NCCBI thanks these
legislators for their support of the APA rewrite
effort:
Rep. Nesbitt
Rep. Wilson
Sen. Miller |
Major Rewrite of
Administrative Procedures Act Passes
Download a complete
fiscal analysis and explanation of the
legislation (28k pdf file)
Ending a
two-year debate and handing NCCBI one of its
major legislative goals for the year, the House
voted 99-11 on Tuesday to approve legislation
that significantly restructures the way
administrative hearings will be handled in North
Carolina in the future. The primary purpose and
effect of the bill is to send a message to
government agencies that they are to give greater
credence to the decisions reached by
Administrative Law Judges (ALJs) in the Office of
Administrative Hearings.
The bill, H.
968 Amend Contested Case Proceedings,
sponsored by Rep. Martin Nesbitt (D-Buncombe),
passed the House last year but became bogged down
in the Senate. After 18 separate revisions, the
Senate eventually approved the bill and returned
it to the House for concurrence in amendments,
which the House did Tuesday.
At issue is what happens when someone contests a
decision by a state agency. For most NCCBI
members, this might happen after a state agency
denies a required environmental permit, for
example, or issues a fine or other penalty.
Up to now, such decisions by state agencies could
be appealed to the Office of Administrative
Hearings and the case would be heard by an ALJ.
The parties would present evidence much like a
regular court case. But once the ALJ announced
his decision, the state agency was not bound to
abide by it. In fact, statistics showed that in
those cases in which the ALJ disagreed with the
initial decision by the agency, the agency then
ignored the ALJ's decision the vast majority of
the time. From there, the plaintiff would have to
take the matter into Superior Court.
A major complaint NCCBI has repeatedly heard
about this process is how much time seems to be
wasted. The legislation enacted Tuesday shortens
somewhat the times in which the agencies must
act. The sponsors of the bill hope and believe
that it will provide faster and fairer hearings
for individuals, state employees, private
companies, local governments and anyone else
whose interactions with North Carolina are
governed by the state's Administrative Procedure
Act.
The bill makes the decision by the ALJ more
meaningful in a number of ways, as reflected by
the basic fact that the ALJ's action is no longer
a "recommended decision," but is now a
decision, which is returned to the agency for a
"final decision."
The legislation says the agency is to adopt the
decision by the ALJ unless the agency
demonstrates that the decision is clearly
contrary to the preponderance of the evidence in
the record.
The bill places special requirements on the
agency if it tries to modify the findings of fact
by the ALJ, and also requires explanation by the
agency if it does not accept the result reached
by the ALJ. Even more importantly, if the agency
does not accept the decision by the ALJ, the
standard of judicial review by the Superior Court
is modified from its current deferential standard
to a standard known as "de novo."
In this de novo review, the court takes the
record (including the decisions by the ALJ and
agency) and makes its own decision, giving no
deference to any previous decision. The court is
given broad powers to affirm, reverse or modify
the decision. It is contemplated that this new
formulation will allow courts, for the first
time, to correct agency decisions that the court
believes to be wrong, but which in the past, have
been allowed to stand, because the courts felt
constrained by the very deferential standards
contained in the APA.
The bill makes other changes designed to
implement a fairer process. It allows a reviewing
court to grant attorney fees to a party appealing
an administrative decision to include the time
and expense of the hearing in front on the ALJ
and the agency, reversing the current law, which
allows such fees only for the time spent before
the court. (The party must, however, still meet
the requirements in the fee statute, including
that the agency acted without substantial
justification.)
The bill also allows the ALJ to award attorneys
fees for state employee appeals, as well as
making other significant changes in the appeals
process for those employees, the most significant
of which is to place the burden of proof on the
State in cases where the employee is discharged,
suspended or demoted for just cause. Finally, the
bill requires that ALJs must comply with relevant
portions of the Model Code of Judicial Conduct.
The bill reflects the hard work of Reps. Martin
Nesbitt and Connie Wilson, as well as Sen. Brad
Miller. (The committee substitute adopted by
Senator Miller's Judiciary 2 Committee was draft
No. 18 as reviewed by a working group composed of
supporters and representatives of the Governor
and Attorney General's office.) The bill was
supported by a broad and diverse coalition of
groups, including NCCBI, the N.C. Home Builders,
and other industry groups, as well as the Academy
of Trial Lawyers, the AFL-CIO, and the N.C.
Justice & Community Development Center (which
often represents State employees).
Although the final bill reflects a less drastic
change than would have been made by the bill as
initially approved by the House (which gave the
ALJ's final decision-making authority), the bill
as passed by the General Assembly reflects an
important effort by the legislature to deal with
those instances where the agencies appear not
have given the ALJs' recommended decisions enough
credence in the past. For the majority of those
agency decisions which are upheld by ALJs and
then readopted by the agencies, the bill makes
much more modest changes, although still
shortening the time periods for appeal and
allowing attorneys fees in appropriate cases.
Note: NCCBI thanks Charles Case of the
Hunton & Williams law firm in Raleigh for
helping prepare this article.
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