News From the States

by Patricia Salkin
Director, Government Law Center
Albany Law School
Co-chair, State Administrative Law Committee.

California's New APA

California has enacted a new Administrative Procedure Act. Prior law covered less than 5% of state-level agency adjudications. The new APA covers nearly all of them.

Most importantly, the APA contains an administrative law bill of rights which is a historic achievement. Among other provisions, the bill of rights provides for:

• Notice and an opportunity to be heard

• Prohibition on ex parte contacts with decisionmakers

• Separation of functions between prosecutors and adjudicators

• Statements of findings and reasons

• Precedential decisions.

The APA limits the ability of agency heads to overturn the credibility determinations of ALJs, thus adopting the Universal Camera principle. It also requires that penalty guidelines used by professional licensing agencies be adopted through rulemaking procedures.

The APA is designed to make administrative adjudication more informal and less costly. For example, it provides for:

• All types of alternate dispute resolution

• Informal hearings without cross-examination where appropriate

• Declaratory orders

• Use of the telephone and other electronic media.

Unfortunately, California's tax adjudication agency, the State Board of Equalization, was stripped from the bill in committee on a 7-6 party-line vote.

The new APA resulted from a study by the California Law Revision Commission that began back in 1989 for which Professor Michael Asimow was the consultant. The Commission is also sponsoring a bill to revamp judicial review that will go to the legislature in 1996.

Considering the Constitutionality of Statutes in Administrative Hearings: Insurance Commissioner v. Equitable Life Assurance Society, 339 Md. 596, 664 A.2d 862 (1995).

In 1978, the Maryland Human Relations Commission (MHRC) charged the Equitable Life Assurance Society with discriminating on the basis of sex in setting rates for life insurance policies and underwriting practices with regard to disability income insurance policies. Equitable argued that pursuant to amendments to the Maryland Insurance Code, discrimination in rate setting and underwriting based on gender was permitted if there existed an actuarial basis for the differentials.

The MHRC hearing examiner found that Equitable was engaged in unlawful discrimination.

Equitable appealed to the Circuit Court for Baltimore City, arguing that the Insurance Commissioner, not the MHRC, had jurisdiction. The circuit court agreed and directed the Commissioner to resolve the conflict between the Code, which allowed differentials based on gender, and the Maryland Equal Rights Amendment, which prohibits sex discrimination.

The Commissioner found that the gender based life insurance rates were actuarially justified. However, the Commissioner concluded that the ERA's mandate against sex discrimination was irreconcilable with the Code and ordered Equitable to cease utilizing gender-based life insurance rates. On appeal, the circuit court disagreed with the Commissioner's conclusion that he had the authority to rule on the constitutionality of a statute.

The Commissioner, the MHRC, and the National Organization of Women appealed, and the Maryland Court of Appeals held that, where a party makes a constitutional claim, an administrative agency or official has the authority to rule on the constitutionality of a statute as applied in a particular case. The court distinguished this authority from the power to issue a declaratory judgment regarding a statute's constitutionality, a power administrative agencies and officials do not possess. The court reasoned that constitutional claims involving the consideration of evidence and fact finding are appropriately addressed in administrative hearings. The court ultimately held that the circuit court erred in holding that the Commissioner lacked the authority to rule on the constitutionality of portions of the Code and remanded the case back to the Commissioner for extensive evidentiary exploration on the issue.

New York Continues the Negotiated Rulemaking Experiment

The New York State Department of Environmental Conservation has experimented with negotiated rulemakings for pesticide and dry cleaning regulations. In November they embarked on a third effort. This time the focus is on cumulative impacts under the State Environmental Quality Review Act. Philip Moses, Project Manager for the Mediation Assistance Program at the Government Law Center of Albany Law School has been selected as the facilitator.

Model Central Panel Act to Be Developed

Twenty two states already have established central panels of administrative law judges to hear and decide contested cases arising under their administrative procedure acts. Each year various Directors of these central panels receive inquiries from legislators around the country, asking how to institute a central panel in the legislator's jurisdiction. At the request of central panel Directors, a committee of the National Conference of Administrative Law Judges of the Judicial Administration Division has been established to draft a model central panel act for states to use. This committee is seeking the help of practitioners and academics interested in state administrative law to develop a model statute for states to use when establishing a central panel. An initial draft is being submitted to the National Association of Administrative law Judges and to the Central Panel Directors' Conference. Anyone interested in participating in this project may contact: Edwin L. Felter, Jr., Director and Chief Administrative Law Judge, The Chancery, 1120 Lincoln Street, Suite 1400, Denver, CO. 80203 (303-894-2500).

Contributors to this column include: Professor Michael Asimow, William Dorsey, and the Honorable John Hardwicke