Original Notice.

     Preproposal statement of inquiry was filed as WSR 10-23-044.

     Title of Rule and Other Identifying Information: 1. Hearings procedures (chapter 326-08 WAC), establishing a new, less time consuming and less costly process for appealing office decisions regarding decertification, denial of certification, and the assessment of penalties under chapter 39.19 RCW.

     2. General provisions (chapter 326-02 WAC), amending sections of this chapter for consistency with the new appeals process.

     3. Certification (chapter 326-20 WAC), amending sections of this chapter for consistency with the new appeals process.

     Hearing Location(s): Office of Minority and Women's Business Enterprises (OMWBE), 406 Water Street S.W., Olympia, WA 98504, on February 8, 2011, at 1:30 p.m.

     Date of Intended Adoption: February 15, 2011.

     Submit Written Comments to: Vicky Schiantarelli, Rules Coordinator, 406 Water Street S.W., Olympia, WA 98504, e-mail vickys@omwbe.wa.gov, fax (360) 586-7079, by February 8, 2011.

     Assistance for Persons with Disabilities: Contact Tammi Hazlitt, (360) 753-9691.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The purpose of the proposal is to reduce the time and unnecessary steps required of the office and the costs to the appellants in the appeal process under chapter 326-08 WAC. Changes in other chapters are to correct references to chapter 326-08 WAC and to make other nonsubstantive edits.

     Reasons Supporting Proposal: The present process involves duplicative and multiple steps that result in additional costs to both the agency and the appellants. Further, the agency is unable to assure a timely resolution of appeals because the process requires the involvement of another agency and the scheduling of hearings depends on the availability of that agency's staff. The proposed process brings the process in-house while assuring that the reviewers have not participated in the process leading to the office's initial determination. The appellant's right to a full adjudicative proceeding is preserved in the new process.

     Statutory Authority for Adoption: RCW 39.19.030.

     Statute Being Implemented: Chapter 39.19 RCW.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: OMWBE, governmental.

     Name of Agency Personnel Responsible for Drafting: Juan Huey-Ray, Olympia, (360) 704-1197; Implementation: Bernard Johnston, Olympia, (360) 753-9679; and Enforcement: Cathy Canorro, Olympia, (360) 704-1187.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. These procedural changes in the rules are designed to reduce rather than increase costs to small businesses.

     A cost-benefit analysis is not required under RCW 34.05.328. The affected rules govern the appeal process when the office has made a decision adverse to a firm's interest. The proposed changes eliminate unnecessary steps in that process.

January 5, 2011

Cathy Canorro

Acting Director

OTS-3835.2

NEW SECTION
WAC 326-08-011   Brief adjudicative proceedings.   (1) The Administrative Procedure Act provides for brief adjudicative proceedings in RCW 34.05.482 through 34.05.494. The office will conduct brief adjudicative proceedings where it does not violate any provision of law and where protection of the public interest does not require the office to give notice and an opportunity to participate to persons other than the parties. If an adjudicative proceeding is requested, a brief adjudicative proceeding will be conducted where the matter involves one or more of the following:

     (a) A denial of certification under WAC 326-20-171; or

     (b) A decertification of a firm under WAC 326-20-172; or

     (c) An assessment of a penalty under WAC 326-02-050.

     (2) If an adjudicative proceeding is requested in a matter not listed in subsection (1) of this section, a brief adjudicative proceeding may be conducted at the discretion of the presiding officer when it appears that:

     (a) Only legal issues exist; or

     (b) Both parties have agreed to a brief adjudicative proceeding; and

     (c) The protection of the public interest does not require that the office provide notice and opportunity to participate to persons other than the parties.

[]

     (2) Brief adjudicative proceedings shall be conducted by a presiding officer for brief adjudicative proceedings designated by the director. The presiding officer for brief adjudicative proceedings shall have agency expertise in the subject matter but shall not have personally participated in the decision to issue the initiating document.

     (3) Accommodations.

     (a) If limited English-speaking or hearing impaired parties will be involved in a brief adjudicative proceeding and need an interpreter, an interpreter will be provided at no cost to the party or witness.

     (b) If disabled parties or witnesses will be involved in a proceeding and need accommodation of facilities or services, the office will provide reasonable accommodation.

     (c) Any party or witness requiring an interpreter or accommodation shall notify the office at the time of the request for a brief adjudicative proceeding.

     (4) The parties or their representatives may present written documentation. The presiding officer for brief adjudicative proceedings shall designate the date by which written documents must be submitted by the parties.

     (5) The presiding officer for brief adjudicative proceedings may, in his or her discretion, entertain oral argument from the parties or their representatives.

     (6) No witnesses may appear to testify.

     (7) In addition to the record, the presiding officer for brief adjudicative proceedings may employ agency expertise as a basis for decision.

     (8) The presiding officer for brief adjudicative proceedings shall not issue an oral order. Within ten days of the final date for submission of materials or oral argument, if any, the presiding officer for brief adjudicative proceedings shall enter an initial order.

[]

     (a) A petition for review of an initial order is served by certified mail, registered mail, or personal service upon the office, and copies shall be served on all parties. A petition for review of an initial order shall contain an explanation of the party's view of the matter and a statement of reasons why the initial order is incorrect; or

     (b) On its own initiative, the office determines to review the matter and, within twenty-one days of service of the initial order, provides notice to the parties of the date by which a determination shall be made.

     (2) If review is taken under subsection (1) of this section, each party shall be provided an opportunity to state its view of the matter, and a written order containing findings of fact, conclusions of law and order shall be entered and served upon the parties within twenty days of service of the initial order or the request for review, whichever is later.

     (3) A request for review is deemed to be denied if the office does not act on the request within twenty days after the request is submitted.

     (4) If administrative review is taken under subsection (1) of this section, the presiding officer may convert the matter to a full adjudicative proceeding.

     (5) The director or his or her designee shall act as the reviewing officer and shall conduct a review of an initial order upon the timely service of a petition for review or upon his or her own motion. The reviewing officer shall adopt, modify, or reject the initial order; but the reviewing officer shall not take any action on review less favorable to any party without giving that party notice and opportunity to explain the party's view of the matter.

     (6) The order on review shall be in writing, shall include a brief statement of the reasons for the decision, and shall be entered within twenty days after the date of the initial order or the petition for review, whichever is later. The order shall include a description of any further available administrative review or, if none is available, a notice that judicial review may be available.

     (7) The record in a brief adjudicative proceeding shall consist of any documents regarding the matters that were considered or prepared by the presiding officer for the brief adjudicative proceedings and/or by the reviewing officer for any review.

[]

     (3) The request must be filed and served on the office within twenty calendar days from the service of the notice to decertify or deny certification, or assess penalties. Service must be made pursuant to WAC 326-08-070.)) At the office's discretion or a presiding officer's determination that to protect the public interest or if the interest involved in the controversy warrants the use of more formal hearing procedures, the office or presiding officer can convert a brief adjudicative proceeding to a full adjudicative proceeding.

[Statutory Authority: RCW 39.19.030(7). 92-15-077, § 326-08-015, filed 7/16/92, effective 8/16/92. Statutory Authority: Chapter 39.19 RCW. 85-14-101 (Order 85-6), § 326-08-015, filed 7/2/85.]

     (2) ((An)) A full adjudicative proceeding commences when the office notifies a party that a prehearing conference, hearing, or other stage of an adjudicative proceeding will be conducted.

     (3) Within thirty days after receipt of the request for an adjudicative proceeding, the office shall examine the request, notify the requestor of any obvious errors or omissions, request any additional information the office wishes to obtain and is permitted by law to require, and notify the requestor of the name, mailing address, and telephone number of the office that may be contacted regarding the request.

[Statutory Authority: RCW 39.19.030(7). 92-15-077, § 326-08-016, filed 7/16/92, effective 8/16/92.]

[Statutory Authority: RCW 39.19.030(7). 92-15-077, § 326-08-018, filed 7/16/92, effective 8/16/92.]

[Statutory Authority: RCW 39.19.030(7). 92-15-077, § 326-08-020, filed 7/16/92, effective 8/16/92. Statutory Authority: Chapter 39.19 RCW. 84-09-002 (Order 84-5), § 326-08-020, filed 4/5/84.]

     (2) The owner of the majority interest in a certified business is a necessary party and shall appear on behalf of the business.

     (3) A former employee of the office shall not, at any time after severing his or her employment with the office, appear as a representative or expert witness on behalf of a petitioner in a matter in which he or she previously took an active part as a representative of the office, except with the written permission of the director.

[Statutory Authority: RCW 39.19.030(7). 92-15-077, § 326-08-035, filed 7/16/92, effective 8/16/92.]

     (2) Time. All parties shall be served with notice not less than twenty days before the hearing.

     (3) The notice shall include:

     (a) The names and mailing addresses of all parties to whom notice is being given and, if known, the names and addresses of their representatives;

     (b) The name of the proceeding;

     (c) The name, official title, mailing address, and telephone number of the presiding officer, if known;

     (d) A statement of the time, place, and nature of the proceeding;

     (e) A statement of the legal authority and jurisdiction under which the hearing is to be held;

     (f) A reference to the particular sections of the statutes and rules involved;

     (g) A short and plain statement of the matters asserted by the agency; and

     (h) A statement that a party who fails to attend or participate in a hearing or other stage of an adjudicative proceeding may be held in default in accordance with WAC 326-08-105.

[Statutory Authority: RCW 39.19.030(7). 92-15-077, § 326-08-050, filed 7/16/92, effective 8/16/92. Statutory Authority: Chapter 39.19 RCW. 84-09-002 (Order 84-5), § 326-08-050, filed 4/5/84.]

     (2) The initial order shall include a statement of findings and conclusions and the reasons and basis on all the material issues of fact, law, or discretion presented on the record, including the remedy or sanction. Any findings based substantially on credibility of evidence or demeanor of witnesses shall be so identified. Findings set forth in language that is essentially a repetition or paraphrase of the relevant provision of law shall be accompanied by a concise and explicit statement of the underlying evidence of record to support the findings. The initial order shall also include a statement of the available procedures and time limits for seeking reconsideration or other administrative relief. An initial order shall include a statement of any circumstances under which the initial order, without further notice, may become a final order.

     (3) Findings of fact shall be based exclusively on the evidence of record in the adjudicative proceeding and on matters officially noticed in that proceeding. Findings shall be based on the kind of evidence on which reasonably prudent persons are accustomed to rely in the conduct of their affairs. Findings may be based on such evidence even if it would be inadmissible in a civil trial. However, the administrative law judge shall not base a finding exclusively on such inadmissible evidence unless the administrative law judge determines that doing so would not unduly abridge the parties' opportunities to confront witnesses and rebut evidence. The basis for this determination shall appear in the order.

     (4) Where it bears on the issues presented, the experience, technical competency, and specialized knowledge of the office may be used in the evaluation of evidence.

     (5) If an administrative law judge becomes unavailable for any reason before the entry of the order, a substitute administrative law judge shall be appointed by the office of administrative hearings. The substitute administrative law judge shall use any existing record and may conduct any further proceedings appropriate in the interests of justice. Any action taken by a duly appointed administrative law judge for an unavailable administrative law judge is as effective as if taken by the unavailable administrative law judge.

     (6) The administrative law judge shall cause to be served copies of the order on all parties.

[Statutory Authority: RCW 39.19.030(7). 92-15-077, § 326-08-110, filed 7/16/92, effective 8/16/92. Statutory Authority: Chapter 39.19 RCW. 84-09-002 (Order 84-5), § 326-08-110, filed 4/5/84.]

     (2) The objections to the initial order shall be filed with the director within twenty days of the date of service of the initial order. Copies of the objections to the initial order shall be served upon all other parties.

     (3) The objections to the initial order shall specify the portions of the initial order to which objection is taken and shall refer to the evidence of the record which is relied upon to support each objection.

     (4) Any party may file a reply to the objections to the initial order. The reply shall be filed with the director within ten days of the date of service of the objections to the initial order and copies of the reply shall be served upon all other parties.

[Statutory Authority: RCW 39.19.030(7). 92-15-077, § 326-08-120, filed 7/16/92, effective 8/16/92. Statutory Authority: Chapter 39.19 RCW. 84-09-002 (Order 84-5), § 326-08-120, filed 4/5/84.]

OTS-3836.1

AMENDATORY SECTION(Amending WSR 04-13-032, filed 6/9/04, effective 7/10/04)

WAC 326-02-034   Political subdivision fees.   (1) It is the intent of the state legislature that political subdivisions within the state of Washington contribute to the costs of the state's certification program for minority and women's business enterprises. For the purpose of this section, political subdivisions means any city, town, county, special purpose district, public corporation created by the state, municipal corporation, or quasi-municipal corporation within the state of Washington that administers a policy or program, or funds from whatever source, which requires or encourages the use of certified minority, women, or disadvantaged business enterprises.

     (2) Effective July 1, 1993, the office shall allocate a portion of its biennial operational costs to political subdivisions. Each political subdivision shall pay a proportionate share of this allocation based on the formula set forth in subsection (4) of this section.

     (3)(a) The fee charged to each political subdivision for the period, July 1, 2003 - June 30, 2005, and subsequent ((bienniums)) biennia unless revised by rule, shall be based on the annual average of expenditures for capital projects, supplies and other services for fiscal years 1999-2001 as reflected in the state auditor's on-line BARS report, when available. Data on the annual average of capital expenditures by the transit districts during the relevant period will be taken from a report produced by the Washington state department of transportation entitled, 2001 Summary of Public Transportation Systems in Washington State. Data on the annual average of expenditures by school districts and educational service districts will be obtained from the office of the superintendent of public instruction. The basis for the fee to be charged to the Housing Authorities is the number of low-income units owned or managed during the last fiscal year as reported to the U.S. Department of Housing and Urban Development. The maximum amount charged to any political subdivision shall not exceed $40,000.00 in a single biennium.

     (b) For the biennium beginning July 1, 2005, and subsequent biennia, similar data reflecting expenditures during the previous biennium or in the case of Housing Authorities, the average number of low-income units owned or managed during the previous biennium will be used to calculate the fee charged to each political subdivision.

     (c) When insufficient data is available to calculate the average expenditures from the sources listed in (a) of this subsection, the office may either use other sources for the data or estimate the amount of relevant expenditures. In either event, the office shall allow the affected political subdivisions to offer alternative data on which to base its calculation. New political subdivisions will be charged based on the office's estimate of the annual average of relevant expenditures by the entity for the current biennium.

     (d) After paying the fee, the political subdivisions may challenge the office about the accuracy of the data used to calculate the fee under (b) of this subsection. Upon verification by the state auditor, the fee may be revised and refund issued or additional fee assessed.

     (e) Following the initial billing in each biennium, which will include the total amount due for the biennium beginning July 1, 2003, the office will mail invoices on a quarterly basis one month before the start of each quarter for the outstanding balance at that time. Payments shall be due within thirty calendar days after receipt of the invoice.

     (4)(a) The following formula will be used to calculate the fees:

     For the annual average of expenditures ranging from $1m - $50.99m, a sliding scale as follows: ($1m - $10m = $100; $11m - $20m = $150; $21m - $30m = $200; $31m - $40m = $250; $41m - $50m = $300). For $51m - $99.99m, the formula will be the annual average of expenditures multiplied by .0001. At $100m, a sliding scale resumes; beginning at $10k and increasing in increments of $5k for each additional $100m in the annual average of expenditures; e.g., $200m - $299m = $15k; $300m - $399m = $20,000; etc. Fees will not be charged to any political subdivision with an average annual expenditure totaling less than $1m during the period under review.

     (b) The fee to Housing Authorities will be $1 per low-income unit owned or managed during the last fiscal year.

     (5) The office shall develop a policy and procedure for collection of any invoice that is not paid within thirty calendar days. The office shall distribute the collection policy and procedure to all political subdivisions along with the initial and quarterly billings.

[Statutory Authority: RCW 39.19.220. 04-13-032, § 326-02-034, filed 6/9/04, effective 7/10/04. Statutory Authority: RCW 39.19.030(17). 98-13-075, § 326-02-034, filed 6/15/98, effective 7/16/98. Statutory Authority: RCW 39.19.030(7). 97-17-045, § 326-02-034, filed 8/14/97, effective 9/15/97. Statutory Authority: RCW 39.19.220. 94-11-113, § 326-02-034, filed 5/18/94, effective 6/18/94.]

     (2) Penalties which may be imposed include one or more of the following:

     (a) Withhold payment until the violation is remedied;

     (b) Debarment from contracting with the state for up to one year; debarment for up to three years may be imposed for willful repeated violations, exceeding a single violation;

     (c) Suspension of the contract;

     (d) Termination of the contract;

     (e) Immediate suspension of the certification of a certified firm;

     (f) Payment of civil penalties of up to five thousand dollars for each violation or up to ten percent of the amount of the contract; or

     (g) Decertification or denial of certification.

     (3) Penalties may be imposed on one or more individuals, partnerships, associations, organizations, corporations, cooperatives, legal representatives, trustees and receivers, or any group of persons.

     (4) Penalties shall be imposed by the office giving a written notice which is either served personally or by certified mail, return receipt requested, to the person or business incurring the penalty. Except for suspension of certification, which is covered by WAC 326-02-090, the notice of the civil penalty shall be a final order of the office unless, within fifteen days after the notice is served, the person incurring the penalty appeals the penalty by filing a notice of appeal with the office.

     (5) If a notice of appeal is filed in a timely manner, the office shall conduct a ((show cause review)) brief adjudicative proceeding as outlined in ((WAC 326-20-171 or an adjudicative proceeding shall be conducted on behalf of the office by the office of administrative hearings in accordance with the provisions in)) chapter 326-08 WAC.

[Statutory Authority: RCW 39.19.030. 94-11-117, § 326-02-050, filed 5/18/94, effective 6/18/94. Statutory Authority: RCW 39.19.030(7). 92-11-007, § 326-02-050, filed 5/11/92, effective 6/11/92. Statutory Authority: Chapter 39.19 RCW. 88-22-017 (Order 88-9), § 326-02-050, filed 10/24/88.]

     (2) After the hearing, the ((administrative law judge)) presiding officer may recommend that:

     (a) Suspension of certification remain in effect for up to one year;

     (b) The suspension be removed; or

     (c) That the business be decertified.

[Statutory Authority: RCW 39.19.030(7). 92-11-007, § 326-02-090, filed 5/11/92, effective 6/11/92. Statutory Authority: Chapter 39.19 RCW. 88-22-017 (Order 88-9), § 326-02-090, filed 10/24/88.]

OTS-3837.2

AMENDATORY SECTION(Amending WSR 04-08-093, filed 4/6/04, effective 5/7/04)

WAC 326-20-120   Submittal of forms.   Application forms may be submitted by mail to the office at the following address:

     The minority, woman, or socially and economically disadvantaged owner shall be responsible for ensuring that the form is complete and accurate and is properly delivered to the office. The applicant should keep a copy of the completed form and all documents submitted with the form for its own reference.

[Statutory Authority: RCW 39.19.030 and 39.19.120. 04-08-093, § 326-20-120, filed 4/6/04, effective 5/7/04. Statutory Authority: RCW 39.19.030. 94-11-114, § 326-20-120, filed 5/18/94, effective 6/18/94. Statutory Authority: RCW 39.19.030(7). 92-11-007, § 326-20-120, filed 5/11/92, effective 6/11/92. Statutory Authority: Chapter 39.19 RCW. 85-14-101 (Order 85-6), § 326-20-120, filed 7/2/85. Statutory Authority: 1983 c 120 § 3(7). 83-22-045 (Order 83-3), § 326-20-120, filed 10/28/83.]

     (b) Submit a written request for an adjudicative proceeding, pursuant to WAC 326-08-015.)) may request a brief adjudicative proceeding under WAC 326-08-012, Application for and conduct of brief adjudicative proceedings. The written request for a review of the decision must contain the information specified in subsection (2) of this section.

     (2) A request for ((show cause review)) brief adjudicative proceeding must set forth in detail the reasons the applicant believes the office's decision to deny certification is in error and include any additional information and documentation the applicant has to offer.

     (3) When an applicant requests a ((show cause review)) brief adjudicative proceeding, the finality of the denial for appeal purposes is stayed until the ((show cause review)) brief adjudicative proceeding is complete.

     (4) Upon receipt of a timely request for a ((show cause review)) brief adjudicative proceeding the office will review any additional information provided by the applicant, and may conduct further investigation, and/or schedule a meeting with the applicant.

     (5) The office will notify the applicant in writing of its decision either to affirm the denial or to grant certification. ((This notification is considered final for purposes of WAC 326-08-015.))

[Statutory Authority: RCW 39.19.030(7). 92-11-007, § 326-20-171, filed 5/11/92, effective 6/11/92. Statutory Authority: Chapter 39.19 RCW. 88-09-047 (Order 88-5), § 326-20-171, filed 4/18/88; 86-17-018 (Order 86-2), § 326-20-171, filed 8/11/86.]

     (2) When the office has determined that a certified business (a) no longer meets the certification criteria or (b) failed to supply additional information requested by the office in a timely manner, or (c) failed to give timely notice of changes, the office will notify the business in writing of its intent to decertify the business.

     (3) When a certified business notifies the office that it is no longer in business, has sold the business, or no longer wishes to remain certified, or when the certified business fails or refuses to return the renewal of certification form, the office will notify the business in writing of its decertification. ((This notification is final for purposes of appeal pursuant to WAC 326-08-015.))

     (4) Upon receipt of ((an "intent to decertify")) a notice of decertification letter, the business ((must either:

     (a) Submit a written request for a show cause review by the director which meets the criteria set out in (c) of this subsection; or

     (b) Submit a written request for an adjudicative proceeding pursuant to WAC 326-08-015.

     (c))) may request a brief adjudicative proceeding under WAC 326-08-012, Application for and conduct of brief adjudicative proceedings.

     The request for ((show cause review)) brief adjudicative proceeding must be received by the office within twenty calendar days of receipt of the notice of ((intent to decertify)) decertification to the firm. The request for a ((show cause review)) brief adjudicative proceeding must set forth the reasons the business believes the office's decision to decertify is in error and must include any additional information and documentation the business has to offer.

     (5) If the office has not received a request for a ((show cause review)) brief adjudicative proceeding nor any additional written documentation within twenty days of receipt of the (("intent to decertify")) notice of decertification letter, the decision to decertify becomes final, with no further rights to contest or appeal the decision.

     (6) Upon receipt of the request for a ((show cause review)) brief adjudicative proceeding, the office will review the request and any additional information provided and may conduct further investigation and/or request that the owner(s) attend ((a show cause meeting)) the brief adjudicative proceeding. The office will thereafter notify the business in writing of its decision to either affirm or reverse ((its intent to decertify the business)) the firm's decertification. ((This decertification decision is considered final for purposes of WAC 326-08-015.

     (7) If a show cause review is requested and the decision to decertify is affirmed, any aggrieved party may request an adjudicative proceeding pursuant to WAC 326-08-015. The request must be made in writing and must be made within twenty days of receipt of the office's decision affirming the decertification decision.

     (8))) (7) If the decision to decertify is appealed, the business shall remain certified until:

     (a) The time provided by WAC ((326-08-015)) 326-08-012 for appeal of the decision to decertify has expired without action by the business; or

     (b) The entry of a final decertification order issued by the director pursuant to WAC 326-08-130.

     (((9))) (8) Decertification shall be effective immediately upon the occurrence of (a) or (b) of this subsection, and will not be stayed pending review by any court.

[Statutory Authority: RCW 39.19.030(7). 92-11-007, § 326-20-172, filed 5/11/92, effective 6/11/92. Statutory Authority: Chapter 39.19 RCW. 88-09-047 (Order 88-5), § 326-20-172, filed 4/18/88; 86-17-018 (Order 86-2), § 326-20-172, filed 8/11/86.]

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