What comes to mind when we speak of federal administrative adjudication? Most likely, it’s the familiar scenario described by APA sections 554, 556 and 557, often called “Type A adjudication.” In this well-mapped world, administrative law judges (ALJs) preside over rather formal trial-type evidentiary hearings. Or perhaps you’ll be thinking about one of the numerous schemes of adjudicatory evidentiary hearings not covered by the APA. These include the quite formal hearings conducted by the Immigration Court, the Board of Veterans Appeals, the Patent Trial and Appeal Board, and numerous other federal agencies that are presided over by administrative judges who are not ALJs. These are often referred to as “Type B adjudication” and have been the subject of much scholarship and of recommendations by the Administrative Conference of the United States (ACUS).
In all likelihood, you’re not thinking at all about the vast world of true federal informal adjudication, known as “Type C adjudication,” which is generally terra incognita to administrative lawyers. In Type C, agencies make legally binding decisions involving private parties without conducting evidentiary hearings. If, by chance, you do think about Type C, you probably consider it to be the black hole of administrative law, completely lacking in legal protections.
There are countless schemes of federal Type C adjudication, and each one is different from the others. Most of them involve the exercise of a discretionary function. They involve applications for federal benefits such as National Science Foundation grants, new drug authorizations, uses of national forests, approval of highway routes, or bank charters. Other important Type C schemes involve immigration disputes (such as visa applications), foreign policy and national security determinations, disputes about tax liens and levies, and decisions based on tests or inspections. Agency decisions refusing to disclose documents requested under the Freedom of Information Act (FOIA) or declining a waiver request are Type C adjudication as well. The stakes may be quite high, as in the case of bank charters, new drug applications, or rejection of foreign investments that might impair national security. The stakes may also be low, such as the legendary forest ranger who gives me the last campsite and turns you away.
As an ACUS consultant, I wrote a report entitled “Best Practices for Adjudication Not Involving an Evidentiary Hearing,” https://www.acus.gov/document/best-practices-adjudication-not-involving-evidentiary-hearing-final-report. That report was the foundation for ACUS Recommendation 2023-5. The Report has been revised and will be published later this year by the Michigan Journal of Environmental and Administrative Law.
Type C adjudication is fundamentally different from Types A and B. In Types A and B, staff members investigate the matter and make a “frontline decision” that may reject an application for government benefits or recommend a sanction. Often, the private party acquiesces in the frontline decision and the case ends. If a party wishes to challenge the frontline decision, the matter moves to the “primary decision” phase. This phase consists of an evidentiary hearing presided over by a neutral decisionmaker who did not participate in the frontline decision phase. In Types A and B adjudication, the frontline phase is sharply separated from the primary decision phase, as it is in criminal law. The primary decision must be based exclusively on the record of the evidentiary hearing. The presiding officer cannot be advised by investigators and prosecutors in the case and cannot receive ex parte communications. The primary decision is typically reviewed within the agency, often by the agency heads. This “review decision” is also normally restricted to consideration of the evidentiary record made at the primary decision phase.
In Type C adjudication, however, the same agency staff member or members who made the frontline decision often make the agency’s primary decision. There is no sharp separation between the frontline and primary decision phases. The parties who challenge the frontline decision submit additional evidence and argument to the primary decisionmaker. The primary decisionmaker engages in consultations and negotiations with all of the stakeholders in order to settle the dispute or, if necessary, to make the primary decision. There is no evidentiary hearing at any point in the proceedings. There is no prohibition on ex parte communications and no required separation of functions. The primary decision is usually subject to an internal appeal performed by other agency staff members who put a second set of eyes on the primary decision (the “review decision”). The final agency decision is usually subject to judicial review. However, judicial review is relatively rare in practice because it is too slow and costly for most Type C cases and the chances of success in challenging fundamentally discretionary decisions are quite low.
Contrary to what most lawyers believe, Type C adjudication is not a procedure-free black hole. Numerous sources of procedural law apply. These include “consultative” due process (if the proceeding involves deprivation of liberty or property) and §555 of the APA which, among other provisions, includes a right to “appear” and requires a statement of reasons for denial of an application. The Administrative Practice Act (not the same as the APA) provides a right to legal representation. The regulations of the Office of Government Ethics ban financial conflicts of interest and contain an aspirational impartiality standard. The potential of judicial review requires agencies to engage in reasoned analysis, maintain a complete file of materials consulted, and state its findings and reasons. FOIA requires that Type C decisions be indexed and made available to the public. Ombuds statutes frequently apply. Most importantly, agency regulations typically provide binding procedural protections for disputants in Type C
adjudication.
Because every scheme of Type C adjudication is different from the others and because the stakes vary enormously, it is not possible to adopt a statute that prescribes fair procedures across the government. One size cannot fit all. Therefore, ACUS Recommendation 2023-5 prescribes a set of best practices for Type C adjudication. These best practices are intended to serve as the raw material from which agencies can design appropriate procedural regulations. These regulations must be carefully tailored to the specific circumstances of the adjudicatory scheme and to the stakes involved. The regulations should balance the often-conflicting criteria of accuracy, efficiency, and user satisfaction. These best practices can serve as a valuable substitute for the protections provided by the evidentiary hearings that occur in Types A and B adjudication.
ACUS Recommendation 2023-5 contains nine best-practice recommendations that are rooted in existing sources of law and which must be tailored to the specific circumstances of each Type C scheme.
Whether the stakes are high or low, Type C adjudication is the face of administrative justice for countless people in dispute with the federal government. Type C adjudication should reach accurate and legally correct results and enable the wise exercise of discretion. They should be conducted efficiently and should generate a sense that private parties have been treated fairly. The best practices set forth in ACUS Recommendation 2023-5 will be helpful in achieving these objectives.
