Opinion ID: 6494575
Heading Depth: 2
Heading Rank: 1

Heading: Disclosure of Ex Parte Communications Is Warranted by Constitutional Due Process and the Hawaii Administrative Procedure Act

Text: A cornerstone of administrative law is the principle of record exclusivity, which requires quasi-judicial administrative decisionmaking to be based “solely on the evidence adduced at the hearing.” Bernard Schwartz, Administrative Law § 7.13, at 367 (2d ed. 1984); HRS § 91—9(g); see generally Sandy Beach Def. Fund v. City Council of Honolulu, 70 Haw. 361, 391, 773 P.2d 250, 268 (1989) (Nakamura, J., dissenting). Record exclusivity is an integral component of constitutional due process, in that the right to a contested case hearing is rendered meaningless if an agency strays from the properly introduced evidence and considers in its lieu (or in addition to) information gathered through ex parte contacts. See Ohio Bell Tel. Co. v. Pub. Utils. Comm’n, 301 U.S. 292, 300, 57 S.Ct. 724, 81 L.Ed. 1093 (1937) (holding that the agency violated due process by relying on statistical information not introduced into evidence and by depriving the party of the opportunity for rebuttal); Schwartz, supra, § 7.13, at 367-68. Three purposes are served by the rule of record exclusivity: “First, it helps to ensure that the agency does not make decisions that have no adequate basis in fact; second, it gives opposing parties the opportunity to challenge the agency’s reasoning process and the correctness of the decision; and third, it affords reviewing courts the opportunity to evaluate the decision.” City of Fairbanks v. Alaska Pub. Utils. Comm’n, 611 P.2d 493, 495 (Alaska 1980); accord Schwartz, supra, § 7.13, at 368. Thus, when agency decisionmaking is influenced by facts extraneous to the record, such as those introduced through ex parte communications, elementary precepts of due process guaranteed by both the state and federal constitutions are offended. See Mauna Kea Power Co. v. Bd. of Land & Nat. Res., 76 Hawai'i 259, 263, 874 P.2d 1084, 1088 (1994) (intimating that due process would have been denied had the ex parte communications not been disclosed and the hearing reopened to allow the opposing party to respond to the contents of the ex parte communications); Guenther v. Comm’r., 939 F.2d 758, 760-61 (9th Cir. 1991) (reasoning that due process under the Fifth Amendment is violated when ex parte communications result in unfair prejudice to a party). As aptly explained by the D.C. Circuit, “[wjhere agency action resembles judicial action, where it involves formal rulemaking, adjudication, or quasi-adjudication among ‘conflicting private claims to a valuable privilege,’ the insulation of the decisionmaker from ex parte contacts is justified by basic notions of due process to the parties involved.” Sierra Club v. Costle, 657 F.2d 298, 400 (D.C. Cir. 1981) (footnote omitted). Injection of ex parte communications into the quasi-judicial decisionmaking process of an administrative agency is inconsistent “with fundamental notions of fairness implicit in due process and with the ideal of reasoned decisionmaking on the merits which undergirds all of our administrative law.” Home Box Office, Inc. v. FCC, 567 F.2d 9, 56 (D.C. Cir. 1977). It follows that when ex parte communications are introduced into an agency adjudication, due process may require their disclosure. Two distinct interests are served by disclosure: (1) “to prevent the appearance of impropriety from secret communications in a proceeding that is required to be decided on the record” and (2) to allow parties to “respond effectively and ensure that [their] position is fairly considered.” Prof'l Air Traffic Controllers Org. v. Fed. Labor Relations Auth. (PATCO v. FLRA II), 685 F.2d 547, 563-64 (D.C. Cir. 1982). In addition, disclosure of ex parte communications would permit appellate courts to independently and effectively determine whether such communications provide grounds for the invalidation of an agency’s decision, Cf. id. at 564 n.32 (reasoning that “effective judicial review may be hampered if ex parte communications prevent adversarial decision of factual issues by the agency”). In determining whether an ex parte communication must be disclosed under due process principles, one must ask whether the communication would produce an appearance of impropriety or prevent parties from meaningfully responding to the contents of the communication; if so, then disclosure is mandatory. Id at 563 (“When the[] interests of openness and opportunity for response are threatened by an ex parte communication, the communication must be disclosed.”). “It matters not whether the communication comes from someone other than a formal party or if the communication is clothed in the guise of a procedural inquiry.” Id. Only when an ex parte communication “does not threaten the interests of openness and effective response” would disclosure not be necessary. Id. Substantive ex parte communications and ex parte communications involving parties or interested persons bear the highest potential of infringing upon the due process interests of openness and opportunity to respond. Substantive ex parte communications from anyone, even those exchanged with disinterested persons, possess a significant potential of giving rise to the appearance of impropriety. In such instances, the agency would appear to be considering outside, off-the-record information or that it is somehow beholden to or influenced by the predilections of the persons with whom the ex parte communications were exchanged. When an adjudicating agency engages in undisclosed ex parte communications with a party, the agency has effectively authorized off-the-record communications, giving rise to the impression that the agency is predisposed towards the interests of that party. The same is true if ex parte communications are made to or received from an interested person, defined under federal law as “any individual or other person with an interest in the agency proceeding that is greater than the general interest the public as a whole may have.” Portland Audubon Soc’y v. Endangered Species Comm’n, 984 F.2d 1534, 1544 (9th Cir. 1993) (quoting H.R. Rep. No. 94-880, pt. I, at 19-20 (1976), reprinted in 1976 U.S.C.C.A.N. 2183, 2201). An individual’s interest “need not be monetary” in order to be considered as an “interested person,” and “[t]he term includes, but is not limited to, parties, competitors, public officials, and nonprofit or public interest organizations and associations with a special interest in the matter regulated.” Id. Excluded from this term are “member[s] of the public at large who make[ ] a casual or general expression of opinion about a pending proceeding.” PATCO v. FLRA II, 685 F.2d at 562. In instances involving the exchange of ex parte communications between an adjudicating agency deci-sionmaker and an interested person, the de-cisionmaker would appear to be improperly considering materials or information not properly introduced in the record. Worse, the agency might be viewed as adjudicating in accordance with the preferences of interested persons instead of the applicable law. There may in fact be situations in which ex parte communications from interested persons will have a more influential effect on an agency’s substantive decisionmaking than ex parte communications from parties in a contested case. This court has recognized as much, when it previously reasoned that statements by the Governor regarding a pending contested case before an agency may constitute improper pressure, given the Governor’s “obvious position of influence” over administrative agencies headed by individuals who may be a member of the Governor’s cabinet. In re Water Use Permit Applications (Waiāhole I), 94 Hawai'i 97, 124, 9 P.3d 409, 436 (2000); see also Portland Audubon, 984 F.2d at 1545 (“No ex parte communication is more likely to influence an agency than one from the President or a member of his staff. No communication from any other person is more likely to deprive the parties and the public of their right to effective participation in a key governmental decision at a most crucial time”)- Just as public statements by the Governor have the potential to improperly pressure an agency acting in a quasi-judicial capacity in contravention of constitutional due process, so too the Governor’s ex parte communications directly conveyed to that agency. See Waiāhole I, 94 Hawai'i at 124-26, 9 P.3d at 436-37 (intimating that the Governor’s general statements about his views on the contested ease before the agency, if directly communicated with the deci-sionmakers, could have been sufficient to demonstrate the requisite nexus between the pressure and the decisionmakers and could have been grounds for the invalidation of the agency decision on due process grounds). To effectuate the guarantees of state constitutional due process, the need to disclose ex parte communications originating from interested persons may thus be more crucial than disclosing the same communications from a party. The contrary conclusion of the deputy attorney general for BLNR in this case—that there was no need to disclose the ex parte communications that Steven Jacobson, the first hearing officer, received from government officials because they did not originate from UHIfA’s counsel—is incorrect. Disclosure of ex parte communications between an agency adjudicator and parties or interested persons is critical because the adverse impacts of these communications to due process interests are present regardless of whether the content of the ex parte communications is procedural or substantive. If the content is substantive, the agency would have in front of it information outside of the record that, if not disclosed, the parties to the contested case would have no opportunity to address or rebut. If the content is procedural, the fact that the agency has permitted that party or interested person to engage in undisclosed communications off the record— an allowance not enjoyed as a matter of right by all of the other parties to a contested case—raises a shadow of impropriety. More importantly, ex parte communications concerning a facially procedural subject matter could nonetheless subtly influence the substantive decisionmaking process of the adjudicating agency. See PATCO v. FLRA II, 685 F.2d at 563 (explaining that ex parte communications concerning requests for information on the procedural status of a proceeding “may in effect amount to an indirect or subtle effort to influence the substantive outcome of the proceedings.”). In such cases, the due process right to respond would be inhibited by nondisclosure. For example, Jacobson stated that, as a result of the communications initiated by the chiefs of staff of the Governor and Senator Inouye, he was required to “make daily reports to both the Health Department and the Board’s Chair as to how soon [he] contemplated finishing, what else [he] thought [he] needed to do, why [he] thought [he] had to do it, etc.” Consequently, Jacobson concluded that his “initial report and recommended decision ... were filed as a result of ‘or else’ pressure.” Although Jacobson averred that he “was not asked to recommend a particular result,” “the result Senator Inouye’s office wanted from the Board was clear.” Thus, even if it were assumed that the contacts initiated by the chiefs of staff of the Governor and Senator Inouye were versed facially as procedural inquiries, their effects made clear to Jacobson what sort of result Senator Inouye’s office wanted BLNR to reach. 2 It follows that ex parte communications from parties and interested persons may affect the due process interests of fairness and opportunity to respond regardless of whether such communications have a substantive or procedural content; hence, due process requires disclosure of these communications. See PATCO v. FLRA II, 685 F.2d at 563. This principle parallels Rule 2.9 of the Hawaii Revised Code of Judicial Conduct (RCJC). Hawaii state judges are generally not permitted to “initiate, permit, or consider ex parte communications, or consider other communications made to the judge outside the presence of the parties or their lawyers, concerning a pending[] or impending matter.” RCJC Rule 2.9(a) (2008). Even when the “circumstances require ... an ex parte communication for scheduling, administrative, or emergency purposes that does not address substantive matters,” RCJC Rule 2.9(a)(1)—an exception to the general prohibition against ex parte communications—a judge is still required “promptly to notify all other parties of the substance of the ex parte communication and gives the parties an opportunity to respond,” RCJC Rule 2.9(a)(1)(B); see also RCJC Rule 2.9(a)(2) (requiring disclosure of a judge’s written consultation with a disinterested expert on the law and the opportunity for the parties to respond). Thus, even though the RCJC does not prohibit procedural ex parte communications, it still requires judges to disclose them. See RCJC Rule 2.9(a)(1)(B), (a)(2). Further, it is notable that RCJC Rule 2.9 does not limit its proscription against ex parte communications to parties or their agents. RCJC Rule 2.9. Except for specifically delineated exceptions, see RCJC Rule 2.9(a)(2)-(3), RCJC Rule 2.9 generally prohibits ex parte communications regardless of the source. Patterning procedures governing ex parte communications in agency contested cases from those already applied by Hawaii judges is consistent with the majority opinion in Mauna Kea Anaina Hou v. Board of Land and Natural Resources, which noted that “[a] contested case hearing is similar in many respects to a trial before a judge: the parties have the right to present evidence, testimony is taken under oath, and witnesses are subject to cross-examination” 136 Hawai'i 376, 380, 363 P.3d 224, 228 (2015). As such, a contested hearing “provides a high level of procedural fairness and protections to ensure that decisions are made based on a factual record that is developed through a rigorous adversarial process.” Id, Analogously, a hearing officer presiding over a contested case hearing should follow procedures akin to those that govern judges with regard to ex parte communications. Applying these procedures is an integral component of the “high level of procedural fairness and protections” provided for in a contested hearing, id that are designed to ensure that decisions are based on the factual record before the agency and not influenced by off-the-record communications. In addition to their procedural similarity to court hearings, agencies in contested cases are “often in the position of deciding issues that affect multiple stakeholders and implicate constitutional rights and duties,” as recognized by a separate majority of this court in Mauna Kea. Id. at 413-14, 363 P.3d at 261-62 (Pollack, J., concurring). These issues commonly surpass, in importance and magnitude, those present in a typical court case. See, e.g., Mauna Kea, 136 Hawai'i 376, 363 P.3d 224 (involving a permit to build an astronomical observatory on the summit of Mauna Kea and implicating the constitutionally guaranteed right of Native Hawaiians to exercise traditional and customary practices); Waiāhole I, 94 Hawai'i 97, 9 P.3d 409 (contested case involving the collection of fresh water and dike-impounded ground water, water use permits, and water reservations affecting various classes of users); Pele Def. Fund v. Puna Geothermal Venture, 77 Hawai'i 64, 66, 881 P.2d 1210, 1212 (1994) (contested cases involving permit applications to construct geothermal exploratory and developmental wells and a power plant). Given the importance of the issues and rights involved in agency contested cases, it is logical and fair to hold agency officials involved in quasi-judicial decisionmaking to the same or a similar standard that governs judges with regard to ex parte eommunica-tions. Not doing so would result in a situation where ex parte conduct that would otherwise be prohibited had the contested case been litigated in a court, to be permitted in the agency adjudication. This is an anomalous result, given that agency contested cases are similar to a trial before a judge, and, as such, the parties to an agency contested case should be afforded the same due process protections as tiróse enjoyed by trial litigants in court. 3
Disclosure of substantive ex parte communications and procedural ex parte communications that bear the potential to influence the substantive decisionmaking of an adjudicating agency is also required by the Hawai'i Administrative Procedure Act (HAPA). In every contested case, HAPA provides that “[n]o matters outside the record shall be considered by the agency in making its decision,” HRS § 91—9(g) (2012), and that “[n]o official of an agency who renders a decision in a contested case shall consult any person on any issue of fact except upon notice and opportunity for all parties to participate, save to the extent required for the disposition of ex parte matters authorized by law,” HRS § 91-13 (2012). 4 Relatedly, HRS § 91-9(c) directs agencies to afford opportunities to “all parties to present evidence and argument on all issues involved.” HRS § 91-9(c). Further, HRS § 91-10(3) (2012) provides every party “the right to conduct such cross-examination as may be required for a full and true disclosure of the facts, and shall have the right to submit rebuttal evidence.” Substantive ex parte communications and procedural ex parte communications that may subtly affect the decisionmaking of an agency adjudicator are, by their nature, “outside the record,” such that the quasi-judicial decisionmaker of an agency may not consider them in the decisional process without giving notice and the opportunity for all parties to participate; otherwise, HRS §§ 91—9(g) and 91-13 are necessarily offended. See Korean Buddhist Dae Won Sa Temple of Haw. v. Sullivan, 87 Hawai'i 217, 241, 953 P.2d 1315, 1339 (1998) (reasoning that the Director of the Honolulu Department of Land Utilization violated HRS § 91-13 by considering a book concerning Buddhism that was not made part of the record and by consulting an unidentified qualified individual regarding the Buddhist belief system). In the event that such ex parte communications are not timely disclosed to allow the parties to respond, the light of parties to present evidence and argument on all issues involved is contravened. HRS § 91—9(c); see Town v. Land Use Comm’n, 55 Haw. 538, 548-49, 524 P.2d 84, 91-92 (1974). By the same token, nondisclosure of these ex parte communications precludes parties from conducting cross-examination and from submitting rebuttal evidence concerning their contents. HRS § 91-10(3); see Town, 55 Haw. at 548-49, 524 P.2d at 91-92. Thus, by proscribing the consideration of off-the-record materials and by guaranteeing parties certain procedural rights during contested case hearings, it is inherent in HAPA that substantive ex parte communications and procedural ex parte communications that have the potential to affect the substantive decisionmaking of an agency adjudicator must be disclosed.
Undisclosed ex parte communications pose a substantial risk on the reality and appearance of fairness in agency adjudications, have the potential to inhibit fair and objective agency decisionmaking based on the eviden-tiary record, present a danger to effective and objective judicial review, and are inconsistent with the strictures of HAPA. Consequently, disclosure and placement in the record of ex parte communications are required if they (1) involve substantive matters, (2) are facially phrased as a procedural inquiry but bear the potential to subtly affect the substantive decisionmaking of an agency adjudicator, or (3) are made to or received from a party or an interested person, regardless of whether the subject is substantive or procedural. 5 See Mauna Kea Power Co., 76 Hawai'i at 262-63, 874 P.2d at 1087-88. Disclosure would allow the parties to challenge or respond to the contents of such ex parte communications, see id. and permit courts to effectively review the implications of the communications to the validity of the agency decision, I PATCO v. FLRA II, 685 F.2d at 564 n.32. Further, in order for disclosure to effectively serve the values protected by due process and HAPA, the contents of the disclosure should be sufficiently detailed to allow the parties to adequately respond to the ex parte communications and to permit the courts to independently review the nature and substance of the communications. Mauna Kea Power Co., 76 Hawai'i at 261, 874 P.2d at 1086; PATCO v. FLRA II, 685 F.2d at 564 n.32 (observing that “effective judicial review may be hampered if ex parte communications prevent adversarial decision of factual issues by the agency”). Therefore, in all instances where an adjudicating agency de-cisionmaker must disclose ex parte communications, see supra, the disclosure should include (a) any written ex parte communication, (b) any writing memorializing the nature, character, or substance of an oral communication, and (c) any response to the ex parte communication. This approach enhances the integrity of administrative adjudication, safeguards the parties’ interests subject to an agency’s adjudication, and insures against the appearance of impropriety. See Sandy Beach Def. Fund v. City Council of Honolulu, 70 Haw. 361, 377, 773 P.2d 250, 260 (1989) (reasoning that “the probable value, if any, of additional or alternative procedural safeguards” should figure in the determination of the kind of procedures that must be afforded in a proceeding). Further, given that the rights and interests involved in many contested cases are profoundly important, this approach is necessary to adequately protect and implement those rights and interests. See id. (stating that the interests affected by a governmental act is a relevant consideration in deciding what procedural protections are warranted by due process). If the approach described herein is not adopted, the same type of ex parte communications that occurred in this case would likely recur in future contested proceedings no matter how ardent the majority’s entreaty that agencies should be more open under similar circumstances. The risk that off-the-record information would influence the deci-sionmaking process of an agency adjudicator would remain open, and the possibility that individuals would be deprived of important rights and interests would remain high. See id. (holding that “the risk of erroneous deprivation” of individual interests through the procedures used should be considered in deciding whether certain procedures are mandated by due process). Further, a rule that comes short of requiring disclosure of substantive ex parte communications and ex parte communications exchanged with parties or interested persons would preclude courts from meaningfully reviewing the validity of agency adjudications. See PATCO v. FLRA II, 685 F.2d at 564 n.32. Likewise, a conclusory disclosure as to the nature and content of ex parte communications would inhibit a reviewing court’s duty to independently review the outcome of agency adjudications and would cause the court to summarily accept the agency’s explanation as true and dispositive. Finally, the additional burden that may accrue to an adjudicating agency of complying with the disclosure principles discussed in this opinion is very slight. Given that agencies are already required to effectuate the Hawai'i Constitution, see Mauna Kea, 136 Hawai'i at 413-15, 363 P.3d at 261-63 (Pollack, J., concurring), and the various statutory mandates of HAPA, see supra note 3, obligating agencies to adhere to procedures regarding ex parte communications that parallel those that apply to courts will not be unduly burdensome. See Sandy Beach Def. Fund, 70 Haw. at 377, 773 P.2d at 260 (noting that the burden on the government of certain procedural protections is relevant to whether such protections should be imposed). And any additional burden that may befall agencies is overwhelmingly outweighed by the benefits of the disclosure procedures discussed. See id. (noting that the “probable value” of additional procedural protections should be balanced against the burden on the government in determining what process is due). Not only will these disclosure procedures guard against the appearance of impropriety that could result in the invalidation of an agency decision, see Mauna Kea, 136 Hawai'i at 399, 363 P.3d at 247 (vacating a permit that BLNR issued because the proceedings produced the appearance of impropriety), but they will also ensure that the proceedings are conducted in compliance with the values embodied by due process and HAPA. Accordingly, substantive ex parte communications, procedural ex parte communications that bear the potential of influencing an agency adjudicator’s decisionmaking process, and ex parte communications exchanged between adjudicating agencies and parties and interested persons must be disclosed consistent with due process. 6