GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

H	1 

HOUSE BILL 1317*

Short Title:  Amend Contested Case Proc.	(Public)

─────────────────────────────────────── 
Sponsors: Representative C. Wilson.

─────────────────────────────────────── 
Referred to:  Judiciary I.

─────────────────────────────────────── 

May 19, 1998

A BILL TO BE ENTITLED
AN ACT TO MODIFY THE PROCEDURES CONCERNING FINAL ADMINISTRATIVE DECISIONS IN CONTESTED CASES HEARD BY THE OFFICE OF ADMINISTRATIVE HEARINGS.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 150B-2(5) reads as rewritten:
"(5)	"Party" means any person or agency named or admitted as a party or properly seeking as of right to be admitted as a party and includes the agency as appropriate. This subdivision does not permit an agency that makes a final decision, or an officer or employee of the agency, to petition for initial judicial review of that decision, except as provided by G.S. 150B-43(b)."
Section 2.  G.S. 150B-29(a) reads as rewritten:
"(a)	In all contested cases, irrelevant, immaterial and unduly repetitious evidence shall be excluded.  Except as otherwise provided, the rules of evidence as applied in the trial division of the General Court of Justice shall be followed; but, when evidence is not reasonably available under the rules to show relevant facts, then the most reliable and substantial evidence available shall be admitted. On the judge's own motion, an administrative law judge may exclude evidence that is inadmissible under this section.  The party with the burden of proof in a contested case must establish the facts required by G.S. 150B-23(a) by a preponderance of the evidence.  It shall not be necessary for a party or his attorney to object at the hearing to evidence in order to preserve the right to object to its consideration by the administrative law judge in making a recommended decision, by the agency in making a final decision, or by the court on judicial review."
Section 3.  G.S. 150B-34 reads as rewritten:
"§ 150B-34.  Recommended decision or order of administrative law judge.
(a)	Except as provided in G.S. 150B-36(c), in each contested case the administrative law judge shall make a recommended decision or order that contains findings of fact and conclusions of law.  The findings of fact shall be supported by a preponderance of the evidence admissable under G.S. 150B-29, 150B-30, or 150B-31."
Section 4.  G.S. 150B-36 reads as rewritten:
"§ 150B-36.  Final decision.
(a)	(1)	After an agency receives the official record in a contested case, the agency must give each party to the contested case 15 days to file exceptions to the decision or order recommended by the administrative law judge and to present written arguments to those in the agency who will make the final decision or order.  If none of the parties files exceptions to the recommended decision or order within the 15-day period, the agency is considered to have adopted the administrative law judge's recommended decision or order as the agency's final decision or order.
(2)	 If a party files in good faith a timely and sufficient affidavit of personal bias or other reason for disqualification of a member of the agency making the final decision, the agency shall determine the matter as a part of the record in the case.  The determination is subject to judicial review at the conclusion of the case.
(b)	(1)	A final decision or order in a contested case shall be made by the agency within the time set by G.S. 150B-44.  If the agency does not adopt as its final decision or order the recommended decision or order made in the contested case under subsection (a) of this section, it must make a written final decision or order.  In making its final decision or order, the agency may consider only the official record as defined in G.S. 150B-37(a) and the exceptions filed by a party.  The final decision or order shall include findings of fact and conclusions of law.  The findings of fact made in the contested case by the administrative law judge are binding on the agency in making its final decision or order if they are supported by substantial evidence admissible under G.S. 150B-29, 150B-30, or 150B-31 in view of the entire record.  Nothing in this subdivision shall affect the policies and need determinations in the State Medical Facilities Plan which have been adopted in accordance with law and shall have the effect of law for this purpose.
(2)	If the agency does not adopt the administrative law judge's recommended decision or order as its final decision or order, the agency shall state in its decision or order the specific reasons why it did not adopt the administrative law judge's recommended decision or order.  A copy of the agency's decision or order shall be served upon each party personally or by certified mail addressed to the party at the latest address given by the party to the agency, and a copy shall be furnished to each party's attorney of record and the Office of Administrative Hearings.
(c)	The following decisions made by administrative law judges in contested cases are final decisions:
(1)	A determination that the Office of Administrative Hearings lacks jurisdiction.
(2)	An order entered pursuant to the authority in G.S. 7A-759(e).
(3)	An order entered pursuant to a written prehearing motion that either dismisses the contested case for failure of the petitioner to prosecute or grants the relief requested when a party does not comply with procedural requirements.
(4)	An order entered pursuant to a prehearing motion to dismiss the contested case in accordance with G.S. 1A-1, Rule 12(b) when the order disposes of all issues in the contested case."
Section 5.  G.S. 150B-37(c) reads as rewritten:
"(c)	The Office of Administrative Hearings shall forward a copy of the official record to the agency making the final decision."
Section 6.  G.S. 150B-43 reads as rewritten:
"§ 150B-43. Right to judicial review.
(a)	Any person who is aggrieved by the final decision in a contested case, and who has exhausted all administrative remedies made available to him by statute or agency rule, is entitled to judicial review of the decision under this Article, unless adequate procedure for judicial review is provided by another statute, in which case the review shall be under such other statute. Nothing in this Chapter shall prevent any person from invoking any judicial remedy available to him under the law to test the validity of any administrative action not made reviewable under this Article. 
(b)	An agency may seek judicial review of procedural errors made by the administrative law judge in the contested case if the agency was required to adopt the administrative law judge's findings of fact and the agency concludes that, although the findings are supported by substantial evidence, the record contains significant evidentiary errors."
Section 7.  G.S. 150B-44 reads as rewritten:
"§ 150B-44.  Right to judicial intervention when decision unreasonably delayed.
Unreasonable delay on the part of any agency or administrative law judge in taking any required action shall be justification for any person whose rights, duties, or privileges are adversely affected by such delay to seek a court order compelling action by the agency or administrative law judge.  An agency that is subject to Article 3 of this Chapter and is not a board or commission has 45 days from the day it receives the official record in a contested case from the Office of Administrative Hearings to make a final decision in the case.  This time limit may be extended by the parties or, for good cause shown, by the agency for an additional period of up to 30 days.  An agency that is subject to Article 3 of this Chapter and is a board or commission has 45 days from the day it receives the official record in a contested case from the Office of Administrative Hearings or 45 days after its next regularly scheduled meeting, whichever is longer, to make a final decision in the case.  This time limit may be extended by the parties or, for good cause shown, by the agency for an additional period of up to 30 days.  If an agency subject to Article 3 of this Chapter has not made a final decision within these time limits, the agency is considered to have adopted the administrative law judge's recommended decision as the agency's final decision.  Failure of an agency subject to Article 3A of this Chapter to make a final decision within 75 days of the close of the contested case hearing is justification for a person whose rights, duties, or privileges are adversely affected by the delay to seek a court order compelling action by the agency or, if the case was heard by an administrative law judge, by the administrative law judge."
Section 8.  G.S. 150B-51 reads as rewritten:
"§ 150B-51.  Scope of review.
(a)	Initial Determination in Certain Cases.  In reviewing a final decision in a contested case in which an administrative law judge made a recommended decision, the court shall make three initial determinations as follows:
(1)	The court shall determine whether the agency heard new evidence after receiving the recommended decision.  If the court determines that the agency heard new evidence, the court shall reverse the decision or remand the case to the agency to enter a decision in accordance with the evidence in the official record. 
(2)	If the agency did not adopt the recommended decision, the court shall determine whether the administrative law judge's findings of fact are supported by substantial evidence admissible under G.S. 150B-29, 150B-30, or 150B-31 in view of the entire record.  If the court determines that the agency failed to adhere to the administrative law judge's findings of fact that are supported by substantial evidence, the court shall reverse the decision or remand the case to the agency to enter a decision in accordance with the evidence in the  official record.
(3)	If the agency did not adopt the recommended decision, the court shall determine whether the agency's decision states the specific reasons why the agency did not adopt the recommended decision.  If the court determines that the agency did not state specific reasons why it did not adopt a recommended decision, the court shall reverse the decision or remand the case to the agency to enter the specific reasons.
(b)	Standard of Review.  After making the determinations, if any, required by subsection (a), the court reviewing a final decision may affirm the decision of the agency or remand the case for further proceedings.  It may also reverse or modify the agency's decision if the substantial rights of the petitioners may have been prejudiced because the agency's findings, inferences, conclusions, or decisions are:
(1)	In violation of constitutional provisions;
(2)	In excess of the statutory authority or jurisdiction of the agency;
(3)	Made upon unlawful procedure;
(4)	Affected by other error of law;
(5)	Unsupported by substantial evidence admissible under G.S. 150B-29(a), 150B-30, or 150B-31 in view of the entire record as submitted; or
(6)	Arbitrary or capricious.”
Section 9.  This act is effective when it becomes law.  Sections 1, 4, 5, 6, 7, and 8 of this act apply to any recommended decision or order made by an administrative law judge on or after the effective date.  The remainder of the act applies to contested cases commenced on or after the effective date.