Schmitt v. Iowa Dept. of Social Services

• Decision Date: 22 March 1978
• Docket Number: No. 60275,60275
• Parties: Donna SCHMITT, Appellant, v. The IOWA DEPARTMENT OF SOCIAL SERVICES, Appellee.
• Court: Iowa Supreme Court

Page 739

263 N.W.2d 739

Donna SCHMITT, Appellant, v. The IOWA DEPARTMENT OF SOCIAL SERVICES, Appellee.

No. 60275.

Supreme Court of Iowa.

March 22, 1978.

Janice M. Woolley and Marc A. Salle, of Legal Aid Society of Omaha-Council Bluffs, Inc., Council Bluffs, for appellant.

Richard C. Turner, Atty. Gen., Stephen C. Robinson, Sp. Asst. Atty. Gen., and Michael P. Murphy, Asst. Atty. Gen., Des Moines, for appellee.

Considered by REYNOLDSON, Acting C. J., and LeGRAND, REES, HARRIS and McCORMICK, JJ.

REYNOLDSON, Acting Chief Justice.

In this appeal Donna Schmitt, a Council Bluffs indigent mother of seven minor children, raises statutory and constitutional challenges to the legality of certain rules promulgated by The Iowa Department of Social Services.

The present controversy was initiated when the Department published notice in the Iowa Administrative Code supplement relating to proposed rulemaking to alter the special needs program of aid to dependent children. Donna filed with the Department a petition for declaratory ruling under § 17A.9, The Code. Attached was a § 17A.4(1)(b) request for oral presentation signed by 30 residents of Council Bluffs or nearby towns. Donna's petition requested a ruling that the Department could not conduct the oral hearing until it had adopted procedural rules in conformance with §§ 17A.3(1)(b) and 17A.4(1)(b), The Code.

Responding, the Department ruled absence of final agency rules governing conduct of public hearings would not deprive persons of opportunity for a fair and adequate hearing to be held March 30, 1976, at Des Moines.

March 18, 1976, Donna petitioned Polk County district court for judicial review. She requested the court to enjoin the Department from holding the scheduled meeting until it had adopted rules required by the above statutes. By separate division she alleged 317 persons in five of the Department's 16 administrative areas had requested the right to make oral presentations pursuant to § 17A.4(1)(b), and prayed that the court order the Department to conduct a public hearing in each of the five areas, or in the alternative provide transportation, meals and lodging for those ADC recipients who wished to attend the Des Moines meeting.

Trial court issued the injunction. The Department then promulgated rules which in part provided:

"770-3.2(17A) Location of oral presentations. All oral presentations should be held in Des Moines, Iowa unless the commissioner of the department of social services finds in the best interests of persons affected by the proposed change that an additional location or locations should be named.

"770-3.3(17A) Notice of oral presentations. Whenever possible notice of oral presentations shall be published in the Iowa Administrative Code. When time does not permit such notice, the commissioner may designate another method of notifying interested persons.

"770-3.4(17A) Conduct of oral presentations.

3.4(1) * * *

3.4(2) * * *

3.4(3) The presiding officer may exercise discretion to limit the time of each presentation to five minutes."

Upon Department's motion, trial court then dissolved the injunction. It refused to decide the merits of Donna's complaints relating to the above rules, indicating she first should present her objections to the Department under § 17A.7 ("An interested person may petition an agency requesting the promulgation, amendment, or repeal of a rule. * * *").

Donna complied by filing with the Department a "Petition for Adoption of Rules," which also incorporated requests to repeal certain of Department's rules. One of her requested rules provided the "Department shall hold an oral presentation in the largest metropolitan area in each administrative 'area' in the State of Iowa from which emanates a petition for oral presentation, as provided by Section 17A.4(1)(b), Code of Iowa." Other attacks were directed at notice and hearing time rule provisions.

The Department's commissioner responded in writing, denying Donna's petition on the merits. See § 17A.7. She then filed a second petition for judicial review alleging the adopted rules effectively prevented her from making oral presentations, and violated various specified statutory provisions and the due process clause of the Fourteenth Amendment. An answer dictated into the trial record essentially admitted the petition's factual allegations and denied those allegations asserting constitutional and statutory violations.

The Department presented the sole trial witness, an employee in its office of procedures. She testified a hearing required a presiding officer, a clerical person, and another person familiar with the specific rules under consideration. Out-of-Des Moines hearings would require travel, meals and perhaps lodging expense for those employees. She testified oral presentations were "very, very repetitious" and "time consuming." She further testified:

"We would be getting the same information in all parts of the State, and it would add just add more time into the rule making process, add more time for our own staff that wouldn't benefit the making of the rule."

Trial court ruled the following § 17A.4(4)(a) objection filed by the administrative rules review committee was ineffective to shift to Department the burden to show the rule was not unreasonable, arbitrary, capricious or otherwise beyond the authority delegated to it:

"The Committee objects to 3.2 in re location of oral presentations on the grounds that it exceeds the power of the Department. Section 17A.4 of the Code requires that all people be given a reasonable opportunity to make an oral presentation and holding all meetings in Des Moines effectively precludes this."

The district court limited its inquiry "to finding whether respondent's final agency action was unreasonable, and arbitrary to such a degree, when tested by appropriate statutory standards, that it amounts, in all respects, to a manifest abuse of discretion." It then held for the Department. We affirm in part, reverse in part, and remand with directions.

I. Scope of review.

This appeal does not result from a "contested case" within the meaning of § 17A.2(2), The Code. See Airhart v. Iowa Dept. of Social Services, 248 N.W.2d 83, 86 (Iowa 1976); Frazee v. Iowa Bd. of Parole, 248 N.W.2d 80, 82 (Iowa 1976). It arises out of the Department's procedural rule-making function. See §§ 17A.3 and 17A.4, The Code.

The Iowa Administrative Procedure Act permits judicial review of "agency action." § 17A.19, The Code. Agency action "includes the whole or a part of an agency rule * * *." § 17A.2(9), The Code. "Rule" means "each agency statement of general applicability that * * * prescribes law or policy, or that describes the * * * procedure, or practice requirements of any agency." § 17A.2(7), The Code.

Bonfield, Arthur E., The Iowa Administrative Procedure Act: Background, Construction, Applicability, Public Access to Agency Law, The Rulemaking Process, 60 Iowa L.Rev. 731, 894 (1975) (hereafter, Bonfield ) relevantly states:

"(A)ny agency failure to conform to the requirements of section 7 (§ 17A.7) in handling petitions for the issuance, amendment, or repeal of rules is remediable under the judicial review provisions of the Act. * * * (S)ection 19(1) provides that 'a person * * * aggrieved or adversely affected by agency action may seek judicial review of such agency action.' A court could grant any appropriate relief including ordering the agency to perform its duty."

Review of administrative action is restricted to a determination whether petitioner's substantial rights have been prejudiced because the agency action violates one of the seven § 17A.19(8) criteria which we set out verbatim in Hoffman v. Iowa Dept. of Trans., 257 N.W.2d 22, 25 (Iowa 1977).

Trial court excessively restricted its review to the test articulated in § 17A.19(8)(g) ("Unreasonable, arbitrary or capricious or characterized by an abuse of discretion or a clearly unwarranted exercise of discretion"). The issues in the case invoked application of other criteria including § 17A.19(8) (a) ("In violation of constitutional or statutory provisions"), and § 17A.19(8)(b) ("In excess of the statutory authority of the agency").

II. Burden of proof.

Donna asserts the administrative rules review committee's objection to the location-of-oral-presentations rule, 770-3.2(17A), supra, shifted the burden to the Department to establish that rule "is not unreasonable, arbitrary, capricious or otherwise beyond the authority delegated to it" under § 17A.4(4) (a), The Code. The Department argues the objection was ineffective for this purpose because it did not "notify the agency of the objection" as the statute requires. It relies on Bonfield, supra, 60 Iowa L.Rev. at 908-912, who reasons the § 17A.4(4) power of the committee and the attorney general is rigidly circumscribed and must be held in check by a specificity requirement:

"(T)he writing must be sufficient to apprise the agency of the precise nature and scope of the objection so that the agency can properly evaluate the objection and cure it if the agency believes that to be the proper course of action. To adequately perform this fair notice function for the agencies, the objection must contain essential findings and a brief elaboration of reasons. Such findings are also necessary so that a court can, facially at least, satisfy itself that the properly filed objection was based only upon the grounds indicated in this rules review provision, and no other. That is, a court needs these findings for the same reason it needs findings in any quasi-judicial determination by an agency to be sure that the action taken by the Committee or Attorney General is within the scope of the authority granted them under section 4(4)(a) (§ 17A.4(4)(a))."

We adopt the rationale underlying the above requirement and agree the obligation to formulate a specific objection should be imposed.

Upon examination, the skimpy objection lodged in this...