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Settlement by Consent

Model State Administrative Procedure Act, 1981 provides for the informal settlement of matters by consent.  Informal settlement may be made by stipulation, agreed settlement, or consent order.  Each agency establishes specific procedures to facilitate informal settlement.  However, agencies may not compel parties to settle matters by informal proceedings.

According to the Federal Administrative Procedure Act, a hearing is to be conducted to the extent that the parties are unable to determine a controversy by consent.[i] Thus if parties can settle a matter by consent then hearing may not be conducted by administrative agencies.

Generally, after the commencement of a proceeding, the parties jointly may move to defer the hearing for a reasonable time to permit negotiation of a settlement.  Before allowing such deferment the administrative law judge considers factors such as:

  • nature of the proceeding,
  • requirements of the public interest,
  • representations of the parties and
  • probability of reaching an agreement which will result in a just disposition of the issues involved.

Any agreement containing consent by settlement should provide:

  • that the order will have the same force and effect as an order made after full hearing,
  • that the entire record on which any order may be based consists solely of the complaint, order of reference or notice of administrative determination, and the agreement,
  • a waiver of any further procedural steps before the administrative law judge, and
  • a waiver of any right to challenge or contest the validity of the order entered into in accordance with the agreement.

Consent decrees are entered into by parties to waive their right to litigate the issues involved in the case. By consent decrees parties can save time, expense, and inevitable risk of litigation.[ii] In Klein v. Bd. of Regents, 2003 WI App 118 (Wis. Ct. App. 2003), the court held that a consent decree or order should be interpreted as a contract which give effect to the intent of the parties.  The consent decrees should be approved by the administrative agencies.  However, predetermination and conciliation agreements need not require agency approval.

[i] 5 USCS § 554 (c) (2)

[ii] Jackson/Charvel, Inc. v. Gibson Guitar Corp., 863 F.2d 48 (6th Cir. Tenn. 1988)

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