Iowa Federation of Labor, AFL-CIO v. Iowa Dept. of Job Service

• Decision Date: 20 July 1988
• Docket Number: AFL-CI,P,No. 87-1093,87-1093
• Citation: 427 N.W.2d 443
• Parties: IOWA FEDERATION OF LABOR,hyllis Trobaugh, and Livingston Moyston, Appellees, v. IOWA DEPARTMENT OF JOB SERVICE, n/k/a Department of Employment Services, Division of Job Service, Appellant.
• Court: Iowa Supreme Court

Page 443

427 N.W.2d 443

IOWA FEDERATION OF LABOR, AFL-CIO, Phyllis Trobaugh, and Livingston Moyston, Appellees, v. IOWA DEPARTMENT OF JOB SERVICE, n/k/a Department of Employment Services, Division of Job Service, Appellant.

No. 87-1093.

Supreme Court of Iowa.

July 20, 1988.

Walter F. Maley, Des Moines, for appellant.

Dennis McElwain of Smith & Smith, Sioux City, Lois Cox and William Hoekstra, Iowa City, and Mark L. Hill, Iowa City, for appellees.

Considered en banc.

LAVORATO, Justice.

In this judicial review proceeding we must decide whether the word "report" in a Job Service rule means the same as "pay." The district court concluded it does not and we agree. We affirm but remand for further rule-making proceedings.

I. Background Facts and Proceedings.

In 1984 the respondent, the Iowa Department of Job Service, amended its rule set out at 345 Iowa Administrative Code 4.2(1)(e), ¹ purportedly to authorize the payment of unemployment compensation benefits on a biweekly rather than weekly basis. See Iowa Code § 17A.4 (1983). The petitioners include the Iowa Federation of Labor, AFL-CIO, whose membership includes persons currently receiving such benefits, and two current recipients, Phyllis Trobaugh and Livingston Moyston.

The petitioners filed a petition for judicial review in the district court, challenging the validity of the rule on two grounds. See id. at § 17A.19. First, they allege the rule requires a claimant for unemployment benefits to "report" on a biweekly basis; the rule, however, says nothing about payment on a biweekly basis. Thus, they conclude the department's interpretation of the rule--that the word "report" includes "payment"--is unreasonable. Second, they allege the rule was not properly promulgated because sufficient notice of the change was not given to the public.

Following a hearing the district court denied the petitioner's request for a temporary injunction to prevent application of the rule. Thereafter, the parties agreed that the district court should decide the merits of the judicial review petition based on the record made at the hearing on the temporary injunction.

The district court concluded that the department's interpretation of the word "report" in the rule was unreasonable. The court also concluded that the department had indeed failed to substantially comply with the rule-making provisions of chapter 17A when the rule was promulgated. It is from this ruling that the department appeals.

On appeal, the department challenges the jurisdiction of the district court to review the department's rule. It contends a recent amendment to the Iowa Constitution precludes such review. The department also challenges the district court's ruling regarding the department's interpretation of the rule and regarding the procedure followed in promulgating the rule.

II. Scope of Review.

When reviewing a district court decision on the validity of agency action, our task is to determine whether the district court has correctly applied the law. Norland v. Iowa Dep't of Job Serv., 412 N.W.2d 904, 908 (Iowa 1987). In doing so, we apply the standards of Iowa Code section 17A.19(8) to the agency action to determine whether our conclusions are the same as those of the district court. Id. If our conclusions are the same, we must affirm; if not, we reverse. Downing v. Iowa Dep't of Transp., 415 N.W.2d 625, 627 (Iowa 1987).

III. Preclusion of Judicial Review.

At the outset the department challenges the district court's jurisdiction to consider the validity of its rule 4.2(1)(e), which it claims changes the payment of benefits from a weekly to a biweekly basis. The department argues that judicial review of administrative rules is now precluded because of a recently adopted amendment to the Iowa Constitution. That amendment, which went into effect in 1984, provides: "The general assembly may nullify an adopted administrative rule of a state agency by the passage of a resolution by a majority of all of the members of each house of the general assembly." Iowa Const. art. III, § 40.

The department construes the amendment to be a transfer of agency rule review power from the judiciary to the legislature, thereby depriving the courts of jurisdiction to review agency rules. Any attempt to exercise such jurisdiction, the department argues, would be a violation of the separation-of-powers provision found in article III, section 1 of the Iowa Constitution. ²

We think the department reads more into the amendment than its words suggest.

Generally, constitutional provisions are subject to the same rules of construction as statutes. 16 Am.Jur.2d Constitutional Law § 90, at 416-17 (1979). Our ultimate goal in interpreting statutes is to ascertain and give effect to the legislature's intent. Ayers v. Straight, 422 N.W.2d 643, 645 (Iowa 1988). To achieve that goal, we look to the object to be accomplished--the mischief to be remedied or the purpose to be served--and construe the statute so that it will best effect rather than defeat the legislative purpose. Id. Our statutory construction analysis should thus begin with the state of the law at the time the statute was passed. Id. We apply these same rules of construction to article III, section 40 of the Iowa Constitution.

Before the constitutional amendment was adopted, the passage of a statute was necessary to overcome an administrative rule. See Iowa Code § 17A.8(8)(1983); Bonfield, The Iowa Administrative Procedure Act, 60 Iowa L.Rev. 731, 904 (1975). In 1967, an Iowa Attorney General's opinion concluded that a proposed statutory amendment, allowing the legislature to change administrative rules by joint or concurrent resolution, violated the Iowa Constitution. 1968 Report Iowa Att'y Gen. 79-80 (May 10, 1967). The opinion cites two reasons:

First, the original rule making power comes from a law duly enacted. Assuming the rule is within the delegation and not an improper exercise of the legislative function, it merges with and becomes an integral part of the statute under which it was promulgated. The rule thereby attains the force and effect of law. If a legislature can change an administrative rule by resolution, which is not a law, it would have the power to effectively repeal any statute which delegates rule making powers, without a law of equal standing ... and without the governor's approval or veto. This would be contrary to the provisions of Article III, §§ 1, 16 and 17 of the Constitution of the State of Iowa respecting the legislature.

Secondly, administration of law, including exercise of the rule making power, is the proper function of the executive, rather than the legislative, branch of our government. Review of administrative rules is, except as heretofore stated, a function of the judicial branch of our government. No one branch of our government may encroach upon the functions of either of the other two except as authorized by our constitution. If the legislature changes administrative rules by joint or concurrent resolution, without the governor's approval or veto, it will, in my opinion, violate Article III, § 1, Constitution of the State of Iowa, respecting distribution of powers.

Id. (citations omitted). One author suggests this opinion probably triggered the chapter 17A requirement that a statute is necessary to overcome an agency rule. Bonfield, 60 Iowa L.Rev. at 904.

The next logical step would be to obviate this requirement, thereby removing the constitutional cloud. Article III, section 40 obviously accomplishes this purpose. We conclude these motives, rather than the motive to preclude judicial review, prompted adoption of the constitutional amendment.

Our conclusion avoids what would otherwise be an apparent conflict between the court's power to interpret and declare laws invalid under article V of the Iowa Constitution and the legislature's supposed exclusive power to nullify administrative rules under article III, section 40. Cf. Schwarzkopf v. Sac County Bd. of Supervisors, 341 N.W.2d 1, 5-6 (Iowa 1983) (separation-of-powers principle is violated if legislature usurps power granted by constitution to the courts). Our duty in light of such a conflict is clear. If fairly possible, we must harmonize constitutional provisions. In re Johnson, 257 N.W.2d 47, 50 (Iowa 1977). The manner in which we have construed the constitutional amendment does just that.

In addition, our construction of article III, section 40 is in harmony with the modern day view of the governor's, legislature's, and judiciary's oversight responsibility with respect to agency rules.

For example, the 1981 Model State Administrative Procedure Act (MSAPA) provides for gubernatorial, legislative, and judicial review of agency rules. See A.E. Bonfield, State Administrative Rule Making §§ 8.4, 9.3, at 550-52, 586-88 (1986). The provisions for gubernatorial and legislative review in the Act have been described as "creat[ing] a complete and fully integrated scheme calculated to ensure, much more effectively than existing schemes, that the rule-making process of the many state agencies is lawful, fully responsive to the popular will, and adequately coordinated to avoid conflict and inconsistency." Id. at § 8.4, at 550. The judicial review provisions of the Act are seen as provid[ing] an accessible, easy to invoke, and effective means with which to check illegal agency rule making. In doing so, these provisions of the Act also appear to preserve the proper relationship between the courts, the agencies, and the legislature, to ensure the performance of essential judicial functions prescribed by the various state constitutions, and to provide a neutral forum for the final resolution of questions relating to the legality of agency rules.

Id. at § 9.3, at 587.

Our own statutory scheme relative to gubernatorial, legislative, and judicial review of agency rules tracks closely with that of the MSAPA. Both allow the governor to rescind an agency rule. Compare Iowa...