Administrative Law Prof Blog

Decision made without regard to the facts = arbitrary and capricious

From Harvey Randall's New York Public Personnel Law blog, "Retirement Board’s failure to make an independent evaluation of an individual’s application for disability retirement fatal to the process":

The primary issue to resolve: was the determination by the Board of Trustees of the New York City Employees' Retirement System denying Schlesinger, a former Corrections Officer, an "accident disability retirement" pension based on a meeting of the Board of Trustees where there was no recorded vote on this request. ...

Although, said the court, it is well-settled that courts may not substitute their own judgment for that of administrative bodies, courts must insist that administrative bodies do, in fact, exercise their discretion.

Here, said the court, by relying, without discussion of the Medical Board's opinion concerning Schlesinger claimed disability, “the Board of Trustees abdicated its responsibility instead of exercising it. This failure to independently consider [Schlesinger's] application meant that the decision [was] made without regard to the facts and is, therefore, arbitrary and capricious.”

Where, as here, an applicant is found disabled, the Board of Trustees is required to make an independent evaluation of causation.

EMM

New administrative law articles

From the University of Washington's Current Index to Legal Periodicals:

• Criddle, Evan J. Fiduciary administration: rethinking popular representation in agency rulemaking. 88 Tex. L. Rev. 441-503 (2010). [H]|[L]|[W]

• Hemel, Daniel. Comment. Empty creditors and debt exchanges. 27 Yale J. on Reg. 159-170 (2010). [H]|[L]|[W]

• Listokin, Yair and student Benjamin Taibleson. If you misrate, then you lose: improving credit rating accuracy through incentive compensation. 27 Yale J. on Reg. 91-113 (2010). [H]|[L]|[W]

• Marian, Cornel. Balancing transparency: the value of administrative law and Matthews- balancing to investment treaty arbitrations. 10 Pepp. Disp. Resol. L.J. 275-301 (2010). [H]|[L]|[W]

• Merrill, Thomas and David M. Schizer. Energy policy for an economic downturn: a proposed petroleum fuel price stabilization plan. 27 Yale J. on Reg. 1-46 (2010). [H]|[L]|[W]

• Sweeney, Maureen A. Fact or fiction: the legal construction of immigration removal for crimes. 27 Yale J. on Reg. 47-89 (2010). [H]|[L]|[W]

• Tokaji, Daniel P. The future of election reform: from rules to institutions. 28 Yale L. & Pol'y Rev. 125-154 (2009). [H]|[L]|[W]

• Vitarelli, Anthony. Note. Happiness metrics in federal rulemaking. 27 Yale J. on Reg. 115-158 (2010). [H]|[L]|[W]

• Winship, Verity. Cooperative interbranch federalism: certification of state-law questions by federal agencies. 63 Vand. L. Rev. 181-234 (2010). [H]|[L]|[W]

EMM

How not to argue an administrative case

Another useful case from Albany Dean Patty Salkin's Law of the Land blog, "Local and State Agencies are Not Necessarily Preempted by Federal Law from Regulating Tree Removal at Airports".

Goodspeed Airport sought to remove certain trees located at the airport, claiming that they were “obstructions to air navigation,” however, it was arguably hindered from doing so because the trees were located in wetlands which were protected by the Wetlands Act and the Conn. Environmental Protection Act.  Both laws required Goodspeed to obtain permission before trimming or removing the trees.  Although Goodspeed did not file for a permit to remove the trees, it filed an action against the East Haddam Wetlands Commission and sought a declaratory judgment that once trees at the airport constitute an “obstruction to air navigation,” local and state agencies are prevented from interfering with their removal.  The Defendants moved to dismiss the action. 

First mistake: Failure to exhaust administrative remedies.

[T]he District Court for the District of Connecticut was asked to determine the extent to which Congress intended federal regulation of aviation safety to preempt generally applicable state and local environmental laws.  The court concluded that the Defendant’s actions in regulating the removal of trees at Goodspeed Airport that were within the protected wetlands were neither preempted by federal aviation law nor expressly preempted by the Airline Deregulation Act.

The court rejected Goodspeed’s argument that since the trees it wished to remove penetrated “navigable airspace” over which the federal government had exclusive dominion Connecticut was powerless to interfere in any way with how the Airport chose to deal with the trees.  The court noted that the conclusion that Congress intended to occupy the entire field of aviation safety is a necessary condition to the preemption issue, however, it was not sufficient.

Emphasis added. Second mistake.

Congress intended for its regulation of aviation safety to preempt only those state laws that either “a) have the purpose or effect of directly regulating an aspect of air safety; or b) are actually shown, on an as-applied basis, to impact the unified regulation of air safety.”  Since the state laws at issue did not have the purpose of directly regulating any aspect of air safety and Goodspeed had not shown that the permit requirement of the laws had that impermissible effect, nor did it choose to bring an as-applied challenge by applying for a permit and having it denied, the court had no basis for concluding that either state law was preempted.

Third and fourth mistakes.

The court went on to note that upholding the state laws would not, in contrast to the cases relied upon by Goodspeed, risk “fractionalized control” of any aspect of air safety by the FAA since the FAA only requires that obstructions be noted and/or studied and therefore requiring owners to get a permit to remove trees did not unduly undermine the regulation.

Poor analysis of the purpose of the federal statute - fifth mistake.

The court also rejected Goodspeed’s argument that the laws are expressly preempted insofar as they regulate the removal of trees that are “obstructions” based on the Airline Deregulation Act.  The Act contains a preemption clause which prohibits states or localities from enacting laws that have an effect on the “price, route or service” of an air carrier.  Goodspeed argued that by regulating the removal of obstructions at the Airport, the laws caused a risk that Goodspeed would face revocation of its license if the obstructions were not removed and therefore the air carriers that used the airport would be forced to use other airports, having an affect on the rates it charged its customers and the service it provided.  The court disagreed, noting that the fact that any impact would not only be indirect, but also entirely speculative, and the possibility that there could be no impact at all if Goodspeed were granted a permit, was sufficient for the court to hold that the state laws were not preempted.

Emphasis added. Sixth mistake. Bad things that might happen do not provide grounds for challenging government actions or requirements. Taking this to federal court was trying to use a pile driver when a hammer would have been sufficient. Unless you have an argument that a law or regulation is unconstitutional on its face (rare as a practical matter), you have to follow the rules to generate some sort of "as applied" argument. Further, it seems as if the plaintiff's analysis of the applicable FAA statutes and regulations was superficial. EMM

A new regulatory interpretation case

From Sheppard Mullin's Government Contracts Blog, a case of regulatory interpretation: "Court of Appeals Finds That R&D Costs Not Explicitly Required By A Contract Qualify As IR&D" by Anne B. Perry.

A controversy with a more than 35 year life has finally been addressed by the US Court of Appeals for the Federal Circuit [COFC] – and in a pro-contractor fashion. In its March 19, 2010 decision in ATK Thiokol, Inc. vs. United States, Fed. Cir. No. 2009-5036 (3/19/10), the Court of Appeals, in affirming the Court of Federal Claims decision from 2005, determined that research and development costs not specifically required by a contract may be treated as Independent Research and Development ("IR&D") under FAR 31.205-18. While this might seem a fairly unremarkable holding, and one consistent with reason, sound procurement policy, and a harmonious reading of the relevant regulations, the Government has for years taken the contrary view that costs of implicitly required development cannot be treated as IR&D. And, as a result, those contractors who treated such costs as IR&D have been treated to cost disallowances, citations for CAS non-compliance, and even accusations of fraud. ...

Noting that both the definition of B&P and IR&D within the same FAR provision have the identical exclusionary phrase of "required in the performance of the contract," the Court could find absolutely no legal or logical support for the Government's contention that identical language in the same regulatory provision should be interpreted differently. Thus, the Court of Appeals agreed with the COFC's determination that "the meaning of that phrase in the definition of IR&D must be the same as the meaning of the identical phrase in the definition of bid and proposal ("B&P") costs."

Rejecting the Government's policy argument for applying two separate definitions, the Court noted that IR&D's purpose was to encourage contractors to innovate and "maintain a high level of technological sophistication, and ultimately to improve the products it offers to the government." Moreover, it found that applying the Government's definition "could have the perverse effect of charging all of the research and development costs for a proposed product line against the first contract for the products in that line, whether the contract is governmental or commercial," an allocation method that the Court concluded "is not sensible as a policy matter," ....

Now that the Government has been told that its interpretation has been incorrect, do we expect that the Government will repay all of the contractors for whom it has disallowed these costs? Should contractors wrongly accused of fraud expect an apology? “Lotsa luck.” In fact, it won’t be a surprise if the Government, instead of applying this correct definition, modifies the regulations to disallow both B&P and IR&D when they are "implicitly" required by a contract. An unfair result to be sure, and one that will stultify technological initiative for sure, but not an unlikely outcome.

Yes, the government can change its rules any time, as long as it follows the rules for changing rules. EMM

Representative, if not typical, local administrative law case

From Albany Dean Patty Salkin's Law of the Land blog, "City Entitled to Regulate Sign Determined to be a Nuisance under the Municipal Code" shows the sort of local administrative law case that ordinary lawyers can expect to see:

In 2002, Desert Outdoor Advertising began displaying a large advertising billboard, visible from the freeway, on a street in Oakland. The City of Oakland demanded that the structure be removed or that a variance be sought because the sign was prohibited by Oakland’s ordinances. Oakland’s sign regulations were based in two separate enactments, the Planning Code (OPC) and the Municipal Code (OMC). The OPC banned the construction of any new “advertising sign” in Oakland without a variance, and also regulated the size, placement, and number of signs, again with the possibility of a variance. The OMC contained an absolute ban on advertising signs visible from a freeway. .. [Precipitates much litigation leading to a 9th Circuit decision affirming partial summary judgment for both parties] ...   The City then applied for, and was granted, an state court order allowing it to remove Desert’s billboard pursuant to OMC § 1501, which it contended rendered the sign a nuisance per se.  This prompted Desert to file an emergency motion in federal district court requesting an order clarifying the court’s declaratory judgment.  Desert sought a declaration that the state judgment impermissibly enforced a regulatory scheme declared unconstitutional by the district court in 2004.  The court denied Desert’s motion, and Desert appealed.

The Ninth Circuit, unraveling all of these various strands, affirmed.  It was the OMC and not the OPC which the City was attempting to enforce in state court.  While the 2004 district court ruling struck down specific sections of the OMC as severable, the order could not “reasonably be understood to have struck down the entire scheme of sign-regulation,” and, while the court “found portions of the OPC unconstitutional and not severable, that part of [the] order cannot be read to have affected the OMC.” Desert was wrong in contending that merely having a conditional use permit under the OPC would allow the display of a sign otherwise banned under the flat prohibition of the OMC, and the City was entitled to remove the sign as a nuisance.

EMM

Basic judicial review case

From Harvey Randall's New York Public Personnel Law blog comes a very basic judicial review case - "Hearing officer to determine the weight to be given to evidence offered in the course of disciplinary hearing":

The Appellate Division agreed with the lower court’s decision, noting that ...

[2] the hearing officer’s determination had a rational basis and was supported by the record.

The court said that it was up to the hearing officer to determine what, if any, weight should be given to the evidence and a court should not substitute its judgment for that of a hearing officer ...

Fundamental rule, worth remembering. EMM

New & Free Regulations Trackers

Recently posted on LLRX: "The Government Domain: New & Free Regulations Trackers" by Peggy Garvin. Opening paragraph:

The independent web developers of this 2.0 world have done a great job in making federal legislative information available in new ways; see GovTrack.us and OpenCongress.org for examples. The same is happening with federal regulatory information. New, free, nongovernment resources have come online to complement the official U.S. government regulatory information sites, RegInfo.gov and Regulations.gov. For this bounty, we can thank innovative developers and the relatively new availability of a free XML version of the Federal Register that can be downloaded in bulk. The Federal Register has long been available for searching and viewing for free, but subscribing to the data in bulk--necessary for meaningful repurposing--carried a cost that discouraged entrepreneurial individuals. In the meantime, both RegInfo.gov and Regulations.gov have been redesigned and continue to provide content and functionality not available on the other free sites mentioned in this article.

Underlined items are links in the original. Contents:

• RegInfo.gov
• Regulations.gov
• Agency-specific Sites
• OpenRegs.com (George Mason)
• FedThread.org (Princeton)
• Justia Regulations Tracker
• RegulationRoom.org (Cornell)

EMM

Narrower state regulation supercedes broader state statute

This is a tricky one. From Proskauer Rose LLP's  New Media, Technology and the Law Newsletter for Spring 2010:

New York Insurance Department Opinion Controls Validity of Electronic Signature on Clickwrap Insurance Application

The New York State Insurance Department may impose a requirement that an insurance company verify the identity of a person providing an electronic signature on an online application for insurance, notwithstanding the less restrictive definition of an electronic signature in the New York Electronic Signatures and Records Act, a district court ruled. The court noted that while the New York ESRA was amended in 2002 to remove language pertaining to verification of identity from the definition of an electronic signature, the Department could impose such a requirement under its regulatory authority over the business of insurance. The court concluded that there was a disputed issue of fact that precluded the grant of summary judgment on the issue of whether the submission an insurance application via a “standard internet click-through process” satisfied the identity verification requirement, where the process required the applicant to submit personal information including an address and Social Security number.

The Prudential Insurance Company of America v. Dukoff, No. 07-CV-1080 (E.D.N.Y. Dec. 18, 2009), 2009 U.S. Dist. LEXIS 117843. EMM

Practice: Professional licenses

Professional licenses are one aspect of administrative law that general practitioners frequently face. There is a good short writeup from Roger C. Haerr (Luce Forward, San Diego) on the problems that can arise in "Harsh Penalties Arise From Contractor's License Lapse". Opening paragraph:

What happens when a contractor’s license lapses or is suspended by operation of law? In California, there are harsh criminal and civil penalties against unlicensed contractors. For example, an unlicensed contractor may not recover any compensation for its work and a party may recover all compensation paid to the unlicensed contractor. This article briefly describes the civil penalties which may be imposed against a contractor who is unlicensed or where the license is suspended by operation of law.

Thank to Lexology for the pointer. EMM

Policy: Discussion topic

If you need a discussion subject on whether or not something should be regulated and if so, how much, there is an article on the Scientific American blog about medical software for iPhones: Jessica Wapner, "iRegulate: Should Medical Apps Face Government Oversight?", April 12, 2010. Subtitle: "With medical applications for smart phones becoming a more prominent part of doctors' diagnostic tool kits, the FDA is considering how it should regulate the market--if at all". As this is the beginning of the process, your class could discuss the pros and cons and follow what the FDA does with it. EMM

Shane on Raso on strategic use of informal guidance documents

On Jotwell, Peter Shane (Ohio State) reviews Connor N. Raso, Strategic or Sincere?  Analyzing Agency Use of Guidance Documents,  119 YALE L. J. 782 (2010). Dr. Raso's article carefully cuts the legs from under the concept that agencies use "guidance documents" not subject to formal rulemaking as strategic substitutes for formal rules. As Mr. Shane points out, "It is quite possible, however, that fears of guidance abuse are overstated and that efforts to police guidance more intensely or to reduce the use of guidance documents outright are misguided and a waste of administrative resources." As Mr. Shane's title points out, "might the motivation for agency guidance be the public's need for guidance?"

I agree.

Let's look at two of the most broadly distributed federal guidance documents (albeit technically not "major" guidance documents): IRS Publications 17, Your Federal Income Tax, and 334, Tax Guide for Small Business. Both are prefaced with disclaimers - they are not to be considered definitive interpretations of the law, blah, blah, blah. However, when I was in private practice I ordered these every year for my small business clients. They were not definitive, but they set out the likely Service interpretations and unless there were big bucks involved, that was the way to bet.

Later, when I was practicing administrative law in the transportation arena, the question came up among some of the firm's trucking clients as to how the Department of Transportation chose trucking companies for inspection. Our clients were not challenging the authority of the DoT to inspect, they just wanted to know their odds and how they could reduce them, to avoid the expense and aggravation. I located an internal guidance document that set out the selection system and was then able to advise our clients about the Department's priorities. I warned them that this could change at any time because it had no status as law, unlike regulations promulgated through formal rulemaking. They were happy just to get some idea of what they were facing.

The DoT publication was created for internal management, but the Department could have used some semi-arbitrary stubby pencil system and nobody would be the wiser; they chose a structured system. The IRS publications were created, I suspect, for two reasons. Enhanced taxpayer knowledge leads to fewer errors requiring Service action, saving employee time and money. And those faceless bureaucrats generally believe in what they are doing and want to help. Even in the IRS. EMM

Three recent administrative law papers on SSRN

"Comparing Regulatory Oversight Bodies Across the Atlantic: The Office of Information and Regulatory Affairs in the US and the Impact Assessment Board in the EU" by Jonathan B. Wiener (Duke) and Alberto Alemanno (HEC Paris). Abstract:

‘Quis custodiet ipsos custodes?’ asked the Roman poet Juvenal – ‘who will watch the watchers, who will guard the guardians?’ As legislative and regulatory processes around the globe progressively put greater emphasis on impact assessment and accountability, we ask: who oversees the regulators? Although regulation can often be necessary and beneficial, it can also impose its own costs. As a result, many governments have embraced, or are considering embracing, regulatory oversight--frequently relying on economic analysis as a tool of evaluation. We are especially interested in the emergence over the last four decades of a new set of institutional actors, the Regulatory Oversight Bodies (ROBs). These bodies tend to be located in the executive (or sometimes the legislative) branch of government. They review the flow of new regulations using impact assessment and benefit-cost analysis, and they sometimes also appraise existing regulations to measure and reduce regulatory burdens. Through these procedures of regulatory review, ROBs have become an integral aspect not only of regulatory reform programs in many countries, but also of their respective administrative systems.

Although most academic attention focuses on the analytical tools used to improve the quality of legislation, such as regulatory impact assessment (RIA) or benefit-cost analysis, this chapter instead identifies the key concepts and issues surrounding the establishment and operation of ROBs across governance systems. It does so by examining and comparing the oversight mechanisms that have been established in the United States and in the EU and by critically looking into their origins, rationales, mandates, institutional designs and scope of oversight.

"The Usual Practice: Raising and Deciding Failure to Exhaust Available Administrative Remedies as a Defense Under the Prison Litigation Reform Act" by Joshua S. Moskovitz (Yeshiva). Abstract:

With troubling frequency, the Federal Rules of Civil Procedure, which govern procedures of all civil actions in federal district courts, are manipulated or avoided when their prescriptions prove inconvenient. The Supreme Court has, on several occasions, admonished lower courts for disregarding or misconstruing these binding procedural rules. Ad hoc procedures are obnoxious to our legal system because they upset traditional notions of fairness and predictability - the very purpose of uniform rules of civil practice. Federal civil rights claims brought by prisoners are a recurrent setting for procedural abnormalities and the misapplication, or avoidance, of clear precedent; these procedural challenges compound the myriad difficulties already faced by prisoner litigants in federal court. While pleading standards for all litigants are modest and pro se plaintiffs enjoy liberal construction of their pleadings, the Prison Litigation Reform Act of 1995 (PLRA) established several unique hurdles for prisoner plaintiffs.

Relief in federal court for the most common civil rights suits does not require the exhaustion of state or administrative remedies. However, among the PLRA’s most effective barriers is the requirement that prisoners exhaust all “available” administrative remedies before bringing an action in federal court “with respect to prison conditions.” Exhaustion of administrative remedies is said to serve the dual purposes of protecting an agency’s authority to maintain procedures and correct its own errors, and promoting efficiency by avoiding unnecessary litigation and facilitating litigation that does result by developing an administrative record. In the prison context, administrative exhaustion means pursuing grievances through internal prison procedures and completing all levels of administrative appeals. Complying with every procedural nuance is vital because the Supreme Court has held that the PLRA’s exhaustion requirement includes a procedural default rule. In other words, while certain exceptions apply, when a prisoner fails to follow any grievance procedure related to a complaint, he is barred from pursuing that claim in federal court.

Frequently, prison grievance procedures include several steps: they often involve speaking with and/or providing a written grievance to prison officials - not infrequently, the officials who work in the area of the prison where the prisoner lives and, may be the very same officials whom the prisoner alleges have violated his constitutional rights; and pursuing one or more levels of administrative appeals. In several states, the time limit for pursuing a grievance is as little as two business days and, in at least one state, is as short as twenty-four hours. Because of the nature of prison grievances, disputes often arise over whether administrative remedies are “available,” whether those remedies were properly exhausted, and if not, whether an exception applies.

Federal courts have grappled with how to properly decide claims by the defendants prison officials that the plaintiff prisoner failed to properly exhaust available administrative remedies. In particular, courts have divided sharply over the overlapping questions of what is the appropriate procedural vehicle for raising a defense of failure to exhaust — e.g., by a motion to dismiss, a motion for summary judgment, or affirmatively pleading in the answer — and whether disputed factual issues raised by the exhaustion defense should be decided by the judge or a jury.

In weighing this issue, courts must contend with the Supreme Court’s recent decision in Jones v. Bock, which held that exhaustion is not a pleading requirement, but an affirmative defense. Therefore, federal courts are faced with two competing principles: in order to reduce the impact of prisoner litigation on federal courts, the PLRA mandates proper administrative exhaustion prior to filing suit; however, failure to exhaust is an affirmative defense, which defendants maintain the burden to plead and prove in an inquiry that is frequently fact intensive. How can courts avoid the burden of cases with unexhausted claims where properly adjudicating the exhaustion issue is dependent on disputed facts and credibility determinations? To reconcile these interests, some courts have fashioned sui generis procedures for resolving an exhaustion defense.

This Note contends that courts are bound by the usual procedural rules for raising and deciding claims of prisoner non-exhaustion as with any affirmative defense, and argues that the unusual procedures employed by some courts violate the usual practice. Part I outlines the background of the PLRA, and its administrative exhaustion requirement and important case law. Part II surveys the unique procedures employed by federal courts for deciding exhaustion issues, and Part III addresses the doctrinal weaknesses of these procedures. In particular, Part III addresses the Supreme Court’s staid enforcement of the usual practice prescribed by the rules of civil practice, the historical development of the relevant Federal Rules of Civil Procedure, conflicting federal statutory provisions, well-established Seventh Amendment jurisprudence on the province of the jury in determining genuine factual disputes, and the overarching policy implications of employing these ad hoc procedures. Finally, this Note concludes with a recommendation for the appropriate procedure to govern this particular area of civil procedure.

"Hearings" by Mark Spottswood (Northwestern). Abstract:

This article explores a constantly recurring procedural question: When is fact-finding improved by a live hearing, and when would it be better to rely on a written record? Unfortunately, when judges, lawyers, and rulemakers consider this issue, they are led astray by the widely shared - but false - assumption that a judge can best determine issues of credibility by viewing the demeanor of witnesses while they are testifying. In fact, a large body of scientific evidence indicates that judges are more likely to be deceived by lying or mistaken witnesses when observing their testimony in person than if the judges were to review a paper transcript of the testimony. Witness presence, in other words, may often harm, rather than improve, the accuracy of credibility assessments. The fact that legal actors value hearings for mistaken reasons does not mean that hearings have no value, but it does raise the concern that hearings will be employed when they are unneeded or even harmful, especially given the lack of available guidance on this question. In this article, I attempt to remedy this problem by providing a sound set of guiding principles concerning both the utility and the harms of live hearings.

Hearings will often, but not always, do more harm than good. In addition to the fact that demeanor cues generally impair, rather than aid, credibility judgments, there are a number of cognitive biases that may arise from having one’s first impressions of a witness be visual and auditory impressions. These include a persistent human tendency to trust or distrust witnesses based on their physical attractiveness, their social status, their race, or other features that may make them similar to, or different than, the fact-finder. On the flip side, hearings may help a judge make sense of confusing evidence. In addition, live hearings often feel fairer to participants than paper-based decisions, due in large part to the desire to have expressive input in decisions that affect us. And sometimes, a live hearing may be preferable for reasons of cost or practicality.

EMM

How not to do an administrative hearing

Another useful case reviewed by Harvey Randall on his New York Public Personnel Law blog, "Due process in administrative hearings requirements":

The Goohya decision sets out a number of pitfalls that an administrative hearing officer must avoid if his or her determination and recommendation is to survive judicial review.

... [The] Commissioner of Mental Health filed disci­plinary charges against Indrakumar Goohya. Commissioner Walsh-Tozer subsequently adopted the findings and recommendations of the disciplinary hearing officer and dis­missed Goohya from his employment as a psychiatrist with the Rockland County De­partment of Mental Health. Goohya appealed.

The Appellate Division, Second Department, annulled Walsh-Tozer's determination and returned the matter to the Department "for a new hearing before a different Hearing Officer and thereafter for a new determination" by the Commissioner.

The court said that "[d]ue process considerations mandate that findings of fact be made in a manner wherein the parties are assured that the decision is based on evidence in the record, uninfluenced by extralegal considerations, and that both an intelligent challenge by a party aggrieved by the determination and an adequate judicial review are possible," citing Simpson v Wolansky, 38 NY2d 391.

The problem here, said the court, was that:

1. Under the guise of making findings of fact, the Hearing Officer merely reiterated the parties' testimony and other evidence submitted at the hearing.

2. Other than the Hearing Officer rejecting one or two portions of the testimony of Goohya's expert, there is no indication of the evidence he relied upon in reaching his ultimate conclusions in deciding the matter.

3. After setting forth all of the evidence in the record, the Hearing Officer merely stated, in conclusory fashion, that each charge was supported by substantial evidence.

Acknowledging that "while it is clear that strict rules of evidence are not applicable to administrative hearings," the Appellate Division pointed out that an administrative determination may be annulled "where prejudice so permeates the underlying hearing as to render it unfair."

Here, said the court, the Hearing Officer "committed errors which so prejudiced Goohya that a new hearing is warranted."

Among the faults attributed to the Hearing Officer by the court was the Hearing Officer's rejection of Goohya's request for disclosure of the medical records of the two patients who testified at the hearing, despite the fact that the Department had access to, and used, these same records at the hearing.

According to the decision, the Hearing Officer had determined that the records were confidential. On this issue -- the confidentiality of patient records -- the Appellate Divi­sion said that "The need for maintaining the confidentiality of the patients' records must be balanced against the concern for [Goohya's] rights and any adverse impact on his reputation, live­lihood and future employment. Clearly, confidentiality, on these facts, must yield to [Goohya's] right to conduct an effective defense to the disciplinary action ... [t]he confi­dentiality accorded the hospital records of mental patients by the Mental Hygiene Law is not absolute. In a proper case, it must yield to the needs of justice." ...

The Appellate Division also noted that the Hearing Officer ruled that while Goohya's witness qualified as an expert in psychiatry, "his testimony would be accorded dimin­ished weight and he would not in fact be given expert status because he had never before testified in an administrative proceeding." In the words of the Appellate Division: "this ruling has absolutely no basis in law.”

In addition, the court faulted the Hearing Officer because he "failed to indicate in his report what weight, if any, he gave to Goohya's expert's testimony."

The Appellate Division concluded that these errors, together with the failure of the Hearing Officer to make findings of fact, prevented it from properly reviewing the final administrative determination by the Commissioner.

Sloppy work. EMM

Hearing in absentia

From Harvey Randall's New York Public Personnel Law blog, "Disciplinary hearings held in absentia":

... [A]n individual against whom disciplinary charges have been filed cannot avoid the consequences of disciplinary action being taken against him or her by refusing to appear at the disciplinary hearing. ...

The general rule in such situations is that if the employee fails to appear at the discipli­nary hearing, the charging party may elect to proceed but must actually hold a "hearing in absentia" and prove its allegations rather then merely impose a penalty on the individual on the theory that the employee's failure to appear at the hearing as scheduled is, in ef­fect, a concession of guilt.

In such case, however, the appointing authority is required to make a reasonable effort to contact the employee before proceeding to hold a disciplinary hearing in absentia. It may be that the employee has a valid excuse for his or her nonappearance such as a family emergency or personal illness, which would justify the hearing officer granting an ad­journment.

The following are factors that should be kept in mind in connection with holding a disci­plinary hearing in absentia:

1. Was the employee properly served with the disciplinary charges and advised of the date, time and place of the hearing?

2. If the individual fails to appear at the hearing as scheduled, a diligent effort must be made to contact the individual to determine if he or she has a reasonable explanation for his or her absence before the hearing officer proceeds with holding the hearing in the absence of the accused employee.

3. A formal hearing must be conducted and the employer is required to introduce evi­dence proving its charges to the hearing officer.

4. A formal record of the hearing must be made and a transcript provided to the appoint­ing authority and, if requested, to the employee.

5. The employee must be advised of the appointing authority's determination and his or her right of appeal if he or she has been found guilty of one or more of the charges.

It should be remembered that it is not may always be a case of the employee being "tried in absentia" -- sometimes the employer fails to appear at the scheduled hearing. ... On the other hand, participating in an arbitration when one need not do so may have consequences equally serious to those flowing from the failure to appear and participate in the arbitration proceeding. ... [I]f a party participates in an arbitration when "it did not have to," it cannot later seek to vacate the arbitration award "because it was not required to submit to the arbitration of the issue." ...

... [P]erhaps critical to due process considerations in connection with taking disciplinary action against a public employee, Section 75 [of the New York public service law] provides that "the burden of proving incompetency or misconduct ... (is) upon the person alleging the same."

In other words, the failure of an employee to file an answer to the disciplinary charges, appear at the disciplinary hearing or his or her even refusing to defend himself or herself against the charges at the hearing does not excuse the employer of its duty to prove the employee's incompetence or misconduct before imposing an appropriate disciplinary sanction.

This is also true in many other administrative matters where the burden of proof is allocated by statute. EMM

Authority to issue Civil Investigative Demands delegated

Holland & Knight has posted a client alert, "Department of Justice Gives U.S. Attorneys New Power to Issue Civil Investigative Demands" by John L. Brownlee, Richard O. Duvall, and Gregory R. "Greg" Hallmark of its Northern Virginia office:

In a move that will likely increase the number and severity of federal investigations of government contractors, Department of Justice leadership has authorized the country's 93 United States Attorneys to issue Civil Investigative Demands (CIDs) in False Claims Act (FCA) investigations. ...

A CID is a powerful and potentially invasive investigatory tool that permits federal investigators to demand production of documents and records, require written answers to interrogatories, and compel depositions. The government can issue a CID before initiating a lawsuit, and often before a potential defendant is able to conduct its own discovery. Also, the government can share CID information with qui tam relators and federal agencies, including federal prosecutors who are conducting criminal investigations.

... [In 2009] Congress rescinded the requirement that the Attorney General personally approve all CIDs and authorized him to delegate his authority to other DOJ officials. ...

While the delegation order does not expand the scope of the Department of Justice's power to issue CIDs in FCA investigations, it is likely to increase the use of CIDs as a practical matter. Prior to [the statute authorizing delegation] and the Attorney General's delegation, a trial attorney from the Department of Justice who wished to issue a CID had to wade through several layers of bureaucracy to obtain the Attorney General's approval. ... [D]elegating CID authority to U.S. Attorneys remove[s] all prior protections and permit[s] U.S. Attorneys to issue CIDs without prior approval. The U.S. Attorney must simply provide notice and submit a report.

Thanks to Lexology for the pointer. EMM

Willful misconduct - not

From Harvey Randall's New York Public Personnel Law blog, "Board member acting on the advice of counsel cannot be deemed to have engaged in willful misconduct".

[Petitioner] asked the Commissioner of Education to remove ... a member of the Board of Education ... from the Board. Without considering the events underlying [Petitioner]’s application, the decision is instructive as it sets out the criteria considered by the Commissioner in addressing such a petition.

The decision explains:

The Education Law §306 authorizes the Commissioner of Education to remove a member of a board of education for a willful violation or neglect of duty under the Education Law for a willful disobedience of any decision, rule or regulation of the Board of Regents or the Commissioner of Education.

To be considered willful, the board member’s actions must have been intentional with a wrongful purpose.

A board member who acts on the advice of counsel has not engaged in a willful violation or neglect of duty justifying removal under Education Law §306.

In an appeal to the Commissioner, a petitioner has the burden of demonstrating a clear legal right to the relief requested and has the burden of establishing the facts upon which the applicant seeks relief. ...

EMM

New administrative law article

From the University of Washington's Current Index to Legal Periodicals:

• Davis, Ethan. An administrative trail of tears: Indian removal. 50 Am. J. Legal Hist. 49-100 (2008-2010). [H]|[L]|[W]

EMM

Watts on Stevens on judicial deferrence

Of interest on SSRN: "From Chevron to Massachusetts: Justice Stevens's Approach to Securing the Public Interest" by Kathryn A. Watts (Washington). Abstract: 

During the past three decades, one Supreme Court justice - Justice John Paul Stevens - has authored two of the most significant administrative law decisions that speak to the judiciary’s role in checking agency interpretations of the statutes that they administer: Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., a landmark 1984 decision in which the Court unanimously upheld the EPA’s construction of a term found in the Clean Air Act, and Massachusetts v. EPA, a 2007 decision in which a five-justice majority handed a major win to global environmental security by ordering the EPA to reconsider its refusal to regulate greenhouse gases under the Clean Air Act. Although both decisions were written by Justice Stevens and both involved the EPA and the Clean Air Act, the two decisions seem to send very different messages about the judiciary’s policing function. In Chevron, the Court embraced a highly deferential, hands-off view of the judiciary, whereas in Massachusetts, the Court embraced a more protective, active judicial role. In light of the seemingly divergent messages sent by Justice Stevens in Massachusetts and Chevron, this Article seeks to assess where Justice Stevens stands when it comes to the judiciary’s policing role with respect to agency action that impacts matters of public security, health, safety and welfare. This Article ultimately concludes that when Justice Stevens’s opinions are viewed as a whole, a fairly clear picture emerges: Justice Stevens cannot accurately be labeled as either the proponent of a hands-off judiciary (à la Chevron), or the proponent of an active judiciary (à la Massachusetts) when it comes to securing the public interest. Rather, as a strong adherent of purposivism, Justice Stevens seeks to effectuate Congress’s own animating goals - paying particularly close attention to Congress’s protective and remedial purposes, such as the protection of the integrity of our animal species, our air, and our waters. Thus, although he expressly eschews deciding cases based on his own policy preferences, his purposivist approach to statutory interpretation seems to enable him to give agencies the leeway they need to facilitate broad protective goals set by Congress and conversely to check agencies when they act counter to Congress’s protective or remedial purposes.

EMM

Pleading yourself out of court

From the Customs Law blog of Lawrence Friedman (Barnes/Richardson), "Pleading is the New Black".

...

The pleading pendulum has swung a bit back toward a more technical style of pleading. ...

Recently, pleading has been an issue in cases at the Court of International Trade. This was an issue in Tip Top Pants and in Totes. Now, it is an issue in Nereida Trading Co., Inc. v. United States.

The specific issues in this decision have to do with whether Nereida properly plead claims under the fifth amendment and the Administrative Procedure Act.

The fifth amendment theory was that Customs and Border Protection improperly applied the presumption that Nereida had been reimbursed for antidumping duties because it failed to file a timely certificate to the contrary. According to the Court, the elements of a fifth amendment due process claim are a lack of both notice and an opportunity to be heard that results in a a fundamental unfairness under the circumstances. According to the facts it asserted, Nereida received prior notice of Customs' intent to liquidate based on the assumption of reimbursement and failed to timely respond. Thus, it did not plead a fifth amendment case.

The second issue involves the Administrative Procedure Act. The importer filed a typical customs protest, which CBP denied. That creates an opportunity for judicial review under 19 USC 1514 and 28 USC 1581(a). Nereida also claims a right to relief for an alleged "violation" of the APA. The problem with this claim is that the APA provides for judicial review under the Act only where there is no other adequate remedy in a court. Nereida asserted a claim seeking the same relief under 1851(a) and did not plead any facts showing that review of the denied protest was an inadequate remedy. Plus, the Court held that recognizing an independent cause of action allowing to APA review of protestable decisions would frustrate the remedy provided for in 19 USC 1514.

Accordingly, the Court dismissed both counts. There are other claims (including the denied protest) that remain alive in this case. So, there is probably more to this story. In the meantime, the takeaways from the case seem to be:

    * The CIT is looking closely at pleadings and is amenable to Rule 12(b)(5) motions to dismiss

    * Late responses and unfair results do not constitute a lack of due process

    * The APA neither trumps nor complements the existing scheme for judicial review of protestable decision.

And you can plead yourself right out of court. EMM

Agency interpretation of statutes

From Law.com, "Car Emissions Rules Likely to Trigger Litigation" by Jenna Greene of the National Law Journal:

The most legal traction may come when the EPA finalizes its PSD [Prevention of Significant Deterioration - ed.] tailoring rule, which "would govern the scope of the Clean Air Act new source permit system," said Wyckoff.

Under the Clean Air statue as written, millions of small sources of greenhouse gases would be required to get EPA permits. Citing the doctrine of absurdity, the EPA has moved to "tailor" the scope of the rule by raising the thresholds so only major polluters would be affected.

"The agency's use of the absurdity doctrine is in my judgment a very big act of discretion," said Wykoff. "The D.C. Circuit is likely to be unhappy with EPA's efforts to craft an administrative solution to a difficult problem."

Absurdity is a rule of statutory interpretation that opposes the plain meaning rule. I have never heard of an executive agency using it. It is seen in court opinions when there is an obvious - and I mean really, really obvious - screwup in the publication of a statute. Usually the opinion will cite to legislative history to show that a word (such as "not") is missing. It is rarely used even by courts where the problem is that the world has changed since the law was passed. Laws that seem spectacularly silly but are not actually unconstitutional are left to the legislature to repair. I don't know the history of the Clean Air Act, but it is not impossible that this permitting provision was fully intentional, either because legislators wanted it to apply to all the small sources or because they snuck it in as a "poison pill" that would motivate opposition to the Act. Or both. Neither of those is "absurd". EMM