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House Bill 2525


Oregon 's Hearing Officer Panel


History of House Bill 2525

            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 against it 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.
          For the last twenty years, there have been attempts to create a central panel in Oregon .  None was successful.  In 1997, however, Senator Neil Bryant and Representative Lane Shetterly, both attorneys, sponsored House Bill 2948, which would have created an "office of administrative hearings."  Both chambers of the Legislature passed the bill.  However, the Governor vetoed it, largely because of concerns over cost.
          Nevertheless, he authorized a study group, chaired by Rep. Shetterly, to further study the idea and to recommend changes to the current system.  The result was House Bill 2525,[1] sponsored by Representative Shetterly and Senators Neil Bryant and Kate Brown at the request of the Governor.  The Oregon Legislature passed the bill and the Governor signed it into law.  The Hearing Officer Panel became operational on January 1, 2000 .  Oregon now joins about 22 other states (plus three cities) with central panels of professional administrative law judges.
Operations of the Hearing Officer Panel
          The Panel is a consolidation of hearing units transferred 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 Panel in the Employment Department rather than make it an independent agency.  The Panel has about 130 employees and is headed by a chief hearing officer.  It has approximately 80 permanent hearing officers and another 50 managerial and support staff.
Scope of Hearings
          The Panel hears the contested cases of almost 80 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. In 2002, it will probably issue over 32,000 orders.  This represents perhaps 90 percent or more of all state contested case orders issued in Oregon .  The principal agencies not included in Panel hearings are the Employment Appeals Board, the Public Utilities Commission, the Bureau of Labor and Industries, the Workers' Compensation Board, and the Land Conservation and Development Commission.
          The budget of the Hearing Officer Panel is about $10,800,000 per year, or $21,600,000 for the biennium.  The Panel receives no direct General Funds.  Instead, all of its revenue comes from billing agencies for hourly services.
Efficiency and Professionalism
            There can be no question but that consolidating hearings units into a central panel produces special efficiencies, although those efficiencies are a bit hard to quantify.  The seven consolidated hearing units absorbed hearings from another seventy or so agencies, equivalent to three to four full-time hearing officer employees.  This was done without adding additional staff.  Before Panel, agencies had to pay salaries to hearing officers even when caseloads were down; conversely, when caseloads rose, agencies either hired additional hearing officers or suffered a backlog.  Today, hearing officers are assigned freely between subject matters, either because there is too little or too much work.  Agencies pay only for services provided.  Moreover, before Panel hearing officers traveled across the state to hear cases.  Today, Panel hearing officers in different geographical areas are cross-trained in those cases, reducing travel expenses. 
          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:  Before, a hearing officer was merely the employee of one of many agency hearings units.  Today, that same hearing officer is part of an organization known to the legislature, the state bar, and to agency heads.
House Bill 2525
Procedural Rules
          Section 8 of House Bill 2525 directs the Attorney General to write 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.  However, House Bill 2525 also authorizes the Attorney General 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 Hearing Officer Panel's web site.)
Ex parte Contacts
          One of the problems addressed by House Bill 2525 is ex parte contacts.  An ex parte contact is one in which a party, including an agency, shares with the hearing officer 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 hearing officer 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.  Section 20 of the Bill requires the hearing officer to disclose the communication, and to give all the parties an opportunity to respond.  However, disclosure is only required if the communication is about a disputed factual or legal issue.  If the communication is not about a disputed issue, there is no duty of disclosure.
Agency Modification of Hearing Officer Orders
            Ninty-eight percent of the Panel's orders are final orders.  These orders generally cannot be changed by agencies after hearing officers 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 rest of Panel orders are proposed orders.  Proposed orders are decisions recommended to agencies by hearing officers based on hearing officers' review of the facts and law.  Agencies are not required to accept the recommendations.  However, if they do not, section 12 requires them to explain the reason for all "substantial" changes.  Moreover, if they change findings of fact, they must show why the facts in the record support their version of the facts.  If an agency changes findings of fact, and the citizen or business appeals 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.
Oversight Committee
            Section 21 of House Bill 2525 provides for the creation of an Oversight Committee.  It is composed of two members of the Senate, two of the House of Representatives, two gubernatorial appointees, two persons appointed by the Attorney General, and the chief hearing officer serving ex officio.  It is chaired by Rep. Lane Shetterly.  The Committee is charged with the tasks of studying the "implementation and operation" of the Panel, of recommending to the governor and Legislative Assembly improvements in the "effectiveness, fairness and efficiency" of Panel operations, and of suggesting additional legislation governing operations.
          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 Panel has adopted a rule, OAR 471-060-0005, setting out the procedure for making such request (see "Statutes and Rules" of the Panel homepage.)
          Some agencies were very concerned about House Bill 2525.  They feared increased costs and they feared that hearing officers would start making policy in place of the agencies.  The costs have not been nearly as great as predicted, and agencies continue to make their policy.  The key difference is that agency policy is now tested by independent administrative law judges. 
          The Hearing Officer Panel has accomplished a great deal since January 1, 2000 .  But House Bill 2525 is a pilot.  It is due to dissolve ("sunset") on June 30, 2005 , unless the Legislature in 2003 decides to make the Panel permanent. 
Rev. 11/12/02

[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 at this link.

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