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Re: ADR in State Agencies
May 19, 2000

 
Honorable Don Siegelman
Governor
Office of the Governor
State Capitol
600 Dexter Avenue, Room N-104
Montgomery, Alabama 36130
 
State Departments and Agencies
Administrative Procedure Act
Alternative Dispute Resolution
Mediation

Section 41-22-12(f) of the Code of Alabama authorizes state agencies to use voluntary, nonbinding alternative dispute resolution processes, such as mediation, to resolve contested cases under the Alabama Administrative Procedure Act, provided: (1) use of such a process is not "precluded by statute" and (2) the parties agree to it in writing. This does not, however, alter the requirements relating to the record which must be kept in contested cases and does not authorize confidential settlements or resolutions unless otherwise authorized by law.

Although administrative agencies lack the authority to engage in voluntary, nonbinding alternative dispute resolution processes, such as mediation, outside the context of "contested cases," the Attorney General may engage in such processes in order to avoid litigation. This authority may be delegated by the Attorney General to the general counsel of state agencies and departments and exercised by them under the Attorney General's oversight.

Dear Governor Siegelman:
This opinion of the Attorney General is issued in response to your request.

QUESTION 1

Is there any proscription in state law or principles of sovereign immunity which would prevent a state agency from resolving an administrative"contested case," as the term is defined in the Alabama Administrative Procedure Act ("AAPA"), by means of voluntary, nonbinding alternative dispute resolution processes, such as mediation? Stated conversely, would statutory authorization to use an alternative dispute resolution [process] such as mediation be necessary in order to resolve an administrative contested case by mediation?

FACTS AND ANALYSIS

The Alabama Administrative Procedure Act defines a "contested case" as follows:

A proceeding, including but not restricted to ratemaking, price fixing, and licensing, in which the legal rights, duties, or privileges of a party are required by law to be determined by an agency after an opportunity for hearing. The term shall not include intra-agency personnel actions; shall not include those hearings or proceedings in which the Alabama Board of Pardons and Paroles considers the granting or denial of pardons, paroles or restoration of civil and political rights or remission of fines and forfeitures; and which are exempt from Sections 41-22-12 through 41-22-21, relating to contested cases.

ALA. CODE § 41-22-3(3) (Supp. 1999).

As the definition of "contested ease" suggests, the provisions governing contested cases are located in sections 41-22-12 through 41-22-21 of the Code of Alabama. See ALA. CODE §§41-22-12 to 41-22-21 (1991, Supp. 1999).
Section 41-22-12(f) provides:
Unless precluded by statute, informal dispositions may be made of any contested case by stipulation, agreed settlement, consent order, or default or by another method agreed upon by the parties in writing.

ALA. CODE § 41-22-12(f) (Supp. 1999) (emphasis added).

Section 41-22-12(f) gives permission to use "another method agreed upon by the parties in writing" and thus authorizes a state agency to use an informal settlement process, such as mediation, in resolving a contested case, provided: (1) use of such a process is not "precluded by statute" and (2) the parties agree to it in writing. The comments pertaining to this provision state that this "is consistent with Alabama's statutory requirement that the judiciary encourage informal settlement of disputes, section 6-6-1, as well as the intent of Ala. R. Civ. P., Rule 16 to discourage judicial proceedings if resolution may be reached in a more informal manner." ALA. CODE § 41-22-12 Commentary (1991). This Office has previously observed that "[s]ettling disputes without litigation is a good public policy. The importance of this policy is evidenced in the actions of the three branches of government — by the Legislature's inclusion in the APA of a process by which contested cases can be settled, see section 41-22-12(f) of the Code of Alabama, by the Governor's issuance of two executive orders encouraging state agencies to engage in dispute resolution measures where appropriate, and in the words of numerous decisions of the courts .... "Opinion to Honorable D. David Parsons, Acting Commissioner, Alabama Department of Insurance, dated May 10, 1999, A.G. No. 99-00201 at 2.

We note, however, that the permission contained in section 41-22-12(f) does not alter the requirements relating to the record which must be kept in contested cases. See ALA. CODE § 41-22-12(g), (h) (Supp. 1999). In addition, section 41-22-12(f) does not authorize a state agency to enter into a settlement or resolution that is confidential, unless otherwise authorized by law. See Alabama Open Records Act, ALA. CODE § 36-12-40 (1991). In Stone v. Consolidated Publishing Co., 404 So. 2d 678 (Ala. 1981), the Supreme Court of Alabama stated that "[r]ecorded information received by a public officer in confidence, sensitive personnel records, pending criminal investigations, and records the disclosure of which would be detrimental to the best interests of the public are some of the areas which may not be subject to public disclosure. Courts must balance the interest of the citizens in knowing what their public officers are doing in the discharge of public duties against the interest of the general public in having the business of government carried on efficiently and without undue interference." Id. at 68l. In a later decision, the Supreme Court also stated that "[t]here is a presumption in favor of public disclosure of public writings and records expressed in the language of § 36-12-40" and "[t]he exceptions set forth in Stone must be strictly construed." Chambers v. Birmingham News Co., 552 So. 2d 854, 856 (Ala. 1989); see also Opinion to Constance S. Aune, Mobile County Board of Education, dated October 4, 1995, A.G. No. 96-00003 (discussing section 36-12-40 and Stone exceptions).

CONCLUSION

Section 41-22-12(f) of the Code of Alabama authorizes state agencies to use voluntary, nonbinding alternative dispute resolution processes, such as mediation, to resolve contested cases under the Alabama Administrative Procedure Act, provided: (l) use of such a process is not "precluded by statute" and (2) the parties agree to it in writing. This does not, however, alter the requirements relating to the record which must be kept in contested cases and does not authorize confidential settlements or resolutions unless otherwise authorized by law.

QUESTION 2

May a state agency use voluntary, nonbinding alternative dispute resolution processes such as mediation to resolve disputes that occur, but which do not rise to the level of a "contested case," or which are exempted from the provisions of the AAPA?

FACTS AND ANALYSIS

This Office addressed an issue similar to your second question in an opinion to Honorable D. David Parsons, Acting Commissioner, Alabama Department of Insurance, dated May 10, 1999, A.G. Opinion No. 99-00201. In that opinion, we addressed whether the Department of Insurance could "settle administrative cases through an agreement, which includes the payment of moneys to the State of Alabama, not related to any express statutory fining authority." Id. at 1. In our opinion, we noted that the Department of Insurance was exempted from the AAPA. Id. at 2; ALA. CODE § 41-22-2(e)(1991). This Office thus opined:
Administrative agencies ... are creatures of the Legislature and may only exercise those powers conferred upon them by the Legislature. Bates v. Jefferson County Board of Health, 486 So. 2d 439 (Ala. Civ. App. 1986). Since the APA does not apply to the Department, and since no other provision of state law grants the department any legal authority to settle cases in return for a cash payment, it may not do so.

A.G. Opinion No. 99-00201 at 2.

This Office then noted, however, that:
Section 36-15-21 of the Code of Alabama grants the Attorney General
the general authority to oversee the conduct of the state's litigation. It provides that "[a]ll litigation concerning the interest of the state, or any department of the state, shall be under the direction and control of the Attorney General.'' ALA. CODE§ 36-15-21 (1998). This general grant of authority empowers the Attorney General to settle cases, including administrative cases such as those that are the subject of your letter where the licensee has the right to take his case to the circuit court, in order to avoid such litigation. As with many other aspects of litigation, the Attorney General may delegate the power to settle these cases to the general counsel of the various agencies and departments of government.

A.G. Opinion No. 99-00201 at 2-3.

The authorization to engage in voluntary, nonbinding alternative dispute resolution processes contained in section 41-22-12(f) applies only to a "contested case." ALA. CODE § 41-22-12(f) (Supp. 1999). This authorization thus does not apply to disputes which do not fall within the definition of a "contested case" or which are otherwise exempted from the AAPA. As we noted previously, "[a]dministrative agencies.., are creatures of the Legislature and may only exercise those powers conferred upon them by the Legislature.'' A.G. Opinion No. 99-00201 at 2; Bates v. Jefferson County Board of Health, 486 So. 2d 439, 440 (Ala. Civ. App. 1986). Since the AAPA does not authorize agencies to engage in voluntary, nonbinding alternative dispute resolution processes outside the context of "contested cases," they may not do so.

Section 36-15-21 of the Code of Alabama, however, authorizes the Attorney General to settle cases, including administrative cases that may result in litigation, in order to avoid litigation. ALA. CODE § 36-15-21 (Supp. 1999); A.G. Opinion No. 99-00201 at 2-3. This grant of authority permits the Attorney General to engage in voluntary, nonbinding alternative dispute resolution processes in cases which do not rise to the level of a "contested case" or which are otherwise exempt from the AAPA, if litigation could result if the matter is not settled or resolved. As we noted previously, "the Attorney General may delegate the power to settle these cases to the general counsel of the various agencies and departments of government." A.G. Opinion No. 99-00201 at 3.

CONCLUSION

Although administrative agencies lack the authority to engage in voluntary, nonbinding alternative dispute resolution processes, such as mediation, outside the context of "contested cases," the Attorney General may engage in such processes in order to avoid litigation. This authority may be delegated by the Attorney General to the general counsel of state agencies and departments and exercised by them under the Attorney General's over sight.

I hope this opinion answers your questions. If this Office can be of further assistance, please contact Charles B. Campbell of my staff.
 
Sincerely,
BILL PRYOR
Attorney General
 
By:
CAROL JEAN SMITH
Chief, Opinions Division
BP/CBC
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