispose of procedural requests or similar matters;

--question witnesses;

--consider facts in the record and arguments made on
questions involved;

--determine credibility and make findings of fact and
conclusions of law;

--make decisions or recommend decisions on the basis of reliable, probative, and substantial evidence; and

--take any other action authorized by agency rule con-
sistent with the act.

Although an ALJ's decision is to be made independently of agency influence or interference, final decisionmaking authority rests with the agency. The ALJ decision is intended to give the agency an independent judgment as to the issues contested before him/her during a trial type hearing. The ALJ is free, after analyzing the hearing record and reading the parties' briefs, to determine what are the decisive issues in a case. In considering the issues and arriving at his/her decision, however, the ALJ is bound by the agency's rules and prior decisions.

If the parties to the case do not appeal the ALJ's decision, and the agency head does not elect to review it, his/ her decision becomes the agency's decision. The agency's decision, whether made by adopting the ALJ's decision or by modifying or reversing it, is administratively final and thus, appealable to the U.S. courts. The fact that the agency retains the authority to make the final decision distinguishes ALJS from regular judges. Regular judges' decisions are final and have the full force and effect of law unless appealed to a higher court.

RESOLVING ADMINISTRATIVE DISPUTES
IS A COSTLY PROCESS

Almost unknown to the public at large, ALJs are involved in a costly process which ultimately results in agency decisions that have the force of law. These decisions can significantly impact on the national economy and on the claims for

administrative justice of thousands of citizens and business firms. According to the administrative officer of the U.S. courts, Federal executive departments and agencies collectively process a larger caseload than the U.S. courts, affect the rights of more citizens, and employ more than twice as many ALJS as there are active judges in the Federal trial courts. As recently reported by the Senate Committee on Governmental Affairs: 1/

"*** While the annual Federal budget for regulations
is almost $3 billion, estimates of the total costs of
regulation to private and public sector range from
$16 to $130 billion. ***"

With respect to the $3 billion annual budget figure, the Committee pointed out that a week's delay in the normal process would increase costs by about $53 million annually; a month's delay by about $200 million. The Committee also noted that

delay:

"* * * inflates legal fees and other costs of participation, increases the expense of doing business which is passed along to consumers, discourages business investment, and results in major health costs related to needless injuries and deaths. * * *"

While cost figures directly related to the adjudication process are not generally available, it is fair to say, based on the magnitude of the total cost cited above, that they are substantial. In this regard, at the Occupational Safety and Health Review Commission (OSHRC)--a relatively small agency employing about 188 people whose sole function is to adjudicate disputes involving health and safety issues-costs for ALJS and agency review personnel for fiscal year 1976 amounted to approximately $3.5 million.

If past trends continue--and indications are that they will--the cost of formal administrative adjudication can only increase. The number of ALJS has quadrupled since passage of the APA, and the number of agencies employing them has doubled. In June 1947, there were 15 agencies employing 196 ALJS; in April 1977, there were 28 agencies employing 826 permanent ALJS and 199 temporary ALJS bringing the total to 1,025. 2/

1/"Study on Federal Regulation," Vol. IV, Delay in the Regulatory Process, July 1977.

2/Recent congressional action has allowed temporary ALJs to be appointed to permanent positions (Social Security Financing Amendments of 1977, P.L. 95-216, Dec. 20, 1977).

Prior to our review, numerous studies were made of the APA and its implementation by CSC and other agencies. Among the most recent is a report issued by the Senate Committee on Governmental Affairs, 1/ which discusses many of the issues relating to delays in the administrative process:

--Over formalized agency procedure and duplicative and lengthy agency review of ALJ decisions.

--The key role ALJS can play in reducing delay in
much of the adjudicating process.

--The need for agency management systems, including
the collection and analysis of production data
over a period of time to identify problems and
provide information necessary to solve them.

--The adverse effects of selective certification
including agency inbreeding and a tarnishing of
the image of ALJ independence.

TITLE CHANGE: HEARING

EXAMINER TO ALJ

Before changing the title, CSC obtained the views of top agency officials, hearing examiners, bar associations and practitioners, members of the Administrative Conference, and the Judiciary. After analyzing these comments, CSC published a proposal in the Federal Register to change the title. There were only 3 unfavorable comments out of the approximately 80 received from hearing examiners, practicing attorneys, and agency officials. CSC concluded that the new title most appropriately covers the kinds of proceedings and the variety of functions performed by hearing examiners.

However, the Judicial Conference of the United States and the Job Evaluation and Pay Review Task Force of CSC had different opinions concerning the title change. In 1966 and 1970 the Judicial Conference of the United States opposed the title change for hearing examiners that involved the word "judge." The Conference's 1970 statement reflects the reason for its opposition in both years.

1/See footnote 1, p. 4.

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