This article is the next installment of NALC’s blog series on legal procedure. A previous blog post in the series explained agency rulemaking. This post explains what happens when someone violates one of those rules. When someone violates an agency’s rule, also known as a regulation, the agency can proceed with a process known as adjudication. However, agencies also adjudicate other things such as the granting of public benefits and applications for certain federal programs. Simply put, agency adjudications are anything that result in an order from the agency. This blog post explains agency adjudication and the related concept of judicial review using examples of programs within the United States Department of Agriculture (USDA) that are not eligible for USDA’s National Appeals Division Hearings.
There are two main hallmarks of adjudication. Adjudication is (1) retrospective, and (2) applies specifically. These hallmarks are what differentiate adjudication from regulation. Adjudication is retrospective, or backwards looking, because it is often the result of a dispute over something that has already happened. This differs from regulation which is prospective, or forward looking. Secondly, and as the judge explained in Yesler Terrace Community Council v. Cisneros, 37 F.3d 442, 448 (9th Cir. 1994), “adjudications resolve disputes among specific individuals in specific cases, whereas rulemaking affects the rights of broad classes of unspecified individuals.”
In agency adjudication, there are usually two parties involved. Sometimes the claim or dispute that leads to agency adjudication is between two private parties, but usually the claim or dispute is between a private party and an agency.
An example of agency adjudication in food and agricultural law that resolves disputes between two private parties are the Perishable Agricultural Commodities Act (PACA) reparation hearings. These hearings are conducted by the Agricultural Marketing Service (AMS), an agency within the USDA. AMS’s website explains that growers, commission merchants, dealers, and brokers can file a formal PACA complaint with the agency “to recover damages related to produce transactions conducted in the course of interstate and foreign commerce.” The result of these PACA complaints are orders issued by USDA which usually direct one party to pay the other.
When there is a dispute between the agency and a private party, the agency is likely enforcing its regulations against the private party. For example, the Animal and Plant Health Inspection Service (APHIS) is in charge of administering the Animal Welfare Act (AWA), and has promulgated regulations to do so. The AWA codifies the requirements for transporting, selling, and handling certain animals such as big cats (lions and tigers), and animals used in scientific research laboratories. Under the AWA and its regulations, those who transport, own, or care for regulated animals must obtain a license from APHIS. If APHIS finds someone is caring for such animals without a license or is violating the terms of the license, then APHIS can initiate an adjudicatory proceeding against the violating party.
Formal v. Informal adjudication
Similar to how agencies can conduct either formal or informal rulemaking, agencies can also conduct either formal or informal adjudication. The Administrative Procedure Act (APA), which Congress passed in 1946 to established uniform procedures across all federal agencies, defines what is commonly referred to as formal adjudication. However, few situations require formal adjudication. When formal adjudication is not required, federal agencies usually conduct what is commonly referred to as informal adjudication.
Under the APA, an agency only has to conduct formal adjudication if a statute directs the agency to conduct adjudicatory hearings “on the record” or explicitly states that the adjudicatory proceedings must adhere to the APA. Sections 554, 556, and 557 of the APA set forth the formal adjudication procedures. These sections require agencies to conduct adjudications similarly to how court trails are conducted. This means that the agency must give the other party or parties notice of the hearing, allow them to submit evidence and introduce witnesses, argue their side of the case, and conduct cross examination of adverse witnesses. Additionally, formal adjudicatory proceedings are presided over by a neutral third party called an Administrative Law Judge (ALJ). ALJ’s are employees of the agency, but must adhere to certain rules to ensure neutrality.
In addition to the requirements in the APA, many agencies have additional rules of practice and procedure that apply to adjudication. As an example, USDA has certain rules of practice governing formal adjudicatory proceedings. These rules are found at 7 C.F.R. §§ 1.130-1.151. USDA also has supplemental rules of practice for certain statutes such as the Endangered Species Act, the AWA, and the Horse Protection Act. Additionally, there are rules of practices within statutes such as PACA and the Packers and Stockyards Act. USDA’s Office of Administrative Law Judges website offers links to all of these different rules of procedure.
Using the AWA example from above, if APHIS decides it is appropriate to suspend or revoke an AWA license, it usually does so through the formal adjudication process. Although the AWA does not contain the words “on the record” or refer to the APA, USDA has created specific procedures for AWA license suspensions and revocations that resemble formal adjudication. Therefore, APHIS must give notice to the licensee of the adjudication, and allow the licensee an opportunity to present evidence as to why their license should not be suspended or revoked. The ALJ will decide whether or not the licensee will keep their license. Many of these cases are decided through summary judgment, meaning that the ALJ will make the decision without an in-person hearing. However, an ALJ can only issue a summary judgment if there are no disputed facts. If the agency and the licensee disagree on the facts of the case, then a hearing will take place. Such hearings take place in the state that the licensee resides in. Because ALJs are usually based out of Washington D.C., they often have to travel to these hearings. During the COVID-19 pandemic, however, these hearings are occurring via tele-conference.
Informal adjudication occurs anytime there are adjudicatory proceedings that are not required to adhere to formal adjudicatory procedures. For example, APHIS conducts an informal adjudication when it decides to give an AWA license to someone who wishes to transport, sell, or care for animals regulated by the AWA. This is informal adjudication because there is not a trial involved, but the action still impacts someone’s specific rights.
Exhausting Administrative Remedies & Judicial Review
Often a party can appeal an adjudicatory decision within an agency. To have a case heard by a judge who is not employed by a federal agency, the appealing party must first exhaust their administrative remedies. Meaning, the appealing party must go through all the levels of appeal the agency makes available before seeking review from a federal judge. Seeking review from a federal judge is a process known as judicial review. Within the USDA, certain programs have fewer levels of appeal before an appealing party can seek judicial review. However, other programs have many levels of appeal.
Those with many levels of appeal are those eligible for the National Appeals Division (NAD) appeals process. Programs eligible for NAD review includes those that fall under USDA’s Farm Production and Conservation (FPC) and the Rural Development mission areas. The agencies that fall under the FPC mission area includes the Farm Service Agency, the Natural Resources Conservation Service, and the Risk Management Agency. Under the Rural Development mission area, programs implemented by the Rural Housing Service, the Rural Business-Cooperative Service, and the Rural Utilities Service are subject to NAD review. Because NAD review is available for these programs, parties who wish to appeal adjudicatory decisions related to these programs must seek NAD review before seeking judicial review. To learn about the NAD appeal process, read this National Agricultural Law Center publication.
Programs in USDA’s other mission areas—such as the Food Safety; the Marketing and Regulatory Programs; and the Food, Nutrition, and Consumer Services mission areas—have only one level of appeal within the agency before parties can seek judicial review. Within these mission areas, exhausting agency review requires parties to appeal an ALJ’s decision to USDA’s Judicial Officer. The Judicial Officer, like the ALJ, is employed by the agency but is bound by certain rules and procedures that aim to ensure neutrality. Only after the party has received a decision from the Judicial Officer, will they have exhausted all avenues of agency review and may appeal their case to the federal court system.
An agency cannot appeal a case to the federal court system, only private parties subject to final agency action can do so. However, federal judges often give a lot of discretion to agency decisions. This means that if a private party has succeeded in obtaining judicial review, they usually have a hard time winning their case in the federal court system. These parties usually have to meet the high burden of proving the agency action was arbitrary and capricious. Under the arbitrary and capricious standard, agency actions will be upheld as long as the agency had a rational reason for taking that action. This means that a private party wishing to prove an agency action was arbitrary and capricious must prove that the agency had no rational reason for taking the action. This tends to be a hard task for private parties.
A party can usually appeal any agency adjudication. For example, if APHIS—where programs are not eligible for NAD review—makes an informal adjudicatory decision such as dening a party an AWA license, that party can appeal that denial to the ALJ. The ALJ will review both the license application and APHIS’s decision for denying the license. If the ALJ agrees with APHIS and finds that the party should not have an AWA license, the party can then appeal that decision to the Judicial Officer. If the Judicial Officer also upholds the denial, the party can appeal the decision to the federal court system.
The term “agency adjudication” refers to many types of agency actions. The hallmarks of adjudication are retrospectivity ad specificity. Because the hallmarks of adjudication are the opposite of the hallmarks for regulation, some describe adjudication as any agency action that is not regulation. In food and agricultural law, the USDA and other federal agencies take part in both formal and informal adjudication. Regardless of whether the adjudication was formal or informal, the party that the agency actions affects can usually seek judicial review, but only after they have exhausted all available administrative remedies.
For an example of a Judicial Officer decision, click here.
To visit the USDA’s Office of Administrative Law Judges website, click here.
To visit the USDA’s Office of the Judicial Officer website, click here.
To visit the USDA’s National Appeals Division website, click here.
To learn about the NAD appeal process, read this National Agricultural Law Center publication.
To view USDA adjudicatory proceedings on the NALC website, click here.
To learn more about administrative law generally, visit NALC’s Administrative Law Reading Room, here.
**This article was written by former NALC Staff Attorney Jana Caracciolo.