§ 21.11 Standards of Judicial Review

• Jurisdiction: Washington

§21.11 STANDARDS OF JUDICIAL REVIEW

The standards of judicial review largely circumscribe how the courts are to analyze the issues raised in an administrative appeal. It is the responsibility of the parties to accurately inform the court as to what standard of review the court should apply to each issue.

(1) Standards of judicial review for agency orders under the APA

The Administrative Procedure Act, Ch. 34.05 RCW, provides nine standards for judicial review of an agency order in an adjudicative proceeding: (1) the order or the statute or rule upon which it is based is unconstitutional; (2) the order is outside the agency's lawful authority; (3) the agency has engaged in unlawful procedure or decision-making process; (4) the agency has erroneously interpreted or applied the law; (5) the order is not supported by substantial evidence in the record; (6) the agency has not decided all issues requiring resolution; (7) there were grounds to disqualify the decision maker, and either a motion to disqualify was wrongfully denied or the moving party has recently discovered evidence that supports the disqualification of the decision maker; (8) the order is inconsistent with an agency rule and the agency has failed to explain the inconsistency; or (9) the order is arbitrary or capricious. RCW 34.05.570(3).

An entire treatise could be written on these review standards. This subsection provides a broad overview of the most common challenges to agency orders.

(a) Findings of fact are reviewed under a substantial evidence standard

To successfully overturn an agency's finding of fact, the petitioner must establish that the finding is not supported by substantial evidence in the agency record, plus any evidence received by the court under the APA. RCW 34.05.570(3)(e). "Substantial evidence is evidence in sufficient quantum to persuade a fair-minded person of the truth of the declared premises." Heinmiller v. Dep't of Health,127 Wn.2d 595, 609-10, 903 P.2d 433 (1995), 909 P.2d 1294 (internal quotation marks omitted), cert. denied, 518 U.S. 1006 (1996); see also Kittitas County v. E. Wash. Growth Mgmt. Hearings Bd., 172 Wn.2d 144, 155, 256 P.3d 1193 (2011).

The court is to view the evidence in the light most favorable to the party who prevailed in the highest forum that exercised fact-finding authority. City of Univ. Place v. McGuire, 144 Wn.2d 640, 652, 30 P.3d 453 (2001). The court will accept the fact finder's views regarding credibility of witnesses and the weight to be given reasonable but competing inferences. Id. at 652. The court will defer to an adjudicative board with specialized expertise when some expert testimony has been offered and the board has issued findings of fact based on the expert testimony, but when evidence is simply too bare to form a credibly persuasive argument in favor of the agency, the factual allegations will be vacated under the substantial evidence standard. Ames v. Health Dep't Med. Quality Health Assurance Comm'n,166 Wn.2d 255, 262, 208 P.3d 549 (2009), cert. denied,559 U.S. 939 (2010).

Unchallenged findings of fact are verities on appeal. Hilltop Terrace Homeowner's Ass'n v. Island County,126 Wn.2d 22, 38, 891 P.2d 29 (1995). The final agency decision maker has full decision-making authority and can replace the presiding officer's findings of fact as long as the review judge gives due regard to the presiding officer's opportunity to observe the witnesses. RCW 34.05.464(4). The review officer has authority to enter substitute findings of fact and conclusions of law and does not need to provide reasons for doing so, but the review officer's findings must be supported by substantial evidence. Nw. Steelhead & Salmon Council v. Dep't of Fisheries,78 Wn.App. 778, 785-86, 896 P.2d 1292 (1995).

The "substantial evidence" test in the 1989 APA replaced the "clearly erroneous" test under the former APA. Thus, older cases that apply the "clearly erroneous" standard to findings of fact are of limited or no applicability under current law.

(b) Conclusions of law are reviewed under an error of law standard

The reviewing court can grant relief from an agency order if the agency erroneously interpreted or applied the law. RCW 34.05.570(3)(d). The court reviews questions of law de novo, but the court gives substantial weight to an agency's interpretation of a nonambiguous statute the agency administers. Pub. Utility Dist. No. 1 v. Dep't of Ecology, 146 Wn.2d 778, 790, 51 P.3d 744 (2002); King County v. Cent. Puget Sound Growth Mgmt. Hearings Bd., 142 Wn.2d 543, 553, 14 P.3d 133 (2000). Courts do not defer to an agency's interpretation of a statute the agency does not administer, or to statutes that determine the agency's authority. Campbell v. Dep't of Soc. & Health Servs., 150 Wn.2d 881, 894 n.4, 83 P.3d 999 (2004); In re Elec. Lightwave, Inc., 123 Wn.2d 530, 540, 869 P.2d 1045 (1994).

No deference is given to an agency's interpretation when the statute in question is unambiguous. Densley v. Dep't of Ret. Sys.,162 Wn.2d 210, 221, 173 P.3d 885 (2007). Additionally, the traditional deference granted to state agencies under the APA may be modified by a more specific statute that grants deference to another level of decision maker. For example, RCW 36.70A.3201 directs that the Growth Management Hearings Board defer to counties and cities in how they plan consistent with the Growth Management Act. Cf. Lewis County v. W. Wash. Growth Mgmt. Hearings Bd.,157 Wn.2d 488, 498, 139 P.3d 1096 (2006) (although the Growth Management Hearings Board must defer to the county's choices that are consistent with the GMA, the board itself was still entitled to deference in determining what the GMA required).

The APA does not explicitly authorize agencies to use summary judgment procedures, but the courts have recognized the practice. When the administrative decision was on summary judgment, the reviewing court must overlay the APA standard of review with the summary judgment standard. Because summary judgment is appropriate only when the undisputed facts entitle the moving party to judgment as a matter of law, the court will evaluate the facts in the administrative record de novo and the law in light of the error of law standard. Verizon Nw., Inc. v. Emp't Sec. Dep't,164 Wn.2d 909, 915-16, 194 P.3d 255 (2008).

(c) Mixed questions of law and fact are reviewed under a three-part process

When the issue involves a mixed question of law and fact, the reviewing court must (1) establish the relevant facts, (2) determine the applicable law, and (3) apply the law to the facts. Tapper v. Emp't Sec. Dep't,122 Wn.2d 397, 403, 858 P.2d 494 (1993).

Factual findings are upheld if supported by substantial evidence. RCW 34.05.570(3)(e). After establishing the relevant facts, the reviewing court is to make a de novo determination of the correct law (subject to appropriate deference to the agency). The court then applies the law to the facts found by the agency, as supported by substantial evidence. In reviewing a mixed question of law and fact, the court does not substitute its judgment of the facts for that of the agency. Id.

(d) Arbitrary and capricious standard

The court can grant relief from an agency order that is arbitrary and capricious. RCW 34.05.570(3)(i). The arbitrary and capricious standard is described as follows:

Harshness . . . is not the test for arbitrary and capricious action. Arbitrary and capricious action has been defined as willful and unreasoning action, without consideration and in disregard of facts and circumstances. Where there is room for two opinions, action is not arbitrary and capricious even though one may believe an erroneous conclusion has been reached. Action taken after giving respondent ample opportunity to be heard, exercised honestly and upon due consideration, even though it may be believed an erroneous decision has been reached, is not arbitrary or capricious.

Heinmiller, 127 Wn.2d at 609-10 (citations and internal quotation marks omitted).

Thus, even if the court believes the agency's decision is erroneous, that decision is not arbitrary and capricious if it was reached after due consideration of the facts; or, more simply, when there is room for two opinions, the agency's decision must prevail. Id. For example, an agency sanction challenged as harsh will be upheld if the sanction was imposed after the party had an adequate opportunity to be heard. Brown v. State,94 Wn.App. 7, 16-17, 972 P.2d 101 (1998), review denied, 138 Wn.2d 1010 (1999).

Practice Tip: The arbitrary and capricious standard is the most deferential judicial review standard. It follows that this standard is the most difficult to meet when challenging agency orders. Despite the difficulty of meeting this standard, some practitioners tend to "toss in" arbitrary and capricious arguments in every challenge to an agency order. This may have the effect of detracting from other, stronger arguments in an appeal. Therefore, it may make strategic sense to forgo the arbitrary and capricious arguments, reserving those arguments for situations when it truly appears the agency's order was willful or unreasoning.

(e) Agency order that is inconsistent with other agency decisions

A court can grant relief from an agency order if the order is inconsistent with an agency rule and the agency has failed to state a rational basis for the inconsistency. RCW 34.05.570(3)(h). Because "rule" is defined in the APA, it is clear that this section applies only to inconsistency with agency rules, rather than with other agency orders.

However, depending on a number of factors, an agency decision in an adjudication may be reversed as arbitrary and capricious if it is inconsistent with past agency decisions and the departure from precedent is not adequately explained. Vergeyle v. Emp't Sec. Dep't,28 Wn.App. 399, 404, 623 P.2d 736, review denied, 95 Wn.2d 1021 (1981)...