SENATE BILL REPORT
ESHB 1367
BYHouse Committee on Judiciary (originally sponsored by Representatives Armstrong, P. King and Appelwick)
Enacting a new Administrative Procedure Act.
House Committe on Judiciary
Senate Committee on Law & Justice
Senate Hearing Date(s):February 18, 1988; February 22, 1988
Majority Report: Do pass as amended.
Signed by Senators Pullen, Chairman; McCaslin, Vice Chairman; Halsan, Hayner, Madsen, Nelson, Newhouse, Talmadge.
Senate Staff:Dick Armstrong (786-7460)
February 22, 1988
AS REPORTED BY COMMITTEE ON LAW & JUSTICE, FEBRUARY 22, 1988
BACKGROUND:
General Provisions. The Administrative Procedure Act (APA), originally adopted in 1959, provides the mechanism by which state agencies are required to adopt rules and decide contested cases. The APA also determines who is entitled to seek review of agency decisions and sets the standard of review to be used by courts in considering the appeal. With a few exceptions, the APA applies to all state agencies, boards, commissions, departments, or officers authorized by law to make rules or decide contested cases. The Legislature and the courts are exempted from the APA.
Agencies not required to comply with the APA are the state militia, the board of prison terms and paroles, and colleges and universities. The provisions governing contested cases do not apply to the board of industrial insurance appeals, or the board of tax appeals. Issues relating to suspension, revocation, or denial of driver's licenses are not governed by the contested case provisions. Certain decisions by the Energy Facility Site Evaluation Council are not subject to the APA provisions relating to judicial review. The state patrol is not subject to the provisions of the APA to the extent of inconsistencies with statutory provisions relating to the state patrol. Colleges and universities are subject to parallel provisions of administrative procedure set forth in the portions of the code relating to those institutions.
A rule is defined as an order or regulation of general applicability which relates to procedure in agency hearings, to qualifications or requirements in the conduct of any activity, to licenses, to product standards, or the violation of which may result in a penalty. A contested case is a proceeding in which a hearing is required prior to the determination of legal rights, duties, or privileges of specific parties.
Rule Adoption Procedures. An agency must file a notice of the proposed adoption of a rule with the code reviser. The notice is published in the state register which is published every two weeks. The notice must also be given to any person who has requested notice of proposed agency rules and to the joint legislative rules review committee. The notice must include a statement of the authority under which the rule is adopted, a statement of the terms or substance of the proposed rule, and the time and place of the hearing on the rule. The agency must keep a copy of the proposed rule and the statement of purpose submitted to the rules review committee available for public inspection.
The agency must provide an opportunity for interested persons to submit written comments on proposed rules. An oral hearing must be provided if requested by twenty-five persons, by another governmental entity, or by the rules review committee. If substantial changes are made in the proposed rule after publication, the agency must give new notice before final adoption of the rule. The agency may not take action on the rule earlier than twenty days after the rule is published in the state register. An agency may adopt an emergency rule when it determines this is necessary. An emergency rule may not be in effect for more than ninety days. An agency rule may not be invalidated for failure to comply with procedural requirements more than two years after the rule has been adopted.
An agency may withdraw a proposed rule at any time before adoption. A proposed rule not adopted within one year after publication is deemed withdrawn.
For purposes of legislative review, proposed rules must have attached an agency description of the rule's purpose and proposed implementation.
Any interested person may request an agency to adopt, amend, or repeal a rule. Agencies must adopt procedures for handling such requests and within thirty days after a request must either initiate rule making proceedings or deny the petition with reasons stated in writing.
Any person whose legal rights or privileges may be or are threatened by the application of a rule to that person may petition the Thurston County superior court for a declaratory judgment on the validity of the rule. The court may invalidate a rule on a petition for declaratory judgment only if it is unconstitutional or if the agency lacked authority or violated procedures in adopting the rule. A small business economic impact statement may not be the sole grounds for invalidating a rule on a petition for declaratory judgment.
An agency may, if requested, issue a declaratory ruling on a rule's applicability to any person, property, or state of facts. The agency ruling is subject to judicial review in the same manner as for contested cases.
Contested Cases. An agency must provide at least twenty days notice of a contested case hearing. The notice must state the time and place of hearing, the legal authority for the hearing, and a statement of the matters asserted. All parties are entitled to participate in the hearing. The agency may provided for entry of summary orders if the pleadings show there is no genuine issue of a material fact and that the moving party is entitled to the order as a matter of law. The parties may agree to an informal settlement of the dispute.
Findings of fact in the decision on a contested case must be based on the evidence produced at the hearing and on matters officially noticed. At the hearing all parties have the right of cross examination and may submit rebuttal evidence. An agency may rely on facts within its specialized knowledge, but must give notice of these facts to the parties. The fact finder shall issue subpoenas on the motion of any party or on motion of the agency.
If a final decision is to be made by a person or entity who has not heard or read the evidence, a decision adverse to a party other than the agency must first be submitted to the parties as a proposed decision with an opportunity for the parties to file exceptions. Every decision which is adverse to a party must be made in writing with findings of fact and conclusions of law.
Communication between the presiding officer and the parties is not permitted except upon notice to all parties. The presiding officer may discuss with agency employees making the decision, personal assistants hired by the agency, or agency employees who are not involved in the proceeding and do not have any investigative or prosecutory functions for the agency.
Judicial Review. Any person aggrieved by a final agency decision may seek judicial review of the decision. If an agency has invoked a procedure for rehearing or reconsideration, the decision is not final until the procedure is completed. Judicial review may be sought in superior court within thirty days of the final agency decision.
Filing of a petition for review does not stay enforcement of the decision, unless the agency or the court orders a stay based upon other statutory provisions. Judicial review is based on the record of the agency except in cases of alleged irregularities in procedures. The court may take oral argument and receive written briefs.
The court may affirm the agency decision or remand the case for further proceedings. The court may also reverse the decision if substantial rights of the petitioner may have been prejudiced because the agency decision is: in violation of constitutional provisions; in excess of statutory authority; follows unlawful procedure; affected by error of law; clearly erroneous in view of the entire record; or arbitrary or capricious.
A superior court may certify a case to the court of appeals for direct review by that court. To be certified for direct review the court must find that the case involves fundamental and urgent issues, delay would be detrimental to a party or the public interest, an appeal will be likely regardless of the superior court outcome, and an appellate decision would have significant precedential value.
SUMMARY:
General Provisions. The definition of agency is modified to include institutions of higher education. In addition to the current exclusion for the judiciary and the Legislature, the governor and the attorney general are explicitly excluded from the definition of agency. A new definition of agency action is added which includes the enforcement of a statute, adoption or an agency rule or order, the issuance, grant, or suspension of a license, the imposition of sanctions, or the granting or withholding of benefits.
The act does not apply to the board of clemency and pardons (the successor of the board of prison terms and paroles), the department of corrections or the indeterminate sentencing review board with respect to persons under their custody or their jurisdiction, or the state militia. The adjudicative proceedings provisions of the act do not apply to the board of industrial insurance appeals or to the department of labor and industries if another statute expressly provides for review of department action before the board of industrial insurance appeals. The adjudicative proceedings provisions do not apply to the state personnel board, the higher education personnel board, the personnel appeals board, or to drivers license actions by the department of licensing not involving financial responsibility. Hearings before the board of tax appeals are exempt from the adjudicative proceedings provisions, unless a formal hearing is requested.
The act encourages settlements and permits conversion of proceedings from one type of proceeding to another more appropriate proceeding. Agencies may vary the time limits imposed by the act under certain circumstances.
Public Access to Agency Rules. In addition to continuing existing provisions relating to the publication of proposed and final rules, new procedures relating to notice of proposed rule making are adopted. Agencies are required to maintain an index and compilation of agency interpretive or policy statements. An interpretive statement is an agency opinion about the meaning of a statute, court decision, or agency order. A policy statement is an agency description of its current approach to implementation of a statute, court decision, or agency order. The agency must keep a roster of persons interested in the statements and send a copy of each statement to all persons on the roster. A charge may be imposed to cover the cost of providing the statements to persons on the roster. The interpretive and policy statements are not binding on the agency with respect to future action, but agency actions must be consistent with these statements unless there is a fair and rational basis for deviation.
All agency written final orders must be indexed by name and subject. An agency order may not be applied to the detriment of any person who does not have actual notice of the order unless it is indexed.
A person may request an agency to issue a declaratory order as to the applicability of a statute, rule, or order to specified circumstances. An agency may adopt rules providing for the form and contents of the petition and the circumstances in which the agency will not issue declaratory orders. The agency must give notice of the petition to all persons to whom notice is required by law to be given. The agency must take some action on the petition within thirty days. The action may be to initiate proceedings, to issue a declaratory order, or to decline to enter an order. The agency may decline to enter an order for procedural reasons, lack of a controversy, impact on the agency's budget, impact on the public, or any other proper reason.
An agency may adopt rules to set forth principles of law or policy that have been used as the basis of agency decisions in particular cases. Failure to adopt such a rule does not invalidate an agency order or action.
Rule Making Procedures. Agencies are specifically authorized to seek public comment on subjects of possible rules before the rules are formally proposed. Each agency is required to designate a rules coordinator who has knowledge of rules being proposed or prepared within the agency. The rules coordinator shall respond to public inquiries about rules and identify agency employees responsible for the rules. Each agency is required to maintain a rule-making docket of rules being prepared for proposal as well as rules actually proposed.
Agencies must give twenty days notice before any rule making hearing at which the agency will receive public comment. The notice must include: a short explanation of the rule; the legal authority; the text of the rule; an analysis of the expected effects of the rule; and a small business impact statement if required. Institutions of higher education must also publish notice of proposed rules in the campus newspaper at least seven days before the hearing.
Oral comment must be received by the agency in the rule making proceeding. The hearing shall be recorded in a manner determined by the agency. The presiding officer, if other than the agency head, shall prepare a summary memorandum of the presentations made at the hearing.
A rule must be adopted within 180 days after proposal or it must be republished. If a proposed rule is substantially different from the rule as published, the agency may initiate either new or supplementary rule making proceedings and publish new notice or it may adopt the rule with a description of the changes. Any person who objects to a rule that substantially varies from the proposed rule may petition the agency to reconsider the rule.
An agency may adopt emergency rules if necessary for the public health, safety, or welfare or to comply with federal or state law. The agency must include in the order a statement of the reasons. If the rule is contested, the burden is on the party alleging validity to establish that an emergency existed. An emergency rule is valid for 120 days and may only be adopted one time on an emergency basis, unless the agency establishes changed circumstances or is in the process of adopting a permanent rule.
The agency shall place in the rule-making file a concise explanatory statement of the reasons for adopting the rule and any differences between the proposed rule and the final rule and the reasons for the differences. An interested person, within thirty days of the adoption of a rule, may request the agency to issue a concise statement of the reasons for overruling considerations presented against adoption of the rule.
Rules not adopted in substantial compliance with the act are invalid. A challenge to a rule based on a claim that proper procedures were not followed must be commenced within two years after the rule is adopted.
Any person may petition an agency to adopt a rule. The agency must either initiate rule making proceedings or deny the petition within sixty days.
Adjudicative Proceedings. An agency may commence an adjudicative proceeding at any time. An agency must commence an adjudicative proceeding when required by law or the constitution. An agency must provide a written explanation of a decision not to conduct an adjudicative proceeding. An agency must, within ninety days of an application for an adjudicative proceeding, conduct a brief or emergency proceeding, initiate an adjudicative proceeding, or deny the application. The agency must notify an applicant for an adjudicatory hearing within thirty days of any deficiencies in the application. If an application for a professional or occupational license discloses grounds for denial of the license, the agency must notify the applicant at least 20 days prior to the examination that the license may be or is denied.
Agencies may authorize by rule prehearing conferences for the settlement or simplification of issues.
Notice of an adjudicatory hearing must be given at least seven days prior to the hearing. Notice must be given to the parties and to any persons asking to intervene. The presiding officer may be a member of the agency head, any other person authorized by law to conduct the hearing, or an administrative law judge. The presiding officer shall give all parties an opportunity to submit and respond to pleadings, and may permit briefs and proposed findings of fact and conclusions of law. All pleadings shall be served by a party on all other parties unless the agency provides otherwise by rule. The hearing shall be conducted in public, unless a statute expressly authorizes the hearing to be closed or the presiding officer issues a protective order. The presiding officer may also exclude witnesses from the hearing upon a showing of good cause.
The presiding officer may authorize any person who qualifies under any provisions of law to intervene in the adjudicatory proceeding. The grant of a petition of intervention may be conditioned by the presiding officer and limit the issues on which the intervenor may participate.
The presiding officer shall enter a final order, an initial order, or where an administrative law judge does not decide the case, transmit the record to the agency officials who will enter the final or initial order. An agency may provide by rule that initial orders in specified classes of cases become final without further action unless the agency head determines to review the initial order, or a party files exceptions to the initial order.
A party may seek to stay enforcement of a final order for ten days unless a statute or the final order provides otherwise. A denial of a request for a stay is not subject to judicial review.
A party may ask the agency for reconsideration within ten days. A petition for reconsideration is not a precondition for seeking judicial review. If the agency does not act on the petition for reconsideration within twenty days, it is deemed to have been denied.
An agency may use emergency adjudicative proceedings in cases involving immediate danger to the public safety, health, or welfare. The agency must proceed as quickly as possible to complete the proceedings that would be required if an emergency did not exist. If a statute expressly authorizes an agency to issue cease and desist orders, the agency may proceed under that statute.
In cases where there is no statutory prohibition, notice to persons other than parties is not necessary, and the agency has by rule established the types of cases which are appropriate, an agency may dispose of a matter by a brief adjudicative proceeding. Brief proceedings may not be used in food stamp or public assistance cases. The agency may dispose of a matter by notifying the parties of it's view of the matter at issue. The parties may request, or the agency on its own motion, may review an order entered after a brief adjudicative proceeding. The parties must be given an opportunity to present their views.
Judicial Review. A person who seeks judicial review of an agency action must have standing, must have exhausted the administrative remedies available, and must have met the time limits for filing for review. The petition for review of an order must be filed and served on all parties within thirty days of the service of the order. A petition for review of a rule may be filed at any time.
A person has standing to seek review of an agency decision if he or she is aggrieved or adversely affected by the action. A person is aggrieved or adversely affected only if: the agency action is prejudicial to that person; that person's interests are among those the agency was required to consider; and a judgment in the person's favor would substantially eliminate the prejudice to the person.
Unless prohibited by statute, an agency may stay enforcement of a rule or order during judicial review. An agency decision not to grant a stay is not subject to judicial review. An agency decision to grant a stay is subject to review on the grounds of reasonableness.
The court may not generally consider new issues and must confine its review of the facts to the record. The scope of review by the court is modified. The court may grant relief from the agency action only if it finds that a person is substantially prejudiced by: an unconstitutional provision; an agency which has exceeded its statutory authority or its range of discretion; the agency has not decided all the issues; the agency has erroneously interpreted the law; an agency decision is not supported by the evidence; or the agency action is arbitrary or capricious.
An agency may seek to enforce its orders by filing a petition for enforcement in superior court. The court may grant declaratory judgments, temporary or permanent injunctions, or other civil remedies authorized by law. Any person who has standing to obtain judicial review of an agency's failure to enforce an order directed to another person may file a petition for civil enforcement of that order. An action by a person may not be commenced until at least sixty days after the petitioner has given notice of the violation and intent to seek enforcement to the agency, to the attorney general, and to persons against whom enforcement is sought. If the agency has filed or is diligently prosecuting civil enforcement or if a petition for review of the order has been filed and the order has been stayed, the petition may not be filed. A person may defend against enforcement of an agency order by claiming it is unconstitutional or that the agency has exceeded its authority. The court may take new evidence to the extent necessary to determine whether the rule or order does not apply to the party, or the party has not violated the rule.
Existing provisions governing higher education administrative procedures are repealed.
The act takes effect July 1, 1989 and applies to agency actions taken after the effective date.
SUMMARY OF PROPOSED SENATE AMENDMENTS:
The bill is amended as follows: (1) For institutions of higher education, "rules of admission" are not subject to rule making and the current system of peer review for internal issues such as student discipline and tenure are not subject to the APA (current system retained); (2) brief adjudicative proceedings can be used for public assistance and food stamp programs; and (3) agencies are required to review rules that have been in effect for five years.
Appropriation: none
Revenue: none
Fiscal Note: requested January 11, 1988
Effective Date:The bill takes effect July 1, 1989.
Senate Committee - Testified: Ed Mackie, Deputy Attorney General; Fred Helberg, OFM; Terry Sebring, Governor's Office; Dean Little, WSBA Task Force; Ann Sanstrom, WSBA Task Force; Bill Anderson, WSBA Task Force; Jean Dixon, Citizen; Dave Henry, Department of Social and Health Services; Steve Olswang, University of Washington; Robert Thomas, University of Washington; Marvin Schurke, PERC; Gary Smith, Small Business Association