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AN ACT Relating to administrative procedure; amending RCW 34.05.461, 34.05.467, 34.05.470, 34.05.510, 34.05.514, 34.05.518, 34.05.530, 34.05.542, 34.05.546, 34.05.550, 34.05.554, 34.05.562, 34.05.566, 34.05.570, 34.05.574, and 34.12.040; creating a new section; providing an effective date; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 34.05.461 and 1989 c 175 s 19 are each amended to read as follows:

(1) Except as provided in subsection (2) of this section:

(a) If the presiding officer is the agency head or one or more members of the agency head, the presiding officer may enter an initial order if further review is available within the agency, or a final order if further review is not available;

(b) If the presiding officer is a person designated by the agency to make the final decision and enter the final order, the presiding officer shall enter a final order; and

(c) If the presiding officer is one or more administrative law judges, the presiding officer shall enter ((~~an initial~~)) a final order. The agency or a person who has standing to obtain judicial review of an agency action may appeal the judge's final order as provided in RCW 34.05.570.

(2) With respect to agencies exempt from chapter 34.12 RCW or an institution of higher education, the presiding officer shall transmit a full and complete record of the proceedings, including such comments upon demeanor of witnesses as the presiding officer deems relevant, to each agency official who is to enter a final or initial order after considering the record and evidence so transmitted.

(3) Initial and final orders shall include a statement of findings and conclusions, and the reasons and basis therefor, on all the material issues of fact, law, or discretion presented on the record, including the remedy or sanction and, if applicable, the action taken on a petition for a stay of effectiveness. 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 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.

(4) 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 presiding officer shall not base a finding exclusively on such inadmissible evidence unless the presiding officer 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.

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

(6) If a person serving or designated to serve as presiding officer becomes unavailable for any reason before entry of the order, a substitute presiding officer shall be appointed as provided in RCW 34.05.425. The substitute presiding officer shall use any existing record and may conduct any further proceedings appropriate in the interests of justice.

(7) The presiding officer may allow the parties a designated time after conclusion of the hearing for the submission of memos, briefs, or proposed findings.

(8) Initial or final orders shall be served in writing within ninety days after conclusion of the hearing or after submission of memos, briefs, or proposed findings in accordance with subsection (7) of this section unless this period is waived or extended for good cause shown.

(9) The presiding officer shall cause copies of the order to be served on each party and the agency.

Sec. 2. RCW 34.05.467 and 1988 c 288 s 420 are each amended to read as follows:

A party may submit to the presiding or reviewing officer, as is appropriate to the stage of the proceeding, a petition for stay of effectiveness of a final order within ten days of its service unless otherwise provided by statute or stated in the final order. If an administrative law judge is the presiding officer, the judge shall dispose of the petition for a stay. In other cases, disposition of the petition for stay shall be made by the presiding officer, reviewing officer, or agency head as provided by agency rule. Disposition may be made either before or after the effective date of the final order. Disposition denying a stay is not subject to judicial review.

Sec. 3. RCW 34.05.470 and 1989 c 175 s 21 are each amended to read as follows:

(1) Within ten days of the service of a final order, any party may file a petition for reconsideration, stating the specific grounds upon which relief is requested. The place of filing and other procedures, if any, shall be specified by agency rule.

(2) No petition for reconsideration may stay the effectiveness of an order.

(3) If a petition for reconsideration is timely filed, and the petitioner has complied with the agency's procedural rules for reconsideration, if any, the time for filing a petition for judicial review does not commence until the agency or administrative law judge disposes of the petition for reconsideration. The agency or administrative law judge is deemed to have denied the petition for reconsideration if, within twenty days from the date the petition is filed, the agency or administrative law judge does not either: (a) Dispose of the petition; or (b) serve the parties with a written notice specifying the date by which it will act on the petition.

(4) Unless the petition for reconsideration is deemed denied under subsection (3) of this section, the petition shall be disposed of by the same person or persons who entered the order, if reasonably available. The disposition shall be in the form of a written order denying the petition, granting the petition and dissolving or modifying the final order, or granting the petition and setting the matter for further hearing.

(5) The filing of a petition for reconsideration is not a prerequisite for seeking judicial review. An order denying reconsideration, or a notice provided for in subsection (3)(b) of this section is not subject to judicial review.

Sec. 4. RCW 34.05.510 and 1988 c 288 s 501 are each amended to read as follows:

This chapter establishes the exclusive means of judicial review of agency action or a final order of an administrative law judge, except:

(1) The provisions of this chapter for judicial review do not apply to litigation in which the sole issue is a claim for money damages or compensation and the agency whose action is at issue does not have statutory authority to determine the claim.

(2) Ancillary procedural matters before the reviewing court, including intervention, class actions, consolidation, joinder, severance, transfer, protective orders, and other relief from disclosure of privileged or confidential material, are governed, to the extent not inconsistent with this chapter, by court rule.

(3) To the extent that de novo review or jury trial review of agency action is expressly authorized by provision of law.

Sec. 5. RCW 34.05.514 and 1994 c 257 s 23 are each amended to read as follows:

(1) Except as provided in subsection (2) of this section ((~~and RCW 36.70A.300(3)~~)), proceedings for review under this chapter shall be instituted by filing a petition in the superior court, at the petitioner's option, for (a) ((~~Thurston county, (b)~~)) the county of the petitioner's residence or principal place of business, or ((~~(c)~~)) (b) in any county where the property owned by the petitioner and affected by the contested decision is located.

(2) For proceedings involving institutions of higher education, the petition shall be filed either in the county in which the principal office of the institution involved is located or in the county of a branch campus if the action involves such branch.

(3) A petition for declaratory judgment challenging the validity of an agency's rule may be addressed to the superior court of Thurston county to the extent authorized in RCW 34.05.554.

Sec. 6. RCW 34.05.518 and 1988 c 288 s 503 are each amended to read as follows:

The final decision of an administrative agency or an administrative law judge in an adjudicative proceeding under this chapter may be directly reviewed by the court of appeals upon certification by the superior court pursuant to this section. An application for direct review must be filed with the superior court within thirty days of the filing of the petition for review in superior court. The superior court may certify a case for direct review only if the judicial review is limited to the record of the agency proceeding and the court finds that:

(1) Fundamental and urgent issues affecting the future administrative process or the public interest are involved which require a prompt determination;

(2) Delay in obtaining a final and prompt determination of such issues would be detrimental to any party or the public interest;

(3) An appeal to the court of appeals would be likely regardless of the determination in superior court; and

(4) The appellate court's determination in the proceeding would have significant precedential value.

Sec. 7. RCW 34.05.530 and 1988 c 288 s 506 are each amended to read as follows:

A person has standing to obtain judicial review of agency action or an administrative law judge's final order if that person is aggrieved or adversely affected by the agency action or administrative law judge's final order. A person is aggrieved or adversely affected within the meaning of this section only when all three of the following conditions are present:

(1) The agency action or administrative law judge's final order has prejudiced or is likely to prejudice that person;

(2) That person's asserted interests are among those that the agency was required to consider when it engaged in the agency action challenged or are among those that the administrative law judge was required to consider when the judge entered the final order; and

(3) A judgment in favor of that person would substantially eliminate or redress the prejudice to that person caused or likely to be caused by the agency action or the administrative law judge's final order.

Sec. 8. RCW 34.05.542 and 1988 c 288 s 509 are each amended to read as follows:

Subject to other requirements of this chapter or of another statute:

(1) A person may file a petition for judicial review of a rule ((~~may be filed~~)) at any time, except as limited by RCW 34.05.375.

(2) A person shall file a petition for judicial review of an agency or administrative law judge's final order ((~~shall be filed~~)) with the court and ((~~served~~)) serve the petition on the agency, the office of the attorney general, and all parties of record within thirty days after service of the final order. An agency that files a petition for review of an administrative law judge's final order must file the petition with the court and serve the petition on all parties of record within thirty days of the final order.

(3) A petition for judicial review of agency action other than the adoption of a rule or the entry of an order is not timely unless filed with the court and served on the agency, the office of the attorney general, and all other parties of record within thirty days after the agency action, but the time is extended during any period that the petitioner did not know and was under no duty to discover or could not reasonably have discovered that the agency had taken the action or that the agency action had a sufficient effect to confer standing upon the petitioner to obtain judicial review under this chapter.

(4) Service of the petition on the agency shall be by delivery of a copy of the petition to the office of the director, or other chief administrative officer or chairperson of the agency, at the principal office of the agency. Service of a copy by mail upon the other parties of record and the office of the attorney general shall be deemed complete upon deposit in the United States mail, as evidenced by the postmark.

(5) Failure to timely serve a petition on the office of the attorney general is not grounds for dismissal of the petition.

Sec. 9. RCW 34.05.546 and 1988 c 288 s 510 are each amended to read as follows:

(1) A person's petition for review must set forth:

((~~(1)~~)) (a) The name and mailing address of the petitioner;

((~~(2)~~)) (b) The name and mailing address of the petitioner's attorney, if any;

((~~(3)~~)) (c) The name and mailing address of the agency whose action is at issue;

((~~(4)~~)) (d) Identification of the agency action at issue, together with a duplicate copy, summary, or brief description of the agency action;

((~~(5)~~)) (e) Identification of persons who were parties in any adjudicative proceedings that led to the agency action;

((~~(6)~~)) (f) Facts to demonstrate that the petitioner is entitled to obtain judicial review;

((~~(7)~~)) (g) The petitioner's reasons for believing that relief should be granted; ((~~and~~

~~(8)~~)) (h) A request for relief, specifying the type and extent of relief requested; and

(i) A copy of the administrative law judge's final order if applicable.

(2) An agency's petition for review of an administrative law judge's final order must set forth:

(a) The agency's name and mailing address;

(b) The names and mailing addresses of all parties and their attorneys if any;

(c) Identification of the administrative law judge's findings of fact, conclusions of law, and duplicate copies of the final order;

(d) Facts to demonstrate that the agency is entitled to obtain judicial review;

(e) The agency's reasons for believing that relief should be granted; and

(f) A request for relief, specifying the type and extent of relief requested.

Sec. 10. RCW 34.05.550 and 1989 c 175 s 25 are each amended to read as follows:

(1) Unless precluded by law, the agency or administrative law judge may grant a stay, in whole or in part, or other temporary remedy.

(2) After a petition for judicial review has been filed, a party may file a motion in the reviewing court seeking a stay or other temporary remedy.

(3) If a person seeks judicial relief ((~~is sought~~)) for a stay or other temporary remedy from agency action based on public health, safety, or welfare grounds the court shall not grant such relief unless the court finds that:

(a) The applicant is likely to prevail when the court finally disposes of the matter;

(b) Without relief the applicant will suffer irreparable injury;

(d) The threat to the public health, safety, or welfare is not sufficiently serious to justify the agency action in the circumstances.

(4) If the court determines that relief should be granted from the agency's action granting a stay or other temporary remedies, the court may remand the matter or may enter an order denying a stay or granting a stay on appropriate terms.

Sec. 11. RCW 34.05.554 and 1988 c 288 s 512 are each amended to read as follows:

(1) Issues not raised before the agency or administrative law judge may not be raised on appeal, except to the extent that:

(a) The person did not know and was under no duty to discover or could not have reasonably discovered facts giving rise to the issue;

(b) The agency action subject to judicial review is a rule and the person has not been a party in adjudicative proceedings that provided an adequate opportunity to raise the issue;

(c) The agency action subject to judicial review is an order and the person was not notified of the adjudicative proceeding in substantial compliance with this chapter; or

(d) The interests of justice would be served by resolution of an issue arising from:

(i) A change in controlling law occurring after the agency action or administrative law judge's entry of a final order; or

(ii) Agency action occurring after the person exhausted the last feasible opportunity for seeking relief from the agency.

(2) The court shall remand to the agency or administrative law judge if the judge was the presiding officer in an adjudicative proceeding for determination any issue that is properly raised pursuant to subsection (1) of this section.

Sec. 12. RCW 34.05.562 and 1988 c 288 s 514 are each amended to read as follows:

(1) The court may receive evidence in addition to that contained in the agency record for judicial review, only if it relates to the validity of the agency action at the time it was taken or to the administrative law judge's final order and is needed to decide disputed issues regarding:

(a) Improper constitution as a decision-making body or grounds for disqualification of the administrative law judge or of those taking the agency action;

(b) Unlawfulness of procedure or of decision-making process; or

(c) Material facts in rule making, brief adjudications, or other proceedings not required to be determined on the agency record.

(2) The court may remand a matter to the agency or administrative law judge as appropriate, before final disposition of a petition for review, with directions that the agency or administrative law judge conduct fact-finding and other proceedings the court considers necessary and that the agency or administrative law judge take such further action on the basis thereof as the court directs, if:

(a) The agency or administrative law judge was required by this chapter or any other provision of law to base its action exclusively on a record of a type reasonably suitable for judicial review, but the agency or administrative law judge failed to prepare or preserve an adequate record;

(b) The court finds that (i) new evidence has become available that relates to the validity of the agency action at the time it was taken or the administrative law judge's final order when entered, that one or more of the parties did not know and was under no duty to discover or could not have reasonably been discovered until after the agency action or final order, and (ii) the interests of justice would be served by remand to the agency or administrative law judge;

(d) A relevant provision of law changed after the agency action or final order was entered and the court determines that the new provision may control the outcome.

Sec. 13. RCW 34.05.566 and 1989 c 175 s 26 are each amended to read as follows:

(1) Within thirty days after service of the petition for judicial review, or within further time allowed by the court or by other provision of law, the agency shall transmit to the court the original or a certified copy of the agency record for judicial review of the agency action or administrative law judge's final order. The record shall consist of any final orders, agency documents expressing the agency action, other documents identified by the agency as having been considered by it before its action and used as a basis for its action, and any other material described in this chapter as the agency record for the type of agency action at issue, subject to the provisions of this section.

(2) If part of the record has been preserved without a transcript, the agency shall prepare a transcript for inclusion in the record transmitted to the court, except for portions that the parties stipulate to omit in accordance with subsection (4) of this section.

(3) When a party other than the agency is the petitioner, the agency may charge a nonindigent petitioner with the reasonable costs of preparing any necessary copies and transcripts for transmittal to the court. A failure by the petitioner to pay any of this cost to the agency relieves the agency from the responsibility for preparation of the record and transmittal to the court.

(4) The record may be shortened, summarized, or organized temporarily or, by stipulation of all parties, permanently.

(5) The court may tax the cost of preparing transcripts and copies of the record:

(a) Against a party who unreasonably refuses to stipulate to shorten, summarize, or organize the record; or

(b) In accordance with any provision of law.

(6) Additions to the record pursuant to RCW 34.05.562 must be made as ordered by the court.

(7) The court may require or permit subsequent corrections or additions to the record.

Sec. 14. RCW 34.05.570 and 1989 c 175 s 27 are each amended to read as follows:

(1) Generally. Except to the extent that this chapter or another statute provides otherwise:

(a) The burden of demonstrating the invalidity of agency action or an administrative law judge's order is on the party asserting invalidity;

(b) The validity of agency action or an administrative law judge's order shall be determined in accordance with the standards of review provided in this section, as applied to the agency action at the time it was taken or to the administrative law judge's final order when entered, as appropriate;

(c) The court shall make a separate and distinct ruling on each material issue on which the court's decision is based; and

(d) The court shall grant relief only if it determines that a person or agency seeking judicial relief has been substantially prejudiced by the action complained of.

(2) Review of rules. (a) A rule may be reviewed by petition for declaratory judgment filed pursuant to this subsection or in the context of any other review proceeding under this section. In an action challenging the validity of a rule, the agency shall be made a party to the proceeding.

(b) The validity of any rule may be determined upon petition for a declaratory judgment addressed to the superior court of Thurston county, when it appears that the rule, or its threatened application, interferes with or impairs or immediately threatens to interfere with or impair the legal rights or privileges of the petitioner. The declaratory judgment order may be entered whether or not the petitioner has first requested the agency to pass upon the validity of the rule in question.

(c) In a proceeding involving review of a rule, the court shall declare the rule invalid only if it finds that it violates constitutional provisions, exceeds the statutory authority of the agency, was adopted without compliance with statutory rule-making procedures, or could not conceivably have been the product of a rational decision-maker.

(3) Review of agency or administrative law judges' orders in adjudicative proceedings. The court shall grant relief from an agency or administrative law judge's order in an adjudicative proceeding only if it determines that:

(a) The order, or the statute or rule on which the order is based, is in violation of constitutional provisions on its face or as applied;

(b) The order is outside the statutory authority or jurisdiction of the agency or administrative law judge conferred by any provision of law;

(c) The agency or administrative law judge has engaged in unlawful procedure or decision-making process, or has failed to follow a prescribed procedure;

(d) The agency or administrative law judge has erroneously interpreted or applied the law;

(e) The order is not supported by evidence that is substantial when viewed in light of the whole record before the court, which includes the agency record for judicial review, supplemented by any additional evidence received by the court under this chapter;

(f) The agency or administrative law judge has not decided all issues requiring resolution by the agency;

(g) A motion for disqualification under RCW 34.05.425 or 34.12.050 was made and was improperly denied or, if no motion was made, facts are shown to support the grant of such a motion that were not known and were not reasonably discoverable by the challenging party at the appropriate time for making such a motion;

(h) The order is inconsistent with a rule of the agency unless the agency or administrative law judge explains the inconsistency by stating facts and reasons to demonstrate a rational basis for inconsistency; or

(i) The order is arbitrary or capricious.

(4) Review of other agency action.

(a) All agency action not reviewable under subsection (2) or (3) of this section shall be reviewed under this subsection.

(b) A person whose rights are violated by an agency's failure to perform a duty that is required by law to be performed may file a petition for review pursuant to RCW 34.05.514, seeking an order pursuant to this subsection requiring performance. Within twenty days after service of the petition for review, the agency shall file and serve an answer to the petition, made in the same manner as an answer to a complaint in a civil action. The court may hear evidence, pursuant to RCW 34.05.562, on material issues of fact raised by the petition and answer.

(c) Relief for persons aggrieved by the performance of an agency action, including the exercise of discretion, or an action under (b) of this subsection can be granted only if the court determines that the action is:

(i) Unconstitutional;

(ii) Outside the statutory authority of the agency or the authority conferred by a provision of law;

(iii) Arbitrary or capricious; or

(iv) Taken by persons who were not properly constituted as agency officials lawfully entitled to take such action.

Sec. 15. RCW 34.05.574 and 1989 c 175 s 28 are each amended to read as follows:

(1) In a review under RCW 34.05.570, the court may (a) affirm the agency action or the administrative law judge's final order or (b) order an agency or administrative law judge to take action required by law, order an agency or administrative law judge to exercise discretion required by law, set aside agency action or the administrative law judge's final order, enjoin or stay the agency action or the administrative law judge's final order, remand the matter for further proceedings, or enter a declaratory judgment order. The court shall set out in its findings and conclusions, as appropriate, each violation or error by the agency or administrative law judge under the standards for review set out in this chapter on which the court bases its decision and order. In reviewing matters within agency discretion, the court shall limit its function to assuring that the agency has exercised its discretion in accordance with law, and shall not itself undertake to exercise the discretion that the legislature has placed in the agency. The court shall remand to the agency for modification of agency action, unless remand is impracticable or would cause unnecessary delay.

(2) The sole remedy available to a person who is wrongfully denied licensure based upon a failure to pass an examination administered by a state agency, or under its auspices, is the right to retake the examination free of the defect or defects the court may have found in the examination or the examination procedure.

(3) The court may award damages, compensation, or ancillary relief only to the extent expressly authorized by another provision of law.

(4) If the court sets aside or modifies agency action or the administrative law judge's final order or remands the matter to the agency or administrative law judge for further proceedings, the court may make any interlocutory order it finds necessary to preserve the interests of the parties and the public, pending further proceedings or agency action.

Sec. 16. RCW 34.12.040 and 1981 c 67 s 4 are each amended to read as follows:

Whenever a state agency conducts a hearing which is not presided over by officials of the agency who are to render the final decision, the hearing shall be conducted by an administrative law judge assigned under this chapter. In assigning administrative law judges, the chief administrative law judge shall ((~~wherever practical~~)) (1) use personnel having expertise in the field or subject matter of the hearing, and (2) assign administrative law judges primarily to the hearings of particular agencies on a long-term basis.

NEW SECTION. Sec. 17. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 18. This act applies to all applications for adjudicative proceedings filed on or after July 1, 1995.

NEW SECTION. Sec. 19. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1995.