Ms. Vickie J. Williams

4332 S. Greystone Lane

Spokane, WA 99223

RE:     RCW 34.05.350 Petition Requesting Immediate Repeal of October 27, 2005 Order Extending Emergency Rule WSR 05-14-081 (Amending WAC 388-865-0201)

Dear Ms. Williams:

I am responding to your petition under RCW 34.05.350(3) requesting repeal of an emergency rule adopted by the Department of Social and Health Services (DSHS) on October 27, 2005. The DSHS emergency rule, as contained in WSR 05-22-041, amends section 388-865-0201 of the Washington Administrative Code (WAC).

WAC 388-865-0201 is the rule that outlines the methodologies that DSHS will use to distribute appropriated funds among the fourteen community mental health Regional Support Networks. The rule outlines two different funding distribution methodologies: one for appropriated community mental health Medicaid funds, and one for appropriated state-only community mental health funds.

In your petition, you request repeal of only that portion of the emergency rule that changes the distribution formula for the state-only community mental health funds. You indicate that you are not requesting a repeal of the portion of the emergency rule that changes the distribution formula for the Medicaid community mental health funds.

You cite two grounds for the partial repeal that you request. First, you argue that DSHS has not met the good cause standard that allows an agency to dispense with the regular permanent rule-making process outlined in the Administrative Procedures Act. RCW 34.05.350(1) allows agencies to dispense with the regular state rule-making process and invoke emergency rule-making if one or both of two allowable good cause standards are met. The two allowable good cause standards for emergency rule-making are as follows:

     a)     That immediate adoption, amendment, or repeal of a rule is necessary for the preservation of the public health, safety, or general welfare, and that observing the time requirements of notice and opportunity to comment upon adoption of a permanent rule would be contrary to the public interest; or

     b)     That state or federal law or federal rule or a federal deadline for state receipt of federal funds requires immediate adoption of a rule.

On the CR-103 form for these rules, DSHS indicated that it was necessary to adopt a new state-only distribution formula in order to be in compliance with ESSB 6090 Sec. 204 (1)(b), the state operating budget law passed earlier this year. The section of the budget law cited by DSHS reads as follows:

          $103,400,000 of the general fund -- state appropriation for fiscal year 2006 and $103,400,000 of the general fund -- state appropriation for fiscal year 2007 are provided solely for persons and services not covered by the Medicaid program. The department shall distribute these amounts among the regional support networks according to a formula that, consistent with RCW 71.24.035(13), assures continuation of fiscal year 2003 levels of nonmedicaid service in each regional support network area for the following service categories in the following priority order: (i) Crisis and commitment services; (ii) community inpatient services; and (iii) residential care services, including personal care and emergency housing assistance. The remaining amounts shall be distributed based upon a formula that incorporates each regional support network's percentage of the state's population. In consultation with regional support networks and other interested groups, the department shall report to the joint legislative and executive task force by September 2006 on options for modifying the allocation formula to assure equitable statewide access to essential nonmedicaid services.

It seems clear to me that the Legislature's intent was that DSHS should not use the methodology for distributing state-only community mental health funds outlined in the pre-emergency rule WAC 388-865-0201. Further, this proviso did not specify a delayed implementation date that would have allowed DSHS to pursue development of a new funding methodology rule within the regular rule-making timeframes. So it may be assumed that the Legislature intended a new methodology to take effect with the implementation of the new budget. I therefore believe that DSHS' position that adoption of a new rule on an emergency basis was indeed with good cause and necessary for it to be in compliance with the state budget law.

Second, you argue that DSHS has not met the criterion that allows an identical emergency rule to be adopted sequentially without implementation of the regular permanent rule-making process. You point out that DSHS initially adopted this emergency rule as WSR 05-14-081, effective on July 1, 2005, and then subsequently adopted the same rule again as WSR 05-22-041 on October 27, 2005. RCW 34.05.350(2) reads, in part, as follows:

          Identical or substantially similar emergency rules may not be adopted in sequence unless conditions have changed or the agency has filed notice of its intent to adopt the rule as a permanent rule, and is actively undertaking the appropriate procedures to adopt the rule as a permanent rule.

You indicate that you do not believe that conditions have changed, or that DSHS has filed any notice of intent to adopt the rule as permanent, or that DSHS is actively undertaking the required procedures to adopt the rule as permanent.

On its CR-103 Rule-Making Order form for this emergency rule, DSHS indicated "The department has filed a preproposal statement of inquiry as WSR 05-14-072 and anticipates filing a proposed rule-making notice (CR-102) in December of 2005." Additionally, in telephone conversations with my staff, DSHS Mental Health Division staff have indicated that, in accordance with DSHS internal rule development guidelines, they are developing a cost-benefit analysis for the proposed rule which will be shared with concerned stakeholders informally prior to the filing of a formal CR-102 so that stakeholders will have sufficient information with which to comment on the CR-102. The DSHS Mental Health Division staff indicate that the development of the cost-benefit analysis is still in progress as it is necessary to get information from the Regional Support Networks regarding allocation and contracting decisions and the consequent costs and benefits to the different components of the existing mental health service system. It appears to me that DSHS has met the requirements of 34.05.350(2).

As mentioned previously, you requested repeal of only those portions of the emergency rule that affect the state-only community mental health funding distribution formula. I do not think partial repeal is an option. RCW 35.05.350 does not in any way make provision for partial repeals.

Upon final analysis, I cannot agree to your request to repeal emergency rule WSR 05-22-041 adopted on October 27, 2005. It is my belief that the good cause standard for adoption of a rule on an emergency basis was met and that DSHS is taking steps toward adopting the rule on a permanent basis.

Thank you for your efforts to ensure that our state's rule-making practices are completed in a manner that does not abuse agency discretion, and is not arbitrary or capricious.

Sincerely,

Christine O. Gregoire

Governor

     Reviser's note: The typographical errors in the above material occurred in the copy filed by the Office of the Governor and appear in the Register pursuant to the requirements of RCW 34.08.040.