Aviation West Corp. v. Washington State Dept. of Labor and Industries

• Decision Date: 08 July 1999
• Docket Number: No. 66574-5,66574-5
• Citation: 980 P.2d 701,138 Wn.2d 413
• Court: Washington Supreme Court
• Parties: , 1999 O.S.H.D. (CCH) P 31,862 AVIATION WEST CORPORATION, Competition Specialties, Inc., Computer Group, Inc., the American Tobacco Company, Brown and Williamson Tobacco Corporation, Lorillard Tobacco Company, R.J. Reynolds Tobacco Company, and Phillip Morris, Inc., Appellants, v. WASHINGTON STATE DEPARTMENT OF LABOR AND INDUSTRIES and Mark Brown, Director, Respondents.

Page 701

138 Wn.2d 413

980 P.2d 701, 1999 O.S.H.D. (CCH) P 31,862

AVIATION WEST CORPORATION, Competition Specialties, Inc. Computer Group, Inc., the American Tobacco Company, Brown and Williamson Tobacco Corporation, Lorillard Tobacco Company, R.J. Reynolds Tobacco Company, and Phillip Morris Inc., Appellants, v. WASHINGTON STATE DEPARTMENT OF LABOR AND INDUSTRIES and Mark Brown, Director, Respondents.

No. 66574-5.

Supreme Court of Washington En Banc.

Argued Nov. 18, 1998.

Decided July 8, 1999.

Heller, Ehrman, White & McAuliffe, Timothy Harold Butler, Andrew Michael Kenefick, Seattle, Covington & Burling, Clausen Ely, Jr., Washington, DC, for Appellant Aviation West Corporation.

Christine O. Gregoire, Atty. Gen., Elliott S. Furst, Asst., Olympia, for Respondent Department of Labor & Industries and Mark Brown.

ALEXANDER, J.

Five major cigarette manufacturing companies and three Washington businesses (hereinafter Companies) brought an action for declaratory judgment and injunctive relief in Thurston County Superior Court against the State of Washington, arguing that a regulation adopted by the Department of Labor and Industries (Department) regulating smoking in private workplaces was invalidly promulgated. The trial court upheld the Department's regulation. The Companies thereafter appealed the decision of the Superior Court to the Court of Appeals, Division Two, which, in turn, certified the case to this court for direct review. We granted review and now affirm the trial court.

On November 3, 1993, the Department filed proposed indoor air quality regulations. One of the proposed regulations was aimed at eliminating environmental tobacco smoke (ETS) ¹ exposures in private workplaces. Following that filing the Department received extensive written comments on their proposal and conducted six public hearings. The Companies presented testimony at the hearings and submitted voluminous written materials concerning the alleged adverse health effects of workplace ETS exposures. Although the Department decided to not promulgate the other proposed indoor air quality regulations, ² the ETS regulation was issued in final form on March 16, 1994--unchanged from its proposed form in any respect material to this case. An accompanying On June 23, 1994, the Joint Administrative Rules Review Committee (JARRC), comprised equally of some state senators and representatives, reviewed the ETS regulation and by a two-thirds majority vote recommended its suspension because it "goes beyond the Department's statutory authority." Clerk's Papers (CP) at 123. After another public hearing the Department rejected JARRC's recommendation.

Concise Explanatory Statement (CES) indicated why the Department adopted the regulation.

The Companies then filed an action for declaratory judgment and injunctive relief in Thurston County Superior Court. The filing was soon followed by their motion for summary judgment. They asserted in their motion, among other things, that the Department violated the Washington Administrative Procedure Act (APA), RCW 34.05, and also failed to meet the two-part "significant risk" test enunciated in Industrial Union Dep't v. American Petroleum Inst., 448 U.S. 607, 100 S.Ct. 2844, 65 L.Ed.2d 1010 (1980) (plurality opinion) [hereinafter Benzene ] that the Companies alleged was required under the Washington Industrial Safety and Health Act (WISHA), RCW 49.17. The trial court denied the motion. The Companies then renewed the motion, indicating that they had new evidence of the Department's alleged failure to comply with Benzene. They also moved to exclude any supplemental trial testimony by Department officials. The trial court denied these motions.

A bench trial was held in early 1996. At trial, the Department submitted its CES, which stated that its risk assessment was based upon an Environmental Protection Agency (EPA) report, as well as "reports issued by the Surgeon General of the United States, the National Research Council, and other studies." AR 58: 34,449. ³ The Department's then-director, Mark Brown, testified at trial and identified a National Institute of Occupational Safety and Health report, as well as a joint report from the Fred Hutchinson Cancer Center and the Washington Department of Health, as also forming a basis for the Department's decision to promulgate the ETS regulation. Brown admitted that the Department did not run an independent statistical analysis on these reports, nor set out its own threshold for "significant risk." Report of Proceedings (RP) at 157.

The trial court upheld the ETS regulation in an oral ruling, following that with an order on July 22, 1996, in which it dismissed the Companies' petition. The Companies appealed to the Court of Appeals, Division Two, which certified the appeal to this court for direct review. The certification was accepted. ⁴

ANALYSIS

1. Was the Department required under the APA to explain its complete rationale for the ETS regulation in the administrative record?

The Companies' contend that the trial court erred in concluding that the Department was not required to confine its rationale for the ETS regulation to materials within the administrative record. The Department responds that it satisfied the then-minimal requirements for a CES, and that, in any event, the regulation's rationale was adequately explained through a combination of both the CES and supplemental trial testimony.

We note at the outset of our discussion of this issue, that the APA's then-existing requirement for a CES must be distinguished from the requirement for a rule-making file. It is undisputed that the size of the record At the time the ETS regulation was adopted, the statutory requirement for a CES, RCW 34.05.355, repealed by Laws of 1995, ch. 403, § 305 [hereinafter RCW 34.05.355 (1992) ], read as follows:

                in this case, which fills 15 boxes, 5 is quite irrelevant to the question of whether the Department fulfilled its statutory obligation to explain the ETS regulation's rationale.  One administrative law professor has written that "the record is merely a compilation of the material considered by the agency in the rulemaking.  It can be likened to a big cardboard box into which copies of things considered are thrown."   William Funk, Rationality Review of State Administrative Rulemaking, 43 ADMIN.  L. REV  . 147, 166 (1991).  For our purposes the essential content of the voluminous rule-making file in this case are the few pages that comprise the CES
                

(1) At the time it files an adopted rule with the code reviser or within thirty days thereafter, an agency shall place into the rule-making file maintained under RCW 34.05.370 a concise explanatory statement about the rule, identifying (a) the agency's reasons for adopting the rule, and (b) a description of any difference between the text of the proposed rule as published in the register and the text of the rule as adopted, other than editing changes, stating the reasons for change.

Appellants strain to import a federal standard of review into this state APA case. With regard to the CES requirement they try to read into it the requirements imposed under federal administrative law cases by taking issue with the fact that the trial court admitted the testimony of Department witnesses to supplement the rationale provided in the CES. ⁶ However, the practice of admitting such testimony was clearly envisioned at the time of the APA's adoption. Indeed, Professor William Andersen, a member of the task force that proposed the APA to the Legislature, lamented the absence of a stricter judicial review standard:

The Model Act wisely included a provision that limited justification of rules on judicial review to reasons contained in the agency's concise general statement. The purpose of such a restriction is to ensure that reasons and justifications were part of the agency deliberative process and not the post hoc rationalizations of agency lawyers or judges....

... Unfortunately, such a provision was not proposed for inclusion in the new Act [the Washington APA]. It is hoped that the legislature will correct this oversight at an early date....

William R. Andersen, The 1988 Washington Administrative Procedure Act - An Introduction, 64 WASH. L.REV. 781, 803-04 (1989) (emphasis in second paragraph added) (footnotes omitted). In fact, the APA specifically provides that the trial court is permitted to take additional evidence where needed to "decide disputed issues regarding ... [u]nlawfulness of procedure or of decision-making process." RCW 34.05.562(1)(b).

We believe the Companies misunderstand Neah Bay Chamber of Commerce v. Department of Fisheries, 119 Wash.2d 464, 832 P.2d 1310 (1992), which they cite as authority forbidding what this court and statute expressly allow. In Neah Bay we indicated that while "additional evidence of an agency's reasoning and the background materials relied upon may be presented on review, such evidence is only admissible to explain the agency's decision at the time." Neah Bay, 119 Wash.2d at 474-75, 832 P.2d 1310 (citation omitted). Moreover, a distinguishing fact in Neah Bay cannot be stressed enough: there the Department of Fisheries had failed to present The Companies also rely heavily upon Inland Foundry Co. v. Spokane County Air Pollution Control Auth., 82 Wash.App. 67, 915 P.2d 537 (1996), review denied, 131 Wash.2d 1025, 937 P.2d 1101 (1997), for the blanket proposition that an agency must, under the APA, "provide a clear explanation of its reasons for issuing a workplace standard which demonstrates that it considered the proper legal factors and that it rationally reviewed and analyzed the pertinent evidence." Appellants' Br. at 12. This is a misinterpretation of the holding. Inland Foundry involved a municipal corporation, which was "not governed by RCW 34.05.370(1)"--the APA requirement for maintaining a rule-making file. Inland Foundry, 82 Wash.App. at 71 n. 5, 915 P.2d 537. However,...