A state agency that performs both regulatory and ministerial acts falls within the definition of regulatory agency in RCW 42.52.010(13). An officer or employee who only participates in ministerial acts is not subject to the more strict limitations on gifts; but, an officer or employee who participates in regulatory matters is subject to the more strict limitations set out in RCW 42.52.150(4).

2. Does a state agency that performs both ministerial and regulatory acts fall within the definition of regulatory agency in RCW 42.52.010(13)?

3. If a regulatory agency performs some functions that are regulatory and some that are not, who is subject to the more stringent limitations on the receipt of gifts in RCW 42.52.150(4)?

2. A state agency that performs both regulatory and ministerial acts falls within the definition of regulatory agency in RCW 42.52.010(13). An agency that is authorized to conduct adjudicative proceedings, issue permits or licenses, or to control or affect the interests of identified persons meets the definition of regulatory agency. The fact that the agency also performs ministerial acts does not remove it from this definition.

3. The strict limits on gifts in RCW 42.52.150(4) apply to officers and employees of a regulatory agency who participate in regulatory matters. Therefore, an officer or employee who only participates in ministerial acts is not subject to the more strict limitations on gifts. An officer or employee who participates in regulatory matters is subject to the more strict limitations. An officer or employee participates if his or her job empowers the officer or employee to participate in regulation.

"Regulatory agency" means any state board, commission, department, or office, except those in the legislative or judicial branches, authorized by law to conduct adjudicative proceedings, issue permits or licenses, or to control or affect the interests of identified persons.

The definition of regulatory agency is significant because RCW 42.52.150(4) imposes more stringent limitations on gifts that can be received by officers and employees of a regulatory agency.

The issue is whether a state agency that does not conduct adjudicative proceedings or issue permits or licenses is a regulatory agency when its sole function consists of performing ministerial acts. Put another way, the question is whether the agency that performs only ministerial acts is "authorized by law to control or affect interests of identified persons".

A ministerial act is defined as:

One which a person performs in a given state of facts in a prescribed manner in obedience to the mandate of legal authority, without regard to or the exercise of his own judgment upon the propriety of the act being done.

Black's Law Dictionary 1148 (4th rev. ed. 1968). The key is that a ministerial act does not involve the exercise of discretion or judgment on the part of the person performing the act.

With this definition in mind, RCW 42.52.010(13) defines a regulatory agency as one "authorized by law . . . to control or affect interests of identified persons". (Emphasis added.) The term "control" is defined as: "to exercise authority or influence over". Webster's II New Riverside University Dictionary 306 (1988). The term "affect" is defined as: "to bring about a change in: INFLUENCE". Id. at 83.

Under this language, an agency is a regulatory agency if it is authorized by law to exercise authority over or influence identified persons. This is consistent with the other language in the definition. Clearly, an agency that conducts adjudicative proceedings and issues permits or licenses is in a position to exercise authority over or influence identified persons.

On the other hand, an agency that performs only ministerial acts does not exercise authority over or influence identified persons because it exercises no judgment or discretion with regard to those persons. Accordingly, the Board concludes that an agency that performs solely ministerial acts is not a regulatory agency.

Question 2 asks whether a state agency that performs both ministerial acts and regulatory acts is a regulatory agency within the definition of RCW 42.52.010(14). It is possible, even likely, that some state agencies will perform both kinds of functions. For example, the Secretary of State has a number of responsibilities under the Washington Business Corporation Act, RCW Title 23B. These duties are set out in RCW 23B.01.

Under the provisions of this chapter, it does not appear that the Secretary of State holds hearings or issues licenses or permits. It also appears that most of the functions of the Secretary of State are ministerial in nature. Essentially, corporations have to file documents with the Secretary of State but the Secretary has no discretion about accepting the documents, if they are filled out correctly. Indeed, RCW 23B.01.250(4) provides:

The Secretary of State's duty to file documents under this section is ministerial. Filing or refusal to file a document does not:

(a) Affect the validity or invalidity of the document in whole or part;

(b) Relate to the correctness or incorrectness of information contained in the document; or

(c) Create a presumption that the document is valid or invalid or that the information contained in the document is correct or incorrect.

(Emphasis added.) In some respects, the Secretary of State's duties under chapter 23B.01 RCW are to act as a repository for certain documents required for corporations to be active in Washington.

Although most of the Secretary of State's duties under RCW 23B.01 appear to be ministerial in nature, there are some that are not. For example, RCW 23B.01.580 provides that "[t]he secretary of state may, where exigent or mitigating circumstances are present, waive penalty fees due from any licensed corporation previously in good standing which would otherwise be penalized or lose its active status". The waiver of a penalty does not appear to be a ministerial act because the Secretary of State must exercise judgment and discretion to determine if there are exigent or mitigating circumstances to justify the waiver of the penalty.
Thus, in looking at the Secretary of State's functions under RCW 23B.01, most are ministerial but some are regulatory. The question is whether the Secretary of State's office is, nevertheless, a regulatory agency.

The answer is yes. RCW 42.52.010(13) defines regulatory agency as one that is "authorized by law to conduct adjudicative proceedings, issue permits or licenses, or to control or to affect the interests of identified persons". The fact that an agency also performs other non-regulatory functions is irrelevant. There is nothing in RCW 42.52.010(13) to indicate that the definition of regulatory agency is based on the primary functions of that agency.

Nor would it be appropriate for the Board to read such elementation into the definition of regulatory agency. RCW 42.52.150(4) limits the gifts that can be accepted by officers and employees of regulatory agencies. If the Board concluded that the definition of regulatory agency was based on the primary activities of the agency, it would necessarily mean that some officers and employees involved in regulatory activities would not be subject to this more strict limitation. The Board does not believe that the Legislature intended to create such an exception.

Question 3 concerns the application of the limitations on gifts in RCW 42.52.150(4) to officers and employees of a regulatory agency that also performs ministerial or non-regulatory functions.

RCW 42.52.150(4) provides in part:

[A] state officer or state employee of a regulatory agency . . . who participates in those regulatory . . . matters may receive . . . only the following items from a person regulated by the agency[.]

At the outset, RCW 42.52.150(4) applies to regulatory agencies. If an agency performs any regulatory function, it is a regulatory agency for purposes of RCW 42.52.150(4), at least with regard to that function. The application of the more stringent prohibition depends on whether the officers and employees "participate" in "regulatory matters". RCW 42.52.010(11) defines "participate" as follows:

"Participate" means to participate in state action or a proceeding personally and substantially as a state officer or state employee, through approval, disapproval, decision, recommendation, the rendering of advice, investigation, or otherwise but does not include preparation, consideration, or enactment of legislation or the performance of legislative duties.

This means that officers and employees who only participate in ministerial acts would not be subject to the strict gift limitations in RCW 42.52.150(4) because they do not participate in "regulatory matters". On the other hand, an officer or employee who participates in regulatory matters is subject to the strict limits in RCW 42.52.150(4).

The question then becomes: When does an officer or employee participate in regulatory matters? There are two potential ways to analyze this question, a transactional analysis and a functional analysis. These two different approaches are best understood by returning to the example of the Secretary of State.

The Secretary of State's authority to waive a penalty under RCW 23B.01.580 is regulatory. Very few corporations may seek to have a penalty waived pursuant to RCW 23B.01.580, but such a request could potentially come from a corporation subject to the law. Under the transactional analysis, regulation occurs only when an officer or employee is interacting with a particular person in a regulatory way. Under this analysis, 10,000 corporations may file documents with the Secretary of State, but there is no regulation until one of them, for example, the XYZ Corporation, applies for a waiver of a penalty. At that time, the regulation begins and it lasts until the penalty has been waived or sustained. During this period, officers and employees who participate in the decision about waiving the penalty for the XYZ Corporation would be subject to the strict limitation on gifts from the XYZ Corporation under RCW 42.52.150(4). However, the strict limits would not apply to gifts to these officers and employees from any other corporation that files with the Secretary of State that has not applied for a waiver of the penalty.

The other way of looking at regulation is the functional analysis. Under this view, an officer or employee participates in regulatory matters if the officer's or employee's job is regulatory‹even if there is no specific regulatory matter pending. As applied to the Secretary of State it would mean that officers and employees who participate in deciding whether to waive a penalty regulate all the corporations who file with the Secretary of State who might potentially be assessed a penalty and request a waiver. Under this analysis, the strict standards of RCW 42.52.150(4) apply to these officers and employees at all times‹not just when a specific corporation seeks a waiver.

After considering these two approaches, the Board adopts the functional analysis because it is more in keeping with the spirit of the ethics law. Under the transactional analysis, an officer or employee who participates in regulatory matters may receive gifts under the more lenient standard until regulation begins. For example, as applied to the Secretary of State's office, the XYZ Corporation could give gifts to officers and employees who usually decide whether to waive a penalty up until the time the XYZ Corporation applied for a waiver (or perhaps when the penalty was imposed which made the application for waiver a possibility).

The purpose of RCW 42.52.150(4) is to impose stricter limits on the gifts that can be received by officers and employees who participate in regulatory matters. This purpose would be defeated if officers and employees could receive gifts from those who were potentially subject to regulation.

Of course, it is possible to participate in a regulatory matter even if it is not normally part of an officer's or employee's job. For example, one could imagine the Secretary of State requesting assistance from another state agency in making a decision about waiving a penalty. The officer or employee who provided that assistance might well meet the definition of "participate" for that particular penalty, but it would not be part of his or her normal job to participate in such a decision.

Under these circumstances, the transactional analysis would apply. In this case the officer or employee from the other agency would only be subject to the more strict limitations (as related to the office of the Secretary of State) during the time they were actually involved in working on the issue.