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OAPA Appeals: Administering Success

published in Oklahoma Bar Journal | October 12, 2013

By Jason A. McVicker

The 20th century saw the radical changes in the way Americans live and work. Industrialization confounded lawmakers, judges and the executive branch alike. Administrative agencies developed to fill the gap. By fusing quasi-legislative and quasi-judicial power with executive authority, an administrative agency could solve modern problems more effectively than traditional state actors. Problems like adulterated food and quack doctors were checked by these nascent agencies.[1] Today, regulatory agencies wield titanic power. It is hard to overstate agency influence at the federal level.[2] At the state level, industrial concerns ranging from motor vehicles to agriculture are all subject to agency regulation.[3] State agencies also regulate professions, like podiatrists, perfusionists and polygraph examiners.[4]

The substantial reach of administrative agencies brings them into conflict with all manner of clients. The next step, or last resort, is an administrative appeal. This article specifically addresses the Oklahoma Administrative Procedures Act (OAPA or act), its scope, and its rules for appeals. It is crucial to understand the OAPA even before an agency makes a potentially adverse ruling. Mistakes early in the process can determine the outcome of appeals taken years later. Careful planning can make all the difference.

THE SCOPE OF THE OAPA

The OAPA provides the default rules for agency proceedings. Yet the OAPA also provides dozens of built-in exemptions.[5] The scope of the act determines how any given appeal may proceed.

The act is conveniently divided into Article I, governing rule-making or quasi-legislative functions, and Article II, controlling hearing requirements or quasi-judicial functions.[6] By default, all agencies or statutorily-created commissions are subject to the OAPA.[7] Local government bodies, including municipalities and some public trusts, are fully exempt.[8] Meanwhile, some administrative agencies are exempt from one or both articles.

Further complicating the issue, some of these exemptions are limited by subject matter. For example, the Department of Corrections and related officials are exempt from Article I only when crafting “internal management procedures.”[9] In reality, some subject matter exemptions are so broad they might as well be full exemptions. The Oklahoma Military Department is only exempt from Article I “to the extent it exercises its responsibility for military affairs.”[10] Yet it is hard to imagine a rule the OMD might promulgate that does not fall within the realm of “military affairs.” Nevertheless, the exemption is technically limited.

The scope of an exemption may become an issue for litigation, as in the recent case of State ex rel. Bd. Of Regents of the University of Okla. v. Lucas, 2013 OK 14, 297 P.3d 378. That case concerned the scope of the Board of Regent’s qualified exemption from Article II.[11] The board is exempt “except with respect to expulsion of any student for disciplinary reasons.” An OU student involved in some colorful disciplinary prolems[12] was prevented from enrolling for one semester.[13] The litigants debated whether this was an “expulsion,” whether the Board of Regents was bound by Article II in that case, and whether the district court had appellate jurisdiction by virtue of the OAPA. The Supreme Court determined that the answer to all of those questions was “no,” rendering the OAPA inapplicable.[14] As Lucas illustrates, application of an exemption can have a decisive effect on any given appeal.

There are many exemptions to the OAPA. The sidebar outlines these exemptions, but carefully review the statue to determine where your issue lies.

If the OAPA does not apply to your issue, some other appellate avenue should be available. For example, Corporation Commission actions regarding rates and regulations can be appealed directly to the Supreme Court of Oklahoma.[15] If the agency is exempt from the OAPA, you must consider a different set of procedures and a different body of precedent. This is not to say that OAPA-based case law is irrelevant. Standards of review for administrative decisions are fairly uniform, and OAPA cases may offer some persuasive value.

CHALLENGING THE AGENCY: ARTICLE I

There are two types of appeals – Article I, governed by §306, and Article II, controlled by §318 et seq. It is typically easy to distinguish between the two types of appeals.[17] Article I of the OAPA sets out a series of requirements that must be satisfied to promulgate a new administrative rule. So long as an agency respects formalities, it is very difficult to challenge rule-making on substantive grounds.[18] Section 306 governs judicial review of rule-making. A plaintiff may seek declaratory judgment in the district court of his domicile or where the rule may be applied.[19] Rules are presumptively valid, but the agency bears the burden of showing the rules were properly promulgated and violate no statutory or constitutional provision.[20] Note that the rule of exhaustion does not apply to judicial review of rule-making.[21]

CHALLENGING THE AGENCY ARTICLE II

Exhaustion is generally required for judicial review of adjudication subject to Article II.[22] This means a litigant must pursue every avenue of relief the agency itself offers before going to court. To appeal an adjudication, a petition for review must be filed within 30 days of the offending order. This 30 day deadline is jurisdictional and cannot be waived.[23] However, a request for rehearing, reopening or reconsideration pursuant to Section 317 may extend the time to appeal, potentially providing precious extra days.[24]

In Article II review, the agency itself is a necessary party.[25] “Generally, an administrative decision . . . should be affirmed if it is a valid order and the administrative proceedings are free from prejudicial error to the appealing party.”[26] An agency order can only be revered for the grounds set out in Section 322; violation of constitutional rights, excess of authority, unlawful procedures, errors of pure law of clearly erroneous evidentiary decisions.[27] An agency decision may also be revered if it is “arbitrary and capricious.”[28] The district court’s review can be further reviewed by the Supreme Court “in the manner and time provided by law for appeal to the Supreme Court from the district court in civil actions.”[29]

Judicial review pursuant to the OAPA is generally the only method of appeal. Attempts to subvert this process typically fail.[30] In one case, a former employee used the Department of Labor’s administrative process to seek overtime compensation from her employer. She exhausted her administrative remedies and ultimately lost. Rather than see district court review of the DOL decision pursuant to the OAPA, the employee filed a breach of contract action against her former employer, claiming overtime compensation as damages.[31] The Supreme Court applied preclusion doctrine and barred her recovery. The court held that, because the employee had already fully and fairly litigated the issue at the administrative level, the final agency order prohibited further litigation.[32] Note that the employee could have appealed the department’s decision pursuant to the OAPA.[33] Trying to go around the OAPA doomed her case.

PRESERVING THE RECORD

Review of an administrative ruling is confined to the record before the agency.[34] It is therefore essential to start creating and preserving the record before seeking appellate relief from a district court. In one case, the Oklahoma Alcoholic Beverage Control Board instructed a store owner to move signage that allegedly “indirectly attracted customer’s attention to the adjacent liquor store.”[35] The store owner challenged this (rather attenuated) accusation. The board held a hearing and ruled the juxtaposition of the sign violated state law. The store owner sought judicial review pursuant to §318 of the OAPA and the district court rejected the board’s decision as “unsupported by sufficient evidence.”

On appeal, the Supreme Court reinstated the board’s decision. The Supreme Court warned that district courts are confined to the record when reviewing agency rulings and can only reverse a decision based on evidence if the agency’s decision is clearly erroneous.[36] The board introduced evidence of a statutory violation at the administrative hearing, but the store owner did not introduce contrary evidence. Failing to introduce at the administrative hearing prevented the store owner from making the requisite showing at the district court.

Building a record must start early, but it need not be difficult. The record in an individual proceeding includes all sorts of material, including pleadings, motions and offers of proof.[37] When in doubt, consult OAPA’s definition of record and choose the best method (or two) to ensure the information you need is preserved.

CONCLUSION

The OAPA may seem arcane and technical. Yet the appellate tools it offers regulatory practitioners are often more simple and more predictable than those available in other areas of law. The key is to become familiar with the statute. The success or failure of an OAPA appeal begins before the first hearing and luck favors the prepared.


Agencies With Exemptions

Article 1 Exemptions
Complete:

  • Oklahoma Ordnance Works Authority
  •  Northeast Oklahoma Public Facilities Authority
  • Oklahoma Office of Homeland Security
  • Board of Trustees of the Oklahoma College Savings Plan
  • Institutional governing boards within the Oklahoma State System of Higher Education

Partial or Qualified:

  • Corporation Commission
  • Oklahoma Military Department
  • Transportation Commission
  • Department of Transportation
  • Oklahoma State Regents for Higher Education
  • Commissioner of Public Safety
  • Council on Judicial Complaints
  • Department of Corrections
  • State Board of Corrections
  • County sheriffs and managers of city jails

Article 2 Exemptions
Complete:

  • Oklahoma Tax Commission
  • Commission for Human Services
  • Oklahoma Ordnance Works Authority
  • Corporation Commission
  • Pardon and Parole Board
  • Midwestern Oklahoma Development Authority
  • Grand River Dam Authority
  • Northeast Oklahoma Public Facilities Authority
  • Council on Judicial Complaints
  • Board of Trustees of the Oklahoma College Savings Plan
  • Oklahoma Military Department
  • University Hospitals Authority and constituent hospitals and institutions
  • Oklahoma Health Care Authority Board
  • Administrator of the Oklahoma Health Care Authority
  • Oklahoma Office of Homeland Security

Partial or Qualified:

  • Supervisory or administrative agency of any penal, mental, medical or eleemosynary institution
  • Board of Regents
  • Oklahoma Horse Racing Commission
  • Commissioner of Public Safety
  • Administrator of the Department of Securities
  • Public agencies conducting certain motor vehicle lien hearings

Source: 75 O.S. §250.4; see also 75 O.S. §250.5 (exempting municipalities, counties, school districts, and other agencies of local government, plus “specialized agencies” performing “essentially local functions.”).

 


  1. The most famous impetus for regulation in twentieth century America was Upton Sinclair’s book “The Jungle,” which exposed disgusting conditions in the meat packing industry. See Upton Sinclair, The Jungle (1906).
  2. See R. Shep Melnick, Power to the People or to the Professionals? The Politics of Mature Regulatory Regimes, 47 TULSA L. REV. 65 (2011).
  3. See, e.g., 47 O.S. §563 (creating the Oklahoma Motor Vehicle Commission); 2 O.S. §§18-300 et seq. (authorizing the Oklahoma Wheat Utilization, Research and Market Development Commission).
  4. 59 O.S. §135.1 et seq. (the Podiatric Medicine Practice Act); 59 O.S. §2051 et seq. (the Oklahoma Licensed Perfusionists Act); 59 O.S. §1451 et seq. (the Polygraph Examiner’s Act). When researching an agency, the Oklahoma Administrative Code, is an invaluable tool. The regulations listed in the Code each provide their statutory authority. The code is available online at www.oar.state.ok.us.
  5. The complete list appears at 75 O.S. §§250.4 & §250.5.
  6. The legislature inelegantly codified Article 1 as 75 O.S. §250.9 through §308.2, plus 75 O.S. §§250.2, 250.6, 250.7, and 250.9. Article 2 consists of 75 O.S. §308 (a) through §323. Both Articles share custody of 75 O.S. §§250, 250.1, 250.3, 250.4, 250.5, and 250.8. See 75 O.S. §250.1.
  7. 75 O.S. §§250.4 (A) (1) & (B) (1); Musgrove Mill, LLC v. Capitol Medical Center Improvement & Zoning Comm., 2009 OK 19, ¶5, 210 P.3d 835, 836-37.
  8. Nevertheless, “public trusts having the state, or any department or agency thereof, as beneficiary” are expressly subject to the OAPA. 75 O.S. §250.5
  9. See 75 O.S. §250.4 (A) (10).
  10. 75 O.S. §250.4 (A) (3).
  11. Id. at ¶15.
  12. Id. at ¶2.
  13. Id. at ¶22.
  14. Id. at ¶45.
  15. Indeed, the Supreme Court is the only proper forum for such appeals. OK. CONST. art IX, §20.
  16. Concerning standards of review, see Justice John F. Reif, Judicial Review of Administrative Agency Decisions: A Discussion of Jurisdiction and Standards of Review, 81 OKLA. BAR J. 102, available at www.okbar.org/obj/articles10/archived10.htm. It provides the definitive explanation of standards of review in administrative cases.
  17. But See Conoco Inc. v. State Dept. of Health, 1982 OK 94, 651 P.2d 125 (comparing Article I appeals under §306 with Article II appeals under 306 with Article II appeals under §318, and discussing the intersection of the two options).
  18. For example, a rule cannot be invalidated simply because its impact statement is insufficient or inaccurate. 75 O.S. § 303 (D) (4). Furthermore, reviewing courts are deferential to an agency’s interpretation of its own rules and regulations. In re: Application for Permit to Build Abstract Plant of Great Plains Investments, 2007 OK CIV APP 113, ¶19, 172 P.3d 237, 241.
  19. 75 O.S. §306 (A)
  20. 75 O.S. §306 (B)
  21. 75 O.S. §306 (D)
  22. See e.g. Conoco, Inc. v. State Dept. of Health, 1982 OK 94, ¶20, 651 P.2d 125, 132; Martin v. Harrah Indep. School Dist., 1975 OK 154, ¶7, 543 P2d 1370, 1372 (“It has long been established in Oklahoma that exhaustion of statutory administrative remedies is a jurisdictional prerequisite for resort to the courts”).
  23. Transwestern Publishing, LLC v. Langdon, 2004 OK CIV APP 21, ¶5, 84 P.3d 804, 805-06.
  24. See State Ex. Rel. Okla. Bd. Of Medical Licensure & Supervision v. Pinaroc, 2002 OK 20, 46 P.3d 114.
  25. 75 O.S. §306 (B); see also Transwestern, 84 P.3d at 804. In Transwestern, the Department of Labor investigated a wage claim and awarded an Employee back pay. The Employer sought judicial review of the decision in district court, but failed to name the Department of Labor as a party to the action. The Court of Civil Appeals held that the Department was a necessary party, and the failure to timely name it in the suit robbed the district court of jurisdiction to hear the case. Id. at ¶8.
  26. City of Tulsa v. State ex rel. Public Employees Relations Bd., 1998 OK 92, ¶12, 967 P.2d 1214, 1219.
  27. See, e.g., Martinez v. State ex rel. Okla. State Bd. Of Medical Licensure & Supervision, 1993 OK CIV APP 68, ¶4, 852 P.2d 173, 175.
  28. “A decision is ‘arbitrary and capricious’ if ‘willful and unreasonable without consideration or in disregard of facts or without determining principle,’ or ‘unreasoning . . . in disregard of facts and circumstances.’” Glover v. Okla. Dept. of Transp., 2011 OK CIV APP 62, ¶10, 259 P.3d 872, 876 (citing State ex rel. Bd. of Trustees of Teacher’s Retirement System v. Garrett, 1993 OK CIV APP 29, ¶6, 848 P.2d 1182, 1183).
  29. 75 O.S. §323.
  30. Feightner v. Bank of Okla., 2003 OK 20, 65 P.3d 624. But see Bowen v. State ex rel. Okla. Real Estate Appraiser Bd., 2011 OK 86, 270 P.3d 133 (statutory procedures may be circumvented in cases that involve a constitutional question, inadequate administrative relief, or threatened or impending irreparable injury).
  31. Id. at ¶¶5-8.
  32. The Court left open the chance that a final order may not have preclusive effect in narrow circumstances, but expressed skepticism about the possibility. Id. at ¶¶14, 17.
  33. Id. at ¶7.
  34. Exceptions may exist in “certain cases of alleged irregularities in procedure before the agency.” Pharmacare Okla., Inc., v. State of Okla. Health Care Auth., 2007 OK CIV APP 5, ¶10, 152 P.3d 267, 269.
  35. Okla. Alcoholic Beverage Control Bd. v. Burris, 1980 OK 58, ¶1, 626 P.2d 1316, 1317
  36. Id. at ¶16 (citing 75 O.S. §321).
  37. 75 O.S. §309.