REPORT TITLE:
Administrative Adjudication


DESCRIPTION:
Establishes a pilot program within the department of commerce and
consumer affairs to evaluate the feasibility of creating a
permanent central panel of hearings officers, in order to prevent
any actual or perceived unfairness or impartiality in the conduct
or outcome of agency hearings.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           1252
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO ADMINISTRATIVE ADJUDICATION.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The legislature finds that there is a need to
 
 2 establish a pilot program to create a central panel of hearings
 
 3 officers within the department of commerce and consumer affairs
 
 4 for administrative purposes to promote efficiency and ensure the
 
 5 continued fairness of administrative adjudication in Hawaii.
 
 6      In 1990, the legislature adopted S.C.R. No. 169, S.D. 1,
 
 7 requesting the auditor to conduct a study regarding the
 
 8 administrative adjudication processes used by state agencies.
 
 9 The auditor issued its "Study of Administrative Adjudication in
 
10 Hawaii" in February, 1991, recommending, among other things, the
 
11 establishment of a central panel of state hearings officers.
 
12      That same year, the legislature considered the auditor's
 
13 recommendations and adopted resolutions, including S.C.R. No.
 
14 200, S.D. 1 and H.C.R. No. 331, requesting the establishment of a
 
15 task force of representatives from executive agencies to examine
 
16 the feasibility of creating a central panel of hearings officers
 
17 independent of the respective state agencies that are involved in
 
18 disputes.
 
19      The governor's task force on administrative adjudication
 

 
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 1 subsequently submitted a report to the 1992 legislature in
 
 2 December, 1991.  That report detailed the ongoing activities of
 
 3 the task force, including the drafting of a model code of conduct
 
 4 for hearings officers and the initiation of a central panel pilot
 
 5 program within the office of administrative hearings in the
 
 6 department of commerce and consumer affairs, commencing on
 
 7 January 1, 1992, and terminating on December 31, 1993.  The task
 
 8 force indicated that it would submit semi-annual reports to the
 
 9 governor regarding the utilization of the pilot program and
 
10 recommendations for changes.
 
11      Under that pilot program, all state agencies responsible for
 
12 conducting administrative adjudications that did not have
 
13 hearings officers on their respective staffs could arrange with
 
14 the pilot program to have appropriate cases heard by the pilot
 
15 central panel.  State agencies that did employ or contract with
 
16 hearings officers could also elect to send appropriate cases to
 
17 the program, subject to availability of program hearings
 
18 officers.  Those agencies referring cases to the program were
 
19 also responsible for providing their respective procedural and
 
20 substantive rules to the program before the pilot central panel
 
21 heard any cases from those agencies, and were required to provide
 
22 any necessary training required for pilot central panel hearings
 
23 officers regarding the substantive and procedural rules of the
 

 
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 1 respective agencies.
 
 2      Despite these efforts on the part of the department of
 
 3 commerce and consumer affairs and other state agencies, it is not
 
 4 clear whether the governor's task force on administrative
 
 5 adjudication found the pilot program to be successful or not.
 
 6 Nevertheless, no state law was ever enacted that would make the
 
 7 pilot program permanent.  The legislature finds that, absent
 
 8 conclusive findings and recommendations on this issue, there is a
 
 9 need to revisit this issue to ascertain the feasibility of
 
10 establishing such a central panel of hearings officers.
 
11      In particular, the legislature finds that although the
 
12 hearings officers who perform the difficult tasks of
 
13 administrative adjudication in this State generally hold to the
 
14 highest standards of integrity, there is a need to prevent even
 
15 the appearance of impropriety in the adjudication and enforcement
 
16 of the law.  However, in view of the fact that agency hearings
 
17 officers are employed or contracted for by the agency that is a
 
18 party to the dispute, they potentially may have, or may be
 
19 perceived to have an interest in the outcome of that dispute.
 
20 The substantive findings and decisions of hearings officers may
 
21 also be influenced by executive officials within the agency.
 
22      Accordingly, the purpose of this Act is to establish a pilot
 
23 program within the department of commerce and consumer affairs to
 

 
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 1 evaluate the feasibility of creating a permanent central panel of
 
 2 hearings officers, in order to prevent any actual or perceived
 
 3 unfairness or impartiality in the conduct or outcome of agency
 
 4 hearings.
 
 5      SECTION 2.  Central panel pilot program; establishment.(a)
 
 6 There is established a central panel pilot program within the
 
 7 department of commerce and consumer affairs, office of
 
 8 administrative hearings.
 
 9      (b)  The objectives of the central panel pilot program are
 
10 to:
 
11      (1)  Determine whether centralizing hearings officers and
 
12           associated resources will improve the overall fairness
 
13           and independence of the administrative adjudication
 
14           process;
 
15      (2)  Determine whether centralizing hearings officers and
 
16           associated resources will result in increased
 
17           efficiency and cost-effectiveness;
 
18      (3)  Provide administrative and adjudicative support for all
 
19           state agencies that are responsible for conducting
 
20           administrative hearings under chapters 91 and 92,
 
21           Hawaii Revised Statutes, that do not presently have
 
22           hearings officers on staff; and
 
23      (4)  Provide additional training for hearings officers
 

 
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 1           participating in the pilot program.
 
 2      (c)  The pilot program shall be implemented by the director
 
 3 of commerce and consumer affairs with the assistance of the
 
 4 department of the attorney general and hearings officers and
 
 5 other personnel in other executive agencies as may be necessary.
 
 6 The director shall evaluate the feasibility of establishing a
 
 7 permanent central panel of hearings officers and shall study
 
 8 related issues, including the following:
 
 9      (1)  Which kinds of contested case hearings could be
 
10           conducted by a central panel, with a minimum of
 
11           disruption to the persons served by the agencies, as
 
12           well as to the respective agencies themselves;
 
13      (2)  Which kinds of cases and which agencies should not be
 
14           considered for inclusion in a central panel;
 
15      (3)  The relative difficulty in transferring personnel,
 
16           budgetary appropriations, and physical inventory, to a
 
17           central panel;
 
18      (4)  The fiscal, personnel, and logistical requirements of
 
19           setting up a central panel; and
 
20      (5)  What revisions or amendments to state laws should be
 
21           made, including the procedural and substantive
 
22           requirements applicable to hearings conducted by each
 
23           state agency, and chapter 91, Hawaii Revised Statutes,
 

 
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 1           to ensure:
 
 2           (A)  The impartiality and competence of hearings
 
 3                officers;
 
 4           (B)  The reasonableness of costs associated with
 
 5                contested case hearings;
 
 6           (C)  That ex parte communications are restricted; and
 
 7           (D)  Provisions are made for pre-hearing conferences.
 
 8      SECTION 3.  Utilization of pilot program central panel.  (a)
 
 9 To the extent authorized by law, all state agencies that are
 
10 responsible for conducting administrative adjudications, that do
 
11 not presently have hearings officers on their respective staffs,
 
12 may arrange with the pilot program to have appropriate cases
 
13 heard by the pilot central panel.  The agencies in this category
 
14 shall have priority with the pilot program in terms of having
 
15 cases processed by the pilot central panel.
 
16      (b)  State agencies that presently employ or utilize staff
 
17 or contract hearings officers may arrange to submit appropriate
 
18 cases to the pilot program for hearing purposes, subject to the
 
19 availability of the pilot central panel hearings officers.
 
20      (c)  All state agencies referring cases to the pilot program
 
21 shall be responsible for providing all of their respective
 
22 procedural and substantive rules to the pilot program prior to
 
23 the pilot central panel hearing any cases from the agencies.
 

 
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 1      (d)  The referring agencies shall be responsible for
 
 2 providing any training that may be required for the pilot central
 
 3 panel hearings officers regarding the substantive and procedural
 
 4 rules of the respective agencies.
 
 5      SECTION 4.  Findings and recommendations; reports.(a)  The
 
 6 director of commerce and consumer affairs shall make findings and
 
 7 recommendations in the following areas:
 
 8      (1)  The total number and disposition of all cases submitted
 
 9           to the pilot program for hearing purposes, within the
 
10           reporting period;
 
11      (2)  The utilization of personnel and appropriations of the
 
12           pilot program, as well as any significant developments
 
13           in the pilot program;
 
14      (3)  Any recommendations for revisions to chapter 91, Hawaii
 
15           Revised Statutes, and any rules governing adjudicatory
 
16           hearings;
 
17      (4)  Any recommendations for the exclusion of hearing
 
18           matters which are not suitable for disposition by the
 
19           pilot program;
 
20      (5)  Any recommendations for the inclusion of additional
 
21           hearing matters which may be suitable for disposition
 
22           by the pilot program; and
 
23      (6)  The feasibility of providing for each of the following:
 

 
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 1           (A)  Centralization of all administrative adjudication
 
 2                functions;
 
 3           (B)  Standardized qualifications of hearings officers;
 
 4           (C)  A model code of conduct for hearings officers;
 
 5           (D)  Standardized contested case procedures;
 
 6           (E)  Standardized hiring and retention policies; and
 
 7           (F)  Any other areas necessary to effectively implement
 
 8                the pilot program;
 
 9      (b)  The director shall:
 
10      (1)  Establish benchmarks for determining whether the pilot
 
11           program is successful, and evaluate whether the pilot
 
12           program meets or exceeds those benchmarks;
 
13      (2)  Submit proposed legislation for the creation of
 
14           permanent central panel hearings office within the
 
15           department of the attorney general or another
 
16           appropriate department of state government; and
 
17      (3)  Report findings and recommendations, including a
 
18           finding of whether the pilot program met or exceeded
 
19           the benchmarks provided under paragraph (1) and any
 
20           proposed implementing legislation, to the legislature
 
21           no later than twenty days before the convening of the
 
22           regular sessions of 2002 and 2003, and a final report
 
23           to the legislature no later than twenty days before the
 

 
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 1           convening of the regular session of 2004.
 
 2      SECTION 5.  There is appropriated out of the general
 
 3 revenues of the State of Hawaii the sum of $          , or so
 
 4 much thereof as may be necessary for fiscal year 1999-2000, for
 
 5 the establishment of a central panel pilot program as provided in
 
 6 this Act.  The sum appropriated shall be expended by the
 
 7 department of commerce and consumer affairs for the purposes of
 
 8 this Act, including the hiring of necessary staff.
 
 9      SECTION 6.  This Act shall take effect on July 1, 1999, and
 
10 shall be repealed on July 1, 2004.
 
11 
 
12                              INTRODUCED BY:______________________