Reforming Administrative Adjudication

There must be something in the air. Perhaps a spore that activates a latent gene among anti-administrativists—that is, liberty-loving folk—to take action.[1] But whatever the cause, both Mike Greve and I have decided that it is time to do something about the serious infirmities that afflict agency adjudication and that the solution is to replace biased agency adjudicators with genuinely independent judges.

The basic problem is that agency adjudication allows the heads of agencies to control both prosecution and adjudication. Thus, the agency gets to be the judge in its own case. Another problem is that agency adjudicators can decide cases based on policy rather than the law and can often apply these decisions retroactively. It is true that administrative law judges enjoy some limited independence, but their decisions are subject to appeal to higher agency officials.

It is also true that there is judicial review of the agency’s decision, but because the agency receives significant deference, it can get its way most of the time. To me, it is sad that most administrative lawyers in the United States seem inured to these violations of basic fairness and the rule of law.

While Greve and I agree that administrative adjudication should be eliminated, there are some important differences between our approaches.  Here I compare them and explain why, despite my sympathy for his general proposal, I favor my own approach.

If You Want Liberty, Follow the Germans

What Greve proposes in his Liberty Forum essay is no mere tinkering with the current system of administrative adjudication. He wants to replace our existing system with a German-influenced version of independent administrative courts. He proposes a new administrative judiciary, with Article I courts at both the trial and appellate levels. Those courts would not decide cases based on policy (either their own or the agency’s) but would rely exclusively on the facts and the law. Nor would the courts grant deference to agencies as to fact or law.

Greve’s proposal attempts to apply the idea of the Rechtsstaat to administrative law—what he says the Germans refer to as the Bundesverwaltungsgericht. I do not know much about this system except what I learned from Friedrich Hayek’s discussion in The Constitution of Liberty. The general idea is that administrative agencies should be subject to the law and should not be allowed to use administrative discretion to adjudicate rights. Administrative adjudication would be conducted by independent administrative courts. In Hayek’s telling, this arrangement, though it offered the best chance to constrain the growth of modern bureaucratic discretion, was rejected by the Anglo-American world, ironically on rule-of-law grounds. Greve now wants to give America a second chance to place this constraint on administrative discretion and bias. His proposal would be a big improvement over our existing system of administrative adjudication.

My Proposal

Like Greve, I am inspired by Hayek’s exploration of ways to subject administrative agencies to the rule of law. But perhaps because I am less knowledgeable about the German system, I have developed a proposal more rooted in American law. While I agree with much of what Greve has in mind, my proposal is designed not merely to protect individual rights, but also to provide an expert and efficient system of adjudication.[2]

The usual argument used to justify administrative adjudication is that agencies have more expertise and lower decisionmaking costs than do ordinary courts. While ordinary federal courts staffed with generalist judges might better protect the rights of members of the public, these courts would be slower and more expensive and would have less knowledge on which to base their decisions. But I argue that a new system of independent administrative courts could eliminate agency bias, while at the same time having both expertise and decisionmaking costs comparable to those of existing administrative agencies.

Under my proposal, the administrative courts—they might be either Article III or Article I courts—would serve within the existing court hierarchy, with their decisions reviewed by the federal circuit courts. The administrative judges would be divided into three groups, with each group possessing expertise in science, medicine, or economics. Cases would be assigned based on the subject matter of the issues involved rather than the agency from which the cases came.  Since the administrative courts would not have the tunnel vision caused by deciding only cases from a single agency, and since their decisions would be appealed not to the agency but to the circuit courts, they would have the genuine independence of ordinary courts. Yet, the administrative courts would also have significant expertise, as to legal and non-legal matters alike.

There is also no reason that the administrative courts should have to follow the elaborate procedures of our ordinary federal courts. Instead, the law could allow them to follow the streamlined procedures that agency adjudication now employs, with departures from those procedures only when the law deemed them inadequate. In that way, independent administrative courts would not need to be slower, more expensive, or less knowledgeable than agency adjudication.

It Is Time to Part Ways

My proposal would have several advantages over Greve’s. First, I hate to sound like an administrativist, but the system that Greve recommends may be too expensive and have too little expertise. If the administrative judges do not have sufficient knowledge, then their fact-finding may lead to less accurate decisions than would be desirable. Similarly, if the Federal Rules of Civil Procedure and the Federal Rules of Evidence apply in administrative adjudication, as Greve recommends, then the length and costs of these adjudications might be too great.

Of course, Greve might argue, with some force, that these disadvantages are worth it to secure independent decisionmaking. But even if his proposal is preferable to the existing system, it would be better yet to adopt my proposal, which secures the lion’s share of the benefits of independent decision-makers without incurring these significant costs.

A second advantage of my proposal is that it allows additional restraints to be placed on administrative agencies. While Greve would use the administrative courts to limit agency adjudication only, agency rulemaking is also an affront to the separation of powers. One might use these administrative courts to impose greater supervision on agency rulemaking. While rulemaking usually involves policymaking and legislative fact-finding, the additional expertise of the administrative judges would allow them to be less deferential to agency decisions on these matters. Thus, one could have more supervision, but without compromising on the expertise of the decision.[3]

Third, my approach would be less of a departure from the existing system. My proposal would have independent administrative courts hear cases and then be reviewed by the circuit courts. Unlike Greve’s approach, it would not require an entirely separate court system and it would retain the traditional American pattern of having generalist judges review administrative cases.

What Exactly Is This Bundesverwaltungsgericht of Which You Speak?

But my biggest concern about Greve’s proposal is that I am not sure I fully understand it. Greve writes:

Any system of administrative law that is worth having needs a reasonably coherent, robust set of rights that run against the government. Under German administrative law, these are called “subjective public rights.” . . . The basic idea is that the rights correspond to, and serve to fend off, coercive government interference with private conduct—the right to hire and fire; to sell your product at a price that willing customers will pay; to make such use of your land as you see fit without harming others; to go about your business without fear of extralegal impositions.

A rather Anglo-Saxon notion, come to think of it. Except it’s enshrined in German law . . . . Meanwhile it is explicitly repudiated under our law.

At first glance, this sounds attractive to me, but upon reflection I realize that I do not really understand what he is describing here. Is this a Lochnerian system of protection? If so, I might like it, but I am not sure whether it would be popular or would function in the big government world of modern-day America. Or is this simply the idea, reflected in the traditional understanding of the Due Process Clauses, that government subsidies and welfare benefits are entitled to less (or no) protection?

Perhaps the reason why I do not fully understand the system is that I am unfamiliar with German administrative law. Or perhaps the reason is that the system is not yet developed—it is merely a promissory note on a better system. Greve writes:

Over time, an independent Administrative Judiciary is bound to generate a tolerably coherent system of nominally public but substantively common law-like rights. Its institutional prestige would hang on such a development. . . .

Advancing [this] proposal would require far more than a few scholars’ creative thinking. It would require a serious and sustained academic, public, and legislative debate of the kind that preceded the APA. It would require careful thought about how exactly the Administrative Judiciary would work and how to integrate it into the existing legal system. Not only that, the APA and a vast number of organic agency statutes would have to be rewritten.

This makes me think that Greve is imagining a radically different system than what we have now. And if so, I might or might not like it depending on what it looked like. A short essay is not the place to expect an extended discussion of a new system, but it might be helpful to have a bit more description here.

This leads to another advantage of my proposal: It is not a system to be developed in the future, but a concrete proposal for today. Of course, I am greatly in sympathy with Greve’s scholarship and his aspirations. And I have little doubt that he has something attractive in mind. But a concrete proposal, rooted in the existing system of law, is of significant value.

[1] “Anti-administrativism” is the term coined by Gillian Metzger of Columbia Law School to describe people who reject the modern vision of activist bureaucratic governance. Gillian E. Metzger, “Foreword: 1930s Redux: The Administrative State Under Siege,” Harvard Law Review 131:1 (November 2017), 4. For my critique, see We the Bureaucrats.

[2] My proposal is contained in two articles. See “Replacing Administrative Adjudication with Independent Administrative Courts,” George Mason Law Review (forthcoming, 2019) (symposium); and “Classical Liberal Administrative Law in a Progressive World,” in Handbook on Classical Liberalism, edited by Todd Henderson (Cambridge University Press, 2018).

[3] In addition, while I agree with Greve that it would be best to prevent the making of policy decisions as part of the adjudicative process, it is not clear that everyone will go along with this recommendation. Again, my proposed expert administrative courts would be able to review  such policymaking with less deference because they have greater expertise.