Agency substantive jurisdiction: the more things change ...

• Author: Downie, Robert C., II
• Position: Florida

Recent decisions by Florida's appellate courts in Barfield v. Department of Health, 805 So. 2d 1008 (Fla. 1st DCA 2001), and Deep Lagoon Boat Club, Ltd. v. Sheridan, 784 So. 2d 1140 (Fla. 2d DCA 2001), have brought to the spotlight the issue of agency substantive jurisdiction within the meaning of the Administrative Procedure Act (APA), F.S. Ch. 120. F.S. [section] 120.57(1) states, in part:

The agency may adopt the recommended order as the final order of the agency. The agency in its final order may reject or modify the conclusions of law over which it has substantive jurisdiction and interpretation of administrative rules over which it has substantive jurisdiction. (Emphasis added.)

Prior to statutory changes to the APA in 1996 and 1999, agencies had been free to reject any conclusion of law within a recommended order. (1)

As the courts have begun addressing this issue, several interpretations of agency substantive jurisdiction have emerged. The first is that agencies do not have jurisdiction to modify or reject rulings on the admissibility of evidence. In Barfield, the court held that the agency did not have the authority to review a conclusion of law in which an administrative law judge (ALJ) labeled tendered evidence as hearsay. The agency had reversed this conclusion in its final order and in doing so construed F.S. [section] 90.803, relating to a hearsay exception for business or public records. Apparently, the court agreed with the appellant that the agency, the Board of Dentistry, had substantive jurisdiction over "matters pertaining to dentistry alone." (2)

The second interpretation is that agencies do not have the authority to modify or reject conclusions of law applying legal concepts. In Deep Lagoon, the court held that the Department of Environmental Protection did not have the authority to review a conclusion of law in a recommended order which related to the application of collateral estoppel, stating:

That legal determination was not one that involved the Department's area of expertise but, rather, required applying a legal concept typically resolved by judicial or quasi-judicial officers. Although the Secretary possesses many powers in conjunction with the exercise of the Department's substantive jurisdiction, the power to reverse the ALJ's decision not to apply collateral estoppel is not one of them. (3)

The court's reasoning was straightforward: DEP is in the business of protecting the environment, not construing abstract legal concepts, and therefore DEP has no "expertise" in matters such as collateral estoppel, and by extension, no substantive jurisdiction.

Commentary on these decisions has focused on ways in which an agency might seek to have adverse recommended conclusions of law that are outside the agency's substantive jurisdiction reviewed by an appellate court. Among the suggestions are no review, appeal of the agency's own final order, and interlocutory review of the recommended order. (4)

Interestingly, there appears to be no debate as to the substantive jurisdiction of the Division of Administrative Hearings (DOAH), and from where it might emanate. In other words, why does DOAH have more substantive jurisdiction than the agency which refers its cases to DOAH? A review of the APA and other authority indicates that in proceedings initiated pursuant to [section] 120.57(1), there is sound reason to conclude that DOAH's substantive jurisdiction is identical to the referring agency's substantive jurisdiction. That means there is no such thing as a recommended conclusion of law over which an agency does not have substantive jurisdiction.

DOAH's Jurisdiction

In order to determine DOAH's substantive jurisdiction, it is important to understand that DOAH is created and controlled by statute. (5) Like any other agency subject to the APA, DOAH may not act beyond its prescribed statutory authority. DOAH has its own rulemaking authority to establish:

(a) Further qualifications for administrative law judges and ... procedures by which candidates will be considered for employment or contract.

(b) The manner in which public notice will be given of vacancies in the staff of administrative law judges.

(c) Procedures for the assignment of administrative law judges. (6)

DOAH also has a "general grant of rulemaking authority" which states: "The division shall have the authority to adopt reasonable rules to carry out the provisions of" the APA. (7) Finally, there is a limit to DOAH rulemaking authority: "Rules promulgated by the division may authorize any reasonable sanctions except contempt for violation of the rules of the division or failure to comply with a reasonable order issued by an administrative law judge, which is not under judicial review." (8) Of particular note is that no current rule within the Florida Administrative Code cites as authority any of DOAH's statutory rulemaking authority, nor is there one rule implementing that authority.

An affected party who seeks to challenge agency action in a [section] 120.57(1) formal hearing is required to file its petition with the...