ACUS adopts recommendations for best practices in informal dispute resolution

A federal administrative ruling may be classified into three types: A, B and C.

The A-type judgment is covered in accordance with known case law provisions Administrative Procedure Act (APA)—Articles 554, 556, and 557.

In the case of a type B judgment, the Act requires the agency holds an evidentiary hearing, but the APA ruling sections do not apply. Type B adjudication is governed by agency procedural rules that closely follow Type A adjudication, except that administrative law judges do not preside. Type B adjudication is equally formal, and often more formal, than Type A adjudication. It should not be referred to as “informal adjudication.”

In the case of a C-type decision, the agency renders a decision that is legally binding on individuals or entities, but the agency does not hold an evidentiary hearing at any point in the administrative process. This type is true “informal adjudication.”

The A and B case law has been thoroughly examined. Recommendation 2016-4this Administrative Conference of the United States (ACUS) has presented a set of best practice recommendations for Type B.

But the C-style ruling has been largely ignored—and with good reason. There are many federal C-style ruling schemes, and each one is different from the next. Most C-style rulings require agency decision-makers to exercise considerable discretion, but there is no uniformity among them. Their decision-making methodology involves consultation between the private party and staff, inspections, testing, document exchanges, and mediation.

C-type judgment ranges from very high-stakes disputes to those in which the stakes are trivial. For example, the decision to grant a banking license or to authorize the marketing of a new drug is informal. So is the decision to issue a visa or to consider issuing or renewing a license to build a hydroelectric project such as a dam. The decision to grant a research application, or to terminate such a grant, is informal.

Many agencies rely on inspections rather than hearings. In the area of ​​national security, decisions regarding foreign investment in the United States are made by Committee on Foreign Investment in the United States and economic sanctions U.S. Office of Foreign Assets Control are Type C judgments. The Internal Revenue Service uses an informal judgment to decide whether to seize a taxpayer’s assets for an unpaid tax shortfall. Permits to use national forests for cattle grazing or mining are informal judgments. Even decisions about whether to disclose documents required by the Freedom of Information Act or whether to grant an exemption from the regulations fall within the definition of a Type C judgment. At the trivial end of the spectrum, decisions to deny someone overnight lodging at a national forest campground or to reject an improperly packaged package at the post office are also Type C judgments.

C-type judgment differs from Types A and B in a fundamental way. In Types A and B there is a sharp division between the “front-line decision” of staff deny application or prosecution of the violation and the “main” interview stage. As in criminal law, the decision-maker at the interview stage is neutral and has no role in the investigation or the front-line decision. However, in Type C cases, there is often no such division. The same person or team that examined Front-line litigation and decision-making is often the agency’s primary decision – the stage where the private party can present evidence and arguments.

Type C case law defies any uniform statutory treatment. There is no one-size-fits-all solution to the Type C problem. Nevertheless, the design of any Type C scheme should provide some level of appropriate procedure for private litigants that can replace, at least in part, the protection provided by an evidentiary hearing in Types A and B.

While we often think of a C-judgment as a black hole without procedures, that view is not entirely accurate. In fact, there are often significant constitutional, statutory, and case law protections at play, including “consultative” due processAPA Sections 555 and 558, government ethics statutes and regulations, the Administrative Practice Act (which guarantees the right to legal representation), proactive disclosure under FOIA, ombudsman regulations, and limitations placed on agency decision-making through the judicial review process. Of course, a Type C ruling is almost always limited by procedural rules specific to the agency in question.

In ACUS Recommendation 2023-5ACUUS adopted a set of nine best practice proposals for C-type case law, developed in part based on the existing set of procedural safeguards.

Proposals contained in Recommendation 2023-5 switch on provisions on: adequate notice, opportunity to present evidence and arguments, representation, neutrality of the decision-maker, statement of reasons, administrative review of the initial decision, access to an ombudsman, adoption of procedural rules and quality assurance.

The proposals contained in Recommendation 2023-5 aim to: to serve as the raw material from which each agency can tailor C procedures to its specific circumstances. Agencies designing C procedures must oscillate:the stakes involved in the decision, accurate fact-finding and wise use of authority, available resources to support decision-making, minimizing costs, and achieving stakeholder satisfaction with the perceived fairness of the procedure.

Regardless of the stakes, each C-type dispute is important to private stakeholders and often to agency programmatic concerns and budget resources. For many in the private sector, the informal resolution process is the face of justice. The private litigant should perceive the resolution process as fair and reasonable. The litigant should have the opportunity to present evidence and arguments and to learn the reasons for an adverse decision. The process should be designed to reduce the risk of error and minimize costs and delays. Administrative lawyers and administrative agencies should focus on designing informal resolution procedures that wisely balance these competing demands.