A party can resort to judicial review of a decision only after exhausting all administrative remedies.[i]  Administrative and judicial competence requires that all claims be first raised at the agency level to allow suitable development and administrative response before judicial review.[ii]  Also, a party is not permitted to proceed on a theory or raise an issue on appeal of an administrative agency’s action that was not raised in the agency action.  The failure to raise an issue before the body prevents a party from asserting that issue in the action for judicial review.[iii]

The courts are also prevented from raising, considering, and sustaining those objections which are not raised before.  This is because considering such grounds which are not considered before will deny the agency the opportunity to consider the matter, make its ruling, and express the reasons for its action.[iv]  Moreover, The court will not make findings of facts[v] regarding issues raised for the first time on the appeal or make a decision regarding the on the credibility of witnesses or the preponderance of the evidence.[vi]

A party also has the right to waive issues which was raised in his/her cross-petition, by not briefing or arguing them before the court of appeal.  The party can also waive an issue and its corresponding argument if the issue was decided before the original appeal or by failure of the party to raise it in the original appeal.  The purpose of this rule is to provide the lower tribunal an opportunity to correct alleged errors, whereby increasing the competent use of judicial resources by increasing the need for appellate review.

Therefore, a party must raise constitutional issues at the agency level itself even if the agency lacks authority to decide upon such constitutional issues.  This is in order to preserve constitutional issues for review, because, if it is not raised in the agency level, the party cannot later bring it in the review for the first time.[vii]  And so, if the party fails to raise a constitutional issue at the agency level, then it is considered that s/he waives such right.[viii]  However, in order to preserve agency error for judicial review, a party can raise a constitutional issue for the first time in a petition for rehearing of an agency action.[ix]

A contrary view is that because administrative agencies cannot rule on constitutional questions, the issue of constitutionality can be raised for the first time before a court of law.  Other courts also allow a party to challenge the constitutionality of a statute regardless of whether it was raised at the agency level, and this may be based on the fact that the judicial review provisions of the applicable Act do not require that constitutional issues be raised at the agency level.  However, it has been held that the issue must be preserved in the trial court and any notice of appeal from the decision of the trial court.

In order to preserve issues for appellate review from an administrative proceeding, the claims must be first raised at the agency level.[x]  There is a standard for assessing if an issue was adequately raised before an administrative agency.  The test is that whether or not the issue was raised with sufficient specificity and clarity that the tribunal was aware that it must decide the issue, and in sufficient time that the agency can do so.[xi]

Further, an issue is considered raised and preserved for appeal in an administrative proceeding if there is more than simply a hint or slight reference to the issue in the record[xii] and there is sufficient basis in the record to alert the court and any opposing party to the existence of that issue.[xiii]

The general rule that an issue must be first raised before the agency, can be waived by the court if there is reasonable ground for the failure to set forth the relief or for asserting new grounds.[xiv]  The Model State Administrative Procedure Act of 1981 also provides that the general rule against consideration of issues not raised before the agency can be avoided in specific circumstances.[xv]  Courts has the right to determine an issue that was not raised before an administrative agency if the facts are undisputed and the issue is one that would allow an erroneous application of a statute.  Court can consider the issue also if the failure to address such issue will result in a possible deprivation of substantive rights.

[i] Island Bay Utilities, Inc. v. Alabama Dep’t of Environmental Management, 587 So. 2d 1210, 1212 (Ala. Civ. App. 1991)

[ii] Hughes v. District of Columbia Dep’t of Employment Services, 498 A.2d 567, 570 (D.C. 1985)

[iii] Personnel Bd. v. Heck, 725 S.W.2d 13, 17 (Ky. Ct. App. 1986)

[iv] Franklin v. Ark. Dep’t of Human Servs., 319 Ark. 468, 472 (Ark. 1995)

[v] Keyes v. N.C. DOT, 684 S.E.2d 65, 69 (N.C. Ct. App. 2009)

[vi] Reisner v. Board of Trustees, 203 N.W.2d 812, 815 (Iowa 1973)

[vii] Soo Line R.R. v. Iowa Dep’t of Transp., 521 N.W.2d 685, 688 (Iowa 1994)

[viii] State v. Parks, 290 N.C. 748, 751 (N.C. 1976)

[ix] Fisher v. Iowa Bd. of Optometry Examiners, 478 N.W.2d 609, 612 (Iowa 1991)

[x] Hughes, 498 A.2d at 570.

[xi] Wallace v. Department of Air Force, 879 F.2d 829, 832 (Fed. Cir. 1989)

[xii] King County v. Wash. State Boundary Review Bd., 122 Wn.2d 648, 670 (Wash. 1993)

[xiii] Farley v. Town of Washburn, 1997 ME 218, 5 (Me. 1997)

[xiv] Pan American Petroleum Corp, 268 F.2d at 828

[xv] Model State Administrative Procedure Act (1981 ed) § 5-112.