A PRACTICAL GUIDE TO TENNESSEE
ADMINISTRATIVE LAW
By: William L. Penny
Stites & Harbison, PLLC
424 Church Street, Suite 1800
Nashville, TN 37219
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A PRACTICAL GUIDE TO TENNESSEE ADMINISTRATIVE LAW
CHAPTER 1
INTRODUCTION
1.
Overview
In today’s regulatory environment, administrative law and process is the principal legal
mechanism for complying with regulatory requirements and for procedural and substantive due
process.
2.
The Functions of Administrative Agencies
The traditional role of administrative agencies is to implement the general policy laid
down by the legislature and have only such powers as is granted by the legislature.
In implementing legislative policy, agencies carry out three distinct but related functions:
Rulemaking, Adjudication and Investigation. These three functions sometimes converge, as
when a private litigant is prosecuted by the legal staff of an administrative agency acting on
behalf of the agency in its executive function, for violation of a regulation promulgated by the
agency in its legislative function, with the determination of whether a violation occurred being
made by the same agency acting in an adjudicative capacity. This hybrid nature of
administrative agencies led a 1937 Presidential Commission to state that agencies were a
“headless fourth branch of government, a haphazard collection of irresponsible agencies and
uncoordinated powers.” President’s Commission on Administrative Management, Report with
Special Studies,(1937) the (“Brownless Report).
(a)
Rulemaking.
Agencies act prospectively to promulgate regulations to implement statutes enacted by
the legislative branch of government. Thus rulemaking is an extension of the legislative powers
granted to the agency by the legislature. Accordingly, they have only the authority granted to
them by the legislature. Properly promulgated rules and regulations promulgated by an agency
of the State of Tennessee have the "full force and effect of law." State ex rel. Chapdelaine v.
Torrence, 532 S.W. 2d 542, 547 (Tenn. 1975).
The manner in which most Tennessee state government administrative agencies exercise
their rulemaking function is governed by the Uniform Administrative Procedures Act (UAPA),
Title 4, Chapter 5, Part 2, TENN. CODE ANN. Federal agency rulemaking is governed by the
Administrative Procedures Act (APA). In effect, rulemaking allows agencies to the “power to
fill up the details.” United States v. Grimaud, 220 U.S. 506, 31 S.Ct. 480, 55 L.Ed. 563 (1911).
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The regulatory power of the state to prescribe regulations and restrictions on professions
which affect the public health may be properly committed to an administrative board. Davis v.
Beeler, supra; Gibson v. Glasgow, 178 Tenn. 273, 157 S.W.2d 814 (1962); State ex rel. Melton
v. Nolan, 161 Tenn. 293, 30 S.W.2d 601 (1930). The Tennessee Supreme Court has recognized
that it is not practicable for the legislature to prescribe a specific rule governing all of the
specifics of the functioning of a certain profession. Tasco Developing and Building Corp. v.
Long, supra. Therefore, it is proper for the legislature to create a board to administer the law and
exercise discretion in its administration. Department of Public Welfare v. National Help "U"
Assn., 197 Tenn. 8, 270 S.W.2d 337 (1954).
(b)
Adjudication
Administrative agencies can also exercise judicial types of powers, often called “quasijudicial.” See Richardson v. Board of Dentistry, 913 S.W.2d 446, 454 (Tenn. 1995) As such,
administrative agencies can be given the power by the legislature to hold trial-type hearings to
adjudicate one’s right to have a license or permit, Big Fork Mining Co. V. Tennessee Water
Quality Control Board, 620 S.W. 2d 515 (Tenn. Ct. App. 1981), to take away a license or
permit, See Richardson, supra., zoning appeals McCallen v. Memphis, 786 S.W.2d 633, 639
(Tenn. 1990), impose sanctions for non compliance with agency regulatory requirements, Wright
v. Tenn. Bd. Of Examiners in Psychology, 2004 Tenn. App. LEXIS 875 (Tenn. Ct. App. 2004),
appeals of adverse employment actions, Elliott v. University of Tennessee, 766 F. 2d 982 (6th
Cir., 1985); Christian v. Tennessee Petroleum Underground Storage Tank Bd., 928 S.W.2d 927
(Tenn. Ct. App. 1996).
A hearing conducted by state administrative agency is known as a “contested case” which
is defined in the UAPA as:
a proceeding, including a declaratory proceeding, in which the
legal rights, duties or privileges of a party are required by any
statute or constitutional provision to be determined by an agency
after an opportunity for a hearing. Such proceeding may include
rate making; price fixing; granting of certificates of convenience
and necessity; the making, review or equalization of tax
assessments; the granting or denial of licenses, permits or
franchises where the licensing board is not required to grant the
licenses, permits or franchises upon the payment of a fee or the
finding of certain clearly defined criteria; and suspensions of,
revocations of, and refusals to renew licenses. An agency may
commence a contested case at any time with respect to a matter
within the agency's jurisdiction.
Tenn. Code Ann. § 4-5-102(3)
Similar to Rulemaking, the manner in which most Tennessee state and an increasing
number of local government administrative agencies exercise their quasi-judicial functions is
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also governed by the Uniform Administrative Procedures Act (UAPA).
agency procedures for hearings are governed by the APA.
(c)
Likewise, federal
Administrative Function
Most of the time spent by agencies is geared to the day to day implementation or carrying
out the legislative mandates through its rules and regulations or other express legislative
language. Agencies are given broad statutory authority to conduct their business. For example,
the Tennessee Department of Environment and Conservation (TDEC) is given almost unfettered
discretion to enter onto private property to investigate violations of the act or conduct studies.
See, e.g., TENN. CODE ANN. §§ 69-3-107(6) (Water), 68-201-107(3) (Air), 68-202-207 (Rad
health); 68-211-105(d) (Solid Waste); 68-212-107(b)(1); 68-215-107(e)(1); (PUST).
Some agencies do not have rulemaking authority. For example, the Tennessee
Department of Environment and Conservation has enormous powers to regulate petroleum
underground storage tanks, but has no statutory authority to promulgate rules and regulations
governing them. See Christian v. Tennessee Petroleum Underground Storage Tank Bd., 928
S.W.2d 927, 930 (Tenn. Ct. App. 1996) That function is the responsibility of the Petroleum
Underground Storage Tank Board. TENN. CODE ANN. § 68-215-107(f). In addition to or
sometime in lieu of rulemaking authority, some agencies often rely written internal policies or
internal guidance to implement or guide their activities. For example, the methodology for
calculating the value of fish used by the Tennessee Wildlife Resources Agency is an internal
policy used to guide the agency in assessing the cost of a fish kill. See, Chastain v. Tennessee
Water Quality Control Bd., 555 S.W.2d 113 (Tenn. 1977). TDEC uses a particular methodology
called Rapid Bioassay for Wadeable Streams in making determinations on state of biological life
in wadeable streams. These policies and guidance, to the extent they are not otherwise
masquerading as a rule, are helpful to the agency and the regulated public.
In addition, the Tennessee Attorney General has the authority to issue a Civil
Investigative Demand (CID). TENN. CODE ANN. § 8-6-402. In any event agencies are given
broad investigative and administrative powers which transcend traditional notions of the fourth
amendments protections against unreasonable searches and seizures.
3.
Questions and Comments
(a)
Administrative Law is somewhat of a microcosm of all government
activity. They have almost unbridled power to take away a persons rights, to impact a person’s
rights and to litigate the same rights they have just impacted. Do you believe our founding
fathers envisioned such a role for executive branch agencies?
(b)
Legislatures give some agencies more authority than others. Why should
the legislative branch not include all requirements for compliance with laws in the enabling
legislation?
(c)
The Air Pollution Control Board can issue a penalty of up to $25,000 per
violation per day and every day is a separate violation. The health department can close down a
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restaurant if it does not comply with its rules for sanitation. Local governments can stop work on
projects they contend violate environmental rules. The TennCare Bureau can take away health
care coverage for an individual. How do you think this authority comports with your concepts of
traditional notions of due process?
(d)
Read the newspaper for a week and think about all of the administrative
agencies that have had an impact on everyday activities. What do you think about the power of
these agencies?
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CHAPTER 2
THE DELEGATION DOCTRINE AND SEPARATION OF POWERS
As discussed in Chapter 1, administrative agencies are creatures of the legislature and
have only those powers proscribed by the legislature. Since Administrative agencies have
functions similar to the legislature (rulemaking) and the judicial branch of government
(adjudicative), one could argue that an executive branch agency should not be able to exercise
the functions of another branch of government. Both the federal and the Tennessee constitution
provide clear proscriptions addressing the so-called “balance of power.”
1.
Constitutional Requirements
Article II, § 1, of the Tennessee Constitution provides that "The powers of the
Government shall be divided into three distinct departments: The Legislative, Executive, and
Judicial." Article II, § 2, of the Tennessee Constitution provides that "No person or persons
belonging to one of these departments shall exercise any of the powers properly belonging to
either of the others, except in cases herein directed or permitted." Notwithstanding this hybrid
nature, which is not unique to Tennessee, administrative agencies, with the most rare of
exceptions, are creatures of the executive branch.
The separation of powers doctrine in Tennessee is paramount in interpreting the scope of
power of agencies. Tennessee Courts have held that each branch of state government is limited
within its appropriate sphere. One branch cannot assume the exercise of any powers conferred
upon the other branches; nor can one branch, by transfer to another department, or other
subagent, divest itself of any portion of the power expressly confided to its own exercise, except
in virtue of an explicit authority to that effect, given by the Constitution itself. See State v.
Armstrong, 35 Tenn. 634 (1856); Richardson v. Young, 122 Tenn. 471, 125 S.W. 664 (1909).
Under the doctrine of separation of powers, the three departments of government are "coordinate,
independent, coequal and potentially coextensive." Richardson v. Tennessee Board of Dentistry,
913 S.W.2d 446, 453 (Tenn. 1995). Each department is expressly prohibited from encroaching
on the powers and functions of the other departments. 913 S.W.2d at 453. The doctrine of
separation of powers is not absolute, however. State v. King, 973 S.W.2d 586, 588 (Tenn. 1998).
2.
Encroachment on the Judiciary
Tennessee case law provides numerous examples of encroachment upon the judicial
branch of government which impacts the separation of powers doctrine of “coordinate,
independent, coequal and potentially coextensive.” The best example of this doctrine is the
power of an agency to rule on the facial constitutionality of a statute or the constitutionality of
the agency’s application of the statute. Despite what appears to be broad powers by
administrative agencies, the Constitution limits rulings by administrative agencies on
constitutional separation of powers grounds. In Richardson v. Board of Dentistry, 913 S.W.2d
446, 454 (Tenn. 1995) the court set out three areas of constitutional challenges agencies may
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encounter. First are those challenges to the facial constitutionality of a statute which authorizes
an agency to act or a rule adopted pursuant to a statute. The second type are those that challenge
the actions of an agency in applying a rule or statute (“as applied”). The third type are those that
challenge the constitutionality of the procedures employed by the agency (“procedural due
process”).
In Richardson the Board of Dentistry issued civil penalties against a person they alleged
was practicing dentistry without a license. This was the first test of a fairly new enforcement
provision given to health related boards in 1989 by the General Assembly. While the applicable
health related boards could issue penalties against its licensees, the Department of Health and the
Health Related Boards, thatp had been hounded because of poor enforcement results, convinced
the General Assembly to provide them with authority to issue civil penalties against unlicensed
practitioners. Accordingly the Dental Board adopted a schedule of penalties for such unlicensed
practice. Richardson, who owned Budget Dental Laboratory and the Madison Dental Center in
Madison, Tennessee was charged with practicing dentistry without a license and was fined some
$38,000.
Richardson challenged the facial constitutionality of the statute and the
constitutionality of the Board’s application of the statute.
With regard to facial challenges of the constitutionality of a statute, the Supreme Court in
the Richardson Court ruled that an administrative agency has no jurisdiction to determine the
facial constitutionality of a statute in an administrative proceeding. The Court reasoned that an
administrative agency is a creation of the legislature. According to the opinion:
While it may have judicial characteristics and may be required to
perform quasi-judicial functions, an agency is not part of the
judicial branch of government. Plasti-Line, Inc. v. Human Rights
Comm'n, et al., 746 S.W.2d 691, 694 (Tenn. 1988). As a result,
the legislature may not confer upon an agency the power to
determine the constitutionality of a statute. Hoover Motor Exp.
Co., Inc. v. Railroad & Public Utilities Comm'n, 195 Tenn. 593,
261 S.W.2d 233, 238 (Tenn. 1953); Pharr v. Nashville, C., & St. L.
Ry., 186 Tenn. 154, 208 S.W.2d 1013, 1017 (Tenn. 1948). Nor
may an agency assume that power. That power rests with the
judiciary. Tennessee Small School Sys. v. McWherter, 851 S.W.2d
139, 148 (Tenn. 1993). To vest an agency with the authority to
determine the constitutionality of the legislation empowering the
agency to act would violate the doctrine of the separation of
powers. Tenn. Const. Art. II, §§ 1 & 2.
See also, Crawford v. Tennessee Consol. Retirement System, 732 S.W.2d 293 (Tenn. Ct. App.
1987); and Metropolitan Government v. State Bd. of Equalization, 1988 Tenn. App. LEXIS 409
(Tenn. Ct. App. 1988).
In addressing the "as applied" challenge to the constitutionality of a statute or any
challenge to the constitutionality of an agency rule, the Court opined that an agency may initially
rule on the challenge. In doing so, the agency will have the opportunity to correct any error it
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might have made in drafting an unconstitutional rule or in enforcing a constitutional mandate in
an unconstitutional manner. According to the Court:
Upon discovery, an agency may modify its rule to comport with
constitutional requirements. L.L. Bean, Inc. v. Bracey, 817 S.W.2d
292 (Tenn. 1991); Crawford v. Tennessee Consolidated Retirement
System, 732 S.W.2d 289 (Tenn. App.), perm. to appeal denied,
(Tenn. 1987). This rule comports with the provision of the
Administrative Procedures Act. TENN. CODE ANN. § 4-5-223 (1991
Repl.). Therefore, an administrative body in a contested case
proceeding may resolve questions of the unconstitutional
application of a statute to the specific circumstances of the case or
the constitutionality of a rule that the agency as adopted.
Similarly, an agency may address a claim that an agency's procedure is constitutionally deficient.
See England v. Civil Service Comm'n of Metro Gov't of Nashville & Davidson County, 617
S.W.2d 135 (Tenn. App.), cert. denied, (Tenn. 1981) (privilege against self-incrimination).
According to the Court:
In contested case proceedings, administrative law judges, boards,
and commissions are bound by the procedural due process
requirements imposed by the Tennessee and United States
constitutions. Full consideration of constitutional procedural issues
by the agency will assure that the responsible agency has a full
opportunity to reach a considered decision on a complete record
after a fair proceeding.
3.
Legislature Usurping the Executive Power
(a)
Rule Making Oversight
The General Assembly has authority to review rules and regulations promulgated by a
state Executive Branch agency. TENN. CODE ANN. § 4-5-207 provides that a non emergency rule
will not become effective until the expiration of 75 days from filing with the Secretary of State.
This permits the rules to be reviewed by the House and Senate Government Operations
Committee (GOC), which is a standing committee of each house of the General Assembly.
TENN. CODE ANN. § 4-5-226 provides a rule sunset provision. All permanent rules
automatically expire on June 30th of the year following the year of its filing, unless legislation is
enacted to delete the expiration date. If the rule is continued, then it will expire automatically on
the day of the agency termination date under TENN. CODE ANN. § 4-29-201 et seq. unless the
agency is extended.
The GOC as the appropriate standing committee will conduct a review of the rules after
public notice in the Tennessee Administrative Register. The GOC can vote to let the rule expire
or vote to continue it. Often, the GOC will request the agency to repeal, amend or withdraw it.
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If the agency does not comply the Committee is authorized to request the general assembly to
suspend “any or all” of the agency’s rulemaking authority. In addition, they can vote to suspend
the effectiveness of the rule pending the established expiration date. Of special note section (l)
provides that grounds for taking such action is for rules promulgated by an environmental
regulatory agency if the rule is more stringent than the federal law and it affects municipalities or
counties, unless the legislature provides money in the budget for the extra costs of complying.
Under prior law, the Attorney General of Tennessee opined that the GOC could not
“veto” the rules and regulations of an Executive Branch agency. See 1982 Tenn. AG LEXIS 430
(Tenn. AG 1982). Under prior law, as part of the rule promulgation process, rules became
effective 45 days after filing with the Secretary of State. During that time the GOC could review
the rules and disallow them if they say fit. The issue that generated the opinion was a GOC
hearing scheduled for the purpose of disallowing a rule of the Tennessee Fire Marshall’s office.
According to this opinion,
Simply put, once the General Assembly delegates rule-making
authority to an agency of the executive branch, it may not interfere
with the rule-making process except through legislation enacted in
compliance with Article II, § 18, of the Tennessee Constitution.
Subsequent to this ruling, the General Assembly enacted legislation that permitted the
GOC to review the rules, make a recommendation to the full General Assembly, and allowed the
full General Assembly to vote on whether to retain them. The Opinion suggested that such an
arrangement would meet constitutional muster.
(b)
Agency Sunset
Since administrative agencies are creatures of the legislature, the General Assembly has
the right to create them and terminate them. The Tennessee Governmental Entity Review Law,
TENN. CODE ANN. § 4-29-101, et seq., is intended "to ensure that state governmental regulation
is beneficial rather than detrimental to the public interest of the citizens of Tennessee." TENN.
CODE ANN. § 4-29-102(b). Each agency of state government is slated for termination every eight
(8) years unless the General Assembly establishes a shorter time period. Prior to termination,
continuation or reestablishing or restructuring an entity a joint evaluation committee established
at TENN. CODE ANN. § 4-29-103 must hold at least one public hearing and received testimony
from the public and from the administrative head. TENN. CODE ANN. § 4-5-104. The burden is
on the agency to demonstrate the public need for continued existence and the extent to which a
change would be beneficial.
During the sunset process, the Comptroller of the Treasury conducts entity reviews of its
operations. It is not uncommon for the evaluation committee to fail to have a hearing prior to the
termination date of the agency. If the report is completed, then each year, traditionally the
general assembly enacts an extension of one or two years. Absent such yearly changes, if an
agency terminates without any action taken, it will have one year to wind up its affairs. TENN.
CODE ANN. § 4-29-112.
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Thus the legislature’s check on the powers of administrative agencies includes being able
to not only kill agency rules but the agencies themselves. In practice, however, many agencies
are threatened but very few are permanently terminated.
4.
Delegation Doctrine
(a)
Overview
Administrative agencies are creatures of statute and do not have any inherent or common
law powers. General Portland, Inc. v. Chattanooga-Hamilton County Air Pollution Control
Board, 560 S.W.2d 910, 914 (Tenn. Ct. App. 1976). See also, Methodist Healthcare-Jackson
Hosp. v. Jackson-Madison County Gen. Hosp. Dist., 129 S.W.3d 57, 69 (Tenn. Ct. App. 2003)
(invalidating procedural rule for reconsideration of a vote on a CON as contrary to express
statutory prohibition on reconsideration); State ex rel. Comm'r of Transp. v. Medicine Bird , 63
S.W.3d 734, 769, (Tenn. Ct. App. 2001) (Indian Commission had no authority to intervene in
lawsuit over road construction activity when it did not have statutory authority); Blaylock &
Brown Constr. Co. v. Collierville Bd., 23 S.W.3d 316, 322 (Tenn. Ct. App. 1999) (As an
administrative agency, the Tennessee Air Pollution Control Board has the discretion, within legal
and reasonable bounds, to determine the methods for administering and enforcing the Tennessee
Air Quality Act and delegating authority to Shelby County was permissible). Sanifill of
Tennessee v. Tennessee Solid Waste Disposal Control Bd., 1994 Tenn. App. LEXIS 181 (Tenn.
Ct. App. Apr. 6, 1994); Wayne County v. Tennessee Solid Water Disposal Control Bd., 756
S.W.2d 274, 282 (Tenn. Ct. App. 1988).
While the General Assembly cannot delegate legislative power, it can create boards,
commissions, and agencies and may delegate to these agencies the power to administer
regulatory laws. See Ford Motor Company v. Pace, 206 Tenn. 559, 335 S.W.2d 360 (1960). It
should further be noted that, in granting an agency the power to administer regulatory statutes,
the Legislature may or may not grant the agency rule-making authority. Whether or not a
particular agency has rule-making power is wholly dependent upon the Legislature. In other
words, there is no inherent power in an agency to promulgate rules and regulations. Tasco
Developing and Building Corporation v. Long, 212 Tenn. 96, 368 S.W.2d 65 (1963).
The General Portland case is probably the watershed case for the doctrine of delegation in
Tennessee. At one time the City of Chattanooga was among the nation’s, and certainly
Tennessee’s, most polluted cities. These were the nascent days of the implementation of the
Clean Air Act. Tennessee adopted statutory requirements for implementation of federal clean air
act provisions in 1967. The Tennessee Air Quality Act allowed local governments to regulate
industries as long as their regulations were as stringent as the Tennessee Air Pollution Control
Board’s rules. One of Chattanooga’s rules involved restrictions on emissions which caused
objectionable odor. In 1971 the Chattanooga-Hamilton County Health Department issued an
order to General Portland, Inc. for the violating the department’s odor regulations. The
company’s emissions created a hydrogen sulfide gas, which smells much like rotten eggs. An
administrative appeal ensued before the Chattanooga-Hamilton County Air Pollution Control
Board. The Board rendered the following ruling which required:
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General Portland Cement Company to cease and desist all
operations at the Signal Mountain Portland Cement Division in
Hamilton County effective 12:00 noon, December 15, 1971 unless
prior thereto a corporate surety bond in the amount of $10,000.00
payable to Hamilton County Tennessee is posted with the
Chattanooga-Hamilton County Air Pollution Control Board, said
bond to be with a corporate surety in a form acceptable to the
Board. Forfeiture to be conditioned upon any further violation of
the provisions of the Section 9, Rule 12 of the County Regulation.
At first blush it would appear that the Board, concerned about the potential fallout of
closing a business down, came up with a win-win proposition that would provide assurances of
further compliance. In fact, the company posted the bond, installed new controls on plant and
operated without incident until a few years later. Another hearing ensued before the Board and
following the hearing the Board found a violation occurred and ordered the bond to be forfeited.
The County attorney proceeded to file an action in Chancery Court for forfeiture. The
Chancellor ruled, inter alia., that the Board did not have authority to require posting of a bond.
In construing the actions of the Board, the Court of Appeals reviewed the enforcement
authority the legislature granted to it to enforce violations of the Air Quality Act. Those
remedies included a civil penalty, actions to abate nuisances, and civil actions for injunctive
relief. The Court found that those actions in no way could be construed to allow the Board to
order the posting of a bond. The Court’s opinion was made clear:
An administrative agency such as this board has no inherent or
common law powers. Being a creature of statute, it can exercise
only those powers conferred expressly or impliedly upon it by
statute. In this absence of statutory authority, administrative
agencies may not enforce their own determinations.
Administrative determinations are enforceable only by the method
and manner conferred by statute and by no other means. The
exercise of any authority outside the provisions of the statute is of
no consequence. . . .
In the Wayne County case, the Solid Waste Disposal Control Board conducted a
contested case hearing and ruled that the Wayne County landfill was responsible for
contaminated groundwater and wells of neighboring properties. The Board ordered, inter alia.,
that Wayne County must provide city water services to these neighbors. Wayne County argued
that the statute did not permit a public entity to provide a private remedy, usually reserved to
civil tort actions. The Board argued that requiring the provision of the water was consistent with
the spirit of the law, was good public policy, and fit the legislature’s broad remedial intent. The
Court of Appeals, in upholding the Chancery Court’s reversal of the Board’s the Court of
Appeals used the law set forth in the General Portland case and others in ruling that:
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Notwithstanding the logic and appeal of the Board's position, it
provides an insufficient basis for this Court to engraft remedies
onto the Act that were not put there by the General Assembly. It is
not our role to determine whether a party's suggested interpretation
of a statute is reasonable or good public policy or whether it is
consistent with the General Assembly's purpose. We must limit our
consideration to whether the power exercised by the Board is
authorized by the express words of the statute or by necessary
implication therefrom.
We have determined that nothing in the Act expressly gives the
Board or the Commissioner the authority to grant remedial relief to
private parties. The Commissioner's and the Board's authority to
provide relief for injuries to the general interests of the public will
not be diminished by their inability to provide private remedies.
Accordingly, it is neither necessary nor proper to find the power to
redress private wrongs between the lines of the statutes.
The test for determining whether a legislature's delegation of power to an administrative
agency is constitutional is "whether the statute contains sufficient standards or guidelines to
enable both the agency and the courts to determine if the agency is carrying out the legislature's
intent." Gallaher v. Elam, 104 S.W.3d 455, 464 (Tenn. 2003) (citing Bean v. McWherter, 953
S.W.2d 197, 199 (Tenn. 1997)).
In Bean, the Tennessee Supreme Court established the test for determining permissible
delegation. In this case the Tennessee Wildlife Resources Agency added certain animals to its
list of dangerous animals. Bean was in the business of propagating certain wildlife and would
adversely affected because he would be unable to propagate the animals. The statute itself
divided up the classes of dangerous animals and actually provided a listing of the species in each
class. The legislation went on, however, to provide that the TWRA could add or delete from the
list by promulgating rules and regulations. This section did not provide any express standards
for adding or deleting the animals. The Supreme Court found that the scheme itself set up a
standard for the agency to follow in upholding the regulations. It stated the test as follows:
Governing standards need not be expressed provided such
standards can be reasonably ascertained from the statutory scheme
as a whole. The necessity of expressed standards is contingent
upon the statute's subject matter and on the degree of difficulty
involved in articulating finite standards. Detailed or specific
legislation may be neither required nor feasible when the subject
matter requires an agency's expertise and flexibility to deal with
complex and changing conditions.
The requirement of expressed standards may also be relaxed when
the discretion to be exercised relates to or regulates for the
protection of the public's health, safety, and welfare.
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In Gallaher, the plaintiffs challenged rules of the Department of Human Services which
established requirements for the state child support program. The statute provided as follows:
[DHS] shall have rulemaking authority to establish any rules
necessary for the administration of the child support
program operated pursuant to Title IV-D of the Social Security
Act and shall have rulemaking authority to establish any rules to
carry out the requirements of any title or part of any title which the
department administers and which are necessary to implement the
provisions of the Title IV-D child support program and to
effectuate any federal legislative or regulatory changes.
As such, the legislature authorized DHS to promulgate rules consistent with federal law.
The guidelines incorporated the requirements in the federal act and the Supreme Court upheld
the rules as being permissibly delegated.
In Bellsouth Adver. & Publ. Corp. v. Tenn. Regulatory Auth., 79 S.W.3d 506, 512 (Tenn.
2002) the Supreme Court considered whether the Tennessee Regulatory Authority (TRA) had the
authority to promulgate rules which required that the names and logos of local telephone service
providers competing with Bellsouth be included on the cover of white pages telephone
directories its advertising company published. The Court noted that the General Assembly
charged the TRA with the "general supervisory and regulatory power, jurisdiction and control
over all public utilities." TENN. CODE ANN. § 65-4-104. In fact, the Legislature explicitly directed
that statutory provisions relating to the authority of the TRA shall be given "a liberal
construction" and has mandated that "any doubts as to the existence or extent of a power
conferred on the [TRA] . . . shall be resolved in favor of the existence of the power, to the end
that the [TRA] may effectively govern and control the public utilities placed under its
jurisdiction . . . ." TENN. CODE ANN. § 65-4-106. The General Assembly, therefore, has
"signaled its clear intent to vest in the [TRA] practically plenary authority over the utilities
within its jurisdiction.”
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CHAPTER 3
POWERS OF ADMINISTRATIVE AGENCIES
1.
Scope of Authority
Administrative agencies are creatures of statute and do not have any inherent or common
law powers. General Portland, Inc. v. Chattanooga-Hamilton County Air Pollution Control
Board, 560 S.W.2d 910, 914 (Tenn. Ct. App. 1976). So, the Board cannot create new
requirements to impose on the regulated public because agencies only have powers granted to
them by the legislature. No more or no less. See also Wayne County v. Tennessee Solid Water
Disposal Control Bd., 756 S.W.2d 274, 282 (Tenn. Ct. App. 1988) and, Methodist HealthcareJackson Hosp. v. Jackson-Madison County Gen. Hosp. Dist., 129 S.W.3d 57, 69 (Tenn. Ct. App.
2003).
In the Methodist case, the Health Facilities Commission (HFC) had considered Methodist
Healthcare's application for a certificate of need (CON) at its meeting. After presentations from
both sides, the Commission initially decided by a six to five vote to grant Methodist Healthcare's
application. Immediately after the vote the HFC took a short recess. Following the recess, the
commission member who had made the motion to grant Methodist Healthcare's application
moved to reconsider the vote. The Commission adopted the motion by a vote of six to five.
Thereafter, the Commission, by a six to five vote, denied Methodist Healthcare's application for
a certificate of need.
The CON statute clearly prohibited any reconsideration of an the agency’s decision on a
CON. However, the Commission had adopted Roberts Rules of Order as the procedure for
which meetings would be conducted. The Commission chairman ruled that Roberts Rules
permitted reconsideration of a vote. Allegedly the Commission historically had entertained
motions for reconsideration under Robert's Rules of Order and had interpreted the statute to
mean that only an applicant or third party cannot petition the Commission for reconsideration.
The Court struck down the HFC’s reconsideration stating that administrative regulations cannot
be inconsistent with statutes on the same subject:
The ordinary and plain meaning of the statutory language is that
the Commission is precluded from reconsidering its decision-that
is, its determination arrived at after consideration-without regard to
the origin of such a proposed course of action. The power of an
administrative agency must find its source in an express statutory
grant of authority.
In State ex rel. Comm'r of Transp. v. Medicine Bird 63 S.W.3d 734, 769, (Tenn. Ct. App.
2001), the Tennessee Indian Affairs Commission and others intervened in a lawsuit aimed at
stopping a road project of the Tennessee Department of Transportation. The project was the
widening of a notorious bottleneck at the corner of Hillsboro Road and Old Hickory Boulevard
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in Nashville, Tennessee. The State Archeologist discovered two Indian graves in the vicinity of
the widening project. As required he duly notified the Tennessee Commission of Indian Affairs
(the “Commission”) which is an agency administered by the Tennessee Department of
Environment and Conservation. As the project was about to commence, the plaintiffs filed a law
suit to stop any interment of the Indian graves. The project itself was on the border of Davidson
County and Williamson County, and they filed suit in the Chancery Court of Williamson County.
Over the Department of Environment and Conservation's objection, the trial court permitted the
Tennessee Commission of Indian Affairs, its executive director, and fifteen individual Native
Americans to intervene to oppose the relocation of the graves. After disqualifying the Attorney
General and Reporter from representing the Commission, the trial court appointed two private
lawyers to represent the Commission. The Chancellor granted the Commission’s petition for
intervention finding that the Commission was an “interested party” and the authority which
allows them to obtain copies of lawsuits involving Indian graves was sufficient authority. The
lawsuit held the project up for several years. In the meantime, the Governor’s office, not happy
about being sued by a state agency, recommended that the Commission be terminated.
The Court of Appeals reversed the Chancery Court, citing among other things, the string
of cases beginning with Portland Cement. In its opinion the Court said:
The Tennessee General Assembly has not explicitly given the
Commission the authority to bring suit in its own name or to
intervene in legal proceedings involving other parties.
Accordingly, if the Commission is to have the power to intervene
in legal proceedings, the power must arise by necessary
implication to enable the Commission to fulfill its statutory
mandates or to carry out its statutory duties. We have concluded
that intervening in pending judicial proceedings is not necessary to
enable the Commission to accomplish the purposes for which it
was created.
See also, Blaylock & Brown Constr. Co. v. Collierville Bd., 23 S.W.3d 316, 322 (Tenn.
Ct. App. 1999) (As an administrative agency, the Tennessee Air Pollution Control Board has the
discretion, within legal and reasonable bounds, to determine the methods for administering and
enforcing the Tennessee Air Quality Act and delegating authority to Shelby County was
permissible).
In Sanifill of Tennessee v. Tennessee Solid Waste Disposal Control Bd., 1994 Tenn. App.
LEXIS 181 (Tenn. Ct. App. Apr. 6, 1994) the landfill owner obtained a permit from the
Department of Environment and Conservation to construct and operate a municipal solid waste
landfill. The statute permitted the County under the so-called “Jackson Law” to approve the
construction of any new landfill before the state acted upon the application. Not popular with
many local citizens, Marshall County, in approving the new landfill expressly conditioned it by
restricting the service area, that is the area from which garbage could be taken, to Marshall and
its surrounding counties. The state followed by placing an express condition in the permit which
restricted the service area accordingly.
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The Court of Appeals found that while the County had authority to approve a new
landfill, they did not have authority to restrict the point of origin of the garbage. Likewise, the
Court stated that state did not have such authority in its statutory authority, unless it could
conclude that it was somehow not safe to allow it.
2.
Public Processes
(a)
The Public Records Act
In Tennessee all records maintained by governmental entities are open to any citizen of
Tennessee. The access to public records is very broad. Memphis Publishing Co. v. City of
Memphis, 871 S.W.2d 681, 684 (Tenn. 1994). The public records act at Tenn. Code Ann § 10-7503 states:
(a) Except as provided in § 10-7-504(f), all state, county and
municipal records and all records maintained by the Tennessee
performing arts center management corporation, except any public
documents authorized to be destroyed by the county public records
commission in accordance with § 10-7-404, shall at all times,
during business hours, be open for personal inspection by any
citizen of Tennessee, and those in charge of such records shall not
refuse such right of inspection to any citizen, unless otherwise
provided by state law.
In effect, if the statute does not specifically exclude records from the public records act,
they are included and are subject to public inspection. The cross references to TENN. CODE ANN.
§ 10-7-504 list approximately 136 statutes containing exceptions to public records act disclosure.
Among the records that are available for inspection are payroll records and personnel records of
state employees, handwritten notes, personal calendars, draft documents, photographs, email and
other electronically recorded data.
Among the records that are expressly made confidential by TENN. CODE ANN. § 10-5-504
are patient medical records, including TennCare and hospital records, ongoing criminal
investigative records of the Departments of Agriculture and Environment and Conservation,
criminal investigative records of the Department of Safety related to stolen cars and bogus hand
gun records and licenses related to undercover investigations, records of the TBI, records
pertaining to national security at the Military Department, work product of the attorney general’s
office as well as documents for which an attorney-client privilege is claimed, uncompleted bids
and proposals, and credit card and personal identification numbers of persons doing business
with the state.
The scope and application of the public records statutes are purposefully broad. They are
an "all encompassing legislative attempt to cover all printed matter created or received by
government in its official capacity." Griffin v. City of Knoxville, 821 S.W.2d 921, 923 (Tenn.
1991); (quoting Board of Educ. of Memphis City Schools v. Memphis Publ'g Co., 585 S.W.2d
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629, 630 (Tenn. Ct. App. 1979)). Accordingly, the General Assembly has directed the courts to
construe the public records statutes broadly "so as to give the fullest possible public access to
public records." TENN. CODE ANN. § 10-7-505(d). A "record" subject to public inspection is any
material "made or received pursuant to law or ordinance or in connection with the transaction of
official business by any governmental agency," 821 S.W.2d at 923.
The Public Records Act also extends to quasi governmental entities. When an entity
assumes responsibility for providing public functions to such an extent that it becomes the
“functional equivalent” of a governmental agency, the Tennessee Public Records Act guarantees
that the entity is held accountable to the public for its performance of those functions. Memphis
Publ. Co. v. Cherokee Children & Family Servs., 87 S.W.3d 67, 80 (Tenn. 2002) In this case
Cherokee provided child care services for indigent families and supervised child placement
under DHS guidelines. TDHS directly performed those services prior to entering into the
contracts with Cherokee. Cherokee's involvement in providing these services was extensive,
with all of its employees performing services under the contracts with TDHS. Indeed, because
Cherokee's business activities were, by its charter, dedicated exclusively to the servicing of the
TDHS contracts, all of its records necessarily relate to its state business. Moreover, Cherokee's
operation was financed with public funds (over ninety-nine percent of its funding came from
governmental sources). In addition, although TDHS did not exercise complete control or
supervision over Cherokee, a significant level of governmental control and oversight is
evidenced by the provisions in the 1992 and 1999 contracts requiring advance State approval of
"allowable costs" under the contracts and the provisions in all three contracts authorizing State
audits of Cherokee's activities. The newspaper wanted access to the records as did the State
Comptroller for purposes of audit. The Court determined they were public records and also
“property of the state.” While it is true that: (1) Cherokee was privately incorporated rather than
created by the legislature; (2) the contracts disavowed any agency relationship between Cherokee
and the State; and (3) the parties asserted that the State incurred no tort liability for Cherokee's
activities, it could not overcome the relationship with the State.
One of the real confrontations with the public records act is with police records. In
Memphis Pub. Co. v. Holt, 710 S.W.2d 513 (Tenn. 1986) an altercation occurred between police
officers and residents. One officer was taken hostage. Officers stormed the residence and a
shoot-out occurred. The officer who was taken hostage and some of the residents were killed.
The newspaper sought to inspect the closed investigative file of the incident, but the reporter was
denied access. The newspaper filed a petition for access to the file, and the petition was granted.
The lower court upheld the order, and the court affirmed. The court held that the closed
investigative file of the police department was available for inspection by the media and the
public under Tenn. Code Ann. § 10-7-503 of the Public Records Act. The lower court's finding
that the records sought were records within the purview of § 10-7-503 comported with the
language of § 10-7-503. The finding was consistent with the legislative directive in Tenn. Code
Ann. § 10-7-505(d) that the access statutes were to be construed so as to give the fullest possible
public access to public records. There was no ambiguity in Tenn. Code Ann. § 10-7-503.
The Court also found that the burden of proving justification for the denial of access upon
the official that denied access. See T.C.A. § 10-7-505(c). The legislature also imposed the
requirement that the court, in ruling on a petition for access to governmental records, make
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written findings of fact and conclusions of law, and granted the court the power "to exercise full
injunctive remedies and relief to secure the purposes and intentions of this section." T.C.A. § 107-505 (d). In the same section of the statute the legislature also directed the court to broadly
construe the access-to-records statute "so as to give the fullest possible public access to public
records." T.C.A. § 10-7-505(d).
In support of their public policy argument, the appellants in Holt argued that § 10-7-505
provides for a "balancing of interests" test to be applied by Tennessee courts in determining if a
particular file is subject to inspection under § 10-7-503. The Court found, however, that the
public records act did not give the courts leeway to exempt records from public inspection. The
Courts only provide an enforcement mechanism to gain access to governmental records opened
to the public by § 10-7-503. According to the Court, a public official can justify refusing a
Tennessee citizen access to a governmental record only by proving by a preponderance of the
evidence that the record in controversy comes within a statutory exemption. Therefore, there is
no balancing.
What about records generated in litigation? In Memphis Publishing Co. v. City of
Memphis, 871 S.W.2d 681, 687-688 (Tenn. 1994) the Court established some ground rules on
public records disclosure. The Court recognized that the Act dealt with two principal groups of
records: 1) traditional public records, or documents filed with a court; and 2) agency records, a
class different from, and considerably broader than, traditional public records. The traditional
public records, which are primarily intended to apprise the public about the status of land titles,
the existence of judgments, and so forth, are by definition not accessible to the public unless they
have been filed in a court. On the other hand, the agency records, which are available to apprise
the public about the goings-on of its governmental bodies, are accessible at any time unless
specifically excepted. Because a contrary holding would subvert the Legislature's intention to
open agency records for public inspection, the Court held that that a deposition does not have to
be filed in the court before the public has a right to inspect it.
A citizen who is denied access in whole or in part to public records can file suit in
Chancery Court for access. TENN. CODE ANN. § 10-7-505. Venue for municipal and county
records is in the County where the entity is located. Venue for all State of Tennessee records is
Davidson County. Upon filing of a Petition, the court will issue an order to the entity to provide
an explanation and show cause why they should not disclose the documents. The burden of
proof is on the agency to show why by a preponderance of the evidence that the documents
should not be released. The Court can award attorneys fees to the party seeking the records
where the agency knowingly and willfully did not disclose the documents. The decision whether
to award attorney's fees is left to the discretion of the trial court, and will not be overturned
absent clear evidence of an abuse of that discretion. In the Cherokee case Memphis Publishing
Company asked for attorneys fees and costs because they "clearly refused to provide access to
certain records it knew were public records subject to the access requirements of the Tennessee
Public Records Act." The trial court denied attorney's fees, stating, "Because this decision
involved a complex interpretation of controlling case law and contractual language, Cherokee's
refusal to turn over documents to [MPC] cannot be deemed willful." The Supreme Court did not
find any evidence of abuse of discretion. See also Aaron v. Aaron, 909 S.W.2d 408, 411 (Tenn.
1995).
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Often release of public records can be embarrassing or even threatening with respect to
personnel data. Consider the case of Hall v. City of Cookeville, 157 Fed. Appx. 809, 810-811
(6th Cir. 2005); cert. denied, Hall v. Shipley, 2006 U.S. LEXIS 2282 (U.S. 2006). This case
involved a most unfortunate event where the Tennessee Highway Patrol pulled over a family on
New Years Day upon the mistaken suspicion that the vehicle had been involved in committing
armed robbery. The suspicion was based on the fact that a woman contacted the Highway Patrol
and reported that she had seen money flying from their car. The family of three was asked to get
out of the car and as the family of three was kneeling on the pavement, being handcuffed by the
officers, the family dog, Patton, leapt out of the car and wagging his tail began moving towards
Officer Eric Hall of the Cookeville Police Department. Officer Hall discharged his shotgun at
Patton when he was approximately a foot away, killing Patton instantly. The officers later
discovered that Mr. Smoak had merely left his wallet atop the car after leaving a gas station and
his money blew away. The entire traffic stop was taped and the video gained international
notoriety.
A local resident requested Hall’s personnel file under the Open Records Act. This person
also operated the website "The Putnam Pit," with commentary on current events in Putnam
County. After obtaining the redacted personnel file, the webmaster posted portions of the
personnel file on his web site. The file given to the media in both instances contained Hall's
parents's names, his wife's name, his oldest child's name and date of birth, and Hall's driver's
license, fingerprints, birth certificate, college transcript, and social security number (although it
was not identified as such). Hall received death threats from organizations such as the Animal
Liberation Front and others. Hall sued the city officials who released the records citing
violations of his due process and right to privacy under the federal Constitution, and his right to
privacy under the Tennessee Constitution. Hall alleged that the Tennessee Open Records Act,
violated the federal Constitution as well as the Tennessee state constitution. The District Court
found that the Hall had been denied due process but the parties appealed only on immunity. The
Court of Appeals did not take on the constitutionality of the Open Records Act directly but
dismissed the State of Tennessee’s appeal because it did not have pendent jurisdiction over the
claim due to the nature of the appeal. While the Court did not rule on the merits of the Open
Records Act, it did state clearly that there was some duty to at least inform the officer of the
release of the information. The Court cited Doe v. Claiborne County Bd. of Educ, 103 F.3d. 495,
506-07 (6th Cir. 1996)), in addition to Kallstrom v. City of Columbus, 136 F.3d 1055 (6th Cir.
1998) as follows:
the procedural component of the Fourteenth Amendment's Due
Process Clause however, at a minimum requires that the City
notify the officers of a request for their addresses, phone numbers,
and driver's licenses, and the names, addresses, and phone numbers
of their family, prior to releasing this information so that they may
have the opportunity to invoke their constitutionally protected
rights to privacy and personal security.
There are no other Tennessee cases on point, but certainly notification would appear
important.
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(b)
Frequently Asked Questions
(i)
Can an agency charge for access to records? No.
(ii)
Can an agency restrict time for viewing? Records are available
during regular business hours. Agencies can request an appointment for the purposes of making
sure that staff will be available to assist with access but cannot require an appointment.
(iii) Can an agency charge for copying records? Yes, if they have
promulgated a rule or regulation
(iv)
Can an agency require you to state the purpose of your review?
(v)
Can an agency redact confidential information on an otherwise
(vi)
Can an agency be required to research records for answers to
No.
public record? Yes.
questions? No.
(vii)
No. Must be a citizen.
Can a resident of Virginia be granted access to public records?
(viii) Can a convicted felon be considered a “citizen?” Yes.
(ix)
Can an agency require identification? Yes, but only for the
purpose of establishing whether they are citizens.
(x)
Can the agency be required to provide equipment for viewing
electronic data, video, etc.? Yes.
3.
Open Meetings Act (Sunshine)
TENN. CODE ANN. § 8-44-101(a) of the Tennessee Open Meetings Act "declares it to be
the policy of this state that the formation of public policy and decisions is the public business and
shall not be conducted in secret." Section 8-44-102(a) then provides that "all meetings of any
governing body are declared to be public meetings open to the public at all times, except as
provided by the Tennessee Constitution”
(a)
Governing Body
The definition of “governing body” is set out in some detail at Section 8-44-102(b):
(b) (1) "Governing body" means:
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(A) The members of any public body which consists of two (2) or
more members, with the authority to make decisions for or
recommendations to a public body on policy or administration and
also means a community action agency which administers
community action programs under the provisions of 42 U.S.C. §
2790 [repealed]. Any governing body so defined by this section
shall remain so defined, notwithstanding the fact that such
governing body may have designated itself as a negotiation
committee for collective bargaining purposes, and strategy sessions
of a governing body under such circumstances shall be open to the
public at all times;
(B) The board of directors of any nonprofit corporation which
contracts with a state agency to receive community grant funds in
consideration for rendering specified services to the public;
provided, that community grant funds comprise at least thirty
percent (30%) of the total annual income of such corporation.
Except such meetings of the board of directors of such nonprofit
corporation that are called solely to discuss matters involving
confidential doctor-patient relationships, personnel matters or
matters required to be kept confidential by federal or state law or
by federal or state regulation shall not be covered under the
provisions of this chapter, and no other matter shall be discussed at
such meetings;
(C) The board of directors of any not-for-profit corporation
authorized by the laws of Tennessee to act for the benefit or on
behalf of any one (1) or more counties, cities, towns and local
governments pursuant to the provisions of title 7, chapter 54 or 58.
The provisions of this subdivision (b)(1)(C) shall not apply to any
county with a metropolitan form of government and having a
population of four hundred thousand (400,000) or more according
to the 1980 federal census or any subsequent federal census;
(D) The board of directors of any nonprofit corporation which
through contract or otherwise provides a metropolitan form of
government having a population in excess of five hundred
thousand (500,000) according to the 1990 federal census or any
subsequent federal census with heat, steam or incineration of
refuse;
(E) (i) The board of directors of any association or nonprofit
corporation authorized by the laws of Tennessee that:
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(a) Was established for the benefit of local government officials or
counties, cities, towns or other local governments or as a municipal
bond financing pool;
(b) Receives dues, service fees or any other income from local
government officials or such local governments that constitute at
least thirty percent (30%) of its total annual income; and
(c) Was authorized as of January 1, 1998, under state law to obtain
coverage for its employees in the Tennessee consolidated
retirement system.
(ii) The provisions of this subdivision (b)(1)(E) shall not be
construed to require the disclosure of a trade secret or proprietary
information held or used by an association or nonprofit corporation
to which this chapter applies. In the event a trade secret or
proprietary information is required to be discussed in an open
meeting, the association or nonprofit corporation may conduct an
executive session to discuss such trade secret or proprietary
information; provided, that a notice of the executive session is
included in the agenda for such meeting.
(iii) As used in this subdivision (b)(1)(E):
(a) "Proprietary information" means rating information, plans, or
proposals; actuarial information; specifications for specific
services provided; and any other similar commercial or financial
information used in making or deliberating toward a decision by
employees, agents or the board of directors of such association or
corporation; and which if known to a person or entity outside the
association or corporation would give such person or entity an
advantage or an opportunity to gain an advantage over the
association or corporation when providing or bidding to provide
the same or similar services to local governments; and
(b) "Trade secret" means the whole or any portion or phrase of
any scientific or technical information, design, process, procedure,
formula or improvement which is secret and of value. The trier of
fact may infer a trade secret to be secret when the owner thereof
takes measures to prevent it from becoming available to persons
other than those selected by the owner to have access thereto for
limited purposes;
Thus, not only traditional government agencies are governing authorities but also not for
profit companies that carry out governmental functions as described. One of the key elements is
that the entity must have authority to make decisions or recommendations to a “public body.” A
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public body consists of more than one person. In Fain v. Faculty of College of Law, 552 S.W.2d
752 (Tenn. Ct. App. 1977), the Court of Appeals determined that neither the faculty of the
College of Law of the University of Tennessee nor committees composed of faculty members
and students created to assist the dean in decision-making satisfied the definition of "governing
body" since they make recommendations to the dean, who is an administrative officer as opposed
to a "public body." Their meetings, therefore, were not subject to the Open Meetings Act. In
Hastings v. South Cent. Human Resource Agency, 829 S.W.2d 679 (Tenn. Ct. App. 1991), the
Court of Appeals determined that the grievance committee of the south central resource agency
is not in a position to formulate the public policy and decisions referred to in the Sunshine Law's
purpose, therefore, was not considered a governing body pursuant to TENN. CODE ANN. § 8-44102. The board of directors of a preferred provider organization is a public body because it is a
subsidiary of the district, is comparable to a division or department of the state or county and is
subject to the requirements of the Tennessee Open Meetings Act. Souder v. Health Partners,
Inc., 997 S.W.2d 140 (Tenn. Ct. App. 1998).
(b)
What is a “meeting”?
TENN. CODE ANN. § 8-44-102(b)(2) defines “meeting" as
the convening of a governing body of a public body for which a
quorum is required in order to make a decision or to deliberate
toward a decision on any matter. "Meeting" does not include any
on-site inspection of any project or program.
In Neese v. Paris Special Sch. Dist., 813 S.W.2d 432 (Tenn. Ct. App. 1990), the school
board announced it would have a retreat at Ken-Lake State Resort Park in Aurora, Kentucky.
While very little notice was given of the agenda, the big question being debated for months was
school clustering to achieve racial desegregation goals. Four of seven school board members,
and the school district's superintendent met at Ken-Lake. They apparently discussed much of the
pros and cons of clustering and came up with a recommendation. The Court stated that this
activity constituted a "meeting" They discussed the issues and deliberated toward making a
decision concerning clustering, even though no decision was made at the gathering.
The Sunshine Act does not apply to meetings pertaining to decisions made by single
public officials. Metropolitan Air Research Testing Auth., Inc. v. Metropolitan Gov't, 842
S.W.2d 611 (Tenn. Ct. App. 1992). So, there may not be any ability to demand access to a show
cause meeting between the Director of the Division of Solid Waste Management and a violator
because the Director is a single public official.
Chance meetings or other type of unplanned exchanges are not considered meetings
unless they are used to “decide or deliberate public business in circumvention of the spirit or
requirements of the Act.” TENN. CODE ANN. § 8-44-102(c). So when members of the Board of
Education met at the superintendent’s home prior to the board meeting and the superintendent
did not discuss with them the matters on the agenda, this type of communication is allowed.
Bundren v. Peters, 732 F. Supp. 1486 (E.D. Tenn. 1989).
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(c)
Meeting with Attorneys for the Governing body.
There is no express exception to the Act permitting a public body to meet privately with
its attorney. In Smith County Education Asso. v. Anderson, 676 S.W.2d 328, 332 (Tenn. 1984),
the Court construed the Open Meetings Act (an act of the legislature) with the attorney-client
privilege for lawyers and their duties (regulated by the judiciary). In this case, the Smith County
Board of Education was negotiating with the local teachers union on pay and compensation. One
of the issues was payment of increased insurance premiums. Apparently the discussions became
rather contentious and the school superintendent simply cut off all payment of premiums until
they had come to a resolution. The union sued the superintendent and the county. During the
course of this lawsuit, counsel for the school board met privately with the board on two
occasions. Neither of these meetings were publicly noticed nor was the public invited to attend.
In ruling on the case, the Tennessee Supreme Court recognized the constitutional conflict
between the Open Meetings Act and the attorney’s obligations to keep communications
confidential. In doing so the Supreme Court clarified that there is an exception to the Open
Meetings Act when a lawyer is discussing present and pending litigation. The following is a
summary of the guidelines established by the Court:
(i)
The meeting must be limited to present and pending litigation;
(ii)
Clients may provide counsel with facts and information regarding
the lawsuit;
(iii)
Counsel may advise them about the legal ramifications of those
facts and the information;
(iv)
Once any discussion, whatsoever, begins among the members of
the public body regarding what action to take based upon advice
from counsel, whether it be settlement or otherwise, such
discussion shall be open to the public.
Failure to follow the above guidelines constitute “a clear violation” of the Open Meetings Act.
676 S.W.2d 328, 334 (Tenn. 1984).
The Court in Smith County was also concerned that the exception would be abused and
therefore made a very significant and clear warning as follows:
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We are aware of the potential misuse of this exception in order to
circumvent the scope of the Open Meetings Act. A public body
could meet with its attorney for the ostensible purpose of
discussing pending litigation and instead conduct public business
in violation of the Act. Although the Act imposes only limited
sanctions on a public body for such violations, any attorney who
participates, or allows himself to be used in a manner that would
facilitate such a violation, would be in direct violation of the Code
of Professional Responsibility and subject to appropriate
disciplinary measures. (emphasis supplied). Smith County
Education Asso. v. Anderson, 676 S.W.2d 328, 335 (Tenn. 1984).
In Van Hooser v. Warren County Bd. Of Educ., 807 S.W.2d 230 (Tenn. 1991) the
Supreme Court voided an action because the conference with the County attorney and the School
Board went further than that suggested in Smith. In this case Marilyn Van Hooser was a tenured
teacher in the Warren County public school system, assigned to the William Biles Elementary
School. She had been having problems getting the third-graders in her class to do their
assignments. As she described it, she tried to convey to her students that "you just don't go
through life not being responsible, and you do have to learn things . . . and that the third grade is
not easy." In an attempt to get them to do their work, Van Hooser had kept her students from
going to physical education, and she required them to take their work with them to lunch. She
testified that she had not prevented them from going to art and music classes, as she had physical
education, because "they didn't care about that and P.E. was important to them." When those
efforts failed, Van Hooser decided to use shame and embarrassment to motivate her students to
do their work. She testified that she gave them two or three weeks notice that, if they did not
start doing their assignments, she was going to have to embarrass them by paddling them in front
of the other students. On March 23, 1983, according to the Court, the day of reckoning arrived.
Van Hooser, in the presence of a teacher's aide and the rest of the students in the class, paddled at
least eight of her students for failing to do their assignments.
Apparently the teacher was very competent and criminal charges were dropped. Her
attorney engaged in negotiations with the County attorney and a settlement was arrived at but
never consummated. The County attorney had a closed meeting with the Board. At the closed
meeting, Galligan explained the terms of the agreement to the board. He told the board that Van
Hooser's attorney had indicated that she had agreed to these terms. Although no vote was taken,
all the board members present at this meeting assented to the settlement. However, there is no
mention of the Conditions anywhere in the school board's minutes prior to formal charges being
preferred against Van Hooser.
The Court agreed that the board had a right to meet with its attorney to discuss the
pending controversy pertaining Ms. Van Hooser. However, to the extent that the board made
decisions or deliberated toward a decision, this was a "meeting" to which the Open Meetings Act
applied. Because conditions were discussed in the meeting and the these Conditions were not
mentioned anywhere else in the minutes, the Court assumed that the board acted to approve the
Conditions in this private meeting. Because this action was taken in violation of the Open
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Meetings Act, the board's attempted settlement of this controversy by approval of the Conditions
for Continued Employment was void and of no effect.
(d)
Adequacy of Notice
The Supreme Court considered the phrase "adequate public notice" as contained in the
statute in Memphis Publishing Co. v. City of Memphis, 513 S.W.2d 511, and observed:
We think it is impossible to formulate a general rule in regard to
what the phrase 'adequate public notice' means. However . . .
adequate public notice means adequate public notice under the
circumstances, or such notice based on the totality of the
circumstances as would fairly inform the public.
In Kinser v. Town of Oliver Springs, 880 S.W.2d 681, 682 (Tenn. Ct. App. 1994), the
Mayor called a special meeting for the appeal of an employee termination. The City
Administrator prepared the notice of the called meeting, which was signed by the Mayor. The
Administrator testified that he placed the notice inside City Hall "where everybody pays their
water bill" and over the entrance to the police department and council room "where people come
in to pay their tickets . . . into the police department." The Police Chief testified that it was "our
policy" to post such notices on the bulletin board at the post office, and he testified "I am pretty
sure I did". The Court of Appeals applied the Memphis Publishing Company holding in stating
that this notice was adequate.
In Neese, supra. at 435-436, the Court addressed the adequacy of the notice of the school
board meeting at Ken-Lake. The only announcements included a message in the newspaper that
at the prior meeting the board had agreed to have a treat at Ken-Lake to discuss two issues: a
merger of the school systems and the recent enrollment drop. No other announcements other
than a radio announcement were made. Clustering which was apparently a very volatile issue in
the community because of the racial issues involved, was not on the agenda, though the
Superintendent spent most of his time preparing for it and the meeting focused on clustering.
The Court found that the issue of clustering was of pervasive importance. They found that
adopting the proposed clustering plan was arguably the most important action taken by the Board
in many years. The school board noted that that Tennessee law does not require notice of a
public meeting to include an agenda; however, the Court stated that the public had a right to be
informed that at least the issue of clustering would be extensively discussed at the Ken-Lake
meeting. Otherwise, there would not have been any interest in traveling to the resort based upon
the items reported in the newspaper. On the other hand, the Court found that if the general
public was aware that the major issue was not as reported in the newspaper, but rather was the
issue of clustering, there would likely be more interest in attending. Certainly adequate public
notice under the circumstances" is not met by misleading notice. We do not suggest that any
party intentionally misled the public with regard to notice, but we do believe that the notice was
insufficient under the circumstances presented in the record before this Court.
In Souder, supra. The hospital Board of Trustees announced the meeting dealing with his
issues to the public by mailing notice of the meeting to the local newspaper, local radio stations,
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and the local television station approximately eight days before the meeting was held. According
to Souder's brief, the notice of the meeting, "the board of trustees of West Tennessee Healthcare
will meet in the city-county conference of Jackson-Madison County General Hospital at 5:00
p.m. on Tuesday, and the date of the meeting. The Court found this notice was adequate even
though no agenda was provided with the notice.
(e)
Nullification and Ratification
TENN. CODE ANN. § 8-44-105. provides:
Any action taken at a meeting in violation of this part shall be void
and of no effect; provided, that this nullification of actions taken at
such meetings shall not apply to any commitment, otherwise legal,
affecting the public debt of the entity concerned.
The fact that the action is void does not preclude the agency from taking up the issue
again properly and “ratifying” the earlier void decision. As noted in the Warren County decision
the action of the Board in approving the settlement conditions was void. However, the Courts
have found that it was not the intent of the legislature to forever bar a governing body from
ratifying a prior decision made in violation of the Act. Neese, 813 S.W.2d at 436. In Neese the
Board held a subsequent meeting, gave proper notice and adopted the proposal for clustering.
The requirement for ratification requires a full action on the proposal to be a valid
ratification. In Souder¸ supra. the Court stated that it was not the intent of the legislature to
allow a governing body to ratify a decision in a subsequent meeting by a "perfunctory
crystallization" of its previous action; Rather, "the purpose of the act is satisfied if the ultimate
decision is made in accordance with the [Act], and if it is a new and substantial reconsideration
of the issues involved, in which the public is afforded ample opportunity to know the facts and to
be heard with reference to the matters at issue.” The court found the notice was adequate even
thought no agenda was provided but found that the confirmation of all actions of the Board of
Directors of HP by the Board of Trustees of the District was “merely a perfunctory rubber stamp
thereby failing to cure the previous violations of the Act.” According to the minutes of the July
29, 1997 meeting, the only resolution pertaining to HP that was raised during the meeting in
discussion was the establishment of the Board of Trustees of the District as the Board for HP.
The minutes state that "Mr. Moss explained to the Board the purpose of reorganizing Health
Partners which will establish the District's Board of Trustees as the Board for Health Partners as
outlined in the resolution presented. Dr. Newell made a motion to approve, seconded by Mr.
Mansfield and the Board unanimously approved." There was no discussion by the Board of
Trustees pertaining to the limitation of HP's physician network previously adopted by the Board
of Directors of HP. The adopted resolution of the Board of Trustees merely states that all actions
of the Board of Directors of HP are ratified and confirmed including the termination of all
contracts. Since there was no discussion of the matter of limiting the network and the only
mention of such is the adopted resolution of which there is no evidence of any discussion on the
matter, the action of the Board of Trustees was determined to be merely a "perfunctory
crystallization" of the decision made by the Board of Directors. The Court called this a
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“subterfuge” and did not cure the previous actions of the Board. See Souder, 997 S.W.2d 149151.
The Neese case also provided that ratification was allowed. The Appellants did not
contend that notice was inadequate for the March 21, 1989 meeting in which clustering was
ratified. Their contention is that regardless of the notice given for that meeting, the decision had
already been made at the meeting in Kentucky, and the vote on March 21, 1989 was nothing
more than a ceremonial acceptance of the decision previously made. The Court quoting from
Souder determined that the meeting for ratification was not just perfunctory and that they
actually addressed all the issues.
Like any other provision of the open meetings act, if the minutes that are required to be
taken by TENN. CODE ANN. § 4-5-104 are defective the agency can cure the defects through
ratification; however, it does not obviate the sanction for injunctive relief. In Zseltvay v.
Metropolitan Gov't, 986 S.W.2d 581, (Tenn. Ct. App. 1998) apparently the Metro Parks Board
did not fully record the minutes on the question of acquisition of Grassmere. The Board
subsequently amended the minutes which cured the defects, but the Court still imposed sanctions
stating that strict compliance is required.
Example of Sunshine Notice
Water Quality Control Board
April 25
17th Floor Conference
401 Church St., L&C Tower
Nashville
10:00 am
Agenda:
Selection of Chair
Presentation of minutes from prior meeting
Open Forum - Public Comment on Water Issues
Appeal of Commissioners Order
•
Amnon Shreiberman and Clanton Paving, LLC
Agreed Order
•
Costal Lumber Company, Terry McCann
Appeal of Denied Permit (Permit Issue)
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•
The Jones Company of TN, LLC
The meeting will continue on April 26th, at 9:00am if needed.
Declaratory Order Challenging Issuance of a Permit
•
•
(f)
Southern Services
Friends of Caney Fork
Participation by Electronic or Other Means
The Open Meetings Act permits meetings to be held other than in each other’s physical
presence where necessary. TENN. CODE ANN. § 8-44-108(a) provides that a governing body can
meet by “electronic or other means” where the body cannot physically meet before the need to
take action. In order to do so, there must be a determination of necessity, TENN. CODE ANN. § 844-108(b)(2), and this statement of necessity must be recorded in the minutes. Further a
governing body can allow participation of the public by electronic or other means when they are
physically meeting, but is not required to. If not meeting physically, then the public must be
given an opportunity to participate by some means and otherwise comply with the Open
Meetings Act. All votes must be by roll call.
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CHAPTER 4
RULEMAKING
1.
INTRODUCTION
As noted in Chapters 1 and 2, administrative agencies carry out the intent of the
legislature through rules and regulations. Tenn. Code Ann § 4-5-102(10) defines “rule” as
". . . each agency statement of general applicability that
implements or prescribes law or policy or describes the procedures
or practice requirements of any agency. "Rule" includes the
amendment or repeal of a prior rule, but does not include:
(A) Statements concerning only the internal management of state
government and not affecting private rights, privileges or
procedures available to the public;
(B) Declaratory orders issued pursuant to § 4-5-223;
(C) Intra-agency memoranda;
(D) General policy statements that are substantially repetitious of
existing law;
(E) Agency statements that:
(i) Relate to the use of the highways and are made known
to the public by means of signs or signals; or
(ii) Relate to the curriculum of individual state supported
institutions of postsecondary education or to the admission or
graduation of students of such individual institutions but not to the
discipline or housing of students;
(F) Rate filings pursuant to title 56, chapters 5 and 6; or
(G) Statements concerning inmates of a correctional or detention
facility.
An agency rule that is not in compliance with the UAPA is void and of no effect. Tenn. Code
Ann. § 4-5-216.
Since a rule is an “agency statement” the first analysis is whether or not the action is that
of an “agency.” In Christian v. Tennessee Petroleum Underground Storage Tank Bd., 928
S.W.2d 927, 929 (Tenn. Ct. App. 1996) the Court sidestepped the rule argument all together by
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determining that the Division of Underground Storage Tanks was not an agency for rulemaking
purposes. In order to be eligible for reimbursement under the Underground Storage Tank Fund,
an owner is required to pay annual permit fees. Christian did not pay the fees one of the years,
The Underground Storage Tank Board had rules pertaining to reestablishing fund eligibility. No
particular form was required, but the Division required Christian to perform a “site check” on a
form developed by the Division. The statute authorize the Board to be the rulemaking authority
and not the Division. Therefore, the Court determined that the since the Division was not an
“agency” for purpose of rulemaking, the site check policy was not a rule.
The Court’s first attempt to interpret the definition of rule under the UAPA was in State
Board of Regents of University v. Gray, 561 S.W.2d 140, 141 (Tenn. 1978). This case involved
a sorority hazing incident at Tennessee State University. Apparently, some sorority sisters
during Hell week went to the fourth floor of Wilson Hall on the campus of the University to the
room of fellow students and Delta Sigma Theta pledges. They were asked to answer questions
regarding sorority history. When they were unable to give satisfactory answers, the "pledges"
were severely beaten by their Big Sisters. According to the facts the defendants:
paddled them on their buttocks with a paddle that had been
concealed in Cheryl Howard's sock. She described the paddle as
being red with white ducks. She stated that Ms. Byrd paddled her
feet; Ms. Shelton hit their hands with a comb and Ms. Howard held
their hands down on their ankles while they were being paddled on
the buttocks
The Big Sisters were expelled from the University based upon allegations by the
administration of aggravated assault. The student handbook permitted “severe discipline” for
charges of aggravated assault. The handbook had not been promulgated under the UAPA. A
portion of the handbook, however, that defined aggravated assault had been approved properly,
but not the sanction. The Court upheld the suspension because suspension for aggravated assault
was substantially a repetition of existing law prohibiting such conduct and the students had
actual notice because they were handed a copy of the student handbook.
In Mandela v. Campbell, 978 S.W.2d 531, 534-535 (Tenn. 1998) the Supreme Court
considered whether or not the Department of Correction’s disciplinary procedures for inmates
was a rule. The prisoners argued that the actions of the Department’s contractors were not valid,
in part, because they were applying the disciplinary guidelines which had not been promulgated.
The Court believed that the agency was to be given considerable deference since the statute was
not clear and they were most familiar with the prison environments and as such the statute when
read in pari materia permitted the activity.
2.
Types of Rulemaking Processes
The UAPA envisions two types of rulemaking processes. The most prevalent is
the rulemaking hearing route. A second method is simply publishing the rule and if no one
requests a hearing none is held. The UAPA has very specific procedures for each process.
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(a)
Rulemaking Hearing
Notice to the public is required by publication in the Tennessee Administrative Register
(TAR) and by notifying others who are “likely to have an interest” in the rule. Tenn. Code Ann.
§ 4-5-203. In order to publish the rulemaking notice in the TAR the agency must submit the
notice of the rule to the Secretary of State’s office and a description of the date and place of the
hearing. The agency must give 45 days notice of the rulemaking hearing, including the time and
place of the hearing. The time line is measured at the 1st day of the month of the TAR
publication. As a matter of practice the TAR is published on the 15th of the month. Many
agencies collect information on individuals who have previously expressed interest in
rulemaking processes of the agency. In addition, agencies tend to know other individuals or
interest groups that they know will have an interest. The notice is usually submitted to them at
the same time it is published in the TAR. The Notice must provide the express terms of the rule
being proposed, but an informative summary reasonably calculated to give notice to interested
parties may be substituted for the express terms of the proposed rule if the Secretary of State
agrees upon filing of the rules that it is impractical to publish the entire text. These rules are then
made available to the public.
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RULEMAKING HEARING RULE
The notice requirements of publication are minimum requirements. Statutes which
provide additional requirements must also be complied with. In U.S. Life Title Ins. Co. v.
Department of Commerce & Ins., 770 S.W.2d 537, 543 (Tenn. Ct. App. 1988), the Court
invalidated rules because the agency’s statutory rulemaking requirements required actual notice
to all title companies. Two claimed they did not receive the notice. So, the legislature can
provide additional requirements if it so chooses, and those additional requirements must be
complied with in order to for the rulemaking to be valid.
Following the comment period the agency is free to make changes in the rule, ostensibly
to take into consideration the public comment, “so long as the changes are within the scope of
the rulemaking notice filed with the secretary of state.” TENN. CODE ANN. § 4-5-203(2)(B).
In Tennessee Envtl. Council v. Solid Waste Disposal Control Bd., Div. of Solid Waste
Management, 852 S.W.2d 893 (Tenn. Ct. App. 1992), the Tennessee Environmental Council
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challenged changes made to the hazardous waste citing rules that were changed after publication
and rulemaking hearing. The following was the notice published in the TAR:
Proposed are new and revised rules intended to implement T.C.A.
Sections 68-46-101 et seq as amended in 1989. Primarily, these
rules provide for the siting (permitting) of new commercial
facilities for the storage, treatment or disposal of hazardous waste
in Tennessee. Further, the proposed rules identify certain criteria to
be considered in carrying out such activities through public
involvement.
The notice provided that draft rules were available at the Division field offices. The final draft
made some changes from the draft that was referenced in the rulemaking hearing. The Plaintiffs
stated that while they had notice and attended the hearings after the changes were made, TDEC
was obligated to redo the rulemaking notice to allow an additional comment period. The
disagreed and stated:
It would be most unreasonable and inefficient to require an agency
to publish the exact text of a proposed rule in order to obtain public
reaction thereto and then require a republication and rehearing for
every alteration made in the proposed rule before final adoption.
852 S.W.2d 893, 896 (Tenn. Ct. App. 1992)
The hearing itself requires the agency to describe the factual information upon which the
rule is based and provide a short discussion of the proposed rule. The hearing is typically
recorded, but not always. Usually some agency member will take written notes in the event of a
failure of the recording. It is very rare for the promulgating authority to be present at the
rulemaking hearing. A person who wants to present the comments to the board or officer, can
request in writing at the rulemaking hearing. TENN. CODE ANN. § 4-5-204.
The agency is supposed to consider all comments. After adoption, if one has so
requested, the agency must give a concise statement. The Attorney General is required to
approve the rule for legality. The Department of Environment and Conservation has specific
rules that require them to quote the exact language of federal rules. TENN. CODE ANN. § 4-5-218.
Once the rules are completed, they are submitted to the Attorney General who reviews
them for form and legality. TENN. CODE ANN. § 4-5-211. Following approval they are
submitted to the Secretary of State. The rules will be effective after 75 days of filing of the rules.
TENN. CODE ANN. § 4-5-207. Each rule is given a “sunset” or termination date. TENN. CODE
ANN. § 4-5-226. The termination date of permanent rules are scheduled to expire at the time of
the agency termination date.
(b)
Proposed Rules
The agency can skip the rulemaking hearing all together by publishing the proposed rule
in the TAR by publishing a statement with the proposed rule that the agency will adopt the rule
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without a public hearing unless within 30 days after actual publication of the proposed rule, at
least 25 persons who are affected by the rule, a municipality that will be affected, an association
representing 25 or more members, or a majority vote of a standing committee of the general
assembly requests a hearing. TENN. CODE ANN. § 4-5-203(a)(3). This type of proceeding is
especially useful for promulgating housekeeping changes or other non controversial rules. It
does not apply if another statute specifically requires a hearing.
(c)
Extraordinary Rulemaking
On occasion an agency is faced with the inability to impose a requirement because there
is no rule in full force and effect and either the public or the government will be adversely
impacted. The UAPA provides procedures for promulgating rules in an exigent circumstances.
Emergency rules and public necessity rules can take effect immediately but are only effective for
165 days, during which time the agency must go through the full rulemaking process.
(i)
Emergency Rule TENN. CODE ANN. § 4-5-208
An emergency rule requires the agency to find that “. . . .an immediate danger to the
public health, safety or welfare exists, and the nature of the danger is such that the use of any
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other form of rulemaking . . .would not adequately protect the public.” The agency can renew
the rule if they establish that it could not reasonably have foreseen that either the emergency
would not continue or recur during the remaining 9 months. If the rule is contested the burden is
on the agency to prove the emergency. Note that subsection (d) of this section provides that the
agency cannot premise their finding of an emergency only on the failure to timely process the
rules through then normal process.
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(ii)
Public Necessity Rules
Similar to an Emergency Rule, a public necessity rule can take effect immediately. The
criteria are different though. They are:
ƒ
The rule only delays the effective date of another rule not yet
effective;
ƒ
Is required by the constitution or court order;
ƒ
Is required by an agency of the federal government and following
normal processes would jeopardize funding; or,
ƒ
Agency is required by an enactment of the general assembly to
implement the rules in a shorter time period.
The requirements for re-adoption are identical to the emergency rules.
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3.
Rule Reviews and Sunset Provisions
Chapter 2 of PGTAL discussed the agency rule sunset process. As noted permanent rules
filed with the Secretary of State automatically expire on June 30 of the following year unless
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legislation is passed continuing it. TENN. CODE ANN. § 4-5-226. The General Assembly assigns
the rules to the appropriate standing committee for review, which is the Government Operations
Committee in both houses. To the extent practical the rules are reviewed during the 75 days
period after filing.
The GOC considers the following in determining whether to keep rules:
(i)
Authority
(ii)
Clarity
(iii)
Consistency
(iv)
Justification
(v)
Necessity
(vi)
Reference.
Each agency is required by TENN. CODE ANN. § 4-5-226 (h) to submit to the GOC the
following:
(i)
Brief summary of the rule and description of changes;
(ii)
Citation to and brief description of any federal requirement;
(iii)
Identify interest groups;
(iv)
AG opinions;
(v)
Increase in state and local revenues and expenditures over 2%;
These provisions provide substantial fodder for challenging proposed rules even if no
comments were received during the rulemaking process. The GOC can express its disapproval
of the rule by voting to allow it to expire which is the published in the TAR. Id. § (j)(2). If the
agency does not make required changes to the proposed rule prior to its expiration date, the
committee cannot only recommend the rule expire, but can recommend the General Assembly
“suspend any or all of such agency’s rulemaking authority.” This provision is the nuclear option
on the rules but is seldom if ever used. In addition, the GOC can vote to suspend the
effectiveness of the rule subject to being rescinded by joint resolution of the General Assembly.
Any rule invalidated or suspended does not effect the previous rule which stays in effect until
resolution.
4.
Invalidity of Improperly Adopted Rules.
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TENN. CODE ANN. § 4-5-216 provides that an agency rule that is not adopted in
compliance with the rulemaking requirements of the UAPA is void and of no effect. In a preUAPA decision, the Court in Chastain v. Tennessee Water Quality Control Board, 555 S.W.2d
113 (Tenn. 1977), the Plaintiffs challenged damages assessed by the Board for a fish kill. The
Tennessee Wildlife Resources Agency had calculated the damages based upon recommended
procedures of the American Fisheries Society. This procedure had been previously submitted to
the board, and, by a resolution, had been approved by the Board; and, that the Board had
instructed its investigators to estimate fish kills using this recommended procedure. It also
appears that the Board had evaluated this procedure and concluded that it produced trustworthy
results which should and would be admissible in evidence at hearings before the Board. The
Court found that the instruction by the Board to use a particular procedure to calculate fish was
internal guidance and not a rule or regulation. The Court, therefore, upheld the procedure as
valid.
The Attorney General provided a very good analysis of the rulemaking issues pertaining
to validly adopted rules in its opinion concerning pharmacy based immunization program of the
Board of Pharmacy at Op. Atty. Gen. 01-0191. The subject of the opinion was a program that
would allow pharmacists to provide immunizations and receive a release of any liability under
state regulatory requirements. The Board adopted eligibility criteria through guidance, rather
than a rule. The language in the guidelines stated in the introductory paragraph "any pharmacist
who wished to participate in a pharmacy based immunization program must meet the following
specifications: (emphasis supplied)." The Attorney General first determined that the Board of
Pharmacy was an “agency.” Since the guidance established mandatory criteria binding on non
agency participants the criteria were not internal guidance nor were they substantially repetitious
of existing law since there was no comparable statutory provision. As such the guidance was not
enforceable.
The Attorney General has also noted that if the entity is not an “agency” defined by the
UAPA, then its activity is not rulemaking. 1995 Tenn. AG LEXIS 94 (Tenn. AG 1995). In this
opinion, the Attorney General construed the validity of a memorandum of agreement between
the Division of Solid Waste Management and Division of Water Pollution Control as to their
responsibilities for enforcement at landfills. Because neither of the Divisions had authority to
promulgate rules and neither could conduct contested cases, they were not an “agency” and the
memorandum could not be a rule.
The above referenced AG opinion does not mean that an agency can require individuals
to comply with an unpromulgated requirement. In the City of Cookeville v. Tenn. Water Quality
Control Bd., the Davidson County Chancery Court, the City filed a Motion for Summary
Judgment with the chancery court of Davidson County asking the court to find that the 1998
section 303(d) list and organic enrichment requirements imposed by the Department on its
wastewater treatment permit were void as a matter of law because the list and the organic
enrichment requirement was not validly promulgated as a rule. The Court granted the City’s
Motion for Summary Judgment. The Court found that the Department was using both the State's
1998 303(d) list of impaired water streams ("303(d) list") and organic enrichment criteria set
forth in the 303(d) list as a Rule as that term is defined in TENN. CODE ANN. § 4-5-102(10).
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The facts of this case are particularly instructive. The federal Clean Water Act requires
that permits contain limits necessary to protect the receiving streams. Section 303(d) of the
Clean Water Act requires states to develop a list of streams whose established uses were
impaired. This list is referred to as the “303(d) list.” Streams that are on the 303(d) list are then
placed in priority for restricting discharges after a study which will then produce a total
maximum daily load of pollutants. The City of Cookeville is required to have a permit from
TDEC to discharge wastewater from its wastewater treatment plant. The permit would allow the
City to discharge directly to Pigeon Roost Creek which was listed on the 303(d) list.
TDEC imposed a nutrient effluent limitation in the City’s permit that would prohibit
discharge of nutrients in excess of a numerical value. The City believed that it would have to
expend millions of dollars to comply with the requirement which it believed was not only
unnecessary but would not add to any environmental benefit. During discovery the permit writer
was asked why the nutrient limit was imposed. She stated, “we looked at the list [the 303(d) list]
and because it was on the list [for organic enrichment] we gave it a nutrient limit.” No study was
done of the resulting discharge or the actual effect of the discharge. Just by being on the list,
Cookeville was impacted.
The Chancery Court found that the use of the list in the manner above was in fact
imposing an unpromulgated rule on Cookeville and stated that the 303(d) list was void. The fact
that the Division of Water Pollution Control had no rulemaking authority or could not conduct
contested case was not controlling. The Attorney General argued that since the Division had no
authority to promulgate rules, it was not an “agency” and therefore the 303(d) could not be a
rule. The City argued that if the Division had no authority to promulgate a rule, it could not
impose the requirement in the same manner as rule. Based on this ruling in the underlying
administrative proceeding the Administrative Judge found that the Division could impose the
nutrient requirement on Cookeville. In addition, the Water Quality Control Board adopted an
emergency rule to establish “nutrients” as a water quality criterion. The State then appealed the
Chancery Court decision to the Court of Appeals which ruled that the case was moot. City of
Cookeville v. Tenn. Water Quality Control Bd., 2004 Tenn. App. LEXIS 759 (Tenn. Ct. App.
2004).
5.
Declaratory Orders
The UAPA provides a means of seeking an opinion from the agency as to the validity or
applicability of a statute, rule or order within the primary jurisdiction of the agency. TENN. CODE
ANN. § 4-5-223. This statute provides:
(a) Any affected person may petition an agency for a declaratory
order as to the validity or applicability of a statute, rule or order
within the primary jurisdiction of the agency. The agency shall:
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(1) Convene a contested case hearing pursuant to the provisions of
this chapter and issue a declaratory order, which shall be subject to
review in the chancery court of Davidson County, unless otherwise
specifically provided by statute, in the manner provided for the
review of decisions in contested cases; or
(2) Refuse to issue a declaratory order, in which event the person
petitioning the agency for a declaratory order may apply for a
declaratory judgment as provided in § 4-5-225.
(b) A declaratory order shall be binding between the agency and
parties on the state of facts alleged in the petition unless it is
altered or set aside by the agency or a court in a proper proceeding.
(c) If an agency has not set a petition for a declaratory order for a
contested case hearing within sixty (60) days after receipt of the
petition, the agency shall be deemed to have denied the petition
and to have refused to issue a declaratory order.
(d) Each agency shall prescribe by rule the form of such petitions
and the procedure for their submission, consideration and
disposition.
The first analysis in seeking a declaratory order is that of the agency status. For example,
in Baptist Hosp. v. Tennessee Dep't of Health, 982 S.W.2d 339 (Tenn. 1998), a group of
hospitals sought additional Medicaid reimbursement from the Tennessee Claims Commission.
The hospitals sought to challenge a rule of the Tennessee Department of Health. Because by
statute the Health Department was the sole state agency for administering Medicaid, the Claims
Commission had no jurisdiction.
In addition, a party must be “aggrieved” in order to get standing to request a declaratory
order. In USW v. Tennessee Air Pollution Control Bd., 3 S.W.3d 468, 474 (Tenn. Ct. App.
1998), the union challenged the transfer of an air pollution control permit to Bayou Steel and was
opposed to restarting the furnaces. The Board ruled that they were not an aggrieved party and,
therefore, lacked standing to complain about the Division's decision to issue the air permit to
Bayou Steel. They determined that they were not aggrieved and had not alleged real threats-only threatened or potential injury because the reheat furnace was not yet operating.
As noted previously in Tennessee Envtl. Council v. Solid Waste Disposal Control Bd., the
plaintiffs could not challenge changes to rules that they contend were not properly promulgated
when they had actual notice of the rule changes.
Under the Declaratory Order procedure, the agency can set a contested case and render a
decision which is appealable to the Chancery Court of Davidson County pursuant to TENN. CODE
ANN. § 4-5-324 or the agency can simply deny the petition, either in writing or by letting the 60
day period go by without setting the matter for a contested case. Note that the matter does not
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have to be concluded within 60 days, but the agency must set it for a contested case. Under
TENN. CODE ANN. § 4-5-224, the agency is required to publish notice of the Petition in the TAR
and any other publication provided by the applicable statute. In addition, it must notify others
who may have an interest. The notice must include the petitioner’s name and representative
capacity, summary of relief requested, outline and a summary of statutes or regulations that the
agency is being called upon to rule.
This procedure is the exclusive procedure for seeking any sort of declaratory judgment
because courts want parties to first exhaust administrative remedies. See Davis v. Sundquist (947
S.W.2d 155 (Tenn. Ct. App. 1997); Watson v. Tenn. Dep’t of Cor., 970 S.W.2d 494 (Tenn. Ct.
App. 1998) and Bonner v. Tenn. Dep’t of Cor., 84 S.W.3d 576 (Tenn. Ct. App. 2001). Tenn.
Code Ann. 4-5-225(b) provides
“[a] declaratory judgment shall not be rendered concerning the
validity or applicability of a statute, rule or order unless the
complainant has petitioned the agency for a declaratory order and
the agency has refused to issue a declaratory order.” Id. § 4-5225(b) (emphasis added).
Therefore, the agency must first either agree to set the matter for a contested case hearing
or simply refuse to enter an order. Under the UAPA a person may seek a declaratory judgment
in the Chancery Court of Davidson County if a state agency has, upon petition by that affected
person, refused to issue a declaratory order. TENN. CODE ANN. §§ 4-5-223, 4-5-224, 4-5-225;
Richardson v. Tennessee Bd. of Dentistry, 913 S.W.2d 446, 456 (Tenn. 1995); Cashion v.
Robertson, 955 S.W.2d 60, 63-64 (Tenn. Ct. App. 1997). In Richardson, the Supreme Court
specifically ruled that:
The Administrative Procedures Act also allows an "affected
person" to petition the Davidson County Chancery Court for a
declaratory judgment regarding the legal validity of a statute, rule,
or agency order in limited circumstances. A declaratory judgment
may be sought if the agency has, upon petition by an affected
person, refused to issue a declaratory order. TENN. CODE ANN. §§
4-5-223 & -224. If the person has first sought a declaratory order
in the agency, the agency has refused to issue a declaratory order,
and the statute, rule, or order, or its application interferes with,
impairs, or threatens to interfere with or impair the person's rights,
the Chancery Court may enter declaratory judgment. Id. The
Chancery Court may declare a statute or rule invalid only if it
"violates constitutional provisions, exceeds the statutory authority
of the agency, was adopted without compliance with the
rulemaking procedures ... or otherwise violates state or federal
law." Id. at § -224(c).
Richardson, 913 S.W.2d at 456 (emphasis added) (citing Tenn. Code Ann. § 4-5-224(c), which is
now TENN. CODE ANN. § 4-5-225(c)). Moreover, in Cashion, the court ruled that it had subject
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matter jurisdiction over a petition filed by a former employee of the Tennessee Department of
Mental Health and Mental Retardation (DMHMR), seeking a declaration concerning her rights
as a probationary employee because the employee had requested DMHMR, the Civil Service
Commission, and the Department of Personnel to issue a declaratory order concerning her rights
and all had declined to issue such order. Cashion, 955 S.W.2d at 63-64.
After the City filed a complaint for declaratory judgment, the State moved to dismiss
stating that the City had not exhausted its administrative remedies since the underlying permit
appeal was still ongoing. The Chancery Court of Davidson County refused to dismiss the case
citing the above cases and the fact that the agency had refused to issue a declaratory order.
The standard of review in a declaratory judgment proceeding in Chancery Court where
the agency has declined to issue an order is governed by TENN. CODE ANN. § 4-5-225. The court
cannot declare a rule order invalid unless it finds that it violates constitutional provisions,
exceeds the statutory authority of the agency, was adopted without compliance with the
rulemaking procedures or otherwise violates state or federal law.
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CHAPTER 5
ADJUDICATORY PROCESS AND PROCEDURES
This chapter will address contested case procedures under the Uniform Administrative
Procedures Act. Local government procedures vary; however, appellate procedures are uniform
and this chapter will discuss the scope of review for those proceedings as well. Due process
requires “some kind of a hearing.” For example, prior to termination of Medicaid benefits, due
process requires a pre-termination hearing. Where a person is denied a permit or license they are
entitled to a hearing following the action of the agency. Due process requires a fair and impartial
tribunal, ability to cross examine witnesses, ability to call witnesses, and ability to have a lawyer
plead their case.
1.
Requirements for Contested Cases.
A contested case is defined at TENN. CODE ANN. § 4-5-102(3) as:
a proceeding, including a declaratory proceeding, in which the
legal rights, duties or privileges of a party are required by any
statute or constitutional provision to be determined by an agency
after an opportunity for a hearing. Such proceeding may include
rate making; price fixing; granting of certificates of convenience
and necessity; the making, review or equalization of tax
assessments; the granting or denial of licenses, permits or
franchises where the licensing board is not required to grant the
licenses, permits or franchises upon the payment of a fee or the
finding of certain clearly defined criteria; and suspensions of,
revocations of, and refusals to renew licenses. An agency may
commence a contested case at any time with respect to a matter
within the agency's jurisdiction.
Thus, the contested case provisions provide a uniform procedure to assure minimum due
process protections where an agency takes an activity impacting individuals. Both the Due
Process Clause of the Fourteenth Amendment and Article 1, Section 8 of the Constitution of
Tennessee protect fundamental property and liberty interests from abridgement under color of
state law. The "law of the land" provision in Tenn. Const. art. 1, § 8 is synonymous with the
Due Process Clause of the Fourteenth Amendment to the United States Constitution. Dearborne
v. State, 575 S.W.2d 259, 262 (Tenn. 1978); Daugherty v. State, 216 Tenn. 666, 674, 393
S.W.2d 739, 743 (1965), cert. denied, 384 U.S. 435, 86 S. Ct. 1601, 16 L. Ed. 2d 671 (1966).
Therefore, even if the statute does not specifically provide for a right to a hearing pertaining to a
license, one is entitled to one anyway unless there is no constitutional right to a property interest.
To be entitled to procedural due process protection, a property interest must be more than a
"unilateral expectation" or an "abstract need or desire." It must be a "legitimate claim of
entitlement" created and defined "by existing rules or understandings that stem from an
independent source such as state law."
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In Mid-South Indoor Horse Racing, Inc. v. Tennessee State Racing Com., 798 S.W.2d
531, (Tenn. Ct. App. 1990) the Court reviewed determined that the UAPA did not provide a right
to a contested case hearing for denial of a horse racing permit since a person seeking to conduct
such activity did not have a property interest protected by the Constitution. While they could
appeal the decision to Court, the Commission had no responsibility to provide for a contested
case.
However, compare a horse racing permit to loss of civil service status. In Armstrong v.
Tennessee Dep't of Veterans Affairs, 959 S.W.2d 595, 600 (Tenn. Ct. App. 1997), a state
employee’s civil service status was changed to executive service though no other loss of job
position or authority. The State argued that the employee was not entitled to a contested case,
but the Court disagreed. The Court found that the employee had a property right to the position
and therefore, was entitled to a contested case.
A contested case can only be conducted by an “agency.” To be an agency for purposes of
a contested case, the entity must have the authority by statute to conduct contested cases. For
example, the Division of Water Pollution Control can issue civil penalties against violators under
TCA 68-3-115. However, issuance of the penalty assessment is not a contested case. The
person who receives the assessment may appeal the decision to the Water Quality Board because
the Board has the authority to conduct the contested case under 69-3-103. Likewise, a Petition
for Declaratory Order must be filed with an agency that has authority to conduct contested cases.
A person seeking a declaratory ruling as to an action of the Division of Solid Waste
Management, must do so before the Solid Waste Disposal Control Board for a ruling on rules,
statutes and orders within the Board’s jurisdiction.
An agency cannot finally determine the rights of an individual without first giving a
person the opportunity for a contested case hearing. A person can forfeit their right to a hearing
by agreement or by failure to act within a prescribed timeframe.
There are two means by which contested cases are conducted. One is with an multiagency or the agency head of an administrative agency. TENN. CODE ANN. § 4-5-301. In these
types of cases, the agency is the fact finder and the judge rules mainly on procedural issues and
questions of law. The second method is for the administrative judge to conduct the hearing and
make a initial order containing all findings of fact, conclusions of law and reasons for decision.
Id. Each agency decides the method.
Contested cases are initiated by either the agency or by a party seeking relief from the
action of an agency. For example, if the Department of Health is seeking to discipline a license
of a health care professional, they will issue a Notice of Charges and triggers the contested case.
In other agencies, such as the Department of Environment and Conservation, a notice is sent
stating their intention and the respondent must decide whether or not to appeal and request a
hearing.
TENN. CODE ANN. § 4-5-305 provides that any person may initiate a contested case on
their own behalf, but an attorney must represent a corporation in initiating and pursuing
contested cases. See Op. Atty. Gen. 04-160, Nov. 10, 2004:
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Therefore, a nonlawyer corporate agent cannot initiate a contested
case hearing by filing an initial pleading as this action would be in
a “representative capacity,” would constitute the “practice of law”
under Tenn. Code Ann. §§ 23-3-101 and 23-3-103, and would be
considered the unauthorized practice of law if any aspect of the
undertaking or conduct requires the “professional judgment of a
lawyer.”
Upon appeal the matter becomes a contested case. The notice must contain enough
information to know the subject matter of the action. The UAPA does not specify any form of
answer to a notice or pleading. However, many agency statutes do have mandatory time frames
for providing an answer and request for a hearing. For example TENN. CODE ANN. § 69-3-105
provides that a person who receives an order assessing civil penalties must appeal and request a
hearing within 30 days of receiving the pleading seeking to take action against a respondent.
The order issued by the Commissioner becomes final after 30 days unless appealed.
Though not mentioned in the UAPA, the Supreme Court has stated that the notice must
also inform the affected person of the availability of free or low-cost representation. See
Simmons v. Traughber, 791 S.W.2d 21 (Tenn. 1990). In the Simmons case, the Department of
Employment Security notified the respondent of the right to be represented at their own expense,
which appears to be the express language of the statute; However, this was determined to be
misleading since the person may be eligible for free legal advice, and the Court found that this
person was denied a hearing under the UAPA.
Much like any other judicial proceeding, pre-hearing procedures permit discovery
comparable to the Rules of Civil Procedure. TENN. CODE ANN. § 4-5-311. Accordingly written
interrogatories, requests for production and requests for admission are provided for. The
Administrative Judge may also provide subpoenas for attendance and for production of
documents. These subpoenas are easily obtained by contacting the administrative procedures
division. Subpoenas can be enforced in the circuit or chancery court of residence or any other
chancellor. One of the most overlooked provisions is that the statute provides that any party has
the right to inspect the files of the agency and copy the files unless confidential.
Motion practice is also spelled out in the contested case rules along with timeframes. The
respondent can request a motion for more definite statement within two weeks of service of a
notice of hearing. The lead pleading can be amended within two weeks from service of the
notice and before an answer is filed. New statutory violations cannot be alleged in amendments.
Most other motions permitted by the Rules of Civil Procedure, including dispositive motions,
can be filed. Motions must be responded to within seven days from the date of filing, unless
permission is granted for a longer period. TENN. ADMIN. COMP. CH.1360-4-.09.
Intervention is permitted in the same manner as with judicial actions at least seven days
before the hearing. Intervention is ruled upon by the administrative judge. However,
intervention can be granted at any time where the agency determines the intervention is interest
of justice and does not impair the orderly and prompt conduct of the proceedings. TENN. CODE
ANN. § 4-5-311. The administrative judge can impose a number of conditions on intervention.
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Agency members and judges are not permitted to communicate directly or indirectly,
regarding any issue in the proceeding while it is pending without notice and opportunity for all
parties to be heard. TENN. CODE ANN. § 4-5-304. These ex parte communications are prohibited
unless otherwise authorized. If ex parte communications are received the agency member or
judge has the duty to place the communication on the record, including the identity of the source
of the communication. All other parties are then notified and they have the opportunity to rebut
the communication by requesting the right within 10 days after notice of the communication.
Any administrative judge or agency member who receives the exparte communication can be
disqualified if necessary to eliminate the effect of the communication. The agency is required to
report a willful violation of the ex part communication prohibition to the appropriate authorities.
This would include reporting to the Board of Professional Responsibility.
An impartial decision maker is one the fundamental aspects of procedural due process.
TENN. CODE ANN. § 4-5-302(a) provides that the administrative judge, hearing officer or agency
member is subject to disqualification for bias, prejudice, interest or any other cause for which a
judge may be disqualified. The agency member, however, must decide on their own whether or
not they should be disqualified. However, the requirement for disqualification does not mandate
the aggrieved party to take any action. Methodist Healthcare-Jackson Hosp. v. Jackson-Madison
County Gen. Hosp. Dist., 129 S.W.3d 57, 72 (Tenn. Ct. App. 2003). In order to request
disqualification, a petition to disqualify is filed with the agency. That person will determine
whether to grant the petition. In Methodist Healthcare, a commission member, Charlie Mann
owned a business that sold to Methodist some $405,093.00 of goods for the period spanning
1997 through 1998. The Court looked at Mr. Mann’s previous votes where he had sold goods
and services and found that he had ruled in favor of another hospital in opposition to a certificate
of need for which he had substantial business interests. The Administrative Judge had
determined that to be a conflict of interest. 129 S.W.3d at 71. The Court of Appeals noted that
often the conflict is not known until after the time for any petition to disqualify can be filed. The
Court of Appeals remanded the matter to the Commission to rehear the matter without the
presence of Mr. Mann.
Agency members are not subject to voir dire. See, Ogrodowczyk v. Tenn. Bd. For
Licensing Health Care Facilities, 886 S.W.2d 246 (Tenn. Ct. App. 1994). A party may file a
petition for disqualification, and may then request the agency administrative judge to question
the suspect agency member. Even if the administrative judge agrees, the agency member also
must agree. TENN. CODE ANN. § 4-5-302(c).
Each agency determines the specific procedures it will employ at the hearings. Most
agencies either incorporate by reference or otherwise rely heavily on the uniform rules for
contested case hearings promulgated by the Secretary of State at TENN. ADMIN. COMP. CH. 13604-1. The rules are based on the Tennessee Rules of Civil Procedure and expressly state that if
the rules do not address a particular issue, the Tennessee Rules of Civil Procedure will be used as
guidance. In addition TENN. CODE ANN. § 4-5-313 provides that agencies can admit and give
probative effect to any evidence admissible in court. The Tennessee Rules of Evidence are used
as guidance, but not mandatory. See Armstrong v. Magill, 2004 Tenn. App. LEXIS 430 (Tenn.
Ct. App. 2004). Unlike a court proceeding the agency can also rely on other evidence if it is “of
a type commonly relied upon by reasonably prudent men in the conduct of their affairs. So, in
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some cases, hearsay, for example, could be admitted. In Armstrong v. Magill, the Court found
that documents in her personnel file from other persons who had written complaints about her,
though hearsay, were admissible as proof to terminate the employee and deny unemployment
benefits.
The order of proceedings is typical of any judicial case. The party with the affirmative
has the burden of proof. In Big Fork Mining Co. v. Tennessee Water Quality Control Bd., 620
S.W.2d 515, 520 (Tenn. Ct. App. 1981), the mining company had appealed conditions in its
permit issued by the Division of Water Pollution Control. Big Fork argued that the Division of
Water Pollution Control had the burden of proof to establish the permit condition was
reasonable. The Court of Appeals for the middle section opined that in Tennessee case law that
the burden of proof is on the party having the affirmative of an issue, and that burden does not
shift, citing Pack v. Royal-Globe Insurance Co., 224 Tenn. 452, 457 S.W.2d 19 (1970); Whipple
v. McKew, 166 Tenn. 31, 60 S.W.2d 1006 (1933); and Freeman v. Felts, 208 Tenn. 201, 344
S.W.2d 550 (1961). In a declaratory proceeding under TENN. CODE ANN. § 4-5-223, the burden
of proof is on the petitioner. In an action to take away someone’s rights such as revocation of a
permit or license or where the agency is taking some sort of action involving a sanction, the
burden of proof is on the agency. The burden of proof in most cases is “a preponderance of the
evidence.”
Proof during the hearing can consist of fact witnesses and expert testimony. However, an
agency has quite a bit of latitude in its reliance on experts. In Big Fork Mining Company v.
Tennessee Water Quality Control Board, 620 S.W.2d 515, 521 (Tenn. Ct. App. 1981), the board
relied upon experts who provided expert testimony on the ultimate question, that is, that the
mining operation would create a condition of pollution. The Court of Appeals, noting that
administrative agencies are not bound by strict rules of evidence, allowed the agency decision to
rely on such testimony. The Court ruled:
Plaintiff is correct that expert evidence in the nature of conclusions
is to be given little weight by an administrative tribunal unless it is
supported by factual data. (citations omitted). However, the
opinions of qualified experts constitute valid evidence and may
support a decision of an administrative tribunal. It is for the trier
of fact to determine the weight to be given to the testimony.
(citations omitted). This was an administrative proceeding and not
a court proceeding. Accordingly, strict rules of evidence do not
apply.
While Courts customarily defer to adjudicatory determinations made by agencies acting
within their area of specialized knowledge, experience, and expertise, there must be some expert
evidence in the record to support technical or professional findings. In Martin v. Sizemore, 78
S.W.3d 249, 268 (Tenn. Ct. App. 2001), the Board of Architects and Engineers voted to take
disciplinary action against an architect. The Board did not hear expert proof; rather it relied on
the fact that its members had the expertise to make the decision. The Court in Martin v.
Sizemore, distinguished the expertise issued as follows:
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It is one thing for a board or agency to use its expertise and
experience to understand and evaluate the complexities of the
technical evidence presented by the parties. It is, however, quite
another thing for the members of the board or agency to rely on
their own expertise as a substitute for expert testimony not
presented during the contested case hearing. Permitting board
members to fill this evidentiary void created by the absence of key
expert testimony seriously compromises the fairness of
administrative proceedings in four fundamental ways. 78 S.W.3d
249, 269.
The Sizemore court was concerned that the respondent did not have the ability to cross
examine the board member or otherwise respond to proof.
If the agency makes the decision at the hearing, it must render a final order. TENN. CODE
ANN. § 4-5-314(a). An administrative judge hearing the case alone issues an initial order, which
becomes final if not appealed to the agency. Tenn. Code. Ann. 4-5-314(b). Final orders or
initial orders must be rendered in writing within ninety days after the conclusion of the hearing
or after submission of proposed findings unless waived or extended by agreement. Id. at
subsection (g).
An initial order of an administrative judge can be appealed by either the agency or any
other party to the extent a statute does not preclude such appeal or the agency. TENN. CODE
ANN. § 4-5-315. The agency can decide to review some issues and let others become final, may
decide not to review the decision at all, in which case the decision becomes final, or it can
delegate an individual or individuals to review the initial order. A party wishing to appeal an
initial order must do so within fifteen (15) days after entry, unless a petition for reconsideration
if filed. If a such petition is filed, the 15 day period runs after the disposition of that petition. A
party can submit briefs to the decision maker, and upon request may be entitled to oral argument.
The contested case proceedings do not apply in this appellate process. The agency can render an
order upholding the administrative judge, remand for further proceedings or render a final order.
The agency is not allowed to entertain new proof. In Lien v. Metro. Gov't of Nashville, 117
S.W.3d 753, 763 (Tenn. Ct. App. 2003), the Court of Appeals held that the reviewing agency or
commission “shall review the "initial order" on the record before the ALJ. If it is necessary to
take further proof, the case has to be remanded back to the ALJ.” The final order must be
rendered and entered within sixty (60) days after receipt of briefs and oral argument, unless
waived or extended by agreement.
The order rendered either by the Administrative Judge or the Agency must contain
findings of fact, conclusions of law and policy reasons for decision. These requirements are
strictly enforced. Often decisions in Court are reached without such findings and language some
would customarily use would not work. For example in Levy v. State Board of Examiners for
Speech Pathology & Audiology, 553 S.W.2d 909, 911 (Tenn. 1977) the Board entered an order
as follows:
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Based upon the sworn testimony of witnesses, all evidence
introduced and argument of counsel, the Board finds as a matter of
fact and law that the Petitioner, Luther M. Fortner [Melvin A.
Levy] has at no time engaged in the practice of audiology as that
term is used in T.C.A. Section 63-1713 and as defined in T.C.A.
Section 63-1703(g)
Accordingly, the decision of the Board on June 5, 1975, denying
Petitioner's application for license is affirmed."
Even though the Chancellor had sifted through the record and found that the elements
were there, the Supreme Court reversed stating that the required elements of the order are:
. . . [N]ot a mere technicality but is an absolute necessity without
which judicial review would be impossible. As Justice Douglas
pointed out in Baltimore & O.R. Co. v. Aberdeen & R.R. Co., 393
U.S. 87, 89 S. Ct. 280, 21 L. Ed. 2d 219 (1968): "The requirement
for administrative decisions based on substantial evidence and
reasoned findings -- which alone make effective judicial review
possible -- would become lost in the haze of so-called expertise.
Administrative expertise would then be on its way to becoming '"'a
monster which rules with no practical limits on its discretion.'"'"
393 U.S. at 92, 89 S. Ct. at 283, 21 L. Ed. 2d at 224.
Reasons for decision are often very short. In Wright v. Tenn. Bd. of Examiners in
Psychology, 2004 Tenn. App. LEXIS 875 (Tenn. Ct. App. 2004) the Court of Appeals reviewed
the following statement:
The Tennessee Board of Examiners in Psychology makes this
decision and takes this action in order to enforce the statutory laws
and rules governing the professional practice of Psychology in the
State of Tennessee and in order to protect the health, safety and
welfare of the citizens of the State of Tennessee."
While this statement is very brief, the record in the case showed that the board was in fact
concerned with the issues stated in the reasons and upheld the adequacy of the statement.
It is not unusual for the agency or administrative judge to go far beyond the 90 day period
when an order must be issued. The 90 day time frame, however, has been determined to be
“directory” rather than “mandatory.” See Garrett v. State, Dep't of Safety, 717 S.W.2d 290, 291
(Tenn. 1986).
TENN. CODE ANN. §§ 4-5-316 and 317 provide a means to stay the effective date of the
order or to request reconsideration. A petition for stay of an initial order or final order must be
filed within seven (7) days after entry. A petition for reconsideration can be flied within fifteen
(15) days of entry of an initial or final order. 4-5-317(b) requires the petition be ruled on by the
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same person or persons who rendered the order. That should be easy with respect to an initial
order or an order from a single member agency. However, for a multi-person agency such as the
Water Quality Control Board, a reconvened meeting sometimes creates logistical problems. The
agency has twenty (20) days to enter a written order either denying the petition or taking such
action to set the matter for further or additional proceedings, issuing a new order or take other
such action. If no action is taken the petition is deemed denied. A petition for consideration is
limited to argument on the existing record and no new evidence shall be introduced unless the
party proposing such evidence shows good cause for such ;party’s failure to introduce the
evidence in the original proceeding. The sixty (60) day period for a party to appeal the final
decision of the agency is tolled if the petition for reconsideration is granted and a new 60 day
period starts after disposition.
The order of the agency is effective upon entry unless otherwise stated. The party against
whom the order issued must have actual knowledge of the order or mailed to the party’s last
known address. The Agency is required to maintain the official record and usually uses a court
reporter. Most agencies must maintain the record for three years. The agency record is the
exclusive basis for agency and for judicial review.
One of the most important sections of the UAPA is Section 4-5-320. This section
provides that where an applicant for a license or permit makes “timely and sufficient” application
for renewal the existing license does not expire until the application has been finally determined
by the agency. This would include any appeals of the agency decision. So, for example, when
an applicant for a permit applies for a renewal of a permit and the agency imposes more stringent
standards, the existing permit will remain in full force and effect until the final agency action.
Agencies are also given authority under 4-5-320 to summarily suspend licenses and
permits where the agency finds that the public health, safety and welfare “imperatively requires
emergency action.” The agency can summarily suspend a license by holding a prompt informal
hearing conference prior to the action with at least seven (7) days notice. The hearing is not a
contested case proceeding and accordingly no administrative judge is present. The agency still
must provide a contested case hearing promptly.
One of the most compelling reasons for a summary suspension of a license is that of a
health care professional that is harming patients. In Watts v. Burkhart, 978 F.2d 269 (6th Cir.
1992), the 6th Circuit addressed the summary suspension of a physician’s license in the context
of a 42 U.S.C. § 1983 lawsuit. Dr. Watts operated a weight loss clinic and prescribed preludin.
He was apparently a prolific prescriber of this diet drug, and the Board of Medical Examiners
notified him that they intended to summarily suspend his license. He appeared before the Board
pro se and agreed to surrender his DEA license, which allowed him to prescribe medication, in
return for keeping his medical license. After consulting counsel he revoked his agreement and
the Board summarily suspended his license. In the course of extensive litigation, the Court of
Appeals evaluated the summary suspension provisions in the UAPA and concluded that they
complied with due process. The Court found that that the provision “scrupulously protects the
fundamental rights of notice and the opportunity to be heard.” 978 F.2d 269, 275.
2.
SCOPE OF REVIEW
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Review of agency decisions under the UAPA are governed by TENN. CODE ANN. § 4-5322. “Aggrieved persons” may appeal. Not every person who wants to appeal is an “aggrieved
person. In Tennessee Envtl. Council v. Solid Waste Disposal Control Bd., Div. of Solid Waste
Management, 852 S.W.2d 893, 897 (Tenn. Ct. App. 1992), an environmental group objected to
rules on siting of commercial hazardous waste facilities. After fully participating in the public
comment period and hearings for the rulemaking, the Board made some changes to the final
version. The Court found that since they had adequate notice of the proceedings and their only
argument was that others participated without commenting. A state agency can be an aggrieved
party from a decision by an independent board or commission if approved by the Attorney
General.
To appeal, the petition for review must be filed with the Chancery Court within sixty (60)
days after entry of the final order. Note that while the Rules of Civil Procedure require filing of
a summons with the complaint for initiating judicial action, a summons is not required for
judicial review under TENN. CODE ANN. § 4-5-322. See, Jaco v. Dept. of Health, 950 S.W.2d
350 (Tenn. 1997). The only two requirements imposed are that the Petition for review be filed
within the 60 day period and petitioner must serve copies of the petition upon the agency and
other parties of record. Batson Eastland Co., Inc. v. Boyd, 4 S.W.3d 185 (Tenn. Ct. app. 1998).
Filing of an appeal does not stay enforcement of the agency decision. In order to stop the order,
a stay must first be requested of the agency. If shown that the public will be adversely affected
in a petition filed within 10 days of the decision, the Court can stay the decision upon posting an
appropriate bond.
The state has forty-five (45) days after service of the petition to transmit the record to the
court. The statute does not require the State to file an answer. The record can be shortened by
agreement and a party can be taxed for insisting on submitting parts of the record that are not
relevant to the appeal.
The scope of review of the chancery court is limited. TENN. CODE ANN. § 4-5-322(g)
provides that the review is without a jury and is confined to the record, unless procedural
irregularities are not shown in the record. See Metropolitan Gov’t v. Shacklett, 544 S.W.2d 601
(Tenn. 1977). The court cannot substitute its judgment for that of the agency’s determination on
the weight of the evidence. In addition, as discussed in Chapter __of PGTAL facts pertaining to
certain constitutional issues may be introduced. The court can affirm or remand it for further
proceedings. The court can also reject or modify the decision where it finds the decision was
based on any of the following:
•
In violation of constitutional or statutory provisions;
•
In excess of the statutory authority of the agency;
•
Made upon unlawful procedure;
•
Arbitrary or capricious or characterized by abuse of discretion or clearly
unwarranted exercise of discretion; or
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•
Unsupported by evidence that is both substantial and material in the light of the
entire record. In determining the substantiality of evidence, the court shall take
into account whatever in the record fairly detracts from its weight, but the court
shall not substitute its judgment for that of the agency as to the weight of the
evidence on questions of fact.
Federal courts also defer to agency fact finding and provide the same preclusive effect
granted agencies under the UAPA’s so-called “substantial and material evidence”. See.
University of Tenn. V. Elliott, 478 U.S. 788, 106 S.Ct. 3220,. 92 L.Ed. 2d 635 (1986).
Substantial and material evidence is such relevant evidence as a reasonable mind might accept to
support a rational conclusion and such action under consideration. Southern Ry. V. State Bd. Of
Equalization, 682 S.W.2d 196 (Tenn. 1984). In Wayne County v. Tenn. Solid Waste Disp.
Control Bd., 756 S.W.2d 274 (Tenn. Ct. App. 1988), the Court of Appeals noted the broad scope
of the standard:
The "substantial and material evidence" standard contained in
Tenn. Code Ann. § 4-5-322(h)(5) is couched in very broad
language. What amounts to substantial evidence is not precisely
defined by the statute. In general terms, it requires something less
than a preponderance of the evidence, (citations omitted), but more
than a scintilla or glimmer (citations omitted).
Substantial and material evidence applies to both direct and circumstantial evidence. Id.
So, in reviewing the agency’s decision, the court looks to see whether the agency based the
decision on evidence in the record and if there are facts to support the decision. The court cannot
set aside the decision, even if the court would come to an opposite conclusion based upon the
facts.
The Court cannot reverse an agency for errors that are not material or that are “harmless
error.” Hoover v. State Board of Equalization, 579 S.W.2d 192 (Tenn. Ct.App. 1978). In Lien v.
Metro. Gov't of Nashville, supra., the civil service commission in reviewing the initial order,
allowed newspaper articles in the record that contradicted the police officer’ claim to an
otherwise clean record. The court of appeals found that many members of the commission did
not rely on the articles and the record had ample evidence to support the termination.
(a)
Agency Deference
Courts generally will defer to decisions of administrative agencies when those agencies
are acting within their area of specialized knowledge, experience, and expertise. Willamette
Industries, Inc., 11 S.W.3d 142 at 146 (Tenn. Ct. App. 1999) (quoting Wayne County v. Tenn.
Solid Waste Disposal Control Bd., 756 S.W.2d 274, 279 (Tenn. Ct. App. 1988)). Accordingly,
judicial review of an agency's action follows the narrow, statutorily defined standard contained
in TENN. CODE ANN. 4-5-322(h) rather than the broad standard of review used in other civil
appeals.
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In Wayne County, supra., the court gave deference to the agency because of the scientific
and technical nature of the issues involved:
The general rules governing judicial review of an agency's factual
decisions apply with even greater force when the issues require
scientific or technical proof. Appellate courts have neither the
expertise nor the resources to evaluate complex scientific issues de
novo. (citations omitted). When very technical areas of expertise
are involved, they generally defer to agency decisions (citations
omitted), and will not substitute their judgment for that of the
agency on highly technical matters. (citations omitted).
Agency deference does not mean complete abdication. As stated in Wayne County, “the
court's deference to an agency's expertise is no excuse for judicial inertia.” Even in cases that
involve scientific or technical evidence, the court will still make inquiry into the decision to see
if those facts are supported.
In Willamette, the Court applied the deference standard to the County in appraisal
methodology. Willamette argued that the statute on valuation of property required the use of
particular methodology while the County argued that other forms of valuation were permitted.
The Court stated:
. . . courts typically will defer to an agency decision where the
agency is acting within its area of knowledge and expertise, and
this is particularly true where technical or scientific matters are
involved. Admittedly, the record contains evidence regarding both
advantages and disadvantages of each appraisal method, as well as
evidence that the residual method could, in certain instances, be the
preferable means of valuation. On the other hand, it also contains
credible evidence indicating that, under the circumstances of this
case, the direct comparable sales method represented the
appropriate choice.
See also, Illinois Cent. Gulf Ry. Co. v. Tennessee Pub. Ser. Comm'n, 736 S.W.2d 112, 117 (Tenn.
App. 1987) ("This principle applies ... when the agency has consistently interpreted its position
and when the interpretation is not inconsistent with the language, goals, or operation of the
statutes in question.").
Where an agency’s interpretation is contrary to the express language of a statute, such
deference is not applicable. For example, in Methodist Healthcare-Jackson Hosp. v. JacksonMadison County Gen. Hosp. Dist., 129 S.W.3d 57 (Tenn. Ct. App. 2003), the chairman of the
Health Facilities Commission permitted reconsideration of the agency’s decision to grant a
certificate of need. Even though the agency’s rules allowed use of Roberts Rules of Order,
which provides a procedure for reconsideration of a vote, the statute prohibited reconsideration
of a decision on a certificate of need. The Court of Appeals rejected the administrative judge’s
conclusion that the Health Facilities Commission had traditionally interpreted its statute to
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permit such reconsideration. Thus, agency deference cannot fly in the face of express statutory
language to the contrary.
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3.
Other Means of Review
(a)
Common Law Writ of Certiorari
Municipal and County governments are not covered by the UAPA unless they
specifically agree to be so bound or the statute otherwise provides (e.g., civil service cases). In
which case the means by which an aggrieved party can obtain review of an adverse ruling by an
agency is through a Petition for Writ of Certiorari. TENN. CODE ANN. § 27-9-101 which states:
Anyone who may be aggrieved by any final order or judgment of
any board or commission functioning under the laws of this state
may have the order or judgment reviewed by the courts, where not
otherwise specifically provided, in the manner provided by this
chapter.
Petitions must be filed within sixty days of the action complained of and must name the
property parties. 27-9-102 and 104. This includes the parties of record before the agency and
any landowners if a zoning matter.
Contested case hearings by civil service boards of a county or municipality which affect
the employment status of an employee are conducted in conformance with the UAPA. TENN.
CODE ANN. § 4-5-114. It does not apply to municipal utility rules or to counties acting under
home rule. To avail of the review, an aggrieved party must file petition of certiorari in the
chancery court of any county in which any one or more petitioners, or one or more defendants
reside or have their principal offices. The petition must be filed within sixty (60) days of the
entry of the order or judgment and must state briefly the issues involved, the substance of the
order or judgment, why the decision is erroneous and pray for accordant review. Fairhaven
Corp. v. Tennessee Health Facilities Comm’n, 566 S.W.2d 885, 886 (Tenn. Ct. App. 1976). A
second procedural requirement relating to common-law writs of certiorari is found in TENN.
CODE ANN. § 27-9-104, which requires the petitioner to “name as defendants the particular board
or commission and such other parties of record, if such, as were involved in the hearing before
the board or commission . . ..”
In Moore v. Metropolitan Board Of Zoning Appeals, (Feb. 3, 2006) the Court of Appeals
addressed an appeal by writ of common law certiorari involving a zoning decision dealing with
White Way Cleaners property. The scope of review goes no further than determining whether
the entity whose decision is being reviewed exceeded its jurisdiction, followed an unlawful
procedure, acted illegally, arbitrarily, or fraudulently, or acted without material evidence to
support its decision. Because a common-law writ of certiorari is an extraordinary judicial
remedy, Robinson v. Traughber, 13 S.W.3d 361, 364 (Tenn. Ct. App. 1999), it is not available as
a matter of right, Boyce v. Williams, 215 Tenn. 704, 713-14, 389 S.W.2d 272, 277 (1965); Yokley
v. State, 632 S.W.2d 123, 127 (Tenn. Ct. App. 1981). Decisions either to grant or to deny the
writ are addressed to the trial court’s discretion.
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The Petitioner may also file with it petition a petition for supersedeas. TENN. CODE ANN.
§ 4-5-106. This will stay the action of the agency until such time as the hearing on the merits
can be held. However, if supersedeas is granted the petitioner must post a bond fixed by the
chancellor.
As helpful as findings of fact might be in an administrative proceeding, administrative
bodies such as the Board are not required to make specific findings of fact unless a statute or
ordinance requires them. Weaver v. Knox County Bd. of Zoning Appeals, 122 S.W.3d 781, 785
(Tenn. Ct. App. 2003). However, the Court in its review of the agency action must develop
findings of fact and conclusions of law. The judge will weigh the evidence and find facts in the
record by a preponderance of the proof.
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CHAPTER 6
STANDING AND RESTRAINT ON AGENCY POWERS
The doctrine of standing is used to determine whether a particular plaintiff is entitled to
judicial relief. Knierim v. Leatherwood, 542 S.W.2d 806, 808 (Tenn. 1976); Garrison v. Stamps,
109 S.W.3d 374, 377 (Tenn. Ct. App. 2003). It requires the court to determine whether the
plaintiff has alleged a sufficiently personal stake in the outcome of the litigation to warrant a
judicial resolution of the dispute. SunTrust Bank v. Johnson, 46 S.W.3d 216, 222 (Tenn. Ct.
App. 2000); Browning-Ferris Indus. of Tennessee, Inc. v. City of Oak Ridge, 644 S.W.2d 400,
402 (Tenn. Ct. App. 1982). To establish standing, a plaintiff must show: (1) that it has sustained
a distinct and palpable injury, (2) that the injury was caused by the challenged conduct, and (3)
that the injury is one that can be addressed by a remedy that the court is empowered to give. City
of Chattanooga v. Davis, 54 S.W.3d 248, 280 (Tenn. 2001); In re Youngblood, 895 S.W.2d 322,
326 (Tenn. 1995); Metropolitan Air Research Testing Auth., Inc. v. Metropolitan Gov't, 842
S.W.2d 611, 615 (Tenn. Ct. App. 1992)
The primary focus of a standing inquiry is on the party, not on the merits of the claim.
Valley Forge Christian Coll. v. Americans United for Separation of Church & State, Inc., 454
U.S. 464, 484, 102 S. Ct. 752, 765, 70 L. Ed. 2d 700 (1982); Petty v. DaimlerChrysler Corp., 91
S.W.3d 765, 767 (Tenn. Ct. App. 2002). Thus, a party's standing does not depend on the
likelihood of success of its claim on the merits. Mayhew v. Wilder, 46 S.W.3d 760, 767 (Tenn.
Ct. App. 2001); Metropolitan Air Research Testing Auth., Inc. v. Metropolitan Gov't, 842
S.W.2d at 615. However, because a party's standing may hinge on the nature of its claims, a
standing inquiry requires a "careful judicial examination of a complaint's allegations to ascertain
whether the particular plaintiff is entitled to an adjudication of the particular claims asserted."
Allen v. Wright, 468 U.S. 737, 752, 104 S. Ct. 3315, 3325, 82 L. Ed. 2d 556 (1984)
The sort of distinct and palpable injury that will create standing must be an injury to a
recognized legal right or interest. In many cases, this right or interest may be created or defined
by statute. Thus, in cases where a party is seeking to vindicate a statutory right of interest, the
doctrine of standing requires the party to demonstrate that its claim falls within the zone of
interests protected or regulated by the statute in question. Federal Election Comm'n v. Akins, 524
U.S. 11, 20, 118 S. Ct. 1777, 1783-84, 141 L. Ed. 2d 10 (1998); Chattanooga Ry. & Light Co. v.
Bettis, 139 Tenn. 332, 337, 202 S.W. 70, 71 (1918) Jefferson County v. City of Morristown, 1999
Tenn. App. LEXIS 680, No. 03A01-9810-CH-00331, 1999 WL 817519, at * 6 (Tenn. Ct. App.
Oct. 13, 1999). (No Tenn. R. App. P. 11 application filed).
Brentwood's standing to seek judicial review of the Board's decision hinges on the
answers to two questions. The first question is whether the applicable statutes and ordinances
permit Brentwood to seek judicial review of the Board's decision. The second is whether the
interests Brentwood seeks to vindicate are within the zone of interests protected by Nashville's
zoning ordinance. The answer to both questions is yes.
The status of an “aggrieved party” is the test for UAPA appeals as well as appeals under
common law and statutory writs of certiorari. The courts have found aggrievement when the
actions of one local government cause (1) reduction in another local government's revenue due to
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decreased property values, (2)depreciation in the value of another local government's property,
(3) interference with another local government's ability to provide police and fire protection, (4)
increased safety hazards on roads, (5) interference with another local government's construction
of court-ordered improvements to a sewer and water system, (6) interference with another local
government's urban development plan, (7) use of property inconsistent with the character of the
adjoining area, and (8) general impairment to the health, safety, or welfare of the residents of
another local government. City of Brentwood v. Metro. Bd. of Zoning Appeals, 149 S.W.3d 49,
58 (Tenn. Ct. App. 2004).
Administrative agencies in Tennessee have a number of different mechanisms at their
disposal for carrying out their responsibilities. Through licensing and permitting, the agency is
able to determine that a person or entity meets some minimal requirement before engaging in a
particular activity. The agency typically will review the eligibility and compliance of licensees
and permittees and notify them if their conduct does not rise to the level of compliance with the
license. In still other situations, persons may apply for state benefits. Like a permit, the agency
determines whether the person meets the requirements for the program. If the person or entity
does not comply with the permit or eligibility requirements an agency can either suspend,
terminate or, in many cases, assess civil penalties against the licensee. These enforcement
mechanisms are very effective at the administrative level at gaining compliance. Most agencies
still have the authority to go to court and seek judicial relief. Finally, some agencies have
authority to impose sanctions, such as civil penalties on persons who are required to have a
license or permit before undertaking a particular activity, but who have not obtained one.
Being able to assess civil penalties is often a more effective and better remedy than
completely stripping away the permit or license. These civil penalties can range anywhere from
$50 to over $1 million. With such large exposure, a common statement is that the civil penalty is
criminal in nature and/or that only a jury can assess such large awards. In analyzing whether a
proceeding under a statute is civil rather than criminal for these purposes, courts have used a
two-prong test. The first prong requires a determination of whether the legislature intended the
proceedings under the statute to be civil or criminal. United States v. Ursery, 518 U.S. 167, 288,
116 S.Ct. 2135, 2147 (1996), on remand on another issue, 92 F.3d 1129 (6th Cir. 1997)
(discussing whether forfeiture proceedings violate the constitutional prohibition against being
punished twice for the same offense). The second prong requires a determination of whether the
proceedings are so punitive in form and effect as to render them criminal in spite of the
legislature’s contrary intent. Id. A determination that the proceedings are so punitive requires the
“clearest proof.” 518 U.S. at 290, 116 S.Ct. at 2148. In Ursery, in making this determination, the
Supreme Court also noted that the procedure had not historically been regarded as punishment.
In applying the second part of the test, the Court noted that the penalty served a remedial, as well
as a deterrent purpose. Id. The Court, therefore, concluded that forfeiture was a civil, and not a
criminal, penalty. See also Stuart v. Tennessee Department of Safety, 963 S.W.2d 28 (Tenn.
1998) (same).
Proceedings to enforce municipal ordinances have long been considered to be civil
actions “in the nature of actions for debt.” Briggs v. City of Union City, 531 S.W.2d 106, 107
(Tenn. 1975); Metropolitan Gov’t v. Allen, 529 S.W.2d 699, 707 (Tenn. 1975); O’Dell v. City of
Knoxville, 214 Tenn. 237, 239, 379 S.W.2d 756, 758 (1964). Accordingly, for at least the past
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four decades, the courts held that the Fifty Dollar Fines Clause in the Tennessee Constitution did
not apply to these proceedings because a monetary assessment for violating a municipal
ordinance was not a “fine” under Tenn. Const. art. VI, § 14. Judge, later Justice, Chester Chattin
explained that there was a “marked distinction in the meaning of the word ‘penalty’ . . . and the
word ‘fine’” and that “while a fine is always a penalty, a penalty is not always a fine.” O’Dell v.
City of Knoxville, 54 Tenn. App. 59, 63, 388 S.W.2d 150, 152 (1964). The Tennessee Supreme
Court has now repudiated this court’s rationale in O’Dell v. City of Knoxville that courts do not
impose punitive sanctions in civil proceedings. Noting that civil proceedings may impose
sanctions that are so punitive in form or effect as to trigger constitutional protections, the Court
held that “proceedings involving the violation of a municipal ordinance may be subject to the
limitations of Article VI, section 14 when either the intended purpose or the actual purpose or
effect of the monetary assessment is to serve as a punitive measure.” City of Chattanooga v.
Davis, 54 S.W.3d at 256. To aid in the application of its decision, the Court devised an elaborate
analysis for determining whether a particular ordinance is remedial or punitive and whether the
actual purpose or effect of a particular monetary assessment for violating an ordinance is
punitive.
Where an ordinance’s intended purpose or the actual purpose or effect of the monetary
assessment is to serve as punishment a trial by jury is required to assess a fine or penalty in
excess of fifty dollars. The Court in Chattanooga v. Davis clarified that it did not matter what
the fine was called; e.g., penalty or fine, but the actual application.. In determining whether the
statute was punitive the Court in Chattanooga v. Davis determined that when (1) the legislative
body creating the sanction primarily intended that the sanction to punish the offender for a
violation of the ordinance; or (2) despite evidence of remedial intent, the monetary sanction is
shown by the "clearest proof" to be so punitive in its actual purpose or effect that it cannot
legitimately be viewed as remedial in nature, it is punitive.
The Supreme Court revisited the Chattanooga v. Davis decision in Town of Nolensville
v. King, 151 S.W.3d 427 (Tenn. 2004) to clarify whether the municipal government could cure
the failure to comply with the fifty dollar fines clause by assuring that the party was given the
right to a de novo appeal and trial by jury on the fine, if they so desired. The Court rejected this
by stating that the clause simply did not permit the imposition of fine.
From an administrative law standpoint, the cases have substantial interest since state and
local administrative boards can assess penalties far in excess of fifty dollars. While some may
have remedial effects, they are predominately punitive in nature. In Dickson v. State, 116 S.W.3d
738 (Tenn. Ct. App. 2003), Mr. Dickson entered into an agreed order with the Underground
Storage Tank Board. He entered into an agreed order with the Department of Environment and
Conservation which would have imposed penalties in excess of $20,000 for failure to comply.
TDEC alleged non compliance and sought payment of $15,000 of the assessed penalty. The
Court of Appeals for the Middle Section first determined that the fifty dollar fine clause did not
apply to administrative agencies. According to the Court its applicability was for judicially
imposed fines alone. Anticipating an petition for review that never came, the Court of Appeals
also determined that the penalty was nevertheless punitive in nature. The Court distinguished the
intent of the statute with the “totality” of the circumstances, by agreeing that the statute
authorizing the penalty was not punitive, but the primary purpose of the actual assessment was
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not to serve to remedy or correct the violation. Citing Chattanooga v. Davis, the Court said that
“remedial measures are any means by which a right is enforced or the violation right is
prevented, redressed or compensated.
Not surprisingly the Attorney General has opined that based on the Dickson case that
penalties issued by either local or state administrative agencies such as Beer Boards are not
covered by the fifty dollar fines clause. 2005 Tenn. AG LEXIS 56 (Tenn. AG 2005)
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