HOUSE BILL REPORT

EHB 1358

As Amended by the Senate

BYRepresentatives Crane, Padden, P. King, Sayan, Heavey, Rector, Ebersole and Inslee;by request of Governor Gardner and Attorney General

Modifying the new Administrative Procedure Act and making conforming amendments.

House Committe on Judiciary

Majority Report:  Do pass with amendments.  (15)

      Signed by Representatives Appelwick, Chair; Crane, Vice Chair; Padden, Ranking Republican Member; Brough, Dellwo, Hargrove, Inslee, P. King, R. Meyers, Moyer, H. Myers, Patrick, Scott, Tate and Wineberry.

House Staff:Harry Reinert (786-7110)

AS PASSED HOUSE FEBRUARY 1, 1989

BACKGROUND:

The 1988 Legislature enacted a substantial revision to the Administrative Procedure Act.  This revision will take effect July 1, 1989.  The 1988 Act changed terminology of the administrative procedure act.  For example, the term "contested case" was replaced by "adjudicative hearing."  A large number of statutes contain cross-references to the Administrative Procedure Act that will no longer be correct when the 1988 Act takes effect or use terminology which has been changed by the 1988 Act.

The 1988 Act provides more detailed procedures governing the process by which individuals and state agencies interact, including provisions concerning notification of proceedings.  No standards were set forth on how that notice is to be given.

The 1988 Act establishes a number of time limits with which agencies must comply, but it enables agencies to adopt rules to modify those time limits.

The 1988 Act requires agencies to adopt rules governing both formal and informal procedures before the agency. The Act also requires the Chief Administrative Law Judge to adopt model rules of procedure.

The 1988 Act authorizes agencies to adopt emergency rules in appropriate circumstances. The rules take effect upon filing with the code reviser.  There are circumstances in which an emergency rule may need to be adopted but should not go into effect until some later date.

The 1988 Act provides for a procedure for disqualification of a presiding officer in an adjudicative proceeding.  This procedure requires a party to the proceeding to file a petition for disqualification with the presiding officer. Another statute provides a procedure for disqualification of administrative law judges.  The procedure requires a party to file a motion of prejudice.  There is some uncertainty as to which of these procedures is applicable in cases where the presiding officer is an administrative law judge.

Under the 1988 Act a party to an adjudicative proceeding may file a petition for reconsideration.  The agency is required to act on the petition within twenty days or the petition is deemed to have been denied.  The agency head has authority to extend the time for disposition of the petition for good cause.

One major change made to the APA by the 1988 Act was to the standards by which courts review agency actions. The 1988 Act recognizes three different types of judicial review: review of agency rules, review of orders, and review of other agency action.  Rules may be reviewed in the context of a declaratory judgment proceeding or during review of an agency order in an adjudicative proceeding.  In a declaratory judgment proceeding the court may only consider whether the rule is unconstitutional, beyond the agency's statutory authority, or was adopted under an improper procedure.  Rules which are reviewed during proceedings involving agency orders may also be reviewed to determine whether they are arbitrary or capricious.

The 1988 Act established statutory procedures for the civil enforcement of agency orders.  The act also limited the defenses which might be raised in the enforcement proceeding. One defense that is permitted is that the rule or order is unconstitutional or beyond the statutory authority of the agency.

The 1988 Act authorizes the presiding officer to issue subpoenas, but does not provide a procedure for their enforcement.

The 1988 legislation as it passed the legislature contained a provision amending the public disclosure act.  The public disclosure act authorizes agencies to declare that indexing of some material would be unduly burdensome.  The amendment to the public disclosure act approved by the legislature would have eliminated this exemption for agency orders.  The Governor vetoed this particular section from the bill because of concerns about the adverse fiscal impact it would have on state agencies.  In his veto message, the Governor declared that he would work towards coming up with an alternative that would meet the legislature's concern for full public access without unduly impeding the ability of agencies to conduct their business.

SUMMARY:

Terminology and cross-references to the Administrative Procedure Act throughout the Revised Code of Washington are corrected to reflect the revision of the APA enacted by the legislature in 1988.

A definition for "service" of pleadings and other papers is added to the APA. Service means posting in the United States mail or personal service.  Agencies may authorize service by electronic transmission or by commercial parcel delivery.

Agencies may not modify the time periods governing the procedures for adoption of rules or the time limits for filing a petition for judicial review.

The requirement that agencies adopt rules governing formal and informal proceedings is modified.  An agency may chose not to adopt procedural rules.  If an agency does not adopt rules, the model rules adopted by the chief administrative law judge apply to the agency's proceedings.

Emergency rules take effect when filed with the code reviser, unless a later date is specified in the order of adoption.

If the presiding officer in an adjudicative proceeding is an administrative law judge, both the procedure for disqualification found in the APA and the procedure for a motion for prejudice which applies to administrative law judges are applicable.

The procedure for processing applications for reconsideration is modified.  If a petition for reconsideration is filed in time, the agency must act within twenty days, or the petition is deemed to be denied.  The agency may either dispose of the petition or set a date certain by which is will act on the petition.

The standards for judicial review of agency rules are modified.  The same standards apply regardless of the context in which the court is asked to review the rules.  Rules may be declared invalid only if the court finds the rules unconstitutional, beyond the agency's statutory authority, out of compliance with procedures for adoption, or if the rules "could not conceivably have been the product of a rational decision- maker."

In civil enforcement proceedings, the respondent may not raise defenses that he or she raised or could have raised before the agency or a court in a prior proceeding.  The respondent may assert that the interest of justice requires resolution of an issue because of a change in controlling law or subsequent agency action.  The respondent may also claim that the rule or order is inapplicable or raise any other defense specifically authorized by statute.

Subpoenas issued by presiding officers may be enforced by petitioning the superior court for enforcement. After a show cause hearing, the court may hold a person in contempt for failure to comply with the subpoena.  An agency may use the same procedure for the enforcement of investigative subpoenas.

The public disclosure act is amended to require agencies to adopt and implement a system for indexing certain agency documents.  In addition to retaining prior indexes which the agencies maintained, agencies must index final orders and declaratory orders issued on or after July 1, 1990 that contain an analysis or decision of substantial importance to the agency.  Agencies must also index all interpretive and policy statements issued after that date.

Except for the revision to the Public Disclosure Act, the act takes effect July 1, 1989, when the 1988 APA revisions take effect.  The amendments to the public disclosure act take effect July 1, 1990.

EFFECT OF SENATE AMENDMENTS:The Senate amendment corrects a provision exempting adjudicative proceedings of the Board of Industrial Insurance Appeals from the APA to recognize that review of certain board decisions are subject to the APA.  The Senate amendment also gives a developmentally disabled person the right to appeal a DSHS decision to change the person's category of residential services.

Fiscal Note:      Requested January 11, 1989.

Effective Date:The bill takes effect July 1, 1989.  Provisions dealing with the Public Disclosure Act take effect July 1, 1990.

House Committee ‑ Testified For:    Fred Hellberg, OFM; Jeff Lane, Assistant Attorney General; Don Cofer, Assistant Attorney General; Dave Henry, DSHS.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    Several issues with the 1988 APA legislation are in need of clarification.  In addition, many sections of the statutes need to be corrected to refer to the proper section of the APA or to use the proper terminology.

House Committee - Testimony Against:      None Presented.

VOTE ON FINAL PASSAGE:

      Yeas 95; Absent 1; Excused 2

Absent:     Representative Bristow

Excused:    Representatives O'Brien and Todd