News from the States
by Michael Asimow^*

California's Aindependent judgment" rule is unique. It applies to judicial review of the decisions of state or local agencies that deprive persons of Avested, fundamental rights." In such cases, reviewing courts must decide factual questions independently. The familiar substantial evidence or clearly erroneous tests do not apply.

In Fukuda v. City of Angels, 20 Cal.4th 805 (1999), the Supreme Court reviewed a local decision upholding the termination of a policeman for conducting an unsafe car chase. The main issue in the case was burden of proof. At the administrative level, of course, the city has the burden to show that an employee should be terminated. On judicial review, the policeman argued, the city should again have the burden in order to allow the court to engage in true independent judgment of the facts. The Court held, however, that the employee must bear the burden of proof because the decision under review is presumed to be correct.

More importantly, the Court solidly reaffirmed independent judgment. This doctrine was created by the California Supreme Court back in the 1940's and has been vastly expanded by subsequent decisions. Today independent judgment is maintained solely as a matter of policy by the Supreme Court. It is not required by the state constitution nor by any statute (although Code of Civil Procedure '1094.5 tells reviewing courts how to proceed if independent judgment applies).

Notwithstanding its responsibility for creating and broadening the independent judgment doctrine, the Court decided in Fukuda that it could not make any changes. It left the task of reforming independent judgment to the legislature. This decision serves as a model of judicial restraint. It was, however, extremely disappointing to this author who filed an amicus brief in Fukuda urging the Court to dispense with independent judgment.

An Oregon initiative measure provided that certain individuals shall be invited to be present at executions by lethal injection. Regulations adopted by the Department of Corrections require witnesses at executions to refrain from disclosing the identities of the persons involved in the execution, such as physicians, executioners, or security personnel. The regulations also prevent witnesses from observing the preparations for the execution.

The Oregon Supreme Court held these regulations are invalid because contrary to the statute. Oregon Newspaper Publishers Ass'n v. Oregon Dep't of Corrections, 329 Or. 115 (1999). Although the Department could adopt security measures such as preventing witnesses from bringing contraband into the institution, it could not abridge the right of witnesses to talk or write about the execution, including disclosure of the names or descriptions of the personnel involved. In addition, the right to witness an execution includes preparation for the execution such as connecting monitoring equipment, placing the prisoner in restraints, and inserting a catheter to administer the fatal drug.

This case appears to be an instance of a court invalidating regulations by narrowly construing the statute that authorized the regulations. The court does this to avoid constitutional issues that might arise if the statute were construed broadly enough to validate the regulations. In addition, it is worth pointing out that the decision contains not a word about deference to the agency's construction of the statute.

Agency Head Upholds His Own Credibility¹

In Hearne v. Sherman, 1999 N.C. Lexis 720, 1999 WL 528170, the North Carolina Supreme Court upheld a decision by Sherman, the head of the County Health Department, that Hearne had voluntarily resigned as an animal control officer. The case turned on what was said in a phone conversation between Hearne and Sherman and whether Hearne's resignation was voluntary or coerced.

An independent ALJ drawn from North Carolina's central panel ruled that Hearne had not voluntarily resigned and had not been discharged for good cause. The State Personnel Commission agreed with the ALJs decision. But Sherman was the agency head and he ruled that the resignation was voluntary. Sherman wrote in his opinion: AIt is evident that either Mr. Sherman or Mr. Hearne are lying about certain points.@ Sherman decided that Sherman was telling the truth and Hearne was lying.

The North Carolina Supreme Court saw no due process problem in an agency head resolving questions of his own credibility. It denied there were any credibility issues even though all of the other adjudicators who looked at the case, including several vigorous dissenting opinions, thought that credibility determinations were crucial. The court also held there was substantial evidence supporting Sherman's decision.

Strangely, the court failed to discuss the rule of necessity, which provides that a biased adjudicator can decide a case if legally nobody else can make the decision. When the rule of necessity applies, as it apparently did in this case, perhaps the court should exercise a broader standard of review than the deferential substantial evidence test.

Florida's Legislature Redoubles Its Effort to Restrict Rulemaking Authority²

In June 1999, Florida Governor Jeb Bush signed into law another set of APA amendments. These amendments modify a restriction on agency rulemaking authority Florida added to its APA in 1996 and heighten the burden an agency must overcome when it rejects an administrative law judge's (ALJ's) interpretation of a statute or administrative rule.

The catalyst for these amendments was judicial interpretation of a provision added to Florida's APA in 1996. The provision added in 1996 stated, AAn agency may adopt only rules that implement, interpret, or make specific the particular powers and duties granted by the enabling statute.@ Following adoption of the 1996 amendments, each agency was required to evaluate all of their rules for compliance with this new standard and to submit to the Legislature a list of the rules that were in violation of the standard. The 1996 standard could also be used as a basis for legal challenges to new and existing rules. As the Legislature was evaluating agency rule submissions for compliance, Florida's First District Court of Appeals had an opportunity to interpret how the 1996 restrictions on rulemaking authority applied to new rules. In St. Johns River Water Management District v. Consolidated-Tomoka Land Company, 717 So. 2d 72 (Fla. 1st DCA 1998), the court reversed an ALJ's invalidation of a water management district's regulations and stated a test: A[a] rule is a valid exercise of delegated legislative authority if it regulates a matter directly within the class of powers and duties identified in the statute to be implemented.@

The 1999 APA amendments reject this test by revising the APA standard. The 1999 amendment states that agencies may only adopt rules that Aimplement or interpret the specific powers and duties granted by the enabling statute.@ It deletes the word Aparticular,@ replacing it with Aspecific.@ Although the bill states Ait is not the intent of the Legislature to reverse the result of any specific judicial decision,@ the 1999 amendments preclude courts and ALJs from applying the Consolidated-Tomoka test in future cases. For example, addressing the language of the test endorsed by the panel in Consolidated-Tomoka, the 1999 amendment states: ANo agency shall have the authority to adopt a rule only because it . . . is within the agency's class of powers and duties.@

As with the 1996 standard restricting agency rulemaking authority, the 1999 standard not only applies to new rules. It also applies to existing rules. As agencies were required to evaluate all rules following the 1996 amendments, they are again required to evaluate all rules for compliance with the 1999 standard. Effectively, the Legislature has told agencies that is not satisfied with their evaluation of whether rules are based in Aparticular@ powers and duties, even though agencies evaluated their rules for compliance with that standard well before the Consolidated-Tomoka decision was issued and more than 5,000 rules (20% of Florida's Administrative Code) were found from that process to be out of compliance. Agencies now must reevaluate all remaining rules to determine whether they are based in Aspecific@ statutory powers and duties, since even rules based in Aparticular@ powers and duties may not meet the new Aspecific@ standard. As with the 1996 amendment, the Legislature has established a timetable. Each agency is required to provide the Joint Administrative Procedures Committee a list of rules exceeding statutory authority under the Aspecific@ powers and duties standard, and the Legislature will again consider whether rule authorization bills and necessary to sustain the rules. As of July 1, 2001, existing rules will be subject to challenge under the new standard. Agencies have no meaningful guidance as to what the amended standard restricting rulemaking authority means and how it will be applied. Following the 1999 amendments, courts will have to come up with a new definition of Aspecific,@ presumably one that is not as broad as Consolidated-Tomoka's definition of Aparticular.@

In addition, the 1999 APA amendment modifies agency authority to make legal interpretations in adjudication and thus tilts the balance towards ALJ or judicial legal interpretations and away from legal interpretations by agencies. In what is certainly the most sweeping change in years to adjudication under Florida's APA, the 1999 amended APA prohibits agencies from rejecting or modifying ALJ conclusions of law unless they overcome a heightened burden. Under the version of Florida's APA that preceded the 1999 amendments, agencies had the discretion to reject or modify ALJ conclusions of law or policy, although agencies are bound to ALJ findings of fact if they are supported by competent substantial evidence.

The 1999 Florida APA amendments require an agency rejecting all conclusions of law or interpretation of regulations to Astate with particularity its reasons@ and to Amake a finding that its substituted conclusion of law or interpretation of an administrative rule is as or more reasonable than that which was rejected or modified.@ This new provision restricts an agency's discretion to reject an ALJ's interpretation of a statute or a rule, placing agencies in a posture of justifying their departure from an ALJ's order. It also introduces an uncertainty: Courts might rubber-stamp agency findings that their legal interpretations are reasonable, but it is likely that the Legislature intended this provision to allow courts more sweeping authority to second guess agency interpretations of law. In this sense, the 1999 amendments may expand the authority of ALJs and courts to decide statutory interpretation and policy issues in adjudication as well as rulemaking.

The 1999 amendments also clarify the APA's definition of an Aagency@ to expressly include a regional water supply authority and to exempt district school boards from the new limitations on rulemaking authority. In addition, the 1999 amendments prohibit agencies from adopting Aretroactive@ rules, including rules that are intended to clarify existing law. This provision precludes future application of the court's holding in Environmental Trust v. Department of Environmental Protection, 714 So.2d 493, 500 (Fla. 2d DCA 1999) (holding retroactive application of a rule may be proper if the rule merely clarifies or explains a previous rule for future cases).

The 1999 amendments signed into law are far superior to those in proposed bills considered by legislative committees early in 1999 session (see previous issue of Administrative & Regulatory Law News), which would have prohibited courts from giving any deference to agency interpretations of law and subjected agencies to additional burdens where their rules had been challenged. Nevertheless, the 1999 amendments to Florida's APA continue to endorse strong restrictions on agency rulemaking authority, require agencies to go through a costly review process that is indistinguishable in form and content from that which they underwent following the 1996 APA amendments, and subject their existing rules to legal challenges that are more restrictive of agency authority to promulgate rules than the 1996 amendment. At the same time, the amendments provide little guidance to agencies, merely substituting the word Aspecific@ for Aparticular@ in Florida's statutory nondelegation provision. The amendments also further tilt the balance in statutory interpretation away from agencies and towards ALJs and courts.

In La Farge Corp. v. Commonwealth of Pennsylvania Insurance Department, decided July 20, 1999, the Supreme Court of Pennsylvania reversed a Commonwealth Court decision [690 A.2d 826 (Pa. Commonwealth 1997)] that had ordered the Insurance Commissioner to provide a trial type hearing before approving a plan for restructure and division of an insurance company. In interpreting the General Association Act Amendments of 1990 [15 P.S. Secs. 21101-21404], the Supreme Court held that the Apublic hearing@ procedures of that act (which were informational and not record-bound) were adequate statutorily, did not conflict with the Administrative Agency Law, and Afulfilled the requirements of administrative due process.@ The Court's opinion makes it clear that the concept of flexible due process, inspired by Mathews v. Eldridge at the federal level, has relevance to state level administrative decisions.

Illinois Authorizes Local Government to Establish Hearing Systems⁴

A recent Illinois statute allows home-rule municipalities to establish their own administrative hearing systems for the adjudication of municipal code violations. Ill. Public Act 90-516 (65 ILCS 5/1-2.1-1 et al.).

The act allows local adjudicatory systems to operate under a uniform set of procedural rules and regulations. More important, the act allows an order by a hearing officer, after opportunity for judicial review, to be enforced in the same manner as a judgment entered by a court of competent jurisdiction. As a result of the act, Chicago, in cooperation with the Circuit Court of Cook County, has removed ten of thousands of ordinance cases from the state court system.

On April 20, 1999, Mayor Richard M. Daley recently signed an executive order establishing an advisory council to the department of administrative hearings. Chaired by former Chicago Bar Association President, Kevin M. Forde, the 10 member council consists of current and former judges, trial attorneys from the plaintiff and defense bars and a representative from a community court advocacy group. Council members will convene twice a year and serve without compensation.

The 16th annual Central Panel Directors and Chief Judges Conference will be held October 3-6, 1999, in Madison, Wisconsin. Twenty-eight states or large cities now have central panels or are very close to changing over to the centralized concept of administrative adjudication of disputes. New jurisdictions that have been invited to join the conference are Kansas, Kentucky, Alabama, and the District of Columbia. The annual conference brings together the directors, chief judges, and senior managers who discuss issues of mutual interest and share solutions to the problems being faced in both high volume and complex administrative hearings. Questions regarding the conference can be directed to David Schwarz, Administrator of the Wisconsin Division of Hearings and Appeals, 5005 University Ave. #201, Madison, WI 53705.

Bybee, Jay S, Agency Expertise, ALJ Independence, and Administrative Courts: Recent Changes in Louisiana's Administrative Procedure Act, 59 La. L. Rev.431 (1999).

Ward, Gregory C., Note, Maryland's Court of Appeals Upholds a Fine Imposed By an Administrative Agency Despite a Lack of Specific Authorization to Fine From the General Assembly, (Lussier v. Maryland Racing Commission, 343 Md.681, 684 A.2d 804, 1996.), 27 U. Balt. L. Rev. 515 (1998).

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