Authority of Education Department Administrative Law Judges in Conducting Hearings ( 1990 )

Authority of Education Department Administrative
Law Judges in Conducting Hearings
A dm inistrative law ju d g e s w ithin the D epartm ent o f E ducation, being em ployees o f the D ep art­
m ent, do n o t have authority to conduct adm inistrative hearings in a m anner contrary to the
D ep artm en t's rules, to invalidate such rules, o r to interpret such rules in a m anner contrary to
the S ecretary ’s interpretation.
January 12, 1990
M em orandum O p in io n Fo r T he G eneral C o u n sel
D epa rtm en t O f E d u c a t io n
You have requested our opinion whether administrative law judges (“ALJs”)
within the Department of Education (“Department”) who preside over agency
hearings required by 20 U.S.C. § 1234 to be conducted in accordance with
the Administrative Procedure Act, 5 U.S.C. §§ 551-596 (“APA”), have inde­
pendent authority to conduct those proceedings in a manner contrary to the
Department’s rules, to invalidate such rules, or to interpret such rules in a
manner contrary to the Secretary’s interpretation.1 We conclude that ALJs,
being employees of the Department, have no such authority. While ALJs
have authority to regulate the conduct of administrative proceedings before
them, such authority remains “[sjubject to published rules of the agency,” id.§ 556(c), and therefore may be exercised only in accordance with “such
rules as the Secretary shall prescribe by regulation.” 20 U.S.C. § 1234(f).
I. Background
The questions posed here concerning the scope of a Department A LJ’s
power have arisen as a result of decisions by such ALJs asserting indepen­
dent authority over procedural matters in administrative hearings. You have
provided us with a copy of one such decision, the recent opinion of ALJ
Daniel R. Shell in In the Matter o f Franklin-Northwest Supervisory Union,
No. 89-4-R (“Order Denying Stay for Settlement Negotiations [and] Order
Granting Stay for Mediation”) (Dec. 11, 1989) (“Opinion”). In that matter,
applicant Franklin-Northwest and the Department jointly requested a stay of
administrative proceedings pending settlement negotiations. The applicable
Department regulation provides that “[i]f the parties to a case file a joint
motion requesting a stay of the proceedings for settlement negotiations or
the approval of a settlement agreement, the ALJ grants the stay.” 34 C.F.R.
§ 81.14(a) (1989).
' See M emorandum for the Under Secretary, Department of Education, from Edward C. Stringer, G en­
eral Counsel, Departm ent of Education (Dec. 15, 1989) (expressing General Counsel’s concerns with
recent ALJ rulings).
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ALJ Shell denied the motion. He concluded that administrative law judges
have the duty under the APA and under their delegated judicial authority in
the Department of Education to exercise the judicial function in an indepen­
dent m anner and to regulate the course of proceedings before them. ALJ
Shell concluded that 34 C.F.R. § 81.14(a) interfered with his exercise of this
judicial responsibility, and he ruled that “the Secretary cannot promulgate
regulations that would deny the [administrative law] judge the opportunity
to exercise the responsibilities of the judicial function of 5 U.S.C. 554, 556,
557 nor deny the [administrative law] judge judicial independence.” Opin­
ion at 9. Mr. Shell therefore rejected the authority of the Secretary’s regulation
and denied the joint stay application of the Department and Franklin-North­
west. In the alternative, Mr. Shell construed 34 C.F.R. § 81.14(a) as not
requiring an ALJ to grant a joint stay motion for settlement.
EL Analysis
Administrative law judges have no constitutionally based judicial power,
see Ramspeck v. Federal Trial Examiners Conference, 345 U.S. 128, 132-33
(1953), but are employees of the executive branch department or agency
em ploying them. See 20 U.S.C. § 1234(c) (statute establishing the Office of
Administrative Law Judges within the Department of Education provides
that ALJs “shall be officers or employees of the Department”). As such,
ALJs are bound by all policy directives and rules promulgated by their agency,
including the agency’s interpretations o f those policies and rules. See Nash
v. Bowen, 869 F.2d 675, 680 (2d Cir.), cert, denied, 493 U.S. 813 (1989);
M ullen v. Bowen, 800 F.2d 535, 540-41 n.5 (6th Cir. 1986); Brennan v.
D epartment o f Health and Human Services, 787 F.2d 1559 (Fed. Cir.), cert,
denied, 479 U.S. 985 (1986); Goodman v. Svahn, 614 F. Supp. 726, 728
(D.D.C. 1985); Association o f Administrative Law Judges, Inc. v. Heckler,
594 F. Supp. 1132, 1141 (D.D.C. 1984); c f D'Amico v. Schweiker, 698 F.2d
903, 906 (7th Cir. 1983). Accord 34 C.F.R. § 81.5(b) (embodying in Depart­
ment regulations the requirement that ALJs adhere to policies and rules of
the agency). ALJs thus do not exercise the broadly independent authority of
an Article III judge, but rather operate as subordinate executive branch offi­
cials who perform quasi-judicial functions within their agencies. In that
capacity, they owe the same allegiance to the Secretary’s policies and regu­
lations as any other Department employee.
The obligation of ALJs to adhere to their employer’s policies and rules
extends to matters of administrative procedure in the conduct of agency
hearings. The APA explicitly provides that the power of employees presid­
ing at agency hearings is subject to the rules prescribed by the employing
agency:
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Subject to published rules o f the agency and within its pow ­
ers, employees presiding at hearings may — . . . (5) regulate
the course of the hearing; . . . (9) dispose of procedural re­
quests or similar matters; . . . .
5 U.S.C. § 556(c) (emphasis added). The statute establishing the Office of
Administrative Law Judges within the Department echoes the restrictions of
§ 556(c) by stating that
[t]he proceedings of the Office shall be conducted according
to such rules as the Secretary shall prescribe by regulation in
conformance with the rules relating to hearings in Title 5,
sections 554, 556, and 557.
20 U.S.C. § 1234(f)(1).
That ALJs remain subject to the authority of the agency in all matters of
policy, procedure, and interpretation of law is wholly consistent with the
type of judicial independence mandated by the APA. The APA requires both
a separation of functions within the agency, 5 U.S.C. § 554(d), and that
ALJs have certain tenure protections. Id. § 7521. Thus, to maintain the
integrity of agency adjudicative proceedings, an ALJ is prohibited from cer­
tain ex parte contacts with parties involved in the adjudication, may not be
responsible to another employee engaged in investigative or prosecutorial
functions, and may not participate in the decision of a case in which he has
performed an investigative or prosecutorial function. These restrictions do
not, however, establish that ALJs are free to ignore agency rules for the
conduct of agency hearings. To draw the conclusion that ALJs are not bound
by such agency rules would be to read § 554(d) as implicitly nullifying §
556(c). Such a construction would be contrary to well established principles
of statutory interpretation disfavoring implied repeals. See Ruckelshaus v.
Monsanto Co., 467 U.S. 986, 1017-18 (1984) (repeals by implication are
disfavored). Rather, an ALJ is “independent” within the meaning of § 554(d)
only in that' he may not also perform another agency function with respect to
a proceeding over which he presides as a hearing officer.
Similarly, 5 U.S.C. § 7521 provides ALJs with only a limited “indepen­
dence” from agency officials by providing tenure protection from unjustified
agency reprisal. Section 7521 provides that ALJs may be removed from
their positions, or otherwise disciplined, only for cause and after notice and
a hearing before the Merit Systems Protection Board. 5 U.S.C. §§ 5372,
7521. See generally 5 C.F.R. §§ 930.201-930.216 (1981). This measure of
independence does not, however, mean that ALJs may disregard agency rules
that are binding on them. Mullen, 800 F.2d at 540 n.5. To the contrary,
failure to adhere to agency policies and procedures may constitute “good
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cause” sufficient to warrant the discharge or discipline of an employee serv­
ing as an administrative law judge. 5 U.S.C. § 7521; see, e.g., Brennan v.
D epartment o f Health and Human Services, 787 F.2d 1559 (Fed. Cir.), cert,
denied, 479 U.S. 985 (1986) (affirming suspension of ALJ for failure to
comply with office administrative procedures).
A 1977 published Attorney General opinion supports our conclusion. In
describing the legislative history of the APA, that opinion notes that Con­
gress rejected a minority recom m endation for complete segregation of
administrative law judges into independent agencies in favor of more limited
independence for ALJs in terms of tenure and compensation. 43 Op. Att’y
Gen. 64-67 (1977). The opinion does observe that, within the scope of
powers granted ALJs under 5 U.S.C. § 556(c), those powers are to be exer­
cised without agency interference. But this conclusion in no way implies
that ALJs are not “[s]ubject to published rules of the agency,” 5 U.S.C. §
556(c), in the conduct of agency proceedings and the exercise of their other
statutory powers. Such an implication would be contrary to the plain lan­
guage o f § 556(c).
ALJ Shell relied on Butz v. Economou, 438 U.S. 478, 513 (1978), as
support for his theory that ALJs are not bound by agency rules. We believe,
however, that the Butz case is fully consistent with our conclusion. In that
case, the Supreme Court described the role of an ALJ as being “functionally v
com parable” to that of a judge. Read in context, however, that statement
provides no support for the assertion that ALJs may conduct agency hear­
ings or adjudications independently of agency regulations. The issue in Butz
was whether ALJs and other investigative, prosecuting, and trial officials of
the Department of Agriculture were entitled to the same immunity from tort
liability for their official actions as Article III judges and government pros­
ecutors. The Court held that, like Article III judges, agency officials must
be able to make decisions free from the intimidation or harassment of retal­
iatory litigation. Id. at 514-17. In that context, the Court held that an
administrative law judge is “functionally comparable” to an Article III judge,
who enjoys absolute immunity. Significantly, however, the Court held that
this functional comparability also applied to prosecutors and grand jurors,
id. at 511-12; see Im bler v. Pachtman, 424 U.S. 409 (1976), and therefore to
agency officials who initiate administrative proceedings against individuals,
and to those who conduct trials and present evidence. Butz, 438 U.S. at 515-
17. “Functional comparability” in this context thus bears no relation to the
scope of an ALJ’s authority with respect to agency rules. Butz does not
overrule the holding in Ramspeck that ALJs are “semi-independent subordi­
nate hearing officers,” id., 345 U.S. at 132 (original quotation marks omitted,
em phasis added), or supersede 5 U.S.C. § 556(c), which plainly requires
ALJ subordination to agency procedures for conduct o f administrative hear­
ings or adjudications.2
As an alternative ground for denying the joint stay application in the
Franklin-Northwest matter, Mr. Shell interpreted 34 C.F.R. § 81.14(a) as not
requiring an ALJ to grant a joint stay motion for settlement. The regulation
provides that, upon joint motion of the parties requesting a stay of proceed­
ings for settlement negotiations, “the ALJ grants the stay." Id. Mr. Shell
declared that because the language states that “the ALJ grants” rather than
“the ALJ shall grant,” the granting of the motion was not mandatory. Opin­
ion at 10-12. Based on the analysis provided above, we believe that it is
clear that an ALJ, being a subordinate employee of the Secretary, is without
authority to adopt a construction of a Department rule at variance from the
construction of the Secretary or his designee (here, the General Counsel).
See Nash, 869 F.2d at 680; Brennan, 787 F.2d at 1559-61; Bauzo v. Bowen,
803 F.2d 917, 921 (7th Cir. 1986); Association o f Administrative Law Judges,
594 F. Supp. at 1141.
In any event, we believe that the Department’s interpretation of § 81.14(a)
is plainly correct. The fact that the regulations are written in a present
tense, active voice style does not negate their mandatory character. We
think Mr. Shell’s construction is strained and effectively nullifies the regula­
tion. The plain import of this provision is that the ALJ is required to grant
the stay upon the joint motion of the parties. The explanatory notes accom ­
panying the proposed regulations clearly indicate that the ALJ is required to
stay the proceedings if requested by both parties. See 53 Fed. Reg. 48,866(1988). We are informed that no comments were received on this section of
the proposed regulations. The wording of the final regulation therefore was
not changed, nor was the intended meaning of the provision as set forth in
the explanatory comment contradicted. Accordingly, the correct inference is
that the meaning and effect o f the regulation were unchanged from that
reflected in the explanatory comment accompanying the proposed rule.
2 No due process issue is presented by the requirement that ALJs adhere to the agency’s policies and
rules. The requirem ent specifically at issue here — that ALJs stay administrative proceedings for
settlem ent discussions upon the joint motion of the parties, 34 C.F.R. § 81.14(a) — cannot be said to
conflict with any provision of the APA or to deprive any person of due process of law. M oreover, it is
plain that ALJs lack standing to assert such a due process challenge, which can arise only w here a
private party is aggrieved by the adjudicative procedures employed by an agency. Goodman, 614 F.
Supp. at 728; see Kalaris v. Donovan, 697 F.2d 376, 399 n.91 (D.C. Cir.), cert, denied, 462 U.S. 1119(1983); D ’Am ico, 698 F.2d at 905-06. An administrative law judge lacks any legally cognizable “right”
to raise a constitutional challenge to an agency rule or procedure that does not injure him in his personal
capacity, but has only such rights of stature by virtue of his position as are conferred by statute. Ramspeck,
345 U.S. at 133; Goodman, 614 F. Supp. at 728. See also Nash, 869 F.2d at 680; Association o f A dm in­
istrative Law Judges, 594 F. Supp. at 1141.
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III. Conclusion
For these reasons, we conclude that administrative law judges within the
Departm ent o f Education must abide by the written rules and regulations
adopted by the Secretary for the conduct of administrative proceedings and
by the Secretary’s interpretation of such regulations.
WILLIAM P. BARR
Assistant Attorney General
Office o f Legal Counse
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