Challenges to Agency Rules in Adjudicatory-type Hearings
| Publication year | 1988 |
| Pages | 1991 |
| Citation | Vol. 17 No. 10 Pg. 1991 |
1988, October, Pg. 1991. Challenges to Agency Rules in Adjudicatory-Type Hearings
More than one attorney, in earnest pursuit of a client's vindication in an administrative hearing, has been brought up short by the discovery that the government's action against a client appears to be mandated by specific agency regulations. Absent other alternatives, the most urgent question usually becomes to what extent, if any, the controlling regulations may be sidestepped, ignored or successfully attacked in the course of the proceeding. The popular view is that an agency, unlike a court, has neither the authority to consider the legal validity of its rules nor the discretion to ignore them. Thus, the result of the hearing is simply a foregone conclusion. Or is it?
This article examines this issue in the context of Colorado Administrative Procedure Act ("APA") adjudicatory-type hearings under CRS § 24-4-105. There are specific administrative agencies which have considered this issue while adjudicating an aggrieved party's case. However, this article focuses on written agency decisions by administrative law judges ("ALJs") of the Division of Administrative Hearings, Colorado Department of Administration, who sit by designation or referral in accordance with the agency's enabling legislation or as otherwise provided for by statute.(fn1)
This article also is concerned with agency regulations cited by the agency as the undisputed basis for the action which is challenged by an aggrieved party. It is assumed that the official conducting the hearing, either the ALJ or a specific agency hearing officer sitting by designation, is doing so with full authority to address the issue. The result is either in the form of a recommended or initial agency decision or, as in the case of at least one agency,(fn2) the ALJ's decision constitutes final agency action for the purposes of judicial review under the APA.(fn3)
The question here is to what extent may an administrative agency, in the context of an adjudicatory-type hearing under the APA, directly or by implication consider the legal validity of its own rules. An examination of reported decisions by ALJs shows that most have taken a conservative view of their authority in this regard.(fn4) Rarely have they accepted that the agency has discretion to consider exceptions to its rules, and almost never have they assumed jurisdiction over questions concerning the facial validity of the agency's rules. However, there have been occasions when the ALJs have implicitly passed on the legal validity of regulations which were initially cited by the agency to be controlling.
The position taken by most of the ALJs is that neither they, when sitting on behalf of the agency, nor the agency itself has the authority to consider whether the agency's own rules are valid. This position is perhaps based on the concept of the separation of powers among the judicial, legislative and executive branches of government, as well as the provisions of the judicial review statute in the APA.(fn5) These provisions indicate that it is the court which may declare agency rules invalid as a matter of law.
A review of the cases show that the ALJs have been presented with this issue on numerous occasions. In one appeal under the Colorado Medical Assistance Act before the Department of Social Services,(fn6) the petitioner argued that the regulations which implemented a new system of reimbursing property costs to participating Medicaid service providers pursuant to statutory changes were invalid, unfairly applied and, in some respects, unconstitutional. In response, the ALJ found she had no authority to make the decision that the regulations were unfair or constituted impermissible ex post facto application of a statute. The ALJ relied on Kinternecht v. Indus. Comm'n,(fn7) even though that case holds only that an agency may not decide the constitutionality of its own statutes---a contention not made by the petitioner.
The petitioner also argued the agency should be equitably estopped from applying its regulations as written because of alleged different treatment offered in other cases, and it cited Colorado case law in support of this position.(fn8) The ALJ found that since it was not disputed the agency had applied the rule as...
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