Judicial Review of the Final Decision of Administrative Agencies in Maryland

In Spencer v. Board of Pharmacy, 380 Md. at 528-30, Judge Raker analyzed State Government Article, 10-222(h), dealing with judicial review of the final decision of administrative agencies in contested cases. Depending on which aspect of an agency's decision is being reviewed, any of three different standards may come into play. When an agency makes "conclusions of law" in a contested case, the court, on judicial review, decides the correctness of the agency's conclusions and may substitute the court's judgment for that of the agency's. This established principle of administrative law is exemplified in 10-222(h)(3)(i)-(iv), which permits judicial modification or reversal of agency action that (i) is unconstitutional; (ii) exceeds the agency's jurisdiction; (iii) results from unlawful procedure; or (iv) is affected by "any other" error of law. In contrast, when an agency is not interpreting law but instead makes a "finding of fact," we have applied "substantial evidence" review. Substantial evidence review of agency factual findings is embodied in 10-222(h)(3)(v). That provision grants a court authority to overrule an agency's factual finding only when the finding is "unsupported by competent, material, and substantial evidence in light of the entire record as submitted." According to this more deferential standard of review, judicial review of agency factual findings is limited to ascertaining whether a reasoning mind could have reached the same factual conclusions reached by the agency on the record before it. Finally, there are circumstances when an agency acts neither as a finder of fact nor as an interpreter of law but rather in a "discretionary" capacity. Logically, the courts owe a higher level of deference to functions specifically committed to the agency's discretion than they do to an agency's legal conclusions or factual findings. Therefore, the discretionary functions of the agency must be reviewed under a standard more deferential than either the de novo review afforded an agency's legal conclusions or the substantial evidence review afforded an agency's factual findings. In this regard, the standard set forth in 10-222(h)(3)(vi), review of "arbitrary or capricious" agency actions, provides guidance for the courts as they seek to apply the correct standard of review to discretionary functions of the agency.