Formal adjudication is a proceeding where administrative agencies resolve disputes, which the Administrative Procedure Act (APA) governs. Administrative agencies may also resolve their disputes through informal adjudication, but must conduct formal adjudication when the statute which creates the agency requires it.
When Formal Adjudication Requirements Apply:
Sections 554, 556 and 557 of the Administrative Procedure Act establish the procedural requirements for formal adjudication. Section 554 requires that the procedural protections in sections 556 and 557 be followed when the statute requires the adjudication to be “on the record after opportunity for agency hearing.” As with formal rulemaking, this provision is narrowly interpreted, and the statute must contain almost exactly that phrase. For example, in Dominion Energy v. Johnson, 443 F.3d 12 (1st 2006), the First Circuit found that a statute which required the adjudication to provide an “opportunity for a public hearing” did not require formal adjudication under § 554.
Procedural Requirements for Formal Adjudication:
Sections 554, 556, and 557 require oral, trial-type proceedings for formal adjudications. Section 554(b) requires the agency to issue notice of the formal adjudication, and 554(c) ensures that interested parties have the opportunity to present their arguments. Sections 556 and 557 lay out the role of the administrative law judge and the manner by which such adjudications should proceed. As in standard civil trials, parties may present evidence and cross-examine witnesses, and the adjudicator must issue a decision with findings and conclusions.
[Last updated in November of 2021 by the Wex Definitions Team]