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| The OAH |
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Oregon's
Office of Administrative Hearings
History
For the last half century, there has been a movement in the United States to separate agency regulation and enforcement from its hearing function. If a citizen or business disputes an action taken by state government and asks for a hearing, an agency employee should not be the one to decide whether the action is lawful or not. Said differently, no agency should be the policeman, prosecutor, judge and jury of its own action. To solve this, many states have created "central panels" of administrative law judges. These panels are independent of the agencies whose hearings they hold.
There have been attempts to create a central panel in Oregon during the last twenty years. None was successful. In 1997, however, Representative Lane Shetterly and Senator Neil Bryant, both attorneys, sponsored House Bill 2948, which would have created an "office of administrative hearings." The Legislature passed the bill. However, the Governor vetoed it, largely because of concerns over cost.
Nevertheless, he authorized a study group, chaired by Representative Shetterly, to further study the idea and to recommend changes to the current system. The result was House Bill 2525,[1] sponsored at the request of the Governor by Representative Shetterly and Senators Neil Bryant and Kate Brown. The Oregon Legislature passed the bill, and the Governor signed it into law. The Hearing Officer Panel became operational on January 1, 2000.[2] The Panel was a pilot, due to sunset in 2003 unless the Governor and Legislature took affirmative steps to make it permanent.
In 2003, Representatives Shetterly (Speaker Pro Tem of the House) and Phil Barnhart, and Senators Peter Courtney (President of the Senate) and Roger Beyer sponsored House Bill 2526 at the request of Hearing Officer Panel Oversight Committee. The principal features of the bill were to remove the sunset provision; to rename “Hearing Officer Panel” to “Office of Administrative Hearings,” “hearing officer” to “administrative law judge,” and “chief hearing officer” to “chief administrative law judge; and to change the appointment of the chief administrative law judge from serving at the pleasure of the director of the Employment Department to holding office for a four-year term terminable only for cause.[3]
Operations of the Office of Administrative Hearings
Structure
The OAH is a consolidation of hearing units transferred in 2000 from seven different agencies: Adult and Family Services (13), Construction Contractors Board (6), Oregon Liquor Control Commission (4), Water Resources Department (1), Department of Transportation (46), Department of Consumer and Business Services (6); and the hearings unit of the Employment Department itself (43). In order to save money, the Legislature decided to place the OAH in the Employment Department rather than make it an independent agency. The OAH has 119 permanent employees, of whom 65 are administrative law judges. It is headed by a chief administrative law judge.
Scope of Hearings
The OAH hears the contested cases of almost 70 agencies, including unemployment insurance, motor vehicle licensing, social services (Medicaid, food stamps, etc.), licensing boards and commissions, forestry, environmental quality, agriculture, child support, and many others. This represents perhaps 90 percent or more of all state contested case orders issued in Oregon. The principal agencies not included in the OAH are the Public Utilities Commission, the Bureau of Labor and Industries, the Workers' Compensation Board, and the Land Conservation and Development Commission.
Budget
The budget of the OAH is $22.4 million for the biennium July 1, 200 to June 30, 2006. The OAH receives no direct General Funds. Instead, all of its revenue comes from billing agencies for hourly services either on an “actual cost” basis or an hourly rate.
Efficiency and Professionalism
There can be no question but that consolidating hearings units into a central panel produces special efficiencies. The seven consolidated hearing units absorbed hearings from another seventy or so agencies, equivalent to three to four full-time ALJ employees. This was done without adding additional staff. Before the OAH, agencies had to pay salaries to ALJs and operational staff even when caseloads were down; conversely, when they rose, agencies either hired additional ALJs or suffered a backlog. Today, ALJs are assigned freely between subject matters to respond to fluctuating caseloads. Agencies therefore pay only for services provided. Moreover, before the OAH, ALJs traveled across the state to hear cases. Today, ALJs located in different geographical areas of the state are cross-trained in those cases, reducing travel expenses.
These efficiencies resulted in reduced costs. The total average number of hours spent on a referral to the Panel has dropped from over 8.5 hours to about 7.0. Similarly, the average cost of a referral over the same period dropped from $322 to a low of $268; despite rising costs since then (costs over which the OAH has little control), the average cost is still less then what it was seven years ago. The OAH has eliminated 17 permanent positions, even though referrals have been 17 percent greater on average than what they were in 2000/2001.
But a central panel is not just about efficiency. It is also about quality and professionalism. A Code of Ethics was adopted. Training has assumed new importance. Standards for the conduct of hearings and the writing of decisions have increased. As standards have increased, so has the quality of hearings and decisions. There is a greater sense of professionalism: Previously, an ALJ was merely the employee of one of many agency hearings units. Today, that same ALJ is part of an organization known to the legislature, the state bar, and to agency heads.
House Bill 2525
Procedural Rules
The Attorney General is responsible for writing all procedural rules for the conduct of contested case hearings. Those rules may be found at OAR (Oregon Administrative Rules) 137-003-0501 to 137-003-0700 (they are available on the Internet at http://arcweb.sos.state.or.us/rules/number_index.html). However, the Attorney General is authorized to exempt agencies from all or a part of the rules; it has done so on occasion. Moreover, some agency statutes prescribe specific procedures for agency hearings different from the Attorney General's rules. Therefore, it is important not to
assume that a procedural rule found in the Attorney General's rules controls. It probably does, but it may not. (Please see the page "Statutes and Rules" in the OAH's web site.)
Ex parte Contacts
One of the problems addressed by House Bill 2526 (and by House Bill 2525 before it) is ex parte contacts. An ex parte contact is one in which a party, including an agency, shares with the ALJ some legal or factual information about a case which is not shared with other parties. For example, after a hearing is over, the agency representative telephones the ALJ to tell her that the citizen who requested the hearing was imprisoned three years before for fraud. This information was never brought out at the hearing, and the citizen therefore had no opportunity to refute it. House Bill 2526 requires the ALJ to disclose the communication, and to give all the parties an opportunity to respond.
Agency Modification of Hearing Officer Orders
Ninety-eight percent of the OAH's orders are final orders. These orders generally cannot be changed by agencies after ALJs issue them. They are appealable to a circuit court or the Court of Appeals (unemployment insurance decisions are appealable to the Employment Appeals Board).
The remaining OAH orders are proposed orders. Proposed orders are decisions recommended to agencies by ALJs based on their review of the facts and law. Agencies are not required to accept the recommendations. However, if they do not, they are required to explain the reason for all "substantial" changes. If findings of fact are changed, they must show how most of the evidence at hearing supports their version of the facts; on appeal to the Court of Appeals, the Court can look at the entire record and determine independently (de novo) whether it agrees with the agency's version.
Recusal
An interesting feature of House Bill 2525 is the automatic right of a party or agency to recuse an ALJ assigned to a case; the requester must show "good cause" for the second request. The OAH has adopted a rule, OAR 471-060-0005, setting out the procedure for making such request (see "Statutes and Rules" in the OAH’s web site.)
Conclusion
In 1999 there was considerable agency and business association (e.g., realtors, construction contractors) opposition to House Bill 2525. By 2003 that opposition had ended. During legislative hearings in 2003, not a single voice testified against House Bill 2526. It passed in the Senate by 21 votes to 1, and in the House of Representatives by 53 to 2. There were several reasons for this support. The quality of work did not suffer, as many feared; indeed, it improved over time for several agencies. Agencies learned the political value of distancing themselves from their adjudicatory role. The OAH did not cost as much as expected, and for some agencies their hearing costs actually declined. For state government as a whole, the savings were even greater.
Rev. 4/30/07
[1] H.B. 2525 (Or Laws 1999, ch 849) has been compiled as a note after ORS (Oregon Revised Statutes) 183.480. They are available on the internet at http://www.leg.state.or.us/
[2] David W. Heynderickx , Senior Deputy Legislative Counsel to the Oregon Legislature, has chronicled the history of House Bill 2525 in Finding Middle Ground: Oregon experiments with a central panel for contested case proceedings, 36 Willamette Law Review 219 (2000). Thomas E. Ewing has traced the history of the Hearing Officer Panel from 2000 through 2002 in Oregon’s Hearing Officer Panel, vol. 23 of the Journal of the National Association of Administrative Law Judges, (2003), and Oregon's Office of Administrative Hearings: A Postscript, vol. 24 of the Journal of National Association of Administrative Law Judges, page 20 (2004).
[3] House Bill 2526, as signed by the Governor, may be found at http://pub.das.state.or.us/LEG_BILLS/PDFs/BEHB2526.pdf.
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