On July 1, 2024, House Enrolled Act (HEA) 1003 will become effective and will substantively change administrative review of agency action taken by the Indiana Department of Environmental Management (IDEM). On that date, the Indiana Office of Environmental Adjudication (OEA), that was established in 1995, will be eliminated (by repealing its authorizing statute at Ind. Code § 4-21.5-7) and review of IDEM "agency action" will be conducted by Indiana's Office of Administrative Law Proceedings (OALP), a centralized panel of administrative law judges created in 2019. While the change seems radical given OEA's nearly 30-year presence, it is not yet clear whether there will be any significant procedural changes between OALP's and OEA's review of IDEM's agency actions.
However, HEA 1003 does make significant substantive changes to review. First, it changes the evidentiary standard for administrative review from a "substantial evidence" standard to a "preponderance of the evidence" standard thereby making it easier to challenge agency action. Second, the legislation eliminates judicial deference to agency interpretations of law.1 Finally, the act will make litigation costs incurred during judicial review proceedings recoverable from the agency in some cases.
The following chart summarizes the major changes to review of agency actions by IDEM:
| Indiana Code Sections Affected | Change Summary |
|---|---|
| General Provisions | |
| 1-1-5.5-24 | Establishes an effective date of July 1, 2024. If judicial or administrative review of agency action was pending on or before June 30, 2024, the proceeding will not be reassigned. |
| Changes to OALP Provisions | |
| 4-15-10.5-12
and 4-15-10.5-15 |
Adds language establishing OALP as the ultimate authority in all administrative proceedings, including review of IDEM actions, and that judicial review may be taken from a "final decision" of OALP. |
| 4-15-10.5-12(c) | Adds language that OALP is not the ultimate authority if "a particular agency or agency action is exempted under Indiana law" or if "an agency is required by federal mandate, as a condition of federal funding, to conduct or render a final order in an adjudication." |
| Changes to AOPA Adjudicative Proceedings | |
| 4-21.5-3-9(b) & (c) | Adds sections requiring ALJs assigned to environmental matters by OALP to have threshold qualifications. Those qualifications are: (1) Indiana citizenship; (2) possession of an Indiana law license that is active and in good standing; (3) a minimum of 5 years of experience in environmental or administrative law; (4) independence from the agency involved in the review; (5) meet the qualifications specific to environmental law as determined by OALP's training program; and (6) be one of the three ALJs in OALP "designated to hear environmental matters." |
| 4-21.5-3-27.5(a)(2) | Requires that the ALJ "shall order the agency to pay reasonable attorney's fees" if the "agency action was unsupported by a statute or valid rule." |
| 4-21.5-3-29 | Makes changes to procedure for objecting to nonfinal orders and issuing final orders. |
| 4-21.5-3-31 | Makes changes to the ultimate authority's ability to review nonfinal orders. |
| Changes to AOPA Judicial Review | |
| 4-21.5-5-11(a) | Deletes language preventing de novo review and prohibiting courts from substituting "its judgment for that of the agency." |
| 4-21.5-5-11(b) | Adds language stating that a court is "not bound by a finding of fact made by the ultimate authority if the finding of fact is not supported by the record." |
| 4-21.5-5-13(a), (d) | Removes the requirement that the petitioner is to file the administrative record when seeking judicial review. Adds language requiring OALP to file the administrative record within 30 days of service of the petition for judicial review. |
| 4-21.5-5-13(c) | Removes the ability to default petitioner for failing to file administrative record. |
| 4-21.5-5-14(d)(5) | Replaces substantial evidence standard with preponderance of the evidence standard. |
| 4-21.5-3-27.5(b)2 | Adds language that requires courts to order agencies to "pay the other party's reasonable attorneys' fees" if the other party prevailed before the ALJ, the agency initiated the proceeding for judicial review, and the other party prevailed on judicial review. |
| 4-21.5-3-27.5(c) | Provides courts with discretion to not award the other party attorneys' fees if the agency was only involved in the case as an arbiter or the agency's position became "unjustified" as a result in an "intervening change in applicable law." |
There is a lot that is still unknown regarding OALP review. For instance, we know that OALP will designate three ALJs as qualified to adjudicate challenges to IDEM's agency actions. Two of those ALJs are known (current OEA ELJ Lori Endris and current OALP ALJ Vanessa Gould), but OALP has apparently not designated a third.
Moreover, the "training program" required to qualify as an ALJ who can review environmental causes has not been completed. It is also unclear whether ALJs will act as the "ultimate authority" as ELJs do now or whether orders issued by the ALJs will be "nonfinal" subject to challenge and review by OALP's "director" (currently Jefferson Garn).
We will provide updates as more information becomes available. If you have any questions, please feel free to contact Brad Sugarman, chair of the Environmental Practice Group at Bose McKinney & Evans LLP, at 317-684-5274.
Footnotes
1. For more information on the impact of eliminating agency deference, see my article on the subject published by the Indiana Lawyer on February 14, 2024.
2. Both Indiana Code § 4-21.5-3-27.5(b) & (c) appear in the chapter of AOPA addressing "Adjudicative Proceedings" even though they expressly mention judicial review (and therefore should've been added to Ind. Code § 4-21.5-5 which addresses "Judicial Review).
Originally published Apr 9, 2024
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