Official Publication of the Minnesota State Bar Association


Vol. 63, No. 2 | February 2006
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Minnesota's OAH:
30 Years of Innovation in Administrative Review

Over 30 years Minnesota’s Office of Administrative Hearings has seen significant growth in the use of administrative process for dispute resolution and has been recognized both locally and nationally for innovations in government.


by Hon. Raymond Krause

 

January 1, 2006, marked a significant anniversary for Minnesota’s legal system. As of that date, the Office of Administrative Hearings (OAH) completed 30 years of service to Minnesotans. In January of 1976, when Wendell Anderson was governor, Robert J. Sheran was chief justice of the Minnesota Supreme Court, and Butch Wynegar was an All-Star for the Minnesota Twins, the Office of Hearing Examiners began with Duane Harves as its first chief hearing examiner.1 Since then, use of the administrative process as a method of dispute resolution has grown significantly, and much of the growth that has occurred in Minnesota has become a model for other states.

Minnesota is nationally recognized for its “good government” innovations in many areas, and administrative law is one of them.  In the mid-1970s, Minnesota was a trendsetter in establishing a neutral forum for adjudication of administrative disputes.  In the succeeding three decades, the state has continued to play a prominent role in expanding the range of possibilities for resolving conflicts between citizens, state agencies and political subdivisions through administrative proceedings.  Hand in hand with innovations in the use of the administrative process, the Legislature has repeatedly emphasized its expectation of quality, accountability, and professionalism in the services that OAH performs. That expectation has also been a further catalyst for innovation.

The Central Panel Concept

Prior to the 1970s, most state agencies throughout the country employed their own hearing officers to conduct the due process hearings that agencies were constitutionally or statutorily required to provide for members of the public. Minnesota was no exception. Each individual agency conducted its own hearings and conducted them in its own way. There was little consistency of process from one agency to another, with some agencies having formal rules governing the hearing process while others simply proceeded by custom.

Similarly, there was little uniformity in the qualifications of the individuals holding the hearings. Some agencies were authorized by statute to employ their own hearing officers.2  Others were precluded from using their own employees but were authorized to contract with private individuals to preside over hearings.3  Concerns began to be raised about the apparent lack of impartiality in the hearing process, specifically about the unfairness inherent in having a person employed by an agency conduct hearings to determine the propriety of that agency’s actions. As legislatures added to the number of situations requiring a due process hearing, this agency-centric system became less and less workable.  In the mid-1970s, the Minnesota Legislature was one of a handful of state legislatures that was struggling with these administrative hearing concerns.

At the same time, concerns were also being raised in Minnesota about agency rulemaking processes.  One cause was the statutory definition of “rule” in early versions of the Minnesota Administrative Procedures Act.  It was ambiguous, and it appeared that agencies were taking advantage of the ambiguities to avoid formal rulemaking. The Legislature increasingly felt that state agencies were engaging in “informal rulemaking” — that is, basing regulatory actions on statements of policy that were not subjected to any formal process.4 The Legislature was also becoming frustrated by the lack of consistency in the rulemaking practices of the 75 or so state agencies that were promulgating rules.  All of these issues came to a head in the 1974 and 1975 sessions of the Legislature, when committees in both chambers conducted thorough reviews of existing rulemaking processes.

In 1946, California had experimented with the administrative process by creating a “central panel” administrative hearing office.  Central panels are independent agencies, usually in a state’s Executive Branch, not affiliated with any other state agency and whose sole function is to provide administrative hearing services for other state agencies. Since central panel hearing officers are not employees of the agency whose actions are being contested, the members of the public are assured of a neutral and impartial forum for resolution of disputes with state agencies.  When the Minnesota Legislature decided to reform the administrative process in the mid-1970s, it chose, along with three other states,5 to adopt the central panel concept. What previously had been an experiment became a trend. Today, 27 states have some form of central panel as do several Canadian provinces.

Combining Independence and Professionalism

In 1975, the Minnesota Legislature addressed the issues of impartiality, consistency, and accountability by creating an independent central panel hearing office to conduct administrative proceedings.  The new Office of Hearing Examiners was given an oversight role in the rulemaking process and was empowered to conduct many of the due process hearings that the state agencies were required to conduct.6 There were some significant exceptions, however, particularly with respect to high-volume hearing functions. Although implied consent drivers’ license revocation hearings were administrative in nature, they had been handled in the state court system, and that practice continued after the Office of Hearing Examiners was established.  Additionally, welfare benefit hearings, unemployment compensation hearings, and workers’ compensation benefit hearings continued to be conducted by employees of the state agencies that were responsible for those programs.

The legislation creating Minnesota’s central panel indicated that the Legislature wanted to ensure independence and professionalism in the newly created hearing office.  The chief hearing examiner was to be appointed by the governor with the advice and consent of the Senate.  To assure independence and to minimize potential politicization of the position, the chief was given a term of six years — two years longer than the governor’s term of four years.  The legislation also contained an explicit requirement that hearing examiners “be free of any political or economic association that would impair their ability to function officially in a fair and objective manner.”7  Additionally, the Legislature addressed the issue of professional competence by requiring that all hearing examiners “have demonstrated knowledge of administrative procedures.”8 

The enabling legislation also provided that “[i]n assigning hearing examiners to conduct such hearings, the chief hearing examiner shall attempt to utilize personnel having expertise in the subject to be dealt with in the hearing.”9 This was in accord with the longstanding view that administrative issues are often complex and highly technical, and therefore require adjudicators with commensurate special expertise. Accordingly, the new chief hearing examiner made an effort to fill the hearing officer positions with persons having experience in a variety of areas of administrative law in order to comply with the Legislature’s expectations. 

Subsequently, as the range of hearings that OAH conducted grew and more cases were filed, a strict separation of case assignment by area of specialization became problematic. Ultimately, overcrowded dockets and fewer hearing officers made it necessary to assign cases outside of narrow specialty areas. In an effort to respond to the Legislature’s concern about expertise, the OAH now cross-trains judges to ensure that there is more than one judge that is familiar with each type of subject matter. This has had an added benefit in that judges enjoy the variety and have actively worked to acquire expertise in multiple areas of administrative law.  In turn, this has fostered a stronger sense of unity, collegiality, and mutual supportiveness that has enhanced the professional standing of the organization as a whole.

OAH has also been mindful of the Legislature’s expectations of high ethical standards and professionalism.  Although the initial legislation creating the agency did not include statutory standards of ethical conduct, the OAH subsequently proposed that its judges be bound by the same provisions of the Code of Judicial Conduct that apply to other judges in the Executive and Judicial branches. The Legislature amended the enabling legislation in 2000, and the Code of Judicial Conduct now applies to all administrative law judges and workers’ compensation judges.

Range of Services

Over the years, the Legislature has sought to resolve various kinds of disputes and provide timely due process for Minnesota’s citizens by giving OAH additional hearing responsibilities. Because OAH is an independent state agency, and not under the control of any other agency, it has been in a unique position to implement the Legislature’s efforts to provide consistent due process, to expedite resolution of administrative issues, and to provide a resource for cities, counties and townships.

The first significant expansion of OAH responsibilities after its creation was in 1981, when legislation transferred all workers’ compensation hearing functions and the compensation judges who were performing those functions from the Department of Labor and Industry to the now renamed Office of Administrative Hearings.10 While OAH took on this high-volume caseload, the Department of Labor and Industry retained, for the time, the alternative dispute resolution functions and the quasijudicial settlement function. The Department of Labor and Industry continued to employ a cadre of compensation judges, known as “settlement judges,” who presided over settlement conferences and certain other related prehearing proceedings. The two quasijudicial functions continued to be done in the two different state agencies until 1997, when the Legislature created a Settlement Division within OAH and transferred all of the settlement functions to OAH, along with the settlement judges who had been performing those functions.

Since that transfer of responsibility, the rulemaking/due process hearing function and the compensation hearing function have become separate operating divisions within the OAH.  Each division is supervised by an assistant chief judge.  Scheduling issues make it difficult for judges to regularly handle cases in both divisions; however, such crossover is permitted by statute.

Child Support Cases

In addition to workers’ compensation, the 1980s saw further expansion of the OAH jurisdiction, this time in response to congressional directives. In 1984 Congress required all states to create expedited procedures for dealing with child support orders involving persons on public assistance.  In 1987 the Minnesota Legislature saw OAH as an efficient and responsible answer to that challenge. It directed OAH to create an administrative process for establishing child support obligations for welfare benefit recipients. The program enabled child support orders to be issued or modified by administrative law judges, rather than district court judges. By 1998 OAH was performing that function in all of Minnesota’s 87 counties.  The state legislation went too far, however, in the breadth of powers it gave to administrative law judges.  For example, the state legislation gave administrative law judges all of the powers, duties, and responsibilities conferred on district court judges for these cases, including the power to issue subpoenas and issue warrants for failures to appear.  Administrative law judges were also given full authority to modify previously issued child support orders, including those issued by district court judges.

OAH’s involvement with child support orders came to an abrupt end in January 1999, when the Minnesota Supreme Court held that OAH’s administrative child support hearing process amounted to an unconstitutional delegation of judicial power to an Executive Branch agency.11  That spring, legislation was enacted transferring that function back to the state court system.

Campaign Complaint Cases

OAH responded again to the changing needs of the state in time for the 2004 elections.  Prior to 2004, Minnesota’s county attorney offices were obligated to investigate alleged violations of the state’s fair campaign practices and financial reporting requirements. This often meant initiating grand jury proceedings and bringing criminal prosecutions when violations appeared to be substantiated. This used significant amounts of county attorney time and resources. Many complaints involved relatively minor or technical infractions, and some were simply frivolous and filed as a campaign tactic. Often, these complaints could not be investigated before the related election was held. The county attorneys and the Legislature were looking for a faster and more economical method for hearing these complaints and sorting out the most serious for criminal prosecution.

In 2004 the Legislature recognized the need for faster resolution of campaign complaints by creating civil remedies and an administrative process for potential campaign violations. Beginning on July 1, 2004, all complaints of alleged violations of state statutes regulating campaigns for public office must be filed with the OAH, rather than with county attorneys.  The legislative change provided that those complaints must be finally disposed of in administrative proceedings conducted by OAH before they may be the subject of criminal prosecution by county attorneys. 

This new approach to addressing violations of election campaign laws is much more expeditious and efficient than prior practice.  There is no need to convene a grand jury unless a case is referred by OAH for criminal prosecution. Most hearings are held and decisions rendered prior to rather than after the election. In the first two years after jurisdiction came to OAH, the number of complaints has dropped significantly and county attorney resources have been redirected to other areas.

Boundary Adjustment Unit

By Reorganization Order No. 192, dated February 2, 2005, the governor transferred the functions, powers, duties, and responsibility of the Department of Administration’s Municipal Boundary Adjustment Unit to OAH.12 The Municipal Boundary Adjustment Unit administers the state’s uniform system for city boundary adjustment, by exercising its quasijudicial authority to issue administrative orders for the creation or dissolution of cities or for the alteration of city borders through consolidation, annexation, or detachment. 

Prior to the reorganization, the Municipal Boundary Adjustment Unit had bounced from the Municipal Board to the Office of Strategic and Long-Range Planning to the Department of Administration. Morale was low, and the recognition of its important functions was diminishing. Transfer of the unit to OAH consolidated all of the administrative, alternative dispute resolution, and hearing functions relating to municipal boundary adjustments.  Combining all of those functions under a single roof has resulted in improved communication, management attention and focus.

Services for Political Subdivisions

The Legislature has also recognized that the state’s political subdivisions are frequently required to conduct their own adjudicative administrative hearings, such as liquor license revocations.  Multimember governing bodies, such as county boards, city councils, and school boards often find it difficult to conduct necessary quasijudicial hearings efficiently as a body and to create records of those proceedings that facilitate later judicial review.  The hearings are, in many cases, not an efficient use of time for entire boards or councils and require expertise in legal issues that council or board members may lack.

Another innovation that sets Minnesota apart from most other states, including those with central panels, is OAH’s statutory authority to contract with local governments to have OAH’s administrative law judges conduct local administrative hearings. Although many county boards, city councils, and school boards still either conduct their own administrative hearings or hire private attorneys to conduct them, increasing numbers of political subdivisions have been contracting with OAH for those services.  OAH currently conducts licensing hearings of various types, personnel due process hearings, and a variety of other administrative hearings for a large number of different political subdivisions.

Leader in Quality

Minnesota’s OAH has also led the way in designing systems for continuous improvement and performance measurement of its judges and its internal operations. For example, in 1998, Chief Judge Ken Nickolai began the Judicial Development Program at OAH. The purpose of the program was to identify for judges the things they are doing well and also to identify those aspects of their performance that could be improved. This was accomplished through surveys of attorneys and parties appearing before OAH judges. The surveys asked key questions about how the judges performed in terms of efficiency, fairness, knowledge of the law, and other factors. The individual survey responses were kept confidential and the individual results given to each judge. The judge then discussed the results with a mentor, usually another judge, and set goals for self-improvement. Those goals, and the judges’ success in achieving them, have become part of the judges’ annual performance reviews. This program was repeated in 2001 and is underway again this year.

OAH’s Judicial Development Program is unique in the U.S. and Canada. In 2001, it was a semifinalist for the Innovations in American Government Award awarded by the Institute for Government Innovation at the John F. Kennedy School of Government at Harvard University. This unique approach to performance management for judges has attracted both national and international attention and invitations to speak to interested groups such as the National Association of Administrative Law Judges, the Central Panel Directors’ Conference, and the British Columbia Association of Administrative Tribunals.  Several states with central panels have also requested more detailed information and design assistance from OAH on this program as they attempt to use it as a model for their own central panels.

The office implemented another approach to assessing the quality of judicial performance in the fall of 2005.  A survey was sent to all the agencies, commissions, and boards that utilize OAH’s rulemaking, mediation, or adjudication services. The survey asked for feedback on responsiveness, cost, quality of work, and additional services that would be helpful, such as mediation or training in rule writing. The results of these surveys will be used for internal improvements and as a basis for providing agencies with a more tailored approach to meeting their needs.  The goal is to create opportunities for better service and lower costs for the various state agencies that utilize those services. OAH has plans to do a similar follow-up with local units of government that contract with OAH for hearing services.

The trend in the United States since the early 1970s has clearly been toward creating central panels as an efficient and impartial means of dealing with administrative due process hearings and rulemaking. Some states conduct a narrower range of hearings than Minnesota’s OAH does, but many of those are gaining that jurisdiction incrementally, as did Minnesota. For example, North Carolina and Michigan acquired the rulemaking oversight function in 2005.  On the other hand, other state central panels have much wider jurisdiction than Minnesota’s does.  Typically, those central panels have jurisdiction that includes unemployment compensation appeals and welfare benefit, child support and corrections department due process hearings. Significantly, in 33 states, implied consent hearings are handled administratively rather than through the already overburdened judicial system.

After 30 years, Minnesota can take some justified satisfaction in the quality and continuing innovation at OAH. There are many opportunities for improvement and expansion of the critical services OAH provides, but if history is any indicator, the judges and staff of OAH will be up to the challenges and at the forefront. c

Notes
1 In its 30 years of existence, the OAH has had five chief hearing examiners (now chief administrative law judges). They are Duane R. Harves 1976-1988, William G. Brown 1988-1993, Kevin E. Johnson 1993-1997, Ken Nickolai 1998-2003 and Raymond R. Krause 2004-present.

2 See, e.g., 1967 Minn. Laws ch. 864, §4 and 1969 Minn. Laws ch. 1129, art. 4, §5.

3 See, e.g., 1973 Minn. Laws ch. 897, §20, 1969 Minn. Laws ch. 975, §§11-13, and 1973 Minn. Laws ch. 688, §3. 

4 In Thomas J. Triplett and James Nobles, “Rule-making under Minnesota’s Administrative Procedure Act: 1975 Amendments,” Hennepin Lawyer, Jul.-Aug. 1975 at 14, the authors, both of whom were serving as legislative staff, list a number of fairly egregious examples of informal rulemaking by agencies.  See also the discussion in Duane R. Harves, The State of Minnesota Office of Administrative Hearings 1975 – 1985: A Report on the First Decade (1986) at pp. 3-4.

5 Florida, Massachusetts, and Tennessee

6 1975 Minn. Laws, ch. 380. 

7 1975 Minn. Laws ch. 380, §16.

8 Id.

9 Minn. Stat. §15.052, subd. 3 (1976).

10 1981 Minn. Laws ch. 346.  The title “hearing officer” became “administrative law judge” to conform to this change.  

11 Holmberg v. Holmberg, 588 N.W.2d 720 (Minn. 1999).

12 Minn. Stat. §16B.37, subd. 2, effective on March 9, 2005.


Raymond R. Krause is Chief Administrative Law Judge for the State of Minnesota. He previously held a position  as a judge on the Minnesota Tax Court.